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Annual Report
2022
“
From the
beginning, Radiant
set out to be a
different kind of
company...
”
CONTENTS
Annual Shareholders Letter - 2022 Financial Highlights
Our Operations - Corporate Citizenship
Financial Details
Fellow Shareholders:
The message behind our tag line is very intentional and sits at the core of our culture at Radiant. It reminds us
that within this world of complex interdependencies it is not any one of us, but all of us working together, that
ultimately shapes both our individual and collective success. More directly stated and to paraphrase Benjamin
Franklin, “If we don’t hang together, we will surely hang separately”. This message has proven to be a durable
guidepost as we think about our families, our businesses, our local communities, our country, and our role as a
global citizen. As you get to know Radiant and its history, you will see this sense of practical partnership and
collaboration in all we do.
Delivering More Than Freight
From the beginning, Radiant set out to be a different kind of company, leveraging our status as a public company
to partner with logistics entrepreneurs to create a world-class service offering. Today we enjoy one of the most
robust platforms in our industry; providing technology-enabled domestic and international freight forwarding
services, truck and rail brokerage services and an expanding array of other value-added services from over 100
operating locations across North America.
We all are deeply aware of the challenges and opportunities presented by the marketplace in the past few
years. In the face of the pandemic, lockdowns and ultimately capacity and labor shortages, we have been
reminded of the essential work we do to keep our customers’ supply chains moving and have seen the power of
our partnerships at work in even the most difficult of times. We are particularly proud of the work we have done
in support of initiatives in the fight against COVID including medical equipment & test kits; ongoing humanitarian
aid for those in desperate need in the Ukraine and surrounding areas; and the latest work we’ve engaged
around Operation Fly Formula to secure and transport infant formula for the newest members of families across
the US. No doubt Radiant’s involvement—but more importantly our dedication—to projects like these contributed
to our recent recognition by Newsweek Magazine as one of the most trusted companies in America in 2022.
However, we ultimately owe our success to our partnerships: those with our customers; operating partners;
carriers; shareholders and our hard-working employees that have come together to make Radiant the great
success that it is today.
(continued...)
(continued...)
Delivering on Financial Results
Our collective hard work also translated into another year of profitable growth for the year ended June 30,
2022, with Radiant delivering record results across several key metrics including record revenues of $1,459.4
million, up $559.6 million or 62.2%, record adjusted gross profit of $306.3 million up $84.9 million or 38.3%,
record net income attributable to common stockholders of $44.5 million, up $21.4 million or 92.6%, record
adjusted net income attributable to common stockholders of $58.2 million, up $23.7 million or 68.7%, and
record adjusted EBITDA of $80.9 million, up $31.9 million or 65.1%.
In addition, we also set a record in terms of our adjusted EBITDA margins for our fiscal year ended June 30,
2022, which increased 429 basis points to 26.4% up from 22.1% over the comparable prior year period.
Having built a scalable back-office infrastructure, our incremental cost of supporting our next dollar of gross
margin is very small and we continue to make good progress on this metric as we continue to grow the business
and leverage the benefits of our ongoing technology investments.
On an earnings per share basis, we also delivered significant improvement reporting $0.90 per basic and
$0.88 per fully diluted share for the year ended June 30, 2022, compared to net $0.46 per basic and $0.45
per fully diluted share form the comparable prior year period. Similarly, our adjusted net income attributable to
common stockholders was $1.18 per basic and $1.15 per fully diluted share for the fiscal year ended June 30,
2022, compared to $0.69 per basic and $0.67 per fully diluted share for the comparable prior year period.
Over the past several months we also took the opportunity to refresh and expand our Revolving Credit Facility.
We replaced our $150.0 million Revolving Credit Facility with a new $200.0 million facility. This facility
provides us with continued financial flexibility to access capital to support and accelerate our growth strategy,
as well as the ability to repurchase the Company’s common stock, should we choose. As we have previously
discussed, we believe that our current share price does not accurately reflect Radiant’s intrinsic value or long-
term growth prospects, particularly given our unlevered balance sheet, and therefore represents an excellent
investment opportunity for both the Company and our shareholders. For the twelve-months ended June 30,
2022, we purchased approximately $11.3 million of our stock at an average price of $6.99 per share. Moving
forward, in addition to continuing our acquisition efforts, we expect to continue to be active in the repurchase of
our stock to take advantage of the opportunity being presented to us in the disconnect between the underlying
value of our stock and our current stock price.
Delivering on Sustainability
When we consider our partnerships, we have seen a growing focus on sustainability and ESG-related topics
from customers, investors, regulators and our own employees. In response, this past year we have set in motion
a process that will gather and present Radiant’s numerous environmental, social and governance programs and
initiatives to provide better insight into our core values and greater transparency to our work in these areas. As
part of this overall initiative, we have established clear accountabilities within both our board and management
team and engaged a third-party consultant to help us through this process. As we progress this effort, our long-
term partners will recognize that many of Radiant’s ESG programs were launched many years ago, long before
ESG had come to the forefront.
These initiatives emerged organically, not as a response to ESG, but as a belief in the responsibility we all have
to do what is right. Our longstanding participation in the U.S. Environmental Protection Agency’s SmartWay
Transport Partnership, our work in the areas of Humanitarian Aid and Disaster Relief and our support and
engagement with organizations that put people and our greater communities first are just a few examples of what
delivering on sustainability has meant to Radiant over the years as the Network that Delivers. As our commitment
to environmental, social and governance responsibility grows, Radiant will continue to build programs that
support these key areas and ultimately support the partnerships we hold as the core value of our business.
(continued...)
Delivering on Innovation
As creators of a unique multi-brand network platform back in 2006, Radiant has always been both a disruptor
and innovator within our industry. Our early success was driven by our ability to differentiate ourselves in the
marketplace by bringing new value to the agent based forwarding community. In leveraging our status as a
public company, we provide our strategic operating partners an opportunity to work as shareholders and share
in the value that they help create, while providing a unique opportunity in terms of succession planning and
liquidity for logistics entrepreneurs both internal and external to the Radiant network.
As we further grow and scale the business, Radiant has continued to build a unique and differentiated platform
from which to service our customers with better purchasing power with our vendors, a best-in-class technology
operating system and an extensive global network of service partners to support our customers around the
world.
As we deliver strategic advantages for our partners, we are very excited for our acquisition of Navegate which
we completed in December of 2021, which we have recently rebranded as Radiant World Trade Services. In
addition to solidifying our presence in Shanghai, the Navegate transaction also strengthens and complements
our international services offering, particularly in the areas of customs brokerage, ocean forwarding and
drayage services and brings to us a robust global trade management capability. These new global trade
management capabilities will be made available to the entire Radiant network as we provide our customers
with purchase order and vendor management tools that unlock SKU-level visibility from the manufacturing floor
in Asia through final delivery here in the U.S. With both the enhanced service offerings and propriety global
trade management technology, we believe Radiant will further differentiate ourselves in the marketplace and
deliver on innovation as we provide additional support for both current and prospective customers moving
forward.
While we remain very optimistic about our prospects and opportunities for fiscal 2023 and beyond, the
continued uncertainty associated with the lingering pandemic and the current global geopolitical turmoil makes
it difficult to project what the “new normal” will look like in fiscal 2023 for our customers and in turn for our
own business. This is only exacerbated by the ripple effect of the pandemic which is now presenting itself in
the form of inflation, broad-based labor shortages and signs of a slowing economy that is eroding the pricing
power of the asset-based carriers. If these market trends continue as they are now, we would expect operations
to return to more normalized levels and growth rates. Whatever comes next, Radiant stands ready to deliver on
results, sustainability and innovation with a durable, diverse service offering and strong balance sheet as we
further support our customers.
Bohn H. Crain
Founder, Chairman & CEO
2022 FINANCIAL HIGHLIGHTS
GROSS REVENUES (MILLIONS)
ADJUSTED GROSS PROFIT(1) (MILLIONS)
0.0
250
500
750
1000
1250
1500
1750
2000
0.0
50
100
150
200
250
300
350
400
‘22
‘21*
‘20
‘19
‘18
1,459.4
899.8
855.2
890.5
842.4
‘22
‘21*
‘20
‘19
‘18
306.3
221.4
209.4
230.1
200.1
ADJUSTED EBITDA(2) (MILLIONS)
ADJUSTED EBITDA(2) MARGIN
0.0
10
20
30
40
50
60
70
80
90 100
0.0
5%
10%
15%
20%
25%
30%
35%
40%
29.6
80.9
49.0
38.3
40.8
29.2
‘22
‘21*
‘20
‘19
‘18
* As restated
‘22
‘21*
‘20
‘19
‘18
26.4%
22.1%
18.3%
17.7%
14.6%
(1) Adjusted gross profit is revenues net of cost of transportation and other services.
(2) Reflects a non-GAAP measure of income management considered useful in analyzing our results. A reconciliation of our non-GAAP
financial measures presented to our GAAP-based net income, as well as a description of our non-GAAP measures, is included on the last page of
this Annual Report. Our non-GAAP measures are not intended to replace any presentation included in our consolidated financial statements.
OUR OPERATIONS
RADIANT and its operating
partners provide a unique and
comprehensive service platform
offering domestic and international
freight forwarding, truck and rail
brokerage and an array of value
added supply chain management
services primarily to customers in
the United States and Canada who
operate across North America and
around the world.
ADJUSTED GROSS PROFIT
BY SERVICE
OFFERING
8%
14%
$306.3 Million
Freight Forwarding
Brokerage
Value Added Service (VAS)
78%
ADJUSTED GROSS PROFIT BREAKOUT
3%
5%
8%
44%
27%
38%
$238.2 Million
$42.6 Million
$25.5 Million
56%
32%
87%
FREIGHT FORWARDING
BROKERAGE
VALUE ADDED SERVICES
Domestic
International
Intermodal
Truckload
Less-Than-Truckload
Drayage
Materials Management
& Distribution (MM&D)
Customs House Brokerage
(CHB)
Consulting/Other
CORPORATE CITIZENSHIP
In 2022, Radiant made strides to further provide further transparency on its
commitment and progress to ESG & Sustainability initiatives.
Environmental Commitments:
We are committed to operating in an environmentally responsible manner to reduce our carbon footprint and our impact
on climate change, conserve natural resources and operate in compliance with environmental regulations.
Social Commitments:
We are committed to being a socially responsible employer by fostering an environment of diversity and inclusion across
our business, with a focus on empowering, operating ethically and supporting our local communities.
Governance Commitments:
We are committed to building a culture dedicated to ethical business behavior and responsible corporate activity.
We are proud of the work we have been doing to promote responsible business
from the inside out. We aim to strengthen this strategy in 2023 through the
following initiatives:
GHG Inventory and Carbon Accounting, with considerations for GHG emissions reduction goals and SBTi alignment
Evaluating feasibility of ISO 14001 EMS certification
Further increasing transparency and public disclosures around ESG initiatives and activities moving forward
Creating a set of metrics that will enable our company to monitor the progress of the implementation of the program
that will meet our sustainability strategy and the risks and opportunities on an ongoing basis
Developing an annual Corporate Social Responsibility (CSR) Report to share our corporate responsibility goals,
efforts, and progress with all stakeholders.
Continuing to strive for alignment of our business practices with the United Nation’s Sustainability Development
Goals (SDGs), which seek to promote peace and prosperity around the globe.
Continuing to prioritize our employees through the development of employee programs such as educational
opportunities for personal and professional development.
“
...it is not any one of us, but all of us working together, that
ultimately shapes both our individual and collective success.
”
SDG Alignment
The United Nation’s Sustainable Development Goals (SDGs) are an
interconnected set of seventeen universal objectives to help achieve “a better
and more sustainable future for all. They address the global challenges
we face, including poverty, inequality, climate change, environmental
degradation, peace and justice”. To support the SDGs, we seek align our
business practices with these goals, including SDG 13 and SDG 17.
SDG 13: Climate Action
We are committed to conducting our business in ways which minimize adverse impacts
on the environment. To that end, we comply with federal and state environmental laws
and have identified climate-related risks and opportunities for future action. We have also
identified the potential for GHG inventory and carbon accounting for scope 1, 2, and 3
emissions and begun discussions about tracking climate-related metrics, developing
SBTi-aligned targets, and potentially pursuing ISO 14001 EMS certification.
SDG 17: Partnerships for the Goals
We are involved in several partnerships that support the SDGs. We are a long-term
member of the SmartWay® Transport Partnership, a collaboration between logistics
companies and the EPA to measure, benchmark and improve logistics operations
so they can reduce their environmental footprint. This partnership supports climate-
related SDGs including SDG 13. We also partner with a number of humanitarian and
government agencies, along with other stakeholders to provide aid & relief that includes
the transportation of COVID medical equipment & test kits; ongoing humanitarian aid
for those in desperate need in the Ukraine and surrounding areas; and most recently
our work with Operation Fly Formula. We also actively explore partnerships with
organizations like Packed with Purpose and Ground Up as part of our corporate
gift-giving program. We are also exploring more opportunities for partnerships with
organizations that support the SDGs.
While we have
completed much
work in identifying
and assessing our
current ESG practices,
we will continue
developing strategies
and tracking metrics
for ESG in the future.
”
THE RADIANT FAMILY OF BRANDS
THE RADIANT FAMILY OF BRANDS
UNITED STATES
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 June 30, 2022
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 001-35392
RADIANT LOGISTICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
04-3625550
(I.R.S. Employer
Identification Number)
Triton Tower Two
700 S Renton Village Place, Seventh Floor
Renton, Washington 98057
(Address of Principal Executive Offices)
(425) 462-1094
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)
RLGT
Securities registered under Section 12(g) of the Exchange Act:
None
Title of each class
Common Stock, $0.001 Par Value
Name of each exchange on which registered
NYSE American
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
Accelerated filer
Smaller reporting company
☐
☐
☒
☒
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☒
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant based on the closing share price of the
registrant’s common stock on December 31, 2021 was approximately $279 million.
As of February 20, 2023, 48,181,256 shares of the registrant’s common stock were outstanding.
Documents Incorporated by Reference:
None.
TABLE OF CONTENTS
PART I
Explanatory Note
Forward-Looking Statements
ITEM 1.
BUSINESS ............................................................................................................................................
ITEM 1A.
RISK FACTORS ...................................................................................................................................
ITEM 1B.
UNRESOLVED STAFF COMMENTS................................................................................................
ITEM 2.
PROPERTIES .......................................................................................................................................
ITEM 3.
LEGAL PROCEEDINGS .....................................................................................................................
ITEM 4.
MINE SAFETY DISCLOSURES.........................................................................................................
PART II
ITEM 5.
ITEM 6.
ITEM 7.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ..............................................
[RESERVED]........................................................................................................................................
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..............................................................................................................
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .....................
ITEM 8.
ITEM 9.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .....................................................
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE................................................................................................................
ITEM 9A.
CONTROLS AND PROCEDURES .....................................................................................................
ITEM 9B.
OTHER INFORMATION.....................................................................................................................
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS ....
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE..............................
ITEM 11.
ITEM 12.
ITEM 13.
EXECUTIVE COMPENSATION ........................................................................................................
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS .................................................................................
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.................................................................................................................................
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES ......................................................................
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES............................................................
ITEM 16.
Signatures
FORM 10-K SUMMARY.....................................................................................................................
1
2
3
10
26
26
26
26
27
28
29
38
38
77
77
79
79
80
86
109
111
112
113
118
119
i
EXPLANATORY NOTE
Radiant Logistics, Inc., and its consolidated subsidiaries (the “Company”, “we” or “us”) is filing this comprehensive annual report on
Form 10-K for the fiscal years ended June 30, 2022 and 2021 (the “Comprehensive Form 10-K”). This Comprehensive Form 10-K
contains our audited financial statements for the fiscal year ended June 30, 2022, as well as restatement of the following previously filed
periods: (i) our audited consolidated financial statements for the fiscal year ended June 30, 2021, (ii) our unaudited consolidated financial
statements covering the quarterly reporting periods during fiscal year 2021, consisting of the quarters ended September 30, 2020,
December 31, 2020, and March 31, 2021; and (iii) our unaudited consolidated financial statements covering the quarterly reporting
periods during fiscal year 2022, consisting of September 30, 2021, December 31, 2021, and March 31, 2022.
Restatement Background
As previously disclosed, on September 28, 2022, the Audit and Executive Oversight Committee (the “Committee”) of the Board of
Directors of the Company, after meeting with management and consultation with Moss Adams LLP (“Moss Adams”), its current
registered independent public accounting firm, and BDO USA, LLP (“BDO”), its predecessor registered independent public accounting
firm, concluded that the Company’s previously issued financial statements for the fiscal year ended June 30, 2021 included in its Annual
Report on Form 10-K, each of the interim financial statements for the quarterly periods in fiscal year 2021 included in its Quarterly
Reports on Form 10-Q, and each of the interim financial statements for the quarterly periods in fiscal year 2022 included in its Quarterly
Reports on Form 10-Q (cumulatively, the “Restatement Periods”) should be restated to correct historical errors related principally to the
timing of recognition of the Company’s estimated accrual of in-transit revenues and related costs.
The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its
fiscal year-end 2022 consolidated financial statements. Principally, in response to its December 2021 cyber event, the Company
completed a detailed lookback analysis to compare its estimated accrued in-transit revenues and related costs, which primarily consist
of, purchased transportation and applicable commission expenses, to its actual customer invoicing, related transportation costs and other
costs subsequently recorded. In the course of its analysis of the actual information gathered through the lookback process, the Company
detected differences between the estimated accrued amounts and the actual revenues and expenses recorded due primarily to errors in
the underlying shipment information that was used to calculate the original estimates of the accrued amounts. Management and the
Committee have concluded that, in the ordinary course of closing its financial books and records, the Company previously inadvertently
excluded certain in-transit revenues and associated costs from the appropriate periods as required under generally accepted accounting
principles (“GAAP”) of the United States. Therefore, the Company misstated gross revenues and associated costs during the Restatement
Periods. The Company principally attributes the errors to a material weakness in internal controls over the recording and processing of
revenues, which was disclosed in Part II, Item 9A of its Annual Report on Form 10-K for the year-ended June 30, 2021, which the
Company is working to remediate in fiscal year 2023.
Items Restated in this Form 10-K
This Comprehensive Form 10-K for the fiscal years ended June 30, 2022 and 2021 reflects changes to the Consolidated Balance Sheet
at June 30, 2021 and the Consolidated Statements of Comprehensive Income, Stockholders’ Equity, and Cash Flows for the year ended
June 30, 2021, and the related notes thereto. Restatement of consolidated financial statements for the fiscal year ended June 30, 2021 is
disclosed in Note 2 to the consolidated financial statements. Restatement of consolidated financial statements for the quarterly and year-
to-date periods in fiscal year 2021 and 2022 are disclosed in Note 20 to the consolidated financial statements. Other sections impacted
are: Part I, Item 1A. Risk Factors; Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations; and Part II, Item 9A. Controls and Procedures.
The Company has not filed, and does not intend to file, amendments to the previously filed Quarterly Reports on Form 10-Q for any of
the quarters for the years ended June 30, 2021 and 2022, nor the previously filed Annual Report on Form 10-K for the fiscal year ended
June 30, 2021. Accordingly, investors should rely only on the financial information and other disclosures regarding the restated periods
in this Form 10-K or in future filings with the SEC (as applicable), and not on any previously issued or filed reports, earnings releases
or similar communications relating to these periods.
In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications
by the Company’s principal executive officer and principal financial officer are filed herewith as exhibits to this Form 10-K pursuant to
Rule 13a-14(a) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
See Note 2 and Note 20 to the consolidated financial statements, included in Part II, Item 8 of this Form 10-K, for additional information
on the restatement and the related consolidated financial statement effects.
1
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning set forth in United States securities laws and regulations – that
is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business,
financial performance and financial condition, and often contain words such as “anticipate,” “believe,” “estimates,” “expect,”
“future,” “intend,” “may,” “plan,” “see,” “seek,” “strategy,” or “will” or the negative thereof or any variation thereon or similar
terminology or expressions. These forward-looking statements are not guarantees and are subject to known and unknown risks,
uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-
looking statements. We have developed our forward-looking statements based on management’s beliefs and assumptions, which in turn
rely upon information available to them at the time such statements were made. Such forward-looking statements reflect our current
perspectives on our business, future performance, existing trends and information as of the date of this report. These include, but are
not limited to, our beliefs about future revenue and expense levels, growth rates, prospects related to our strategic initiatives and
business strategies, along with express or implied assumptions about, among other things: our continued relationships with our strategic
operating partners; the performance of our historic business, as well as the businesses we have recently acquired, at levels consistent
with recent trends and reflective of the synergies we believe will be available to us as a result of such acquisitions; our ability to
successfully integrate our recently acquired businesses; our ability to locate suitable acquisition opportunities and secure the financing
necessary to complete such acquisitions; transportation costs remaining in-line with recent levels and expected trends; our ability to
mitigate, to the best extent possible, our dependence on current management and certain larger strategic operating partners; our
compliance with financial and other covenants under our indebtedness; the absence of any adverse laws or governmental regulations
affecting the transportation industry in general, and our operations in particular; the impact of COVID-19 on our operations and
financial results; continued disruptions in the global supply chain; higher inflationary pressures particularly surrounding the costs of
fuel; potential adverse legal, reputational and financial effects on the Company resulting from the ransomware incident or future cyber
incidents and the effectiveness of the Company’s business continuity plans in response to cyber incidents, like the ransomware incident;
the commercial, reputational and regulatory risks to our business that may arise as a consequence of our need to restate our financial
statements; our longer-term relationship with our senior lenders as a consequence of our need to restate our financial statements; our
temporary loss of the use of a Registration Statement on Form S-3 to register securities in the future; any disruption to our business
that may occur on a longer-term basis should we be unable to remediate during fiscal year 2023 certain material weaknesses in our
internal controls over financial reporting, and such other factors that may be identified from time to time in our Securities and Exchange
Commission (“SEC”) filings and other public announcements including those set forth under the caption “Risk Factors” in Part 1
Item 1A of this report. In addition, the global economic climate and additional or unforeseen effects from the COVID-19 pandemic
amplify many of these risks. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our
behalf, are expressly qualified in their entirety by the foregoing. Readers are cautioned not to place undue reliance on our forward-
looking statements, as they speak only as of the date made. We disclaim any obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
2
ITEM 1. BUSINESS
Our Company
PART I
Radiant Logistics, Inc., and its consolidated subsidiaries (the “Company”, “we” or “us”) operates as a third-party logistics company,
providing technology-enabled global transportation and value-added logistics solutions primarily in the United States and Canada. We
service a large and diversified account base across a range of industries and geographies, which we support from an extensive network
of operating locations across North America as well as an integrated international service partner network located in other key markets
around the globe. We provide these services through a multi-brand network, which includes over 100 operating locations. Included in
these operating locations are a number of independent agents, who we also refer to as our “strategic operating partners”, that operate
exclusively on our behalf, and approximately 25 Company-owned offices. As a third-party logistics company, we have a vast carrier
network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in our carrier network. We
believe shippers value our services because we are able to objectively arrange the most efficient and cost-effective means, type and
provider of transportation service without undue influence caused by the ownership of transportation assets. In addition, our minimal
investment in physical assets affords us the opportunity for a higher return on invested capital and net cash flows than our asset-based
competitors.
Through our operating locations across North America, we offer domestic, international air and ocean freight forwarding services and
freight brokerage services, including truckload services, less than truckload (“LTL”) services, and intermodal services, which is the
movement of freight in trailers or containers by combination of truck and rail. Our primary business operations involve arranging the
shipment, on behalf of our customers, of materials, products, equipment, and other goods that are generally larger than shipments handled
by integrated carriers of primarily small parcels, such as FedEx, DHL, and UPS. Our services include arranging and monitoring all
aspects of material flow activity utilizing advanced information technology systems. We also provide other value-added logistics
services including materials management and distribution services (collectively, “Materials Management and Distribution” or “MM&D”
services), customs house brokerage (“CHB”) services and global trade management (“GTM”) services to complement our core
transportation service offering.
The Company expects to grow its business organically and by completing acquisitions of other companies with complementary
geographical and logistics service offerings. The Company’s organic growth strategy will continue to focus on strengthening existing
and expanding new customer relationships leveraging the benefit of the Company’s technology platform, while continuing its efforts on
the organic build-out of the Company’s network of strategic operating partner locations. In addition, as the Company continues to grow
and scale its business, the Company believes that it is creating density in its trade lanes, which creates opportunities for the Company to
more efficiently source and manage its transportation capacity.
In addition to its focus on organic growth, the Company will continue to search for acquisition candidates that bring critical mass from
a geographic and purchasing power standpoint, along with providing complementary service offerings to the current platform. As the
Company continues to grow and scale its business, it also remains focused on leveraging its back-office infrastructure and technology
systems to drive productivity improvement across the organization.
COVID-19
The COVID-19 pandemic continues to impact our business operations and financial results. Although the effects have lessened over
time, there is uncertainty in the nature and degree of its continued effects over time with new strains frequently being discovered and
additional booster shots being recommended. As the world continues to respond to COVID-19, we continue to follow guidelines
ensuring the safety of our employees, while striving to protect the health and well-being of the communities in which we operate.
Competitive Strengths
As a non-asset-based third-party logistics provider, we believe that we are well-positioned to provide cost-effective and efficient
solutions to address the demand in the marketplace for transportation and logistics services. We believe that the most important
competitive factors in our industry are quality of service, including reliability, responsiveness, expertise and convenience, scope of
operations, geographic coverage, information technology and price. We believe our primary competitive advantages are as follows:
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Non-asset-based business model
As a non-asset-based logistics provider, we own only a minimal amount of equipment. By not owning the transportation equipment used
to transport the freight, which results in relatively minimal fixed operating costs, we are able to leverage our network of locations to
offer competitive pricing and flexible solutions to our customers. Moreover, our balanced product offering provides us with revenue
streams from multiple sources and enables us to retain customers even as they shift across various modes of transportation. We believe
our low capital intensity model allows us to provide low-cost solutions to our customers, operate our business with strong cash flow
characteristics, and retain significant flexibility in responding to changing industries and economic conditions.
Offer significant advantages to our strategic operating partners
Our current network is predominantly represented by independent agents, who operate exclusively on our behalf, who we also refer to
as our “strategic operating partners”, who rely on us for operating authority, technology, sales and marketing support, access to working
capital, our carrier and international partner networks, and collective purchasing power. Through this collaboration, our strategic
operating partners have the ability to focus on the operational and sales support aspects of their business without diverting costs or
expertise to the structural aspect of their operations, thus, providing our strategic operating partners with the regional, national and global
brand recognition that they would not otherwise be able to achieve acting alone.
Lower-risk operation of network of strategic operating partners
We derive a substantial portion of our revenue pursuant to agreements with our strategic operating partners operating under our various
brands. These arrangements afford us with a relatively low risk growth model as each strategic operating partner is responsible for its
own sales and costs of operations. Under shared economic arrangements, we are responsible to provide to our strategic operating partners
centralized back-office infrastructure, transportation and accounting systems, billing and collection services.
Diverse customer base
We service a large and diversified account base consisting of consumer goods, food and beverage, electronics and high-tech, aviation
and automotive, military and government, and manufacturing and retail customers. For the annual period up to the date of this report,
no single customer and no strategic operating partner represented more than 5% of our consolidated revenue, reducing risks associated
with any particular industry, geographic or customer concentration.
Information technology resources
A primary component of our business strategy is the continued development of advanced information systems to provide accurate and
timely information to our management, strategic operating partners and customers. We believe that the ability to provide accurate real-
time information on the status of shipments has and will become increasingly important in our industry. Our customer delivery tools
enable connectivity with our customers’ and trading partners’ systems, which leads to more accurate and up-to-date information on the
status of shipments. Our centralized transportation management system (rating, routing, tender and financial settlement process) drives
significant efficiency across our network. Through our December 2021 acquisition of Navegate we now also have access to a proprietary
global trade management platform that will provide purchase order and vendor management tools that unlock SKU-level visibility from
the manufacturing floor in Asia through final delivery here in the U.S. We believe this will allow us to further differentiate ourselves in
the marketplace and provide additional support for both current and prospective customers.
Global network of transportation providers
We provide worldwide supply chain services, which include international air and ocean services that complement our domestic service
offerings. Our offerings include heavyweight and small package air services, providing same day (next flight out) air charters, next day
a.m./p.m., second day a.m./p.m. as well as time definite surface transport moves. Our non-asset-based business model allows us to use
commercial passenger and cargo flights. Thus, we have thousands of daily flight options to choose from, and our pickup and delivery
network provides us with zip code to zip code coverage throughout North America.
Sourcing and managing transportation
As we continue to grow and scale the business, we expect to continue to develop density in our trade lanes, which creates opportunities
for us to more efficiently source and manage our transportation capacity. With our acquisition of Radiant Canada (formerly, Wheels
Group, Inc.) in 2015, our network has access to truck brokerage and intermodal capabilities. We believe the benefit of our relative
purchasing power along with our service line expansion will serve as a competitive differentiator in the marketplace to help us secure
new customers and attract additional strategic operating partners to our network.
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Value-added services
In addition to our core transportation service offerings, we also provide value-added supply chain services including MM&D, CHB, and
GTM services. We believe that our value-added services allow us to leverage our transportation services to generate additional revenue
and provide additional convenience to our customers.
Industry Overview
The logistics industry is highly fragmented with thousands of companies of various sizes competing in the domestic and international
markets. As business requirements for efficient and cost-effective logistics services have increased, so has the importance and
complexity of effectively managing freight transportation. Businesses increasingly strive to minimize inventory levels, perform
manufacturing and assembly operations in the lowest cost locations, and distribute their products in numerous global markets. As a
result, companies are increasingly looking to third-party logistics providers to help them execute their supply chain strategies.
Shippers typically manage their supply chains using some combination of asset and non-asset-based service providers. We operate
principally as a non-asset-based third-party logistics provider focused on freight forwarding, truck brokerage and intermodal
transportation services, along with associated value-added services. According to Armstrong and Associates, the market for third-party
logistics services in the United States and Canada is estimated at approximately 247.2 billion annually.
Because non-asset-based companies select from various transportation options in routing customer shipments, they are often able to
serve customers less expensively and with greater flexibility than their asset-based competitors, who are typically focused on maximizing
the utilization of their own captive fleets of trucks, aircraft and ships rather than the specific needs of the customer.
We believe there are several factors that are increasing demand for global logistics solutions. These factors include:
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outsourcing of non-core activities;
globalization of trade;
increased need for time-definite delivery;
consolidation of global logistics providers; and
increasing influence of e-business and the Internet.
Our Growth Strategy
Our objective is to provide customers with comprehensive multi-modal transportation and logistics solutions offered by us through our
Radiant®, Airgroup®, Adcom®, DBA™, Service by Air™, Navegate® and Centrade brands. Since inception of our business in 2006,
we have executed a strategy to expand operations through a combination of organic growth and the strategic acquisition of non-asset-
based transportation and logistics providers meeting our acquisition criteria. We have successfully completed 21 acquisitions since our
initial acquisition of Airgroup in January of 2006, including:
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Automotive Services Group, expanding our services into the automotive industry, in 2007;
Adcom Express, Inc., (“Adcom”) adding domestic operating partner locations, in 2008;
DBA Distribution Services, Inc., (“DBA”) adding two Company-owned locations and operating partner locations, in 2011;
ISLA International Ltd., (“ISLA”) adding a Company-owned location in Laredo, Texas, providing us with bilingual
expertise in both north and south bound cross-border transportation and logistics services, in 2011;
Brunswicks Logistics, Inc., (“ALBS”) adding a strategic Company-owned location in New York-JFK, in 2012;
Marvir Logistics, Inc., (“Marvir”) adding a Company location in Los Angeles from the conversion of a former operating
partner since 2006, in 2012;
International Freight Systems of Oregon, Inc., (“IFS”) adding a Company location in Portland, Oregon, from the conversion
of a former operating partner since 2007, in 2012;
On Time Express, Inc., (“On Time”) adding three Company-owned locations in Phoenix, Arizona, Dallas, Texas and
Atlanta, Georgia, to providing additional line-haul and time critical logistics capabilities, in 2013;
Phoenix Cartage and Air Freight, LLC, (“PCA”) opening a Company-owned location in Philadelphia, Pennsylvania, in
2014;
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Trans-NET, Inc. (“TNI”) expanding Company-owned operations in Seattle, Washington and providing a gateway of
services to the Russian Far East, in 2014;
Don Cameron and Associates, Inc. (“DCA”), a Minnesota based, privately held company that provides a full range of
domestic and international transportation and logistics services across North America, in 2014;
Radiant Canada, one of the largest third-party logistics providers in Canada, offering truck brokerage services and
intermodal service offering throughout the United States and Canada along with value-added warehouse and distribution
service offerings in support of U.S. shippers looking to access the Canadian markets, in 2015;
Highways and Skyways, Inc. (“Highways”), a privately held Kentucky based company, adding a Company-owned location
near the Cincinnati airport from the conversion of a former SBA operating partner in 2015;
Service by Air, Inc. (“SBA”), a privately held corporation based in New York, adding three Company-owned operating
locations and forty strategic operating partner locations across North America, in 2015;
Copper Logistics, Incorporated (“Copper”), a Minneapolis, Minnesota based privately held company that provides a full
range of domestic and international transportation and logistics services across North America, in 2015;
Lomas Logistics (“Lomas”), a division of L.V. Lomas Limited, a Canada based third-party logistics provider that operates
in Ontario and British Columbia, in 2017;
Dedicated Logistics Technologies, Inc. (“DLT”), a privately held company that has historically operated under the
Company’s SBA brand in Newark, New Jersey and Los Angeles, California, in 2017;
Sandifer-Valley Transportation and Logistics, Ltd. (“SVT”), a privately held company providing a full range of domestic
and international cross-border services with Mexico, in 2017;
Alexandria, Virginia based Friedway Enterprises, Inc. (“Friedway”) and Pittsburgh, Pennsylvania based CIC2, Inc.
(“CIC2”), historically operated the Company’s Adcom agency locations, in 2020; and
Navegate, Inc. and its subsidiaries (“Navegate”), a privately held company based in Minnesota, which provides international
technology-enabled supply chain management and third-party transportation and logistics services including its technology
platform, in 2021.
Cascade Enterprises of Minnesota, Inc. (“Cascade”), a privately held company based in Minnesota that has operated as a
strategic operating partner under the Company’s Airgroup brand since 2007 that provides a full range of domestic and
international transportation and logistics services across North America, in 2022.
We expect to grow our business organically and by completing acquisitions of other companies with complementary geographical and
logistics service offerings. We will continue to make enhancements to our back-office infrastructure, transportation management, global
trade management and accounting systems to support this growth. Our organic growth strategy will continue to focus on strengthening
existing and expanding new customer relationships, while continuing our efforts on the organic build-out of our network of strategic
operating partner locations. In addition, we will also be working to drive further productivity improvements enabled through our value-
added truck brokerage and customs house brokerage service capabilities.
Our acquisition strategy has been designed to take advantage of shifting market dynamics. The third-party logistics industry continues
to grow as an increasing number of businesses outsource their logistics functions to more cost effectively manage and extract value from
their supply chains. The industry is positioned for further consolidation as it remains highly fragmented, and as customers are demanding
the types of sophisticated and broad reaching service offerings that can more effectively be handled by larger more diverse organizations.
We believe the highly fragmented composition of the marketplace, the industry participants’ need for capital, and their owners’ desire
for liquidity has and will continue to produce a large number of attractive acquisition candidates. For the most part, our target acquisition
candidates are generally smaller than those identified as acquisition targets of larger public companies and have limited ability to conduct
their own public offerings or obtain financing that will provide them with capital for liquidity or rapid growth. We believe that many of
these “smaller” companies are receptive to our acquisition program as a vehicle for liquidation or growth. We intend to be opportunistic
in executing our acquisition strategy with a goal of expanding both our domestic and international capabilities.
Our Operating Strategy
Leverage the People, Process and Technology Available through a Central Platform. A key element of our operating strategy is to
maximize our operational efficiencies by integrating general and administrative functions into our back-office operations and reducing
or eliminating redundant functions and facilities at acquired companies. This is designed to enable us to quickly realize potential savings
and synergies, efficiently control and monitor operations of acquired companies, and allow acquired companies to focus on growing
their sales and operations.
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Develop and Maintain Strong Customer Relationships. We seek to develop and maintain strong interactive customer relationships by
anticipating and focusing on our customers’ needs. We emphasize a relationship-oriented approach to business, rather than the
transaction or assignment-oriented approach used by many of our competitors. To develop close customer relationships, we and our
network of operating partners regularly meet with both existing and prospective customers to help design solutions for, and identify the
resources needed to execute, their supply chain strategies. We believe that this relationship-oriented approach results in greater customer
satisfaction and reduced business development expense.
Operations
Through our operating locations across North America, we offer domestic and international air and ocean freight forwarding services
and freight brokerage services including truckload services, LTL services, and intermodal services, which is the movement of freight in
trailers or containers by combination of truck and rail. As a third-party logistics provider, our primary business operations involve
arranging the shipment, on behalf of our customers, of materials, products, equipment and other goods that are generally larger than
shipments handled by integrated carriers of primarily small parcels, such as FedEx, DHL and UPS, including arranging and monitoring
all aspects of material flow activity utilizing advanced information technology systems. We also provide other value-added supply chain
services, including MM&D, CHB, and GTM, to complement our core transportation service offering.
As a non-asset-based provider, we generally do not own the transportation equipment used to transport the freight. We generally expect
to neither own nor operate any material transportation assets and, consequently, arrange for transportation of our customers’ shipments
via trucking companies, commercial airlines, air cargo carriers, railroads, ocean carriers and other non-asset-based third-party providers.
We select the carrier for a shipment based on route, departure time, available cargo capacity and cost. We may charter cargo aircraft
and/or ocean vessels from time to time depending upon seasonality, freight volumes and other factors. We generate our gross margin on
the difference between what we charge to our customers for the services provided to them, and what we pay to the transportation
providers to transport the freight.
We are organized functionally in two geographic operating segments: U.S. and Canada. Our transportation services for both the U.S.
and Canada segments can be broadly placed into the categories of freight forwarding and freight brokerage services:
Freight forwarding. As a freight forwarder, we operate as a non-asset-based carrier providing domestic and international air and ocean
freight forwarding services. Our freight forwarding operations involve obtaining shipment or material orders from customers, creating
and delivering a wide range of logistics solutions to meet customers' specific requirements for transportation and related services, and
arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems. We arrange for
transportation of our customers’ shipments via trucking companies, commercial airlines, air cargo carriers, ocean carriers and other
asset-based and non-asset-based third-party providers. We select the carrier for a shipment based on route, departure time, available
cargo capacity and cost. We charter cargo aircraft from time to time depending upon seasonality, freight volumes and other factors.
Freight brokerage. We also provide significant bi-modal brokerage capabilities providing truckload, LTL and intermodal services
throughout the United States and Canada, which is managed through our centralized service centers in Chicago, Illinois and Toronto,
Ontario. We offer temperature-controlled, dry van, intermodal drayage, and flatbed services and specialize in the transport of food and
beverage, consumer packaged goods and frozen food and refrigerated products.
As a truck broker, we match the customers’ needs with carriers’ capacity to provide the most effective combination of service and price.
We have contracts with a substantial number of carriers allowing us to meet the varied needs of our customers. As part of the truck
brokerage services, we negotiate rates, track shipments in transit and handle claims for freight loss and damage on behalf of our
customers. For our LTL service, we employ a point-to-point model that we believe serves as a competitive advantage over the traditional
hub and spoke LTL model in terms of faster transit times, lower incidence of damage, and reduced fuel consumption.
As an intermodal services company, we arrange for the movement of our customers’ freight in containers, trailers and rail boxcars,
typically over long distances of at least 750 miles. We contract with railroads to provide transportation for the long-haul portion of the
shipment and with local trucking companies, known as “drayage companies,” for pickup and delivery. As part of our intermodal services,
we negotiate rail and drayage rates, electronically track shipments in transit, consolidate billing and handle claims for freight loss or
damage on behalf of our customers.
To complement our core transportation service offerings, we also provide a number of value-added services, including MM&D, CHB,
and GTM solutions.
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Information Services
The continued enhancement of our information systems and ultimate migration of acquired companies and additional strategic operating
partners to a common set of customer-facing and back-office applications is a key component of our growth strategy. We believe that
the ability to provide accurate real-time information on the status of shipments as well as enhanced reporting and visibility tools has
become increasingly important and that our efforts in this area will result in competitive service advantages. Through our December
2021 acquisition of Navegate we are also now able to offer customers purchase order and vendor management tools that unlock SKU-
level visibility from the manufacturing floor in Asia through final delivery here in the U.S through our proprietary global trade
management platform which we believe this will allow us to further differentiate ourselves in the marketplace. In addition, we believe
that centralizing our operations into a single transportation management system (rating, routing, tender and financial settlement
processes) will continue to drive significant productivity improvement across our network.
In our forwarding operations, we use a third-party and proprietary transportation management system (Cargowise, SBA Review) and
are migrating operations to SAP TM, which are integrated to our third-party accounting system (SAP ECC). These systems combine to
form the foundation of our supply-chain technologies, which provides us with a common set of back-office operating, accounting and
customer facing applications. In our brokerage operations, we utilize the TEDS system for transportation management and Megatrans
and Revenova for intermodal services, and Profit Tools for drayage services. In our warehousing operations, we use Microsoft’s
Navision and are migrating to Highjump, which uses SAP for order management services. These systems are connected to Epicor and
JD Edwards for accounting and financial reporting. We continue to make gradual progress in migrating these various operating and
financial reporting systems to a singular SAP-based platform. We are taking a phased approach to these migrations and currently we
continue to transition our freight forwarding services to our new SAP-based transportation management system. Future phases will
include the transition of our legacy brokerage transportation management and financial reporting systems to SAP ECC.
Sales and Marketing
We principally market our services through our network of Company-owned and strategic operating partner locations across North
America. Each office is staffed with operational employees to provide support for the sales team, develop frequent contact with the
customer’s traffic department, and maintain customer service. Our current network is predominantly represented by strategic operating
partners that rely on us for operating authority, technology, sales and marketing support, access to working capital, our carrier and
international partners networks, and collective purchasing power. Through this collaboration, our strategic operating partners have the
ability to focus on the operational and sales support aspects of the business without diverting costs or expertise to the structural aspect
of their operations, providing our partners with the regional, national and global brand recognition that they would not otherwise be able
to achieve by solely serving their local market. We have no customers or strategic operating partners that separately account for more
than 5% of our consolidated revenue, although we do have a number of significant customers and strategic operating partner locations
with volume and stature, the loss of one or more of which could negatively impact our ability to retain and service our customers.
Competition and Business Conditions
The logistics business is directly impacted by the volume of domestic and international trade. The volume of such trade is influenced by
many factors, including economic and political conditions in the United States and abroad, major work stoppages, currency fluctuations,
acts of war, terrorism and other armed conflicts, United States and international laws relating to tariffs, trade restrictions, foreign
investments, interest rates, inflation, and taxation.
The global transportation and logistics services industry is intensively competitive and is expected to remain so for the foreseeable
future. We compete against asset-based and other non-asset-based third-party logistics companies, consultants, information technology
vendors and shippers’ transportation departments. This competition is based primarily on rates, quality of service (such as damage-free
shipments, on-time delivery and consistent transit times), reliable pickup and delivery and scope of operations. Certain of our competitors
have substantially greater financial resources than we do. However, we believe the incremental service offerings enabled through our
acquisition strategy (e.g., Navegate’s global trade management platform) will serve as a catalyst for margin expansion in our existing
business and a competitive differentiator in the marketplace to help us secure new customers and attract additional strategic operating
partners to our network.
Regulation
Interstate and international transportation of freight is highly regulated. Failure to comply with applicable state and federal regulations,
or to maintain required permits or licenses, can result in substantial fines or revocation of operating permits or authorities imposed on
both transportation intermediaries and their shipper customers. We cannot give assurance as to the degree or cost of future regulations
on our business. Some of the regulations affecting our current and prospective operations are described below.
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Air freight forwarding operations are subject to regulation, as an indirect air cargo carrier, under the Federal Aviation Act as enforced
by the Federal Aviation Administration of the U.S. Department of Transportation, and the Transportation Security Administration of
the Department of Homeland Security. While air freight forwarders are exempted from most of the Federal Aviation Act’s requirements
by the Economic Aviation Regulations, the industry is subject to ongoing regulatory and legislative developments that can impact the
economics of the industry by requiring changes to operating practices or influencing the demand for, and the costs of, providing services
to customers.
Surface freight forwarding operations are subject to various state and federal statutes and are regulated by the Federal Motor Carrier
Safety Administration of the U.S. Department of Transportation and, to a very limited extent, the Surface Transportation Board. These
federal agencies have broad investigatory and regulatory powers, including the power to issue a certificate of authority or license to
engage in the business, to approve specified mergers, consolidations and acquisitions, and to regulate the delivery of some types of
domestic shipments and operations within particular geographic areas.
The Federal Motor Carrier Safety Administration also has the authority to regulate interstate motor carrier operations, including the
regulation of certain rates, charges and accounting systems, to require periodic financial reporting, and to regulate insurance, driver
qualifications, operation of motor vehicles, parts and accessories for motor vehicle equipment, hours of service of drivers, inspection,
repair, maintenance standards and other safety related matters. The federal laws governing interstate motor carriers have both direct and
indirect application to the Company. The breadth and scope of the federal regulations may affect our operations and the motor carriers
that are used in the provisioning of the transportation services. In certain locations, state or local permits or registrations may also be
required to provide or obtain intrastate motor carrier services.
The Federal Maritime Commission, or FMC, regulates and licenses ocean forwarding operations. Non-vessel operating common carriers
are subject to FMC regulation, under the FMC tariff filing and surety bond requirements, and under the Shipping Act of 1984,
particularly those terms proscribing rebating practices.
United States customs brokerage operations are subject to the licensing requirements of the Bureau of Customs and Border Protection
of the Department of Homeland Security. Likewise, any customs brokerage operations must also be licensed in and subject to the
regulations of countries into which freight is imported.
Human Capital
We consider our employees to be the foundation for our growth and continued success. We believe in creating and maintaining a positive
work environment for employees. As of June 30, 2022, we have 836 employees, of which 811 are full time. None of these employees
are covered by a collective bargaining agreement. We have experienced no work stoppages and consider our relations with our
employees to be good. We believe that an equitable and inclusive environment with diverse teams is crucial to our efforts to attract and
retain key talent and foster a work culture that reflects our core values.
Available Information
We maintain a website at www.radiantdelivers.com. We are not including the information contained on our website as a part of, nor
incorporating it by reference into, this Annual Report on Form 10-K. We post on our website, free of charge, documents that we file
with or furnish to the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish such material to,
the SEC. These reports are also available free of charge on the SEC website at www.sec.gov.
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ITEM 1A. RISK FACTORS
RISKS PARTICULAR TO OUR BUSINESS
You should carefully consider the risk factors set forth below as well as the other information contained in or incorporated by reference
into this Annual Report on Form 10-K before investing in our common stock. Any of the following risks could materially and adversely
affect our business, financial condition or results of operations. In such a case, you may lose all or part of your investment. The risks
described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view
to be immaterial may also materially adversely affect our business, financial condition or results of operations. The future trading price
of shares of our common stock will be affected by the performance of our business relative to, among other things, competition, market
conditions and general economic and industry conditions.
Risks Related to our Business
The restatement of our previously issued financial statements has been time-consuming and expensive and could expose us to
additional risks that could materially adversely affect our financial position, results of operations and cash flows.
As discussed in the Explanatory Note to this Annual Report and in Note 2, Restatement of Previously Issued Consolidated Financial
Statements, and Note 20, Quarterly Financial Data (Unaudited and Restated), to the consolidated financial statements included in this
Annual Report, we are restating our previously issued financial statements for (i) our audited consolidated financial statements for the
year ended June 30, 2021, and (ii) our unaudited consolidated financial statements covering the quarterly reporting periods during fiscal
year 2021, consisting of the quarters ended September 30, 2020, December 31, 2020, March 31, 2021; and (iii) our unaudited
consolidated financial statements covering the quarterly reporting periods during fiscal year 2022, consisting of September 30, 2021,
December 31, 2021, and March 31, 2022. These restatements, and the remediation efforts we have undertaken and are continuing to
undertake, have been time-consuming and expensive and could expose us to a number of additional risks that could materially adversely
affect our financial position, results of operations and cash flows.
In particular, we have incurred significant expenses, including audit, legal, consulting and other professional fees, in connection with
the restatement of our previously issued financial statements and the ongoing remediation of material weaknesses in our internal control
over financial reporting. We have implemented and will continue to implement additional processes utilizing existing resources and
adding new resources as needed. To the extent these steps are not successful, we could be forced to incur additional time and expense.
Our management’s attention has also been diverted from the operation of our business in connection with the restatements and ongoing
remediation of material weaknesses in our internal controls.
We identified a material weakness in our internal control over financial reporting related to the recording and processing of revenue
transactions. Such material weaknesses could materially and adversely affect our operations, financial condition, reputation and
stock price.
As discussed in Note 2 of the consolidated financial statements, Management has concluded that the Company’s previously issued
consolidated financial statements should be restated due to, inadvertently excluding certain in-transit revenues and associated costs from
the appropriate periods as required under GAAP. Therefore, the Company misstated gross revenues and associated costs during the
Restatement Periods. The restatement related to the Company’s material weakness in internal control over financial reporting over the
recording of revenue transactions. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements
will not be prevented or detected on a timely basis. The Company completed the restatement, is evaluating, and is working towards the
appropriate corrective actions to remediate the material weakness during the fiscal year 2023 to strengthen our internal controls over the
recording of revenue transactions.
It is possible that we may discover significant deficiencies or material weaknesses in our internal control over financial reporting in the
future. For example, internal control over financial reporting may not achieve their intended objectives. Control processes that involve
human diligence and compliance, such as our disclosure controls and procedures and internal control over financial reporting, are subject
to lapses in judgment and breakdowns resulting from human failures. Controls can also be circumvented by collusion or improper
management-override of such controls. Because of such limitations, there are risks that material misstatements due to error or fraud may
not be prevented or detected, and that information may not be reported on a timely basis.
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Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could
cause us to fail to meet our periodic reporting obligations, or result in material misstatements in our financial information. If we are
unable to effectively remediate and adequately manage our internal control over financial reporting in the future, we may be unable to
produce accurate or timely financial information. As a result, we may be unable to meet our ongoing reporting obligations or comply
with applicable legal requirements, which could lead to the imposition of sanctions or further investigation by regulatory authorities.
Any such action or other negative results caused by our inability to meet our reporting requirements or comply with legal and regulatory
requirements could lead investors and others to lose confidence in our financial data and could adversely affect our business and our
stock price. Significant deficiencies or material weaknesses in our internal control over financial reporting could also reduce our ability
to obtain financing or could increase the cost of available financing.
The delayed filing of our annual report has made us currently ineligible to use a registration statement on Form S-3 to register the
offer and sale of securities, which could adversely affect our ability to raise future capital or complete acquisitions.
As a result of the delayed filing of our annual report with the SEC, we will not be eligible to register the offer and sale of our securities
using a registration statement on Form S-3 until one year from the date we regain and maintain status as a current filer. Should we wish
to register the offer and sale of our securities to the public prior to the time we are eligible to use Form S-3, both our transaction costs
and the amount of time required to complete the transaction could increase, making it more difficult to execute any such transaction
successfully and potentially harming our financial condition.
We need to maintain and expand our existing strategic operating partner network to increase revenues.
We sell our services through Company-owned locations operating under the Radiant brands and through a network of independently
owned strategic operating partners throughout North America operating under the Airgroup, Adcom, DBA, and Service by Air brands.
For the years ended June 30, 2022 and 2021, approximately 49% and 53% of our consolidated adjusted gross profit (this is a non-GAAP
measure, see further discussion and reconciliation to a GAAP measure in Item 7) was derived through our strategic operating partners.
We believe our strategic operating partners will remain a critical component to our success for the foreseeable future. Although the
terms of our strategic operating partner agreements vary widely, they generally cover the manner and amount of payments, the services
to be performed, the length of the contract, and provide us with certain protections such as strategic operating partner-funded reserves
against potential bad debts, indemnification obligations, and in certain instances include a personal guaranty of the independent owner(s)
of the strategic operating partners. Certain of our strategic operating partner agreements are for defined terms, while others are subject
to “evergreen” terms, or contain automatic renewal provisions or are at-will on a month-to-month basis. Regardless of stated term, in
most situations the agreements can be terminated by the strategic operating partner with prior notice. As certain agreements expire, there
can be no assurance that we will be able to enter into new agreements that provide for the same terms and economics as those previously
agreed upon, if at all. Thus, we are subject to the risk of strategic operating partner terminations and the failure or refusal of certain of
our strategic operating partners to renew their existing agreements. This risk is often accentuated upon the acquisition of a new agency-
based network. We have a number of customers and strategic operating partner locations with significant volume and stature; however,
no single customer or strategic operating partner location represents more than 5% of our consolidated revenue. We cannot be certain
that we will be able to maintain and expand our existing strategic operating partner relationships or enter into new strategic operating
partner relationships, or that new or renewed strategic operating partner relationships will be available on commercially reasonable
terms. If we are unable to maintain and expand our existing strategic operating partner relationships, renew existing strategic operating
partner relationships, or enter into new strategic operating partner relationships, we may lose customers, customer introductions and co-
marketing benefits, and our operating results may be negatively impacted. We may also be restricted from growing in certain territories
or with certain customers, except through our strategic operating partners.
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If our strategic operating partners fail to maintain adequate reserves against unpaid customer invoices, or if we are unable to offset
against commissions earned and payable by us to our strategic operating partners for unpaid customer invoices, our results of
operations and financial condition may be adversely affected.
We derive a substantial portion of our revenue pursuant to agreements with strategic operating partners operating under our various
brands. Under these agreements, each individual strategic operating partner is responsible for some or all of the collection of amounts
due from customers being serviced by such strategic operating partner. Certain of our strategic operating partners are required to maintain
a security deposit with us to be used to fund those customer accounts ultimately not collected by us. We charge each of the strategic
operating partners for any accounts receivable aged beyond 90 days. If the strategic operating partner’s deposit with us has been depleted,
an amount will be owed to us by our strategic operating partner. Based on legacy contracts assumed upon acquisition, some strategic
operating partners are not required to maintain a security deposit, however, they are still responsible for deficits and their strategic
operating partner agreements provide that we may withhold all or a portion of future commissions payable to the strategic operating
partner in satisfaction of any deficit. As of June 30, 2022, approximately $1.7 million was owed to us by our strategic operating partners.
To the extent any of these strategic operating partners cease operations or are otherwise unable to replenish these deficit accounts, we
would be at risk of loss for any such amount. We include such amounts in the allowance for doubtful accounts when it is probable the
amounts owed will not be collected.
Failure to comply with obligations as an “indirect air carrier” could result in penalties and fines and limit our ability to ship freight.
We are regulated, among other things, as “indirect air carriers” by the Transportation Security Administration of the Department of
Homeland Security. These agencies provide requirements, guidance and, in some cases, administer licensing requirements and processes
applicable to the freight forwarding industry. We monitor our compliance and the compliance of our subsidiaries with such agency
requirements. We rely on our strategic operating partners to monitor their own compliance, except when we are notified of a violation,
when we may become involved. Failure to comply with these requirements, policies and procedures could result in penalties and fines.
To date, a limited number of our strategic operating partners have been out of compliance with the “indirect air carrier” regulations,
resulting in fines to us, which we attempt to collect from the strategic operating partners. There is no assurance that additional violations
will not take place, which could result in penalties or fines or, in the extreme case, limits on our ability to ship freight.
Our business will be seriously harmed if we fail to develop, implement, maintain, upgrade, enhance, protect and integrate
information technology systems.
We rely heavily on our information technology systems to efficiently run our business, and they are a key component of our growth
strategy. To keep pace with changing technologies and customer demands, we must correctly interpret and address market trends and
enhance the features and functionality of our technology platform in response to these trends, which may lead to significant ongoing
software development or licensing costs. We may be unable to accurately determine the needs of our customers and strategic operating
partners and the trends in the transportation services industry, or to design or license and implement the appropriate features and
functionality of our technology platform in a timely and cost-effective manner, which could result in decreased demand for our services
and a corresponding decrease in our revenues. Despite testing, external and internal risks, such as malware, insecure coding, “Acts of
God,” data leakage and human error pose a direct threat to our information technology systems and operations. We have been and may
in the future be subject to cybersecurity attacks and other intentional hacking. For example, as previously disclosed, on December 8,
2021, we detected a ransomware incident impacting certain of our operational and information technology systems. While our systems
recovery efforts are complete, and our operations are fully functional, the incident did result in a loss of revenue as well as certain
incremental costs and we have yet to determine the extent to which our insurance may cover such costs. In addition, following an
extensive forensic investigation by a full team of cybersecurity experts, we confirmed that some data extraction related to the Company’s
customers and employees occurred from the Company’s servers before the Company took its systems offline. We notified law
enforcement, provided notice to customers apprising them of the situation and are providing any notices that may be required by
applicable law related to potential Personal Identifiable Information (PII data) exposure. Any failure to identify and address such defects
or errors or prevent or remediate a cyber-attack could result in corruption or loss of our data, service interruptions, operational
difficulties, loss of revenues or market share, liability to customers or others, diversion of resources, injury to our reputation and
increased service and maintenance costs. Addressing such issues could prove to be impossible or very costly and responding to resulting
claims or liability could similarly involve substantial cost. We must maintain and enhance the reliability and speed of our information
technology systems to remain competitive and effectively handle higher volumes of freight through our network and the various service
modes we offer. If our information technology systems are unable to manage additional volume for our operations as our business grows,
or if such systems are not suited to manage the various service modes we offer or businesses we acquire, our service levels and operating
efficiency could decline. We expect customers and strategic operating partners to continue to demand more sophisticated, fully
integrated information systems from their supply chain services providers. If we fail to hire and retain qualified personnel to implement,
protect and maintain our information technology systems or if we fail to upgrade our systems to meet our customers’ and strategic
operating partners’ demands, our business and results of operations could be seriously harmed. This could result in a loss of customers
or a decline in the volume of freight we receive from customers.
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In addition, acquired companies will need to be integrated with our information technology systems, which may cause additional training
or licensing cost, along with potential delays and disruption. In such event, our revenue, financial results and ability to operate profitably
could be negatively impacted. The challenges associated with integration of our acquisitions may increase these risks.
Our management information and financial reporting systems are spread across diverse platforms and geographies.
The growth of our business through acquisitions has resulted in our reliance on the accounting, business information, and other computer
systems of these acquired entities to capture and transmit information concerning customer orders, carrier payment, payroll, and other
critical business data. We continue to make progress towards migrating our various legacy operating and accounting systems to a new
singular SAP-based system. As long as an acquired business remains on another information technology system, we face additional
manual calculations, training costs, delays, and an increased possibility of inaccuracies in the data we use to manage our business and
report our financial results. Any delay in compiling, assessing, and reporting information could adversely impact our business, our
ability to timely react to changes in volumes, prices, or other trends, or to take actions to comply with financial covenants, all of which
could negatively impact our stock price.
We depend on third-party carriers to transport our customers’ cargo.
We rely on commercial airfreight carriers and air charter operators, ocean freight carriers, trucking companies, major U.S. railroads,
other transportation companies, draymen and longshoremen for the movement of our customers’ cargo. Consequently, our ability to
provide services for our customers could be adversely impacted by, among other things: shortages in available cargo capacity; changes
by carriers and transportation companies in policies and practices such as scheduling, pricing, payment terms and frequency of service,
increases in the cost of fuel, taxes and labor, changes in the financial stability or operating capabilities of carriers, and other factors not
within our control. Reductions in airfreight or ocean freight capacity could negatively impact our yields. Material interruptions in service
or stoppages in transportation, whether caused by supply chain irregularities, strike, work stoppage, lock-out, slowdown, other supply
chain issues or otherwise, could adversely impact our business, results of operations and financial condition.
In addition, any determination that our third-party carriers have violated laws and regulations could seriously damage our reputation and
brands, resulting in diminished revenue and profit and increased operating costs.
Our profitability depends on our ability to effectively manage our cost structure as we grow the business.
We have increased, and intend to further increase, our revenue through organic growth, adding strategic operating partners, and
acquisitions. We believe that certain of our costs, such as those related to information technology, physical locations, senior management,
and sales and general operations, and excluding non-cash amortization, should grow more slowly than our adjusted gross profit, which
would lead to improved cash flow margins over time. Historically, our cash flow margins have fluctuated, and have not always improved
as we have grown. To the extent we fail to manage our costs, including purchased transportation, strategic operating partner
commissions, personnel expenses, and sales and general expenses, our profitability may not improve or may decrease. This could
adversely impact our business, results of operation, financial condition, and the trading price of our common stock.
Economic recessions and other factors that reduce freight volumes could have a material adverse impact on our business.
The transportation industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns
in business cycles of our customers, interest rate fluctuations, inflation pressures, and other economic factors beyond our control.
Deterioration in the economic environment subjects our business to various risks that may have a material impact on our operating
results and cause us to not reach our long-term growth goals, and which may include the following:
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a reduction in overall freight volumes in the marketplace reduces our opportunities for growth. In addition, if a downturn in
our customers’ business cycles causes a reduction in the volume of freight shipped by those customers, our operating results
could be adversely affected;
some of our customers may face economic difficulties and may not be able to pay us, and some may go out of business. In
addition, some customers may not pay us as quickly as they have in the past, causing our working capital needs to increase;
a significant number of our transportation providers may go out of business and we may be unable to secure sufficient
equipment or other transportation services to meet our commitments to our customers; and
we may not be able to appropriately adjust our expenses to changing market demands. In order to maintain high variability
in our business model, it is necessary to adjust staffing levels to changing market demands. In periods of rapid change, it is
more difficult to match our staffing level to our business needs. In addition, we have other primarily variable expenses that
are fixed for a period of time, and we may not be able to adequately adjust them in a period of rapid change in market
demand.
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COVID-19 or other health crises may adversely affect our business.
The COVID-19 pandemic continues to impact our business operations and financial results. Although the effects have lessened over
time, there is uncertainty in the nature and degree of its continued effects over time with new strains frequently being discovered and
additional booster shots being recommended. As the world continues to respond to COVID-19, we continue to follow guidelines
ensuring the safety of our employees, while striving to protect the health and well-being of the communities in which we operate.
The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that we
are not able to predict, including the duration and scope of the pandemic; governmental, business, and individuals’ actions in response
to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability. These factors
may adversely impact consumers, business, and government spending as well as customers' ability to pay for our services on an ongoing
basis. This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a
variety of areas that depend on these estimates and assumptions, including receivables and forward-looking guidance.
Our business is subject to seasonal trends.
Historically, our operating results have been subject to seasonal trends when measured on a quarterly basis. Our first and fourth fiscal
quarters are traditionally weaker compared with our second and third fiscal quarters. As a result, our quarterly operating results are likely
to continue to fluctuate. This trend is dependent on numerous factors, including the markets in which we operate, holiday seasons,
climate, economic conditions, inflationary pressure, and numerous other factors. A substantial portion of our revenue is derived from
customers in industries whose shipping patterns are tied closely to consumer demand, which can sometimes be difficult to predict or are
based on just-in-time production schedules. Therefore, our revenue is, to a large degree, affected by factors that are outside of our
control. There can be no assurance that our historic operating patterns will continue in future periods as we cannot influence or forecast
many of these factors.
Comparisons of our operating results from period to period are not necessarily meaningful and should not be relied upon as an
indicator of future performance.
Our operating results have fluctuated in the past and likely will continue to fluctuate in the future because of a variety of factors, many
of which are beyond our control including inflationary pressures and supply chain disruptions. A substantial portion of our revenue is
derived from customers in industries whose shipping patterns are tied closely to economic trends, such as inflation and supply chain
irregularities during the fiscal year ended June 30, 2022, and consumer demand that can be difficult to predict or are based on just-in-
time production schedules. Because our quarterly revenues and operating results vary significantly, comparisons of our results from
period to period are not necessarily meaningful and should not be relied upon as an indicator of future performance. Additionally, the
timing of acquisitions, as well as the revenue and expenses of the acquired operations, the transaction expenses, amortization of
intangible assets, and interest expense associated with acquisitions can make our operating results from period to period difficult to
compare. Accordingly, there can be no assurance that our historical operating patterns will continue in future periods or that comparisons
to prior periods will be meaningful.
Higher carrier prices may result in decreased adjusted gross profit.
Carriers can be expected to charge higher prices if market conditions warrant, including increased costs of fuel, labor shortages, increased
shipping times due to supply chain disruptions in order to cover higher operating expenses such as increased shipping times, labor rates,
and rising gas prices. Our adjusted gross profit and income from operations may decrease if we are unable to increase our pricing to our
customers. Increased demand for truckload services and pending changes in regulations may reduce available capacity and increase
carrier pricing.
We face intense competition in the freight forwarding, freight brokerage, logistics and supply chain management industry.
The freight forwarding, freight brokerage, logistics and supply chain management industry is intensely competitive and is expected to
remain so for the foreseeable future. We face competition from a number of companies, including many that have significantly greater
financial, technical and marketing resources. Customers increasingly are turning to competitive bidding processes, in which they solicit
bids from a number of competitors, including competitors that are larger than us. Increased competition may lead to revenue reductions,
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reduced profit margins, or a loss of market share, any one of which could harm our business. There are many factors that could impair
our profitability, including the following:
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competition with other transportation services companies, some of which have a broader coverage network, a wider range
of services, more fully developed information technology systems and greater capital resources than we do;
reduction by our competitors of their rates to gain business, especially during times of declining growth rates in the economy,
which reductions may limit our ability to maintain or increase rates, maintain our operating margins or maintain significant
growth in our business;
shift in the business of shippers to asset-based trucking companies that also offer brokerage services in order to secure access
to those companies’ trucking capacity, particularly in times of tight industry-wide capacity;
solicitation by shippers of bids from multiple transportation providers for their shipping needs and the resulting depression
of freight rates or loss of business to competitors; and
establishment by our competitors of cooperative relationships to increase their ability to address shipper needs.
Our industry is consolidating and if we cannot gain sufficient market presence, we may not be able to compete successfully against
larger companies in our industry.
There currently is a trend within our industry towards consolidation of the niche players into larger companies that are attempting to
increase global operations through the acquisition of regional and local freight forwarders, brokers, and other freight logistics providers.
If we cannot gain sufficient market presence or otherwise establish a successful strategy in our industry, we may not be able to compete
successfully against larger companies in our industry.
If we are not able to limit our liability for customers’ claims for loss or damage to their goods through contract terms and limit our
exposure through the purchase of insurance, we could be required to pay large amounts to our customers as compensation for their
claims and our results of operations could be materially adversely affected.
In our freight forwarding operations, we have liability under law to our customers for loss or damage to their goods. We attempt to limit
our exposure through release limits, indemnification by the air, ocean, and ground carriers that transport the freight, and insurance.
Moreover, because a freight forwarder relationship to an airline or ocean carrier is that of a shipper to a carrier, the airline or ocean
carrier generally assumes the same responsibility to us as we assume to our customers. When we act in the capacity of an authorized
agent for an air or ocean carrier, the carrier, rather than us, assumes liability for the safe delivery of the customer’s cargo to its ultimate
destination, unless due to our own errors and omissions. However, these efforts may prove unsuccessful, and we may be liable for loss
and damage to the goods.
In addition to legal liability, from time-to-time customers exert economic pressure when the underlying carrier fails to cover the costs
of loss or damage. We have, from time to time, made payments to our customers for claims related to our services and may make such
payments in the future. Should we experience an increase in the number or size of such claims or an increase in liability pursuant to
claims or unfavorable resolutions of claims, our results could be adversely affected.
There can be no assurance that our insurance coverage will provide us with adequate coverage for such claims or that the maximum
amounts for which we are liable in connection with our services will not change in the future or exceed our insurance levels. As with
every insurance policy, there are limits, exclusions and deductibles that apply, and we could be subject to claims for which insurance
coverage may be inadequate or even disputed and such claims could adversely impact our financial condition and results of operations.
In addition, continued increases in the cost of insurance costs impact our profitability.
We may be subject to claims arising from transportation of freight by the carriers with which we contract.
We use the services of thousands of transportation companies in connection with our transportation operations. From time to time, the
drivers employed and engaged by the carriers we contract with are involved in accidents, which may result in death or serious personal
injuries. The resulting types and/or amounts of damages may be excluded from or exceed the amount of insurance coverage maintained
by the contracted carrier. Although these drivers are not our employees and all of these drivers are employees, owner-operators, or
independent contractors working for carriers, from time to time, claims may be asserted against us for their actions, or for our actions in
retaining them. Claims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all. A material
increase in the frequency or severity of accidents, liability claims or workers’ compensation claims, or unfavorable resolutions of claims
could materially and adversely affect our operating results. In addition, significant increases in insurance costs or the inability to purchase
insurance as a result of these claims could reduce our profitability. Our involvement in the transportation of certain goods, including but
not limited to hazardous materials, could also increase our exposure in the event one of our contracted carriers is involved in an accident
resulting in injuries or contamination.
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We are subject to various claims and lawsuits that could result in significant expenditures.
Our business exposes us to claims and litigation related to damage to cargo, labor and employment practices (including wage-and-hour,
employment classification of independent contractor drivers, sales representatives, brokerage agents and other individuals, and other
federal and state claims), personal injury, property damage, business practices, environmental liability and other matters. We carry
insurance to cover most exposures, subject to specific coverage exceptions, aggregate limits, and self-insured retentions that we negotiate
from time to time. However, not all claims are covered, and there can be no assurance that our coverage limits will be adequate to cover
all amounts in dispute. To the extent we experience claims that are uninsured, exceed our coverage limits, or involve significant
aggregate use of our self-insured retention amounts, the expenses could have a material adverse effect on our business, results of
operations, financial condition or cash flows, particularly in the quarter in which the amounts are accrued. In addition, in the future, we
may be subject to higher insurance premiums or increase our self-insured retention amounts, which could increase our overall costs or
the volatility of claims expense.
Our failure to comply with, or the costs of complying with, government regulation could negatively affect our results of operation.
Our business is subject to evolving, complex and increasing regulation by national and international sources. Regulatory changes could
affect the economics of our industry by requiring changes in operating practices or influencing the demand for, and the costs of providing,
services to customers. Future regulation and our failure to comply with any applicable regulations could have a material adverse effect
on our business.
The motor carriers we contract with are subject to increasingly restrictive laws protecting the environment, including those relating
to climate change, which could directly or indirectly have a material adverse effect on our business.
Future and existing environmental regulatory requirements could adversely affect operations and increase operating expenses, which in
turn could increase our purchased transportation costs. If we are unable to pass such costs along to our customers, our business could be
materially and adversely affected. Even without any new legislation or regulation, increased public concern regarding greenhouse gases
emitted by transportation carriers could harm the reputations of companies operating in the transportation logistics industries and shift
consumer demand toward more locally sourced products and away from our services.
If we are unable to maintain our brand images and corporate reputation, our business may suffer.
Our success depends in part on our ability to maintain the image of the Radiant, Airgroup, Adcom, DBA, Service by Air, and Navegate
brands and our reputation for providing excellent service to our customers. Service quality issues, actual or perceived, even when false
or unfounded, could tarnish the image of our brand and may cause customers to use other freight-forwarding companies. Damage to our
reputation and loss of brand equity could reduce demand for our services and thus have an adverse effect on our business, financial
position and results of operations, and could require additional resources to rebuild our reputation and restore the value of our brands.
Issues related to the intellectual property rights on which our business depends, whether related to our failure to enforce our own
rights or infringement claims brought by others, could have a material adverse effect on our business, financial condition and results
of operations.
We use both internally developed and purchased technology in conducting our business. Whether internally developed or purchased, it
is possible that the user of these technologies could be claimed to infringe upon or violate the intellectual property rights of third parties.
In the event that a claim is made against us by a third-party for the infringement of intellectual property rights, any settlement or adverse
judgment against us either in the form of increased costs of licensing or a cease and desist order in using the technology could have an
adverse effect on us and our results of operations.
We also rely on a combination of intellectual property rights, including copyrights, trademarks, domain names, trade secrets, intellectual
property licenses and other contractual rights, to establish and protect our intellectual property and technology. Any of our owned or
licensed intellectual property rights could be challenged, invalidated, circumvented, infringed or misappropriated; our trade secrets and
other confidential information could be disclosed in an unauthorized manner to third-parties or we may fail to secure the rights to
intellectual property developed by our employees, contractors and others. Given our international operations, we seek to register our
trademarks and other intellectual property domestically and internationally. The laws of certain foreign countries may not protect
trademarks to the same extent as do the laws of the United States. Efforts to enforce our intellectual property rights may be time
consuming and costly, distract management’s attention and resources and ultimately be unsuccessful. Moreover, our failure to develop
and properly manage new intellectual property could adversely affect our market positions and business opportunities.
Our failure to obtain, maintain and enforce our intellectual property rights could therefore have a material adverse effect on our business,
financial condition and results of operations.
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We may not successfully manage our growth.
We intend to grow rapidly and substantially, including by expanding our internal resources, by making acquisitions and entering into
new markets. We may experience difficulties and higher-than-expected expenses in executing this strategy as a result of unfamiliarity
with new markets and change in revenue and business models.
Our growth will place a significant strain on our management, operational and financial resources. We will need to continually improve
existing procedures and controls as well as implement new transaction processing, operational and financial systems, and procedures
and controls to expand, train and manage our employee base. Our working capital needs will increase substantially as our operations
grow. Failure to manage growth effectively, or obtain necessary working capital, could have a material adverse effect on our business,
results of operations, cash flows, stock price and financial condition.
Our loans and credit facilities contain financial covenants that may limit current availability and impose ongoing operational
limitations and risk of compliance.
We currently maintain (i) a USD$200 million revolving credit facility (the “Revolving Credit Facility”) with Bank of America, N.A.
and BMO Capital Markets Corp. as joint book runners and joint lead arrangers, Bank of America, N.A. as Administrative Agent,
Swingline Lender and Letter of Credit Issuer, Bank of Montreal as syndication agent, KeyBank National Association and MUFG Union
Bank, N.A. as co-documentation agents and Bank of America, N. A., Bank of Montreal, KeyBank National Association, MFUG Union
Bank, N.A. and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as
“Lenders”), pursuant to a Credit Agreement dated as of August 5, 2022, (ii) a CAD$29 million senior secured Canadian term loan from
Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit
Facilities Amended and Restated Loan Agreement (the “FPD IV Loan Agreement”), and (iii) a CAD$10 million senior secured Canadian
term loan from Fiera Private Debt Fund V LP (“FPD V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000
Credit Facilities Amended and Restated Loan Agreement (the “FPD V Loan Agreement” and, together with the FPD IV Loan
Agreement, the “FPD Loan Agreements”). Repayment of the foregoing credit facilities is secured by our assets and the assets of our
subsidiaries, including, without limitation, all of the capital stock of our subsidiaries.
The Credit Facility includes a $75 million accordion feature to support future acquisition opportunities. For general borrowings under
the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and minimum consolidated
interest coverage ratio of 3.0. Additional minimum availability requirements and financial covenants apply in the event the Company
seeks to use advances under the Revolving Credit Facility to pursue acquisitions or repurchase its common stock.
Our compliance with the financial covenants of our credit facilities is particularly important given the materiality of such facilities to
our day-to-day operations and overall acquisition strategy. If we fail to comply with these covenants and are unable to secure a waiver
or other relief, our financial condition would be materially weakened and our ability to fund day-to-day operations would be materially
and adversely affected. Accordingly, we employ EBITDA and adjusted EBITDA as management tools to measure our historical
financial performance and as a benchmark for future financial flexibility.
We may operate with a significant amount of indebtedness, which is secured by substantially all of our assets and subject to variable
interest rates and restrictive covenants.
Substantial indebtedness could have adverse consequences, such as:
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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness with our
lenders, which could reduce the availability of our cash flow to fund future operating capital, capital expenditures,
acquisitions and other general corporate purposes;
expose us to the risk of increased interest rates, as a substantial portion of our borrowings are at variable rates of interest;
require us to sell assets to reduce indebtedness or influence our decisions about whether to do so;
increase our vulnerability to general adverse economic and industry conditions;
limit our flexibility in planning for, or reacting to, changes in our business and our industry;
restrict us from making strategic acquisitions, buying assets or pursuing business opportunities; and
limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow
additional funds.
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In addition, violating covenants in these agreements could have a material adverse effect on our business, financial condition and results
of operations. Consequences if the violations are not cured or waived could include substantially increasing our cost of borrowing,
restricting our future operations, termination of our lenders’ commitments to supply us with further funds, cross defaults to other
obligations, or acceleration of our obligations. If some or all of our obligations are accelerated, we may not be able to fully repay them.
Dependence on key personnel.
For the foreseeable future, our success will depend largely on the continued services of our Founder, Chairman and Chief Executive
Officer, Bohn H. Crain, as well as certain of our other key executives and executives of our acquired businesses because of their
collective industry knowledge, marketing skills and relationships with vendors, customers and strategic operating partners. Our ability
to appropriately staff and retain employees is important to our variable cost model. Should any of these individuals leave us, we could
have difficulty replacing them with qualified individuals and it could have a material adverse effect on our future results of operations.
Our results of operations could vary as a result of the methods, estimates, and judgments that we use in applying our accounting
policies.
The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on our results of
operations (see “Critical Accounting Estimates” in Part II, Item 7 of this report). Such methods, estimates, and judgments are, by their
nature, subject to substantial risks, uncertainties, and assumptions, and factors may arise over time that lead us to change our methods,
estimates, and judgments. Changes in those methods, estimates, and judgments could significantly affect our results of operations.
Terrorist attacks and other acts of violence, anti-terrorism measures or war may affect our operations and our profitability.
As a result of the potential for terrorist attacks, federal, state and municipal authorities have implemented and continue to follow various
security measures, including checkpoints and travel restrictions on large trucks. Such measures may reduce the productivity of our
independent contractors and transportation providers or increase the costs associated with their operations, which we could be forced to
bear. For example, security measures imposed at bridges, tunnels, border crossings and other points on key trucking routes may cause
delays and increase the non-driving time of our independent contractors and transportation providers, which could have an adverse effect
on our results of operations. We also have higher costs due to mandated security screening of air cargo traveling on passenger airlines
and ocean freight. War, risk of war, or a terrorist attack also may have an adverse effect on the economy. A decline in economic activity
could adversely affect our revenues or restrict our future growth. Instability in the financial markets as a result of terrorism or war also
could impact our ability to raise capital. In addition, the insurance premiums charged for some or all of the coverage currently maintained
by us could increase dramatically or such coverage could be unavailable in the future.
We intend to continue growing our international operations and will become increasingly subject to variations in the international
trade market.
We provide services to customers engaged in international commerce and intend to grow our international business in the coming years.
For the years ended June 30, 2022 and 2021, international transportation revenue accounted for 43% and 35% of our adjusted gross
profit, respectively. International transportation revenue is defined as any shipment with an initiation or destination point outside of the
United States. All factors that affect international trade have the potential to expand or contract our international business and impact
our operating results. For example, international trade is influenced by, among other things:
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currency exchange rates and currency control regulations;
interest rate fluctuations;
changes in governmental policies, such as taxation, quota restrictions, tariffs, other forms of trade barriers and/or restrictions
and trade accords;
changes in and application of international and domestic customs, trade and security regulations;
wars, strikes, civil unrest, acts of terrorism, and other conflicts, such as the conflict that has led to the imposition of economic
sanctions by the United States and the European Union against Russia;
natural disasters and pandemics;
changes in consumer attitudes regarding goods made in countries other than their own;
changes in availability of credit;
economic conditions in other countries and regions;
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changes in supply chain design including those resulting from near shoring, widening and deepening of canals, and port
congestion or disruption;
changes in the price and readily available quantities of oil and other petroleum-related products; and
increased global concerns regarding environmental sustainability.
If any of the foregoing factors have a negative effect on the international trade market, we could suffer a decrease in our international
business, which could have a material adverse effect on our results of operations and financial condition.
In connection with our international business, we are subject to certain foreign regulatory requirements, and any failure to comply
with these requirements could be detrimental to our business.
We provide services in parts of the world where common business practices could constitute violations of the anticorruption laws, rules,
regulations and decrees of the United States, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and of all other
countries in which we conduct business; as well as trade control laws, or laws, regulations and Executive Orders imposing embargoes
and sanctions; and anti-boycott laws and regulations. Compliance with these laws, rules, regulations and decrees is dependent on our
employees, subcontractors, consultants, agents, third-party brokers and customers, whose individual actions could violate these laws,
rules, regulations and decrees. Failure to comply could result in substantial penalties, damages to our reputation and restrictions on our
ability to conduct business. In addition, any investigation or litigation related to such violations may require significant management
time and could cause us to incur extensive legal and related costs, all of which may have a material adverse effect on our results of
operations and operating cash flows.
International operations expose us to currency exchange risk, and we cannot predict the effect of future exchange rate fluctuations
on our business and operating results.
We generate a significant portion of revenues from our international operations, including a substantial amount in Canada. For the years
ended June 30, 2022 and 2021, international transportation revenue accounted for 43% and 35% of our adjusted gross profit,
respectively. Our international operations are sensitive to currency exchange risks. We have currency exposure arising from both sales
and purchases denominated in foreign currencies, as well as intercompany transactions. Significant changes in exchange rates between
foreign currencies in which we transact business and the U.S. dollar may adversely affect our results of operations and financial
condition. Historically, we have not entered into any hedging activities, and, to the extent that we continue not to do so in the future, we
may be vulnerable to the effects of currency exchange-rate fluctuations.
In addition, our international operations also expose us to currency fluctuations as we translate the financial statements of our foreign
operations to the U.S. dollar. There can be no guarantee that the effect of currency fluctuations will not be material in the future.
We identified a material weakness in our internal control over financial reporting related to recording and processing of revenue
transactions. Ineffective internal controls could impact our business and operating results as well as our public reporting and stock
price.
We have grown rapidly and face additional challenges of disparate systems and geographically dispersed management. Our internal
controls over financial reporting and disclosure are strained at times due to COVID-19, acquisitions, and other corporate development
activities.
Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the
possibility of human error, the circumvention or overriding of controls, or fraud. Effective internal controls are necessary for us to
provide reliable and accurate financial statements and to effectively prevent fraud. As further described in Part II Item 9A “Controls and
Procedures” of this Annual Report, management has concluded that our disclosure controls and procedures were not effective as of
June 30, 2022 because of material weaknesses in internal control over financial reporting related to: our controls with respect to the
recording and processing of revenue as currently designed lack the level of precision necessary to ensure the completeness and accuracy
of revenue. We are currently working on the remediation of this material weaknesses.
We cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses. Any remediation efforts
additionally may require us to incur unanticipated costs for various professional fees and services. If we fail to maintain the adequacy
of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their
implementation, our business and operating results could be harmed, and we could fail to meet our financial reporting obligations.
Material inaccuracies in our financial statements would decrease the reliability of our financial reporting, which could adversely affect
our business and reduce our stock price.
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We may be adversely affected by the physical effects of climate change as well as legal, regulatory, or market responses to climate
change concerns.
Risks associated with climate change are subject to increasing societal, regulatory and political focus. Shifts in weather patterns caused
by climate change may lead to an increase in the frequency, severity or duration of certain adverse weather conditions and natural
disasters, such as hurricanes, tornadoes, earthquakes, wildfires, droughts, extreme temperatures or flooding, which could cause more
significant business interruptions, increased costs, increased liabilities, and decreased revenue than what we have experienced in the
past from such events. In addition, increased public and political concern over climate change could result in new legal or regulatory
requirements designed to mitigate the effects of climate change and greenhouse gas emissions such as carbon dioxide, a by-product of
burning fossil fuels, which could include the adoption of more stringent environmental laws and regulations or stricter enforcement of
existing laws and regulations. There is also a focus from regulators and our customers on sustainability issues. This focus may result in
new legislation or customer requirements. Costs associated with future climate change concerns or environmental laws and regulations
and sustainability requirements could have a material adverse effect on our operations and operating results.
Risks Related to our Acquisition Strategy
There is a scarcity of and competition for acquisition opportunities.
There are a limited number of operating companies available for acquisition that we deem to be desirable targets. In addition, there is a
very high level of competition among companies seeking to acquire these operating companies. We are and will continue to be a very
minor participant in the business of seeking acquisitions of these types of companies. A large number of established and well-financed
entities are active in acquiring interests in companies that we may find to be desirable acquisition candidates. Many of these entities
have significantly greater financial resources, technical expertise and managerial capabilities than us. Consequently, we will be at a
competitive disadvantage in negotiating and executing possible acquisitions of these businesses. Even if we are able to successfully
compete with these entities, this competition may affect the terms of completed transactions and, as a result, we may pay more or receive
less favorable terms than we expected for potential acquisitions. We may not be able to identify operating companies that complement
our strategy, and even if we identify a company that complements our strategy, we may be unable to complete an acquisition of such a
company for many reasons, including:
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failure to agree on the terms necessary for a transaction, such as the purchase price;
incompatibility between our operational strategies or management philosophies with those of the potential acquiree;
competition from other acquirers of operating companies;
lack of sufficient capital to acquire a profitable logistics company;
unwillingness of a potential acquiree to agree to subordinate any future payment of earn-outs or promissory notes to the
payments due to our lenders; and
unwillingness of a potential acquiree to work with our management.
Risks related to acquisition financing.
We have a limited amount of financial resources and our ability to make additional acquisitions without securing additional financing
from outside sources is limited. In order to continue to pursue our acquisition strategy, we may be required to obtain additional financing.
We may obtain such financing through a combination of traditional debt financing or the placement of debt and equity securities. We
may finance some portion of our future acquisitions by either issuing equity or by using shares of our common stock for all or a portion
of the purchase price for such businesses. In the event that our common stock does not attain or maintain a sufficient market value, or
potential acquisition candidates are otherwise unwilling to accept our common stock as part of the purchase price for the sale of their
businesses, we may be required to use more of our cash resources, if available, in order to maintain our acquisition program. If we do
not have sufficient cash resources, we will not be able to complete acquisitions and our growth could be limited unless we are able to
obtain additional capital through debt or equity financings. The terms of our credit facility require that we obtain the consent of our
lenders prior to securing additional debt financing. There could be circumstances in which our ability to obtain additional debt financing
could be constrained if we are unable to secure such consent.
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On May 9, 2022, we announced that the Securities and Exchange Commission (SEC) had declared effective our $150 million universal
shelf registration statement on Form S-3, which provided us with the continued financial flexibility to access capital. Our ability to raise
capital under the Form S-3 depends upon several circumstances including staying up to date with our filing of audited financial
statements, our financial and operating performance, and the capital market’s receptiveness to our potential offerings. As a result of the
need for restatement of certain prior periods as discussed in the Explanatory Note to this Annual Report on Form 10-K, the Company
failed to timely file its fiscal 2022 Annual Report on Form 10-K and fiscal 2023 first quarter and second quarter Quarterly Reports on
Form 10-Qs within the SEC’s permitted extension periods and will be unable to access its universal shelf registration statement on Form
S-3 until it timely files its SEC reports for at least one year.
Our credit facilities place certain limits on the acquisitions we may make.
Under the terms of our credit facilities, we may be required to obtain the consent of each of our lenders prior to making any additional
acquisitions.
We are permitted to make additional acquisitions without the consent of the lenders only if certain conditions are satisfied. These
conditions include the following: (i) no default shall have occurred or would result from such acquisition, (ii) the property acquired is
used or useful in the same or a similar line of business as Radiant’s, (iii) in the case of an acquisition of the equity interests, the board
of directors of the target business shall have duly approved such Acquisition, (iv) we shall be in compliance with the financial
covenants after giving effect to such acquisition and the consolidated leverage ratio shall be less than 3.25 to 1.00 for acquisitions valued
above $25 million and 2.75 to 1.00 for any other acquisitions, (v) the representations and warranties made by Radiant in each loan
document shall be true and correct, (vi) if such transaction involves the purchase of an interest in a partnership between Radiant as a
general partner and entities unaffiliated with the borrower as the other partners, such transaction shall be effected by having such equity
interest acquired by a corporate holding company directly or indirectly wholly owned by Radiant newly formed for the sole purpose of
effecting such transaction, and (vii) immediately after giving effect to such acquisition, there shall be at least $25 million of availability
under the Revolving Credit Facility.
In the event we are not able to satisfy the conditions of our credit facilities in connection with a proposed acquisition, we must either
forego the acquisition, obtain the consent of the lenders, or retire the credit facility. This may prevent us from completing acquisitions
that we determine are desirable from a business perspective and limit or slow our ability to achieve the critical mass we need to achieve
our strategic objectives.
To the extent we make any material acquisitions, our earnings will be adversely affected by non-cash charges relating to the
amortization of intangible assets, which may cause our stock price to decline.
Under applicable accounting standards, purchasers are required to allocate the total consideration paid in a business combination to the
identified acquired assets and liabilities based on their fair values at the time of acquisition. The excess of the consideration paid to
acquire a business over the fair value of the identifiable tangible assets acquired must be allocated among identifiable intangible assets
including goodwill. The amount allocated to goodwill is not subject to amortization. However, it is tested at least annually for
impairment. The amount allocated to identifiable intangible assets, such as customer relationships and the like, is amortized over the life
of these intangible assets. We expect that this will subject us to periodic charges against our earnings to the extent of the amortization
incurred for that period. Because our business strategy focuses, in part, on growth through acquisitions, our future earnings will be
subject to greater non-cash amortization charges than a company whose earnings are derived solely from organic growth. As a result,
we will experience an increase in non-cash charges related to the amortization of intangible assets acquired in our acquisitions. Our
financial statements will show that our intangible assets are diminishing in value, even if the acquired businesses are increasing (or not
diminishing) in value. Because of this discrepancy, we believe our EBITDA, a measure of financial performance that does not conform
to GAAP, provides a meaningful measure of our financial performance. However, the investment community generally measures a
public company’s performance by its net income. Further, the financial covenants of our credit facility adjust EBITDA to exclude costs
related to share-based compensation and other non-cash charges. Thus, we believe that EBITDA and adjusted EBITDA provide a
meaningful measure of our financial performance. If the investment community elects to place more emphasis on net income, the future
price of our common stock could be adversely affected.
We are not obligated to follow any particular criteria or standards for identifying acquisition candidates.
Other than as required under the credit facility, we are not obligated to follow any particular operating, financial, geographic or other
criteria in evaluating candidates for potential acquisitions or business combinations. We will determine the purchase price and other
terms and conditions of acquisitions. Our stockholders will not have the opportunity to evaluate the relevant economic, financial and
other information that our management team will use and consider in deciding whether or not to enter into a particular transaction.
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We may be required to incur a significant amount of indebtedness in order to successfully implement our acquisition strategy.
Subject to the restrictions contained under our current credit facilities, we may be required to incur a significant amount of indebtedness
in order to complete future acquisitions. If we are not able to generate sufficient cash flow from the operations of acquired businesses
to make scheduled payments of principal and interest on the indebtedness, then we will be required to use our capital for such payments.
This will restrict our ability to make additional acquisitions. We may also be forced to sell an acquired business in order to satisfy
indebtedness. We cannot be certain that we will be able to operate profitably once we incur this indebtedness or that we will be able to
generate a sufficient amount of proceeds from the ultimate disposition of such acquired businesses to repay the indebtedness incurred
to make these acquisitions.
We may experience difficulties in integrating the operations, personnel and assets of acquired businesses that may disrupt our
business, dilute stockholder value and adversely affect our operating results.
A core component of our business plan is to acquire businesses and assets in the transportation and logistics industry. There can be no
assurance that we will be able to identify, acquire or profitably manage businesses or successfully integrate acquired businesses into the
Company without substantial costs, delays or other operational or financial problems. Such acquisitions also involve numerous
operational risks, including:
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difficulties in integrating operations, technologies, services and personnel;
the diversion of financial and management resources from existing operations;
the risk of entering new markets;
the potential loss of existing or acquired strategic operating partners following an acquisition;
the potential loss of key employees following an acquisition and the associated risk of competitive efforts from such departed
personnel;
possible legal disputes with the acquired company following an acquisition; and
the inability to generate sufficient revenue to offset acquisition or investment costs.
As a result, if we fail to properly evaluate and execute any acquisitions or investments, our business and prospects may be seriously
harmed.
In certain acquisitions, we may recognize non-cash gains or losses on changes in fair value of contingent consideration. We include
contingent consideration based on future financial performance as a portion of the purchase price of certain acquisitions. To the extent
that an acquired operation underperforms relative to anticipated earnings levels, we are able to set-off certain levels of future unpaid
purchase price for such acquired operations. This will result in the recognition of a non-cash gain on the change in fair value of contingent
consideration. In the alternative, to the extent an acquired operation outperforms anticipated earnings levels, we will recognize a non-
cash expense on the change in fair value of contingent consideration. These non-cash gains and expenses may have a material impact
on our financial results, and the impact could be opposite to the underlying results of the acquired operation.
Not every acquisition is structured utilizing contingent consideration. Our 2015 acquisitions of Radiant Canada and Service by Air, our
2017 acquisition of Lomas, and our 2022 acquisition of Navegate were structured without using contingent consideration. We will be
unable to reduce the purchase price of these entities if they underperform relative to anticipated earnings levels.
Claims against us or other liabilities we incur relating to any acquisition or business combination may necessitate our seeking claims
against the seller for which the seller may not indemnify us or that may exceed the seller’s indemnification obligations.
There may be liabilities we assume in any acquisition or business combination that we did not discover or underestimated in the course
of performing our due diligence investigation. A seller will normally have indemnification obligations to us under an acquisition or
merger agreement, but these obligations will be subject to financial limitations, such as general deductibles and a cap, as well as time
limitations. There can be no assurance that our right to indemnification from any seller will be enforceable, collectible or sufficient in
amount, scope or duration to fully offset the amount of any undiscovered or underestimated liabilities. Any such liabilities, individually
or in the aggregate, could have a material adverse effect on our business, results of operations or financial condition.
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We may face competition from parties who sell us their businesses and from professionals who cease working for us.
In connection with our acquisitions, we generally obtain non-solicitation agreements from the professionals we hire, as well as non-
competition agreements from senior managers and professionals. The agreements prohibit such individuals from competing with us
during the term of their employment and for a fixed period afterwards and seeking to solicit our employees or clients. In some cases,
but not all, we may obtain non-competition or non-solicitation agreements from parties who sell us their business or assets. Certain
activities may be carved out of or otherwise may not be prohibited by these arrangements. We cannot assure that one or more of the
parties from whom we acquire assets or a business or who do not join us or leave our employment will not compete with us or solicit
our employees or clients in the future. Even if ultimately resolved in our favor, any litigation associated with the non-competition or
non-solicitation agreements could be time consuming, costly and distract management’s focus from locating suitable acquisition
candidates and operating our business. Moreover, states and foreign jurisdictions may interpret restrictions on competition narrowly and
in favor of employees.
Therefore, certain restrictions on competition or solicitation may be unenforceable. In addition, we may not pursue legal remedies if we
determine that preserving cooperation and a professional relationship with the former employee or his clients, or other concerns,
outweigh the benefits of any possible legal recourse or the likelihood of success does not justify the costs of pursuing a legal remedy.
Such persons, because they have worked for us or a business that we acquire, may be able to compete more effectively with us, or be
more successful in soliciting our employees and clients, than unaffiliated third parties.
Risks Related to our Common Stock
The market price of our common stock may fluctuate significantly, and this may make it difficult for you to resell our common stock
at times or at prices you find attractive.
The market price of our common stock may fluctuate significantly as a result of a number of factors, many of which are outside our
control. The current market price of our common stock may not be indicative of future market prices. Fluctuations may occur in response
to the other risk factors listed in this Annual Report on Form 10-K and for many other reasons, including:
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actual or anticipated variations in earnings, financial or operating performance or liquidity, including those resulting from
the seasonality of our business;
our financial performance or the performance of our competitors and similar companies;
the public’s reaction to our press releases, other public announcements and filings with the SEC;
changes in estimates of our performance or recommendations by securities analysts;
failure to meet securities analysts’ quarterly and annual projections;
the impact of new federal or state regulations;
changes in accounting standards, policies, guidance, interpretations or principles;
the introduction of new services by us or our competitors;
the arrival or departure of key personnel;
acquisitions, strategic alliances or joint ventures involving us or our competitors;
technological innovations or other trends in our industry;
news affecting our customers;
operating and stock performance of other companies deemed to be peers;
regulatory or labor conditions applicable to us, our industry or the industries we serve;
market conditions in our industry, the industries we serve, the financial markets and the economy as a whole;
changes in our capital structure;
our ability to remain current in our SEC filings;
our ability to remediate during fiscal year 2023 our material weakness in internal controls over financial reporting; and
sales of our common stock by us or members of our management team.
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In addition, the stock market historically has experienced significant price and volume fluctuations. These fluctuations are often
unrelated to the operating performance of a particular company. These broad market fluctuations may cause declines in the market price
of our common stock.
Volatility in the market price of our common stock may make it difficult for you to resell shares of our common stock when you want
or at attractive prices. In addition, when the market price of a company’s common stock drops significantly, stockholders often institute
securities class action lawsuits against the Company. A lawsuit against us could cause us to incur substantial costs, including settlement
costs or awards for legal damages, and could divert the time and attention of our management and other resources.
Provisions of our certificate of incorporation, bylaws and Delaware law may make a contested takeover more difficult.
Certain provisions of our certificate of incorporation, bylaws and the General Corporation Law of the State of Delaware (“DGCL”)
could deter a change in our management or render more difficult an attempt to obtain control of us, even if such a proposal is favored
by a majority of our stockholders. For example, we are subject to the provisions of the DGCL that prohibit a public Delaware corporation
from engaging in a broad range of business combinations with a person who, together with affiliates and associates, owns 15% or more
of such corporation’s outstanding voting shares (an “interested stockholder”) for three years after the person became an interested
stockholder, unless the business combination is approved in a prescribed manner. Our certificate of incorporation provides that directors
may only be removed for cause by the affirmative vote of 75% of our outstanding shares and that amendments to our bylaws require the
affirmative vote of holders of two-thirds of our outstanding shares. Our certificate of incorporation also includes undesignated preferred
stock, which may enable our board of directors to discourage an attempt to obtain control of us by means of a tender offer, proxy contest,
merger or otherwise. Finally, our bylaws include an advance notice procedure for stockholders to nominate directors or submit proposals
at a stockholders meeting.
Our Founder, Chairman and Chief Executive Officer controls a large portion of our common stock and has substantial control over
us, which could limit other stockholders’ ability to influence the outcome of key transactions, including changes of control.
Under applicable SEC rules, our Founder, Chairman and Chief Executive Officer, Bohn H. Crain, beneficially owns approximately 20%
of our outstanding common stock as of June 30, 2022. Accordingly, Mr. Crain can exert substantial influence over our management and
affairs and matters requiring stockholder approval, including the election of directors and the approval of significant corporate
transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this concentration of ownership
may have the effect of delaying or preventing a change of control, including a merger, consolidation, or other business combination
involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that
change of control would benefit our other stockholders. Further, this concentration of share ownership may adversely affect the trading
price for our common stock because investors may perceive disadvantages in owning stock in companies with concentrated stockholders.
Trading in our common stock has been limited.
Although our common stock is traded on the NYSE American, it is traded not as frequently as compared to the volume of trading activity
associated with larger companies whose shares trade on the larger national exchanges. Because of this limited liquidity, stockholders
may be unable to sell their shares at the prices or volumes they desire. The trading price of our shares may from time to time fluctuate
widely. The trading price may be affected by a number of factors including events described in the risk factors set forth in this report as
well as our operating results, financial condition, announcements, general conditions in the industry and the financial markets, and other
events or factors. In recent years, broad stock market indices, in general, and smaller capitalization companies, in particular, have
experienced substantial price fluctuations. In a volatile market, we may experience wide fluctuations in the market price of our common
stock. These fluctuations may have a negative effect on the market price of our common stock.
The influx of additional shares of our common stock onto the market may create downward pressure on the trading price of our
common stock.
We have completed many acquisitions that often include the issuance of additional shares pursuant to the purchase agreements. In
addition, we may issue additional shares in connection with such acquisitions upon the achievement of certain earn-out thresholds or in
connection with future acquisitions as part of the purchase consideration. The availability of additional shares for sale to the public under
Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”) and sale of such shares in public markets could have an
adverse effect on the market price of our common stock. Such an adverse effect on the market price would make it more difficult for us
to sell our equity securities in the future at prices we deem appropriate or to use our shares as currency for future acquisitions, which
will make it more difficult to execute our acquisition strategy.
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The issuance of additional shares may result in additional dilution to our existing stockholders.
At any time, we may make private offerings of our securities. We have issued, and may be required to issue, additional shares of common
stock or common stock equivalents in payment of the purchase price of businesses we have acquired. This will have the effect of further
increasing the number of shares outstanding. In connection with future acquisitions, we may undertake the issuance of more shares of
common stock without notice to our then existing stockholders. We may also issue additional shares in order to, among other things,
compensate employees or consultants or for other valid business reasons in the discretion of our board of directors, which could result
in diluting the interests of our existing stockholders.
The exercise or conversion of our outstanding options, or other convertible securities or any derivative securities we issue in the future
will result in the dilution of the ownership interests of our existing stockholders and may create downward pressure on the trading price
of our common stock. We are currently authorized to issue 100 million shares of common stock. As of February 20, 2023, we had
48,181,256 outstanding shares of common stock. As of February 20, 2023, we may in the future issue up to 1,002,386 additional shares
of our common stock upon exercise of existing stock options.
We may issue shares of preferred stock with greater rights than our common stock.
Our certificate of incorporation authorizes our board of directors to issue shares of preferred stock and to determine the price and other
terms for those shares without the approval of our stockholders. Any such preferred stock we may issue in the future could rank ahead
of our common stock in many ways, including in terms of dividends, liquidation rights, and voting rights.
As we do not anticipate paying dividends on our common stock, investors in our shares of common stock will not receive any dividend
income.
We have not paid any cash dividends on our common stock since our inception and we do not anticipate paying cash dividends on our
common stock in the foreseeable future. Any dividends that we may pay in the future will be at the discretion of our board of directors,
and will depend on our future earnings, any applicable regulatory considerations, our financial requirements and other similarly
unpredictable factors. Our ability to pay dividends on our common stock is further limited by the terms of our credit facilities.
Accordingly, investors seeking dividend income should not purchase our common stock.
If securities or industry analysts do not publish research about our business, or publish negative reports about our business, our
stock price and trading volume could decline.
The trading market for our common stock, to some extent, depends on the research and reports that securities or industry analysts publish
about our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares
or lower their opinion of our shares, our share price may decline. If one or more of these analysts ceases coverage of our business or
fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading
volume to decline.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
Our principal executive offices are located in Renton, Washington. Our network is comprised of over 100 operating locations, including
the following Company-owned offices and warehouses operating from the following leased locations:
United States:
● Tempe, Arizona
● Carson, California
● Addison, Illinois
● Woodridge, Illinois
● Hebron, Kentucky
● Louisville, Kentucky
Canada:
● Calgary, Alberta
● Delta, British Columbia
Other International locations:
● Shanghai, China
● Taylor, Michigan
● Mendota Heights, Minnesota
● Edison, New Jersey
● Jamaica, New York
● Woodbury, New York
● Portland, Oregon
● Folcroft, Pennsylvania
● Middletown, Pennsylvania
● Pittsburgh, Pennsylvania
● Edinberg, Texas
● Laredo, Texas
● Alexandria, Virginia
● Bolton, Ontario
● Brampton, Ontario
● Mississauga, Ontario
● Laval, Québec
● Cebu City, Philippines
We believe our current offices and warehouses are adequately covered by insurance and are sufficient to support our operations for the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The information set forth in Legal Proceedings of Note 16, Commitments and Contingencies in the notes to the audited consolidated
financial statements in Item 8 of this Form 10-K is incorporated by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
PART II
Market Information
Our common stock trades on the NYSE American under the symbol “RLGT.”
Holders
As of February 20, 2023, the number of stockholders of record of our common stock was 76. This figure does not include a greater
number of beneficial holders of our common stock, whose shares are held of record by banks, brokers and other financial institutions.
Dividend Policy
We have never declared or paid cash dividends on our common stock. In addition, we and our subsidiaries are subject to certain
restrictions on declaring dividends under our existing credit facilities. We currently do not anticipate declaring or paying any cash
dividends in the foreseeable future on our common stock. Any future determination to declare cash dividends on our common stock will
be made at the discretion of our board of directors, subject to applicable laws and contractual restrictions, and will depend on our
financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors
may deem relevant.
Unregistered Sales of Equity Securities and Use of Proceeds
The Company’s board of directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock through
December 31, 2023. Under this repurchase program, the Company purchased the following shares of common stock during the three
months ended June 30, 2022.
Issuer Purchases of Equity Securities
Period
April 1 - 30, 2022
May 1 - 31, 2022
June 1 - 30, 2022
Total
Total Number of
Shares Purchased
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271,652
480,407
752,059
$
Average Price
Paid per Share
—
6.45
6.95
6.77
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
—
271,652
480,407
752,059
Maximum Number
(or Approximate
Dollar Value) of
Shares That May
Yet Be Purchased
Under the Plans or
Programs
—
—
—
—
As of June 30, 2022, future repurchases of up to 2,475,392 shares were available in the share repurchase program.
27
Comparative Stock Performance
The graph below compares the cumulative total stockholder return on our common stock with the Russell 2000 Index and the Dow Jones
Transportation Average Index, which is a SIC code 4731 line-of-business index, for the last five years. S&P Dow Jones Indices LLC
prepared the line-of-business index. The graph assumes $100 is invested in our common stock, the Russell 2000 Index, and the line-of-
business index on June 30, 2017. The comparisons in the graph below are based on historical data and are not intended to forecast the
possible future performance of our common stock. The information in the graph below shall be deemed “furnished” and not “filed” for
purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
Radiant Logistics, Inc.
Dow Jones Transportation Average Index
Russell 2000 Index
Investment value as of June 30,
2017
2018
2019
2020
2021
2022
$
$
100
100
100
$
73
108
116
$
114
109
111
$
73
96
102
$
129
156
163
138
138
121
ITEM 6. [RESERVED]
28
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the
consolidated financial statements and the related notes and other information included elsewhere in this report.
This discussion has been impacted by the restatement described in the Explanatory Note and in the Notes 2 and 20 of the consolidated
financial statements of this Annual Report. Certain of the financial and other information provided in this Management’s Discussion
and Analysis of Financial Condition and Results of Operations has been updated to reflect the restatement adjustments.
Overview
We operate as a third-party logistics company, providing technology-enabled global transportation and value-added logistics solutions
primarily in the United States and Canada. We service a large and diversified account base consisting of consumer goods, food and
beverage, manufacturing and retail customers, which we support from an extensive network of operating locations across North America
as well as an integrated international service partner network located in other key markets around the globe. We provide these services
through a multi-brand network, which includes over 100 operating locations. Included in these operating locations are a number of
independent agents, who we also refer to as our “strategic operating partners”, that operated exclusively on our behalf, and approximately
25 Company-owned offices. As a third-party logistics company, we have a vast carrier network of asset-based transportation companies,
including motor carriers, railroads, airlines and ocean lines in our carrier network. We believe shippers value our services because we
are able to objectively arrange the most efficient and cost-effective means, type and provider of transportation service without undue
influence caused by the ownership of transportation assets. In addition, our minimal investment in physical assets affords us the
opportunity for a higher return on invested capital and net cash flows than our asset-based competitors.
Through our operating locations across North America, we offer domestic, international air and ocean freight forwarding services and
freight brokerage services, including truckload services, LTL services, and intermodal services, which is the movement of freight in
trailers or containers by combination of truck and rail. Our primary business operations involve arranging the shipment, on behalf of our
customers, of materials, products, equipment and other goods that are generally larger than shipments handled by integrated carriers of
primarily small parcels, such as FedEx, DHL and UPS. Our services include arranging and monitoring all aspects of material flow
activity utilizing advanced information technology systems. We also provide other value-added logistics services, including MM&D,
CHB and GTM solutions to complement our core transportation service offering.
The Company expects to grow its business organically and by completing acquisitions of other companies with complementary
geographical and logistics service offerings. The Company’s organic growth strategy will continue to focus on strengthening existing
and expanding new customer relationships leveraging the benefit of the Company’s technology platform, while continuing its efforts on
the organic build-out of the Company’s network of strategic operating partner locations. In addition, as the Company continues to grow
and scale its business, the Company believes that it is creating density in its trade lanes, which creates opportunities for the Company to
more efficiently source and manage its transportation capacity.
In addition to its focus on organic growth, the Company will continue to search for acquisition candidates that bring critical mass from
a geographic and purchasing power standpoint, along with providing complementary service offerings to the current platform. As the
Company continues to grow and scale its business, it also remains focused on leveraging its back-office infrastructure and technology
systems to drive productivity improvement across the organization.
Restatement of Previously Issued Consolidated Financial Statements
On September 28, 2022, the Company concluded that the Company’s previously issued financial statements for the Restatement Periods
should be restated to correct historical errors related principally to the timing of recognition of the Company’s estimated accrual of in-
transit revenues and related costs.
When preparing its fiscal year-end 2022 consolidated financial statements, in response to its December 2021 cyber event, the Company
completed a detailed lookback analysis to compare its estimated accrued in-transit revenues and related costs, primarily, purchased
transportation and applicable commission expenses, to its actual customer invoicing, related transportation costs and other costs
subsequently recorded. In the course of its analysis of the actual information gathered through the lookback process, the Company
detected differences between the estimated accrued amounts and the actual revenues and expenses recorded due primarily to errors in
the underlying shipment information that was used to calculate the original estimates of the accrued amounts. In the ordinary course of
closing its financial books and records, the Company previously inadvertently excluded certain in-transit revenues and associated costs
from the appropriate periods as required under GAAP. Therefore, the Company misstated gross revenues and associated costs during
the Restatement Periods. The Company principally attributes the errors to a material weakness in financial controls over the recording
and processing of revenues, which was disclosed in Item II, Part 9A of the Annual Report on Form 10-K for the year-ended June 30,
2021, which the Company is working to remediate in fiscal year 2023. The discussion of financial results presented here is reflective of
the restatement adjustments.
29
Ransomware Incident
As previously disclosed during the quarter ended December 31, 2021, the Company filed an 8-K on December 13, 2021, disclosing
some of the Company’s systems were affected by a ransomware incident that encrypted information on its systems and disrupted
customer and employee access to its applications and services. The Company immediately took steps to isolate the impact and prevent
additional systems from being affected, including taking its network offline as a precaution. Promptly upon our detection of this incident,
we initiated response and containment protocols and our security teams, supplemented by leading cyber defense firms, worked to
remediate this incident. We notified law enforcement, provided notice to customers apprising them of the situation and will provide any
notices that may be required by applicable law related to potential PII data exposure.
We undertook extensive efforts to identify, contain and recover from this incident quickly and securely. We systematically brought our
information systems back online in a controlled, phased approach. Our teams worked to maintain our business operations and minimize
the impact on our customers, operating partners, and employees.
The total ransomware incident related costs for fiscal year 2022 were $0.7 million. These costs were primarily comprised of various
third-party consulting services including forensic experts, legal counsel, and other IT professional expenses including additional
hardware and software.
We are making information technology investments in order to further strengthen our information security infrastructure. We engaged
a leading cybersecurity defense firm that completed a forensics investigation of the ransomware incident, and we are taking appropriate
actions in response to the findings. For example, in the short-term, we reset all credentials Company-wide and strengthened security
tooling across our servers and workstations including whitelisting known Internet Protocol (IP) addresses and implementation of Multi-
factor Authentication (MFA) to access our network from unknown IP addresses. In the long-term, we are continuing to advance the
maturity and effectiveness of our information security resiliency strategy and capabilities. Our technology team has accelerated its
roadmap to further strengthen the monitoring of network and servers to enable us to detect, respond and recover more quickly from
security and technical incidents. As a proactive measure we have also implemented tools that pre-scan equipment requesting VPN access
to our network servers to ensure they meet the standards of the Company. More specifically, we plan to continue to improve our security
monitoring capabilities and enhance the information security within the Company and stations while also implementing a new Cyber
Awareness training program.
COVID-19
The COVID-19 pandemic continues to impact our business operations and financial results. Although the effects have lessened over
time, there is uncertainty in the nature and degree of its continued effects over time with new strains frequently being discovered and
additional booster shots being recommended. As the world continues to respond to COVID-19, we continue to follow guidelines
ensuring the safety of our employees, while striving to protect the health and well-being of the communities in which we operate.
Performance Metrics
Our principal source of income is derived from freight forwarding and freight brokerage services we provide to our customers. As a
third-party logistics provider, we arrange for the shipment of our customers’ freight from point of origin to point of destination.
Generally, we quote our customers a turnkey cost for the movement of their freight. Our price quote will often depend upon the
customer’s time-definite needs (first day through fifth day delivery), special handling needs (heavy equipment, delicate items,
environmentally sensitive goods, electronic components, etc.), and the means of transport (motor carrier, air, ocean or rail). In turn, we
assume the responsibility for arranging and paying for the underlying means of transportation.
Our transportation revenue represents the total dollar value of services we sell to our customers. Our cost of transportation includes
direct costs of transportation, including motor carrier, air, ocean, and rail services. Our adjusted transportation gross profit (gross
transportation revenue less the direct cost of transportation) is the primary indicator of our ability to source, add value and resell services
provided by third parties, and is considered by management to be a key performance measure. In addition, management believes
measuring its operating costs as a function of adjusted transportation gross profit provides a useful metric, as our ability to control costs
as a function of adjusted transportation gross profit directly impacts operating earnings.
Our operating results will be affected as acquisitions occur. Since all acquisitions are made using the acquisition method of accounting
for business combinations, our financial statements will only include the results of operations and cash flows of acquired companies for
periods subsequent to the date of acquisition.
Adjusted gross profit, a non-GAAP financial measure, is our total revenue minus our total cost of transportation and other services
(excluding depreciation and amortization, which are reported separately) and adjusted gross profit percentage is adjusted gross profit as
a percentage of our total revenue. We believe that these provide investors meaningful information to understand our results of operations
and the ability to analyze financial and business trends on a period-to-period basis.
30
Our GAAP-based net income will be affected by non-cash charges relating to the amortization of customer related intangible assets and
other intangible assets attributable to completed acquisitions. Under applicable accounting standards, purchasers are required to allocate
the total consideration in a business combination to the identified assets acquired and liabilities assumed based on their fair values at the
time of acquisition. The excess of the consideration paid over the fair value of the identifiable net assets acquired is to be allocated to
goodwill, which is tested at least annually for impairment. Applicable accounting standards require that we separately account for and
value certain identifiable intangible assets based on the unique facts and circumstances of each acquisition. As a result of our acquisition
strategy, our net income will include material non-cash charges relating to the amortization of customer related intangible assets and
other intangible assets acquired in our acquisitions. Although these charges may increase as we complete more acquisitions, we believe
we will be growing the value of our intangible assets (e.g., customer relationships). Thus, we believe that earnings before interest, taxes,
depreciation and amortization, or EBITDA, is a useful financial measure for investors because it eliminates the effect of these non-cash
costs and provides an important metric for our business.
EBITDA is a non-GAAP measure of income and does not include the effects of interest, taxes, and excludes the “non-cash” effects of
depreciation and amortization on long-term assets. Companies have some discretion as to which elements of depreciation and
amortization are excluded in the EBITDA calculation. We exclude all depreciation charges related to property, technology, and
equipment and all amortization charges (including amortization of leasehold improvements). We then further adjust EBITDA to exclude
changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition and lease termination
costs, foreign currency transaction gains and losses, share-based compensation expense, litigation expenses unrelated to our core
operations, and other non-cash charges. While management considers EBITDA and adjusted EBITDA useful in analyzing our results,
it is not intended to replace any presentation included in our consolidated financial statements. The Company’s financial covenants with
its lenders define an adjusted EBITDA as a key component of its covenant calculations. The Company’s ability to grow adjusted
EBITDA is closely monitored by management as it’s directly tied to financial borrowing capacity and also is a frequent point of
discussion with its investors as well as the Company’s earnings calls.
Our operating results are also subject to seasonal trends when measured on a quarterly basis. The impact of seasonality on our business
will depend on numerous factors, including the markets in which we operate, holiday seasons, consumer demand, and economic
conditions. Since our revenue is largely derived from customers whose shipments are dependent upon consumer demand and just-in-
time production schedules, the timing of our revenue is often beyond our control. Factors such as shifting demand for retail goods and/or
manufacturing production delays could unexpectedly affect the timing of our revenue. As we increase the scale of our operations,
seasonal trends in one area of our business may be offset to an extent by opposite trends in another area. We cannot accurately predict
the timing of these factors, nor can we accurately estimate the impact of any particular factor, and thus we can give no assurance any
historical seasonal patterns will continue in future periods.
Critical Accounting Estimates
Accounting policies, methods and estimates are an integral part of the consolidated financial statements prepared by management and
are based upon management’s current judgments. These judgments are normally based on knowledge and experience regarding past and
current events and assumptions about future events. Certain accounting policies, methods and estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events affecting them may differ from
management’s current judgments. While there are a number of accounting policies, methods and estimates that affect our financial
statements, the areas that are particularly significant include revenue recognition; the fair value of acquired assets and liabilities and the
assessment of the recoverability of long-lived assets, goodwill and intangible assets; and fair value of contingent consideration.
As a non-asset-based carrier, we do not generally own transportation assets. We do, however, own certain trailers and refrigerated trailers
that we use in our business. We generate the majority of our air and ocean freight forwarding and freight brokerage revenues by
purchasing transportation services from direct (asset-based) carriers and reselling those services to our customers. Freight forwarding
revenues related to shipments where we issue a House Airway Bill or a House Ocean Bill of Lading and corresponding related costs are
recognized over the transit period as customers’ goods move from point of origin to point of destination. We estimate revenues at the
end of each of our fiscal accounting periods for partially completed shipments and their related costs based on several factors including
calculating recent average transit times by mode and, calculating the percentage of completion of shipments in transit. Furthermore, any
known posted shipment information available after month end, but prior to our accrual is utilized to estimate revenues and costs for
those shipments that were open as of month end. Macroeconomic conditions impacting the supply chain such as port delays, COVID-
19 impacting the labor force, as well as inflationary pressures can impact the actual results compared to our estimates. All other revenue,
including revenue from other value-added services including freight brokerage services, customs brokerage services and warehousing
and fulfillment services, is recognized upon completion of the service.
We perform an annual impairment test for goodwill as of April 1 of each year unless events or circumstances indicate impairment may
have occurred before that time. We assess qualitative factors to determine whether it is more-likely-than-not that the fair value of the
reporting unit is less than the carrying amount. After assessing qualitative factors, if further testing is necessary, we would determine
the fair value of each reporting unit and compare the fair value to the reporting unit’s carrying amount.
31
Intangible assets consist of customer related intangible assets, trade names and trademarks, and non-compete agreements arising from
our acquisitions. Customer related intangible assets are amortized using the straight-line method over periods of up to 15 years,
trademarks and trade names are amortized using the straight-line method over periods of up to 15 years, and non-compete agreements
are amortized using the straight-line method over periods of up to five years, and developed technology is amortize using the straight-
line method over five years.
We review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate the carrying
amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life
of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the
amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, we estimate
fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the
asset. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
The Company has contingent obligations to transfer cash payments and/or equity shares to the former shareholder of acquired operations
in conjunction with certain acquisitions if specified operating results and financial objectives are met over the next four fiscal years. The
Company uses projected future financial results based on recent and historical data to value the anticipated future earn-out payments.
To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs.
32
Results of Operations
The results of operations for the fiscal year ended June 30, 2021 have been restated. Refer to Note 2, Restatement of Previously Issued
Consolidated Financial Statements, of this Annual Report on Form 10-K for details.
Fiscal year ended June 30, 2022, compared to fiscal year ended June 30, 2021 (as restated)
The following table summarizes revenues, cost of transportation and other services, and adjusted gross profit by reportable operating
segments for the fiscal years ended June 30, 2022 and 2021 (as restated):
(In thousands)
Revenues
Transportation
Value-added services
Cost of transportation and other
services
Transportation
Value-added services
Adjusted gross profit (1)
Transportation
Value-added services
Adjusted gross profit percentage
Transportation
Value-added services
United
States
Year Ended June 30, 2022
Canada
Corporate/
Eliminations
Total
United
States
(as restated)
Year Ended June 30, 2021
Canada
Corporate/
Eliminations
Total
(as restated)
$
1,266,704
16,329
1,283,033
$
149,230
28,584
177,814
1,015,199
6,816
1,022,015
251,505
9,513
261,018
$
$
119,944
12,603
132,547
29,286
15,981
45,267
$
$
(1,428) $
—
(1,428)
1,414,506
44,913
1,459,419
$
772,586
8,887
781,473
$
97,418
21,410
118,828
(1,428)
—
(1,428)
1,133,715
19,419
1,153,134
—
—
— $
280,791
25,494
306,285
$
587,837
6,004
593,841
184,749
2,883
187,632
$
80,715
4,339
85,054
16,703
17,071
33,774
$
$
(489) $
—
(489)
869,515
30,297
899,812
(489)
—
(489)
—
—
— $
668,063
10,343
678,406
201,452
19,954
221,406
19.9%
58.3%
19.6%
55.9%
N/A
N/A
19.9%
56.8%
23.9%
32.4%
17.1%
79.7%
N/A
N/A
23.2%
65.9%
(1)
Adjusted gross profit is revenues net of cost of transportation and other services.
Transportation revenue was $1,414.5 million and $869.5 million for the years ended June 30, 2022 and 2021 (as restated), respectively.
The increase of $545.0 million, or 62.7%, is primarily attributable to the mark-ups associated with higher transportation costs, driven
by substantial surcharges on ocean, some rail and trucking lanes due to tight capacity, coupled with significant fuel surcharges, and
meaningful charter business included in the current year, overall increased shipment volumes and seven months of results related to our
acquisition of Navegate. Adjusted transportation gross profit was $280.8 million and $201.5 million for the years ended June 30, 2022
and 2021 (as restated), respectively. Adjusted transportation gross profit percentage decreased from 23.2% to 19.9%, primarily due to
the significant surcharges associated with the extremely tight capacity experienced in certain modes of transportation, most notably
ocean, fuel surcharges, and significant lower margin business associated with charter business and inclusion of seven months of
Navegate, which has lower margin characteristics.
Value-added services revenue was $44.9 million and $30.3 million for the years ended June 30, 2022 and 2021 (as restated), respectively.
The increase of $14.6 million, or 48.2%, is primarily attributable to the increase in warehouse revenues and other value-added services
from our Canada segment. Adjusted value-added services gross profit was $25.5 million for the year ended June 30, 2022, compared to
$20.0 million for the comparable prior year period. Adjusted value-added services gross profit percentage decreased from 65.9% to
56.8%, primarily due to additional startup costs associated with moving to a new warehouse at our Coleraine facility in Canada.
33
The following table provides a reconciliation for the fiscal years ended June 30, 2022 and 2021 (as restated) of adjusted gross profit
to gross profit, the most directly comparable GAAP measure.
(In thousands)
Reconciliation of adjusted gross profit to GAAP gross profit
Revenues
Cost of transportation and other services (exclusive of depreciation and
amortization, shown separately below)
Depreciation and amortization
GAAP gross profit
Depreciation and amortization
Adjusted gross profit
GAAP gross margin (GAAP gross profit as a percentage of revenues)
Adjusted gross profit percentage (adjusted gross profit as a percentage of revenues)
$
$
$
Year Ended June 30,
2022
2021
(as restated)
1,459,419
$
899,812
(1,153,134)
(12,775)
293,510
12,775
306,285
$
$
20.1%
21.0%
(678,406)
(11,986)
209,420
11,986
221,406
23.3%
24.6%
The following table compares consolidated statements of comprehensive income data by reportable operating segments for the fiscal
years ended June 30, 2022 and 2021 (as restated):
(In thousands)
United
States
Year Ended June 30, 2022
Corporate/
Eliminations
Canada
Total
Adjusted gross profit (1)
$
261,018
$
45,267
$
— $ 306,285
United
States
(as restated)
187,632
$
$
Canada
Year Ended June 30, 2021
Corporate/
Eliminations
(as restated)
$
33,774
Total
(as restated)
221,406
— $
Operating expenses:
Operating partner commissions
Personnel costs
Selling, general and administrative expenses
Depreciation and amortization
Change in fair value of contingent
consideration
121,937
54,524
22,500
5,651
—
16,287
6,902
3,509
—
—
—
1,431
4,598
9,556
767
121,937
72,242
34,000
18,716
95,141
38,109
14,974
3,929
—
13,441
5,765
2,586
—
3,802
2,979
10,127
95,141
55,352
23,718
16,642
767
—
—
4,350
4,350
Total operating expenses
204,612
26,698
16,352
247,662
152,153
21,792
21,258
195,203
Income from operations
Other (expense) income
Income before income taxes
Income tax expense
56,406
678
57,084
—
18,569
233
18,802
—
(16,352)
(1,351)
(17,703)
(12,692)
58,623
(440)
58,183
(12,692)
35,479
676
36,155
—
11,982
(162)
11,820
—
(21,258)
2,863
(18,395)
(5,951)
26,203
3,377
29,580
(5,951)
Net income
Less: net income attributable to non-
controlling interest
Net income attributable to Radiant Logistics,
Inc.
57,084
18,802
(30,395)
45,491
36,155
11,820
(24,346)
23,629
(1,027)
—
—
(1,027)
(519)
—
—
(519)
$
56,057
$
18,802
$
(30,395)
$
44,464
$
35,636
$
11,820
$
(24,346)
$
23,110
Operating expenses as a percent of
adjusted gross profit (1):
United
States
Canada
Corporate/
Eliminations
Total
Year Ended June 30, 2022
Year Ended June 30, 2021
Canada
Corporate/
Eliminations
United
States
(as restated)
Operating partner commissions
Personnel costs
Selling, general and administrative
expenses
Depreciation and amortization
46.7%
20.9%
8.6%
2.2%
0.0%
36.0%
15.2%
7.8%
N/A
N/A
N/A
N/A
39.8%
23.6%
11.1%
6.1%
50.7%
20.3%
8.0%
2.1%
0.0%
39.8%
17.1%
7.7%
N/A
N/A
N/A
N/A
Total
(as restated)
43.0%
25.0%
10.7%
7.5%
(1)
Adjusted gross profit is revenues net of cost of transportation and other services.
34
Operating partner commissions increased $26.8 million, or 28.2%, to $121.9 million for the year ended June 30, 2022. The increase is
primarily due to increased adjusted gross profit from operating partners. As a percentage of adjusted gross profit, operating partner
commissions decreased 316 basis points to 39.8% from 43.0% for the years ended June 30, 2022 and 2021, respectively as a result of a
greater percentage of business is coming from company owned locations which are not subject to commissions.
Personnel costs increased $16.9 million, or 30.5%, to $72.2 million for the year ended June 30, 2022. The increase is primarily due to
increased workforce supporting the expansion of business volumes in both U.S. and Canada, the restoration of COVID related payroll
reductions associated with the pandemic, and the inclusion of payroll associated with our acquisition of Navegate. As a percentage of
adjusted gross profit, personnel costs decreased 141 basis points to 23.6% from 25.0% for the years ended June 30, 2022 and 2021,
respectively.
Selling, general and administrative (“SG&A”) expenses increased $10.3 million, or 43.4%, to $34.0 million for the year ended
June 30, 2022. The increase is primarily due to increased professional services primarily attributed to IT related initiatives, increased
bad debt costs, increased banking fees, increased professional services fees, and overall increase in SG&A spent with Navegate being
included in the consolidated results of the organization. As a percentage of adjusted gross profit, SG&A increased 39 basis points to
11.1% from 10.7% for the years ended June 30, 2022 and 2021, respectively.
Depreciation and amortization costs increased $2.1 million, or 12.5%, to $18.7 million for the year ended June 30, 2022. The increase
is primarily attributed to the acquisition of Navegate. As a percentage of adjusted gross profit, depreciation and amortization decreased
141 basis points to 6.1% from 7.5% for the years ended June 30, 2022 and 2021, respectively.
Change in fair value of contingent consideration was an expense of $0.8 million for the year ended June 30, 2022, compared to an
expense of $4.4 million for the year ended June 30, 2021. The change in each year is attributable to a change in management’s estimates
of future earn-out payments through the remainder of the respective earn-out periods.
Net other (expense) income decreased $3.8 million, or 113.0%, from an income of $3.4 million for the year ended June 30, 2021 to an
expense of $0.4 million for the year ended June 30, 2022. The decrease is primarily due to the gain on the forgiveness of the PPP loans
offered under the CARES Act recorded during the year ended June 30, 2021, partially offset by increases in the fair value of interest
rate swap contracts during the year ended June 30, 2022.
Our change in net income is driven principally by increased adjusted gross profit, partially offset by increased operating expenses and
increased income taxes compared to the prior year.
Our future financial results may be impacted by amortization of intangible assets resulting from acquisitions as well as gains or losses
from changes in fair value of contingent consideration that are difficult to predict.
The following table provides a reconciliation for the fiscal years ended June 30, 2022 and 2021 (as restated) of adjusted EBITDA to
net income (loss), the most directly comparable GAAP measure.
(In thousands)
Net income attributable to Radiant Logistics,
Inc.
$
Income tax expense
Depreciation and amortization
Net interest expense
United
States
Year Ended June 30, 2022
Corporate/
Eliminations
Canada
Total
United
States
(as restated)
Year Ended June 30, 2021
Corporate/
Eliminations
(as restated)
Canada
Total
(as restated)
56,057
—
5,651
—
$
18,802
—
3,509
—
$
(30,395) $
12,692
9,556
3,191
44,464
12,692
18,716
3,191
$
35,636
—
3,929
—
$
11,820
—
2,586
—
$
(24,346) $
5,951
10,127
2,531
EBITDA
61,708
22,311
(4,956)
79,063
39,565
14,406
(5,737)
Share-based compensation
Change in fair value of contingent
consideration
Acquisition related costs
Ransomware incident related costs, net
Litigation costs
Gain on litigation settlement, net
Change in fair value of interest rate swap
contracts
Gain on forgiveness of debt
Foreign currency transaction (gain) loss
1,016
248
—
—
—
—
—
—
—
(573)
—
—
—
—
—
—
—
(145)
534
767
596
684
568
—
767
596
684
568
—
(1,840)
—
—
(1,840)
—
(718)
—
—
—
—
—
—
—
(179)
—
—
—
—
—
—
—
368
475
4,350
42
—
535
(25)
594
(5,987)
—
1,798
378
218
Adjusted EBITDA
$
62,151
$
22,414
$
(3,647) $
80,918
$
39,764
$
14,992
$
(5,753) $
49,003
Adjusted EBITDA as a % of adjusted gross
profit (1)
23.8%
49.5%
N/A
26.4%
21.2%
44.4%
N/A
22.1%
(1)
Adjusted gross profit is revenues net of cost of transportation and other services.
35
23,110
5,951
16,642
2,531
48,234
1,071
4,350
42
—
535
(25)
594
(5,987)
189
Adjusted EBITDA increased $31.9 million, or 65.1% to $80.9 million for the year ended June 30, 2022.
Liquidity and Capital Resources
Generally, our primary sources of liquidity are cash generated from operating activities and borrowings under our Revolving Credit
Facility, as described below. These sources also fund a portion of our capital expenditures and contractual contingent consideration
obligations. Our level of cash and financing capabilities along with cash flows from operations have historically been sufficient to meet
our operating and capital needs. As of June 30, 2022, we have $24.4 million in cash on hand to serve as adequate working capital.
Fiscal year ended June 30, 2022 compared to fiscal year ended June 30, 2021
Net cash provided by operating activities were $24.9 million and $14.1 million for the fiscal years ended June 30, 2022 and 2021,
respectively. The cash provided primarily consisted of net income adjusted for depreciation and amortization and changes in accounts
payable and accounts receivable. Compared to the prior fiscal year, cash provided by operating activities increased mainly due to
increased net income and increased payables to vendors offset by increased accounts receivable and contract assets balances.
Net cash used for investing activities were $45.7 million and $11.1 million for the years ended June 30, 2022 and 2021, respectively.
The primary uses of cash were for acquisition and purchases of technology and equipment. During the fiscal year ended June 30, 2022,
cash paid for the acquisition of Navegate, Inc., net of the acquiree company's cash balance on the acquisition date, was $38.4 million.
Cash paid for purchases of technology and equipment were $7.5 million and $11.4 million for the years ended June 30, 2022 and 2021,
respectively. Proceeds from sale of property, technology, and equipment were $0.2 million and $0.4 million for the years ended
June 30, 2022 and 2021, respectively.
Net cash provided by financing activities was $28.9 million and net cash used for financing activities was $23.7 million for the fiscal
years ended June 30, 2022 and 2021, respectively. Gross proceeds from the credit facility was $116.1 million and gross repayments
from the credit facility was $68.6 million during the fiscal year ended June 30, 2022. Gross proceeds from the credit facility was
$6.4 million and gross repayments to the credit facility was $21.4 million for the fiscal year ended June 30, 2021. Repayments of notes
payable and finance lease liability were $5.1 million and $4.7 million for the fiscal years ended June 30, 2022 and 2021, respectively.
During the fiscal year ended June 30, 2022, $0.2 million was received in exchange for issuance of common stock to former shareholders
of Navegate, Inc. Payments for repurchases of common stock were $11.3 million and $1.9 million for the fiscal years ended
June 30, 2022 and 2021, respectively. Payments of contingent consideration were $1.1 million and $2.0 million for the fiscal years ended
June 30, 2022 and 2021, respectively. Distributions to non-controlling interest were $1.1 million and $1.0 million for the fiscal years
ended June 30, 2022 and 2021, respectively. Proceeds from employees’ exercise of stock options were $0.4 million and $1.4 million for
the fiscal years ended June 30, 2022 and 2021, respectively. Payments of employee tax withholdings related to vesting of restricted
stock awards were $0.4 million and $0.3 million for each of the fiscal years ended June 30, 2022 and 2021, respectively. Payments of
employee tax withholdings related to the cashless exercise of stock option were $0.1 million and $0.2 million for the fiscal years
ended June 30, 2022 and 2021, respectively.
Working Capital
We believe that our current working capital, anticipated cash flow from operations, and access to financing through the Revolving Credit
Facility are adequate for funding existing operations for the next twelve months.
Acquisitions
Below are descriptions of recent acquisitions in the last two fiscal years.
On December 3, 2021, and effective as of November 30, 2021, the Company entered into a Stock Purchase Agreement, pursuant to
which it acquired all of the issued and outstanding common shares of Navegate, Inc. (“Navegate”), a Minnesota based, privately held
company and subsidiaries from Saltspring Capital, LLC. Navegate is a technology-enabled supply chain management and third-party
logistics services company that combines a robust digital platform and decades of expertise to manage international, cross-border, and
domestic freight from purchase order to final delivery. Navegate’s combination of tech-enabled services, customs brokerage expertise,
and a full complement of international and domestic services significantly reduces costs and leads to better compliance and risk
mitigation for its customers. Navegate has come to operate as a wholly owned subsidiary of Radiant Logistics, Inc. As consideration for
the acquisition, the Company paid $38.4 million in cash upon closing.
36
On October 1, 2022, the Company acquired the assets and operations of Cascade Enterprises of Minnesota, Inc. (“Cascade”) a
Minneapolis, Minnesota based, privately held company that has operated under the Company's Airgroup brand since 2007. Cascade will
continue to operate under the Airgroup brand through the remainder of 2022 and is expected to transition to the Radiant brand in early
2023 as Cascade is combined with existing Company owned operations in the Minneapolis and will be able to leverage the Company’s
global trade management platform to strengthen our purchase order and vendor management service offering. As consideration for the
acquisition, the Company paid $3,250 in cash upon closing, and the seller is entitled to additional contingent consideration payable in
subsequent periods based on future performance of the acquired operation.
Technology
A primary component of our business strategy is to provide robust and advanced technology offerings to our customers, while providing
advanced technology to our operations, strategic operating partners and management. To accomplish this, we will continuously develop
and enhance our technology platform to align with current and future business requirements. During the year ended June 30, 2022, we
capitalized approximately $2.4 million on technology enhancements and software systems in order to increase our operating efficiency
and improve technology offerings. We expect to spend between $4 million and $5 million during the fiscal year ended June 30, 2023 in
order to continue enhancing our technology platform, which we expect will include elements focused on customer facing, vendor facing,
and user facing tools and systems that will be integrated into our existing platform and support our continued growth.
Revolving Credit Facility
The Company currently operates under a $200 million syndicated, Credit Facility pursuant to a Credit Agreement dated as of August 5,
2022 (the “Credit Facility”). The Credit Facility was entered into with Bank of America, N.A. and BMO Capital Markets Corp. as joint
book runners and joint lead arrangers, Bank of America, N.A. as Administrative Agent, Swingline Lender and Letter of Credit Issuer,
Bank of Montreal as syndication agent, KeyBank National Association and MUFG Union Bank, N.A. as co-documentation agents and
Bank of America, N. A., Bank of Montreal, KeyBank National Association, MFUG Union Bank, N.A. and Washington Federal Bank,
National Association as lenders (such named lenders are collectively referred to herein as “Lenders”).
The Credit Facility has a term of five years and is collateralized by a first-priority security interest in the accounts receivable and other
assets of the Company and the guarantors named below on a parity basis with the security interest held by Fiera Private Debt Fund IV
LP and Fiera Private Debt Fund V LP described below. Borrowings under the Credit Facility accrue interest (at the Company’s option),
at a) the Lenders’ base rate plus 0.75% and can be subsequently adjusted based on the Company’s consolidated net leverage ratio under
the facility at the Lenders’ base rate plus 0.5% to 1.50%: b) Term SOFR plus 1.65% and can be subsequently adjusted based on the
Company’s consolidated net leverage ratio under the facility at Term SOFR plus 1.40% to 2.40%; and c) Term SOFR Daily Floating
Rate plus 1.65% and can be subsequently adjusted based on the Company’s consolidated net leverage ratio under the facility at Term
SOFR Daily Floating Rate plus 1.40% to 2.40%.
The Credit Facility includes a $75,000 accordion feature to support future acquisition opportunities. For general borrowings under the
Credit Facility, the Company is subject to the maximum consolidated net leverage ratio of 3.00 and minimum consolidated interest
coverage ratio of 3.00. Additional minimum availability requirements and financial covenants apply in the event the Company seeks to
use advances under the Credit Facility to pursue acquisitions or repurchase its common stock. Restatement described in Note 2 and Note
20 has no impact on the Company’s compliance with debt covenant ratios. Although the restatement delayed the process of providing
audited financial statements to the Lenders, a waiver was received to extend the period within which the audited financial statements
may be submitted to the Lenders.
The Company’s current Credit Facility replaces a $150 million Revolving Credit Facility that was put in place and used by the Company
from March 13, 2020, until August 5, 2022 (the “Revolving Credit Facility”). On June 30, 2022, the borrowings outstanding on the
Revolving Credit Facility was $62.5 million. The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as
sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A
as lender and documentation agent and Bank of America, N. A., KeyBank National Association and Washington Federal Bank, National
Association as lenders (such named lenders are collectively referred to herein as “Lenders”).
The Revolving Credit Facility had a term of five years and was collateralized by a first-priority security interest in the accounts receivable
and other assets of the Company. Borrowings under the Revolving Credit Facility accrued interest (at the Company’s option), at the
Lenders’ base rate plus 1.00% or LIBOR plus 2.00% and could be subsequently adjusted based on the Company’s consolidated leverage
ratio under the facility at the Lenders’ base rate plus 1.00% to 1.75% or LIBOR plus 2.00% to 2.75%.
The Revolving Credit Facility included a $50 million accordion feature to support future acquisition opportunities. For general
borrowings under the Revolving Credit Facility, the Company was subject to the maximum consolidated leverage ratio of 3.00 and
minimum consolidated fixed charge coverage ratio of 1.25. Additional minimum availability requirements and financial covenants
applied in the event the Company sought to use advances under the Revolving Credit Facility to pursue acquisitions or repurchase its
common stock.
37
In conjunction with the Revolving Credit Facility, Radiant entered into two interest rate swap contracts. On March 20, 2020, and
effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows
at one-month LIBOR for a $20 million notional amount, for fixed interest cash outflows at 0.635%. On April 1, 2020, and effective
April 2, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at
one-month LIBOR for a $10 million notional amount, for fixed interest cash outflows at 0.5865%. Both interest rate swap contracts
mature and terminate on March 13, 2025.
Senior Secured Loan
On April 2, 2015, Radiant Canada obtained a CAD$29 million senior secured Canadian term loan from Fiera Private Debt Fund IV LP
(“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit Facilities Loan Agreement (the “FPD
IV Loan Agreement”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations
thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per annum. We made interest-only payments for
the first twelve months and blended principal and interest payments through maturity. In connection with the loan, we paid an amount
equal to five months of interest payments into a debt service reserve account controlled by FPD IV.
In connection with our acquisition of Lomas, Radiant Canada obtained a CAD$10 million senior secured Canadian term loan from Fiera
Private Debt Fund V LP (“FPD V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities Loan
Agreement (the “FPD V Loan Agreement,” and together with the FPD IV Loan Agreement, the “FPD Loan Agreements”). The Company
and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on June 1, 2024
and accrues interest at a rate of 6.65% per annum. The loan repayment consists of monthly blended principal and interest payments.
The loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between
(i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond Yield for
the term from the date of prepayment to the maturity date and (ii) the face value of the principal amount being prepaid.
For additional information regarding our indebtedness, see Note 9 to the consolidated financial statements.
Off Balance Sheet Arrangements
As of June 30, 2022, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred
to as structured finance or special purpose entities, which had been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity,
market or credit risk that could arise if we had engaged in such relationships.
Recent Accounting Guidance
The recent accounting guidance is discussed in Note 3 to the consolidated financial statements contained in this report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, the Company is not required to provide the information called for by Item 7A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm for fiscal year ended June 30, 2022 (PCAOB ID 659)
Report of Independent Registered Public Accounting Firm for fiscal year ended June 30, 2021 (PCAOB ID 243)
Consolidated Balance Sheets
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
39
42
43
44
45
46
48
38
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Radiant Logistics, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of Radiant Logistics, Inc. (the “Company”) as of June 30, 2022, the
related consolidated statements of comprehensive income, changes in equity and cash flows for the year ended June 30, 2022, and the
related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control
over financial reporting as of June 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of the Company as of June 30, 2022, and the consolidated results of its operations and its cash flows for the year ended June
30, 2022, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, because of
the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not
maintained effective internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control -
Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting included in Item 9A. Our responsibility is to
express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinions.
As discussed in Management’s Report on Internal Control over Financial Reporting included in Item 9A, on December 3, 2021, the
Company acquired Navegate, Inc. For the purposes of assessing internal control over financial reporting, management excluded
Navegate, Inc., whose financial statements constitute 5.8% of the Company’s consolidated total assets excluding $34 million of
goodwill and intangible assets, which were integrated into the Company’s control environment and 6.3% of consolidated revenues as
of and for the year ended June 30, 2022. Accordingly, our audit did not include the internal control over financial reporting of
Navegate, Inc.
39
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or
detected on a timely basis. The following material weakness has been identified and included in management’s assessment in Item 9A:
The Company does not have effective internal controls over the recording and processing of revenues. Specifically, the
controls as currently designed are not sufficient to prevent or detect a material misstatement in revenues as the design of
the controls lacks the level of precision necessary to ensure the completeness and accuracy of revenues.
We considered the material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the Company’s
consolidated financial statements as of and for the year ended June 30, 2022, and our opinion on such consolidated financial
statements was not affected.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
In-Transit Revenue Recognition
The Company’s contract assets relating to in-transit revenue as of June 30, 2022 was $61.2 million.
As described in Note 4 to the consolidated financial statements, the Company’s transportation transactions provide for the
arrangement of the movement of freight to a customer’s destination. The Company recognizes revenue for the performance obligation
that is satisfied over time upon the transfer of control of the services over the requisite transit period as the customer’s goods move
from point of origin to point of destination. Recognizing revenue at period end for partially completed shipments and their related
costs requires management to make significant judgments that affect the amounts and timing of revenue recognized, including the
estimation of recent average historic in-transit times by mode and percentage of completion of shipments in transit. Macroeconomic
conditions impacting the supply chain can impact the actual results compared to the Company’s estimates.
40
We identified the auditing of the contract assets related to in-transit revenue as a critical audit matter. Auditing the estimate of the
Company’s revenue at period end for partially completed shipments involved significant audit effort, as well as especially challenging
and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures. The following are
the most relevant procedures we performed to address this critical audit matter:
•
Evaluating the Company’s process used in developing the estimate for in-transit revenue at the period end by:
▪
▪
▪
▪
Evaluating the methodology used by management to develop its estimate for reasonableness.
Testing the accuracy and completeness of the data utilized by management to develop its estimate.
Evaluating the reasonableness of the assumptions used for recent average historic in-transit times by mode.
Testing the mathematical accuracy of the Company’s calculations.
•
Developing an independent expectation of in-transit revenue by mode of transportation based on the average days in-
transit by mode and comparing our expectations to management’s estimate of in-transit revenue at period end for
reasonableness.
/s/ Moss Adams LLP
Seattle, Washington
February 27, 2023
We have served as the Company’s auditor since 2021.
41
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Radiant Logistics, Inc.
Renton, Washington
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Radiant Logistics, Inc. (the “Company”) as of June 30, 2021, the
related consolidated statements of comprehensive income, changes in equity, and cash flows for the year then ended, and the related
notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company at June 30, 2021, and the results of its operations and its cash flows
for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Restatement of Consolidated Financial Statements
As discussed in Note 2 to the consolidated financial statements, the 2021 consolidated financial statements have been restated to correct
misstatements.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error
or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ BDO USA, LLP
We served as the Company's auditor from 2019 to 2021.
Seattle, Washington
September 20, 2021, except for the effects of the restatement discussed in Note 2, as to which the date is February 27, 2023.
42
RADIANT LOGISTICS, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance of $2,983 and $1,489, respectively
Contract assets
Prepaid expenses and other current assets
Total current assets
Property, technology, and equipment, net
Goodwill
Intangible assets, net
Operating lease right-of-use assets
Deposits and other assets
Long-term restricted cash
Total other long-term assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Operating partner commissions payable
Accrued expenses
Income tax payable
Current portion of notes payable
Current portion of operating lease liability
Current portion of finance lease liability
Current portion of contingent consideration
Other current liabilities
Total current liabilities
Notes payable, net of current portion
Operating lease liability, net of current portion
Finance lease liability, net of current portion
Contingent consideration, net of current portion
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
Total liabilities
Commitments and contingencies (Note 16)
Equity:
Common stock, $0.001 par value, 100,000,000 shares authorized; 51,265,543 and 50,832,205
shares issued, and 48,740,935 and 49,930,389 shares outstanding, respectively
Additional paid-in capital
Treasury stock, at cost, 2,524,608 and 901,816 shares, respectively
Retained earnings
Accumulated other comprehensive (loss) income
Total Radiant Logistics, Inc. stockholders’ equity
Non-controlling interest
Total equity
Total liabilities and equity
June 30,
2022
2021
(as restated)
$
$
$
24,442
186,492
61,154
17,256
289,344
24,823
88,199
48,545
41,111
4,704
625
183,184
497,351
137,853
18,731
11,349
4,035
4,575
7,641
577
2,600
303
187,664
66,719
37,776
1,223
2,930
6,482
—
115,130
302,794
33
106,146
(16,004)
104,998
(796)
194,377
180
194,557
497,351
$
13,696
117,349
45,040
17,512
193,597
24,151
72,582
41,404
39,022
3,124
648
156,780
374,528
103,709
15,065
6,812
2,768
4,446
6,989
743
2,600
345
143,477
24,000
34,899
1,809
4,663
4,021
89
69,481
212,958
32
104,228
(4,658)
60,534
1,141
161,277
293
161,570
374,528
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
43
RADIANT LOGISTICS, INC.
Consolidated Statements of Comprehensive Income
(In thousands, except share and per share data)
Revenues
Operating expenses:
Cost of transportation and other services
Operating partner commissions
Personnel costs
Selling, general and administrative expenses
Depreciation and amortization
Change in fair value of contingent consideration
Total operating expenses
Income from operations
Other (expense) income
Interest income
Interest expense
Foreign currency transaction gain (loss)
Change in fair value of interest rate swap contracts
Gain on forgiveness of debt
Other
Total other (expense) income
Income before income taxes
Income tax expense
Net income
Less: net income attributable to non-controlling interest
Net income attributable to Radiant Logistics, Inc.
Other comprehensive (loss) income
Foreign currency translation (loss) gain
Comprehensive income
Income per share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
Year Ended June 30,
2022
2021
(as restated)
$
1,459,419
$
899,812
1,153,134
121,937
72,242
34,000
18,716
767
1,400,796
58,623
23
(3,214)
718
1,840
—
193
(440)
58,183
(12,692)
45,491
(1,027)
678,406
95,141
55,352
23,718
16,642
4,350
873,609
26,203
18
(2,549)
(189)
(594)
5,987
704
3,377
29,580
(5,951)
23,629
(519)
$
$
$
$
44,464
$
23,110
(1,937)
43,554
0.90
0.88
$
$
$
696
24,325
0.46
0.45
49,570,594
50,736,582
49,890,945
51,208,295
The accompanying notes are an integral part of these consolidated financial statements.
44
Y
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4
(In thousands)
OPERATING ACTIVITIES:
RADIANT LOGISTICS, INC.
Consolidated Statements of Cash Flows
Year Ended June 30,
2022
2021
(as restated)
Net income
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
$
45,491
$
Share-based compensation
Amortization of intangible assets
Depreciation and amortization of property, technology, and equipment
Deferred income tax benefit
Amortization of debt issuance costs
Change in fair value of contingent consideration
Gain on forgiveness of debt
Other
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable
Contract assets
Income tax receivable/payable
Prepaid expenses, deposits, and other assets
Operating lease right-of-use assets
Accounts payable
Operating partner commissions payable
Accrued expenses and other liabilities
Operating lease liability
Payment of contingent consideration
Net cash provided by operating activities
INVESTING ACTIVITIES:
Payments to acquire Navegate, Inc., net of cash acquired
Purchases of property, technology, and equipment
Proceeds from sale of property, technology, and equipment
Net cash used for investing activities
FINANCING ACTIVITIES:
Proceeds from revolving credit facility
Repayment of revolving credit facility
Repayments of notes payable and finance lease liability
Proceeds from sale of common stock
Repurchases of common stock
Payments of contingent consideration
Distribution to non-controlling interest
Proceeds from exercise of stock options
Payments of employee tax withholdings related to vesting of restricted stock awards
Payments of employee tax withholdings related to cashless exercise of stock options
Net cash provided by (used for) financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF YEAR
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents
Long-term restricted cash
Total cash, cash equivalents, and restricted cash, end of period
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid
Interest paid
1,798
11,385
7,331
(2,603)
500
767
—
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(55,079)
(14,739)
(885)
(1,322)
8,808
26,429
3,666
1,251
(8,695)
(1,377)
24,877
(38,400)
(7,464)
186
(45,678)
116,144
(68,619)
(5,102)
244
(11,346)
(1,123)
(1,140)
407
(392)
(139)
28,934
2,590
10,723
14,344
25,067
24,442
625
25,067
16,524
2,639
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10,120
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4,350
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3,633
115
7,557
39,846
5,934
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358
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6,371
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1,446
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(367)
(21,089)
35,433
14,344
13,696
648
14,344
6,520
2,021
The accompanying notes are an integral part of these consolidated financial statements.
46
RADIANT LOGISTICS, INC.
Consolidated Statements of Cash Flows (continued)
Supplemental disclosure of non-cash investing and financing activities:
During the twelve months ended June 30, 2021, Paycheck Protection Program (the “PPP”) Loans totaling $5,925 were forgiven,
including $62 of interest previously accrued.
The accompanying notes are an integral part of these consolidated financial statements.
47
RADIANT LOGISTICS, INC.
Notes to the Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
Radiant Logistics, Inc., and its consolidated subsidiaries (the “Company”, “we” or “us”), operates as a third-party logistics company,
providing technology-enabled global transportation and value-added logistics solutions primarily in the United States and Canada. We
service a large and diversified account base across a range of industries and geographies, which we support from an extensive network
of operating locations across North America as well as an integrated international service partner network located in other key markets
around the globe. We provide these services through a multi-brand network, which includes over 100 operating locations. Included in
these operating locations are a number of independent agents, who we also refer to as our “strategic operating partners” that operate
exclusively on our behalf, and approximately 25 Company-owned offices. As a third-party logistics company, we have a vast carrier
network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in our carrier network.
Through its operating locations across North America, the Company offers domestic and international air and ocean freight forwarding
services and freight brokerage services, including truckload services, less than truckload services, and intermodal services, which is the
movement of freight in trailers or containers by combination of truck and rail. The Company’s primary transportation services involve
arranging shipments, on behalf of its customers, of materials, products, equipment, and other goods that are generally larger than
shipments handled by integrated carriers of primarily small parcels, such as FedEx, DHL and UPS, including arranging and monitoring
all aspects of material flow activity utilizing advanced information technology systems. We also provide other value-added logistics
services including materials management and distribution services (collectively, “Materials Management and Distribution” or “MM&D”
services), and customs house brokerage (“CHB”) services to complement our core transportation service offering.
On December 3, 2021, the Company acquired Navegate, Inc. Refer to Note 18 for details on the business combination.
The COVID-19 pandemic continues to impact our business operations and financial results. Although the effects have lessened over
time, there is uncertainty in the nature and degree of its continued effects over time with new strains frequently being discovered and
additional booster shots being recommended. As the world continues to respond to COVID-19, we continue to follow guidelines
ensuring the safety of our employees, while striving to protect the health and well-being of the communities in which we operate.
Comments and discussion as well as all financials and other data presented here have been updated to reflect the restatement adjustments
detailed in Note 2 to the consolidated financial statements, Restatement of Previously Issued Consolidated Financial Statements (the
“Restatement Footnote”).
NOTE 2 - RESTATEMENT OF PREVIOUSLY ISSUED ANNUAL CONSOLIDATED FINANCIAL STATEMENTS FOR
THE FISCAL YEAR ENDED JUNE 30, 2021
As further described below, (i) our audited consolidated financial statements for the fiscal year ended June 30, 2021, and (ii) our
unaudited consolidated financial statements covering the quarterly reporting periods during fiscal year 2021, consisting of the quarters
ended September 30, 2020, December 31, 2020, March 31, 2021; and (iii) our unaudited consolidated financial statements covering the
quarterly reporting periods during fiscal year 2022, consisting of September 30, 2021, December 31, 2021, and March 31, 2022 have
been restated to reflect the correction of material errors. For restatement information on these interim periods, see Note 20, Quarterly
Financial Data (Unaudited and Restated).
Restatement Background
The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its
fiscal year-end 2022 consolidated financial statements. Principally, in response to its December 2021 cyber event, which is discussed in
Note 19, the Company completed a detailed lookback analysis to compare its estimated accrued in-transit revenues and related costs,
primarily, purchased transportation and applicable commission expenses, to its actual customer invoicing, related transportation costs
and other costs subsequently recorded. In the course of its analysis of the information gathered through the lookback process, the
Company detected differences between the estimated accrued amounts and the actual revenues and expenses recorded due primarily to
errors in the underlying shipment information that was used to calculate the original estimates of the accrued amounts. Management and
the Audit and Executive Oversight Committee have concluded that, in the ordinary course of closing its financial books and records, the
Company previously inadvertently excluded certain shipments for in-transit revenues and associated costs from the appropriate periods
as required under GAAP. Therefore, the Company misstated gross revenues, associated costs, and related assets and liabilities during
the Restatement Periods.
48
Restatement Adjustments
The Company inadvertently excluded certain in-transit revenues and associated costs, which led to accounting adjustments to correct
errors identified as part of the revenue lookback process. The following table summarizes the effect of the errors on the Company’s
consolidated balance sheet as of June 30, 2021 and consolidated statement of comprehensive income and consolidated statement of cash
flows for the fiscal year ended June 30, 2021:
(In thousands)
Contract assets
Total current assets
Total assets
Accounts payable
Operating partner commissions payable
Accrued expenses
Income tax payable
Total current liabilities
Total liabilities
Retained earnings
Total equity
(In thousands, except per share data)
Revenues
Cost of transportation and other services
Operating partner commissions
Personnel costs
Selling, general and administrative expenses
Income from operations
Income tax expense
Net income
Net income attributable to Radiant Logistics, Inc.
Income per share:
Basic
Diluted
June 30, 2021
As Previously
Reported
Adjustment
June 30, 2021
As Restated
$
27,753 $
176,310
357,241
87,941
13,779
6,801
2,713
126,357
195,838
60,367
161,403
17,287 $
17,287
17,287
15,768
1,286
11
55
17,120
17,120
167
167
45,040
193,597
374,528
103,709
15,065
6,812
2,768
143,477
212,958
60,534
161,570
Year Ended June 30,
2021
As Previously Reported
$
889,124 $
668,299
94,040
55,378
24,434
25,981
(5,896)
23,462
22,943
Adjustment
Year Ended
June 30, 2021
As Restated
10,688 $
10,107
1,101
(26)
(716)
222
(55)
167
167
899,812
678,406
95,141
55,352
23,718
26,203
(5,951)
23,629
23,110
$
$
0.46 $
0.45 $
— $
— $
0.46
0.45
While the adjustments changed contract assets, accounts payable, and operating partner commissions payable line items in the
consolidated cash flow statement, they did not have an impact on total net cash provided by operating activities, net cash used in investing
activities, or net cash provided by (used for) financing activities.
(In thousands)
OPERATING ACTIVITIES:
Net income
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Contract assets
Income tax receivable/payable
Accounts payable
Operating partner commissions payable
Accrued expenses, other liabilities, and operating lease liability
Net cash provided by operating activities
Year Ended
June 30, 2021
As Previously
Reported
Adjustment
Year Ended
June 30, 2021
As Restated
$23,462
$167
$23,629
(11,392)
3,578
24,078
4,648
(6,962)
14,100
(17,287)
55
15,768
1,286
11
—
(28,679)
3,633
39,846
5,934
(6,951)
14,100
49
NOTE 3 - RECENT ACCOUNTING GUIDANCE
Recent Accounting Guidance Not Yet Adopted
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference
Rate Reform (Topic 848) and subsequent amendments to the initial guidance: ASU 2021-01, which provides temporary optional
expedients and exceptions to the current guidance on contract modifications to ease the financial reporting burdens related to the
expected market transition from London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.
The amendments are effective as of March 12, 2020 and applies to contract modifications made before December 31, 2022. As of
June 30, 2022, the Company has not utilized any of the expedients discussed within this ASU, however, it continues to assess its
agreements to determine if LIBOR is included and if the expedients would be utilized through the allowed period of December 31, 2022.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, 2019-04, 2019-05, 2020-03, and 2022-02
(collectively, Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326
is effective for the Company in the first quarter of fiscal year 2024. The Company is currently evaluating the impact of the standard on
its consolidated financial statements and disclosures.
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a)
Principles of Consolidation
The consolidated financial statements include the accounts of Radiant Logistics, Inc. and its wholly-owned subsidiaries as well as a
single variable interest entity, Radiant Logistics Partners, LLC (“RLP”), which is 40% owned by Radiant Global Logistics, Inc. (“RGL”)
and 60% owned by Radiant Capital Partners, LLC (“RCP”, see Note 12), an entity owned by the Company’s Chief Executive Officer.
All significant intercompany balances and transactions have been eliminated.
Non-controlling interest in the consolidated balance sheets represents RCP’s proportionate share of equity in RLP. Net income (loss) of
non-wholly owned consolidated subsidiaries or variable interest entities is allocated to the Company and the holder(s) of the non-
controlling interest in proportion to their percentage ownership.
b)
Use of Estimates
The preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United
States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results reported in future periods may be based upon amounts that could differ from these estimates
due to the inherent uncertainty involved in making estimates and risks and uncertainties, including uncertainty in the current economic
environment due to COVID-19.
c)
Cash, Cash Equivalents, and Restricted Cash
The Company maintains its cash in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts. Cash equivalents consist of highly liquid investments with original maturities of three months
or less. Restricted cash includes five months interest in a debt service reserve account for a senior secured Canadian term loan, which
will mature on April 1, 2024. The Company includes restricted cash along with the cash balance for presentation in the consolidated
statement of cash flows.
d)
Accounts Receivable
The Company’s receivables are recorded when billed and represent amounts owed by third-party customers, as well as amounts owed
by strategic operating partners. The carrying value of the Company’s receivables, net of the allowance for doubtful accounts, represents
their estimated net realizable value. The Company evaluates the collectability of accounts receivable on a customer-by-customer basis.
The Company records an allowance for doubtful accounts to reduce the net recognized receivable to an amount the Company believes
will be reasonably collected. The allowance for doubtful accounts is determined from the analysis of the aging of the accounts receivable,
historical experience and knowledge of specific customers.
50
The Company derives a substantial portion of its revenue through independently owned strategic operating partner locations operating
under various Company brands. Each strategic operating partner is responsible for some or all of the collection of the accounts related
to the underlying customers being serviced by such strategic operating partner. To facilitate this arrangement, based on contractual
agreements, certain strategic operating partners are required to maintain a bad debt reserve in the form of a security deposit with the
Company. The Company charges each strategic operating partner’s bad debt reserve account for any accounts receivable aged beyond
90 days along with any other amounts owed to the Company by strategic operating partners. However, the bad debt reserve account may
carry a deficit balance when amounts charged to this reserve account exceed amounts otherwise available. In these circumstances, a
deficit bad debt reserve account is recognized as a receivable in the Company’s consolidated financial statements. Some strategic
operating partners are not required to establish a bad debt reserve; however, they are still responsible to make up for any deficits and the
Company may withhold all or a portion of future commissions payable to the strategic operating partner to satisfy any deficit balance.
As of June 30, 2022, a number of the Company’s strategic operating partners have a deficit balance in their bad debt reserve accounts.
The Company expects to replenish these funds through the future business operations of these strategic operating partners or as their
customers satisfy the amounts payable to the Company. However, to the extent any of these strategic operating partners were to cease
operations or otherwise be unable to replenish these deficit accounts, the Company would be at risk of loss for any such amounts and
generally would reserve for them.
e)
Property, Technology, and Equipment
Property, technology, and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is
computed using the straight-line method over the estimated useful lives of the related assets. Upon retirement or other disposition of
these assets, the cost and related accumulated depreciation or amortization are removed from the accounts and the resulting gain or loss,
if any, is reflected in other income or expense. Expenditures for maintenance, repairs and renewals of minor items are expensed as
incurred. Major renewals and improvements are capitalized.
f)
Goodwill
Goodwill represents the excess acquisition cost of an acquired entity over the estimated fair values assigned to the net tangible and
identifiable intangible assets acquired. The Company performs its annual goodwill impairment test as of April 1 of each year or more
frequently if facts or circumstances indicate that the carrying amount may not be recoverable. Based on the most recent annual
impairment test, and further review by management, the Company concluded that there was no impairment.
An entity has the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of the
reporting unit is less than its carrying amount prior to performing a quantitative impairment test. The qualitative assessment evaluates
various factors, such as macro-economic conditions, industry and market conditions, cost factors, relevant events and financial trends
that may impact the fair value of the reporting unit. If it is determined that the estimated fair value of the reporting unit is more-likely-
than-not less than its carrying amount, including goodwill, a quantitative assessment is required. Otherwise, no further analysis is
required.
If a quantitative assessment is performed, a reporting unit’s fair value is compared to its carrying value. A reporting unit’s fair value is
determined based upon consideration of various valuation methodologies, including the income approach, which utilizes projected future
cash flows discounted at rates commensurate with the risks involved, and multiples of current and future earnings, and market approach,
which utilizes a selection of guideline public companies. If the fair value of a reporting unit is less than its carrying amount, an
impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss
recognized cannot exceed the total amount of goodwill allocated to that reporting unit.
As of June 30, 2022 and 2021, management believes there are no indications of impairment.
g)
Long-Lived Assets
Long-lived assets, such as property, technology, and equipment, and definite-lived intangible assets, are reviewed for impairment
whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. If circumstances require
a long-lived asset or asset group to be tested for possible impairment, the Company compares the undiscounted expected future cash
flows to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is
not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent the carrying amount of the asset
or asset group exceeds the fair value. Fair values of long-lived assets are determined through various techniques, such as applying
probability weighted, expected present value calculations to the estimated future cash flows using assumptions a market participant
would utilize or through the use of a third-party independent appraiser or valuation specialist. No impairment losses of long-lived assets
were recorded during the years ended June 30, 2022 and 2021.
51
Intangible assets consist of customer related intangible assets, trade names and trademarks, and non-compete agreements arising from
the Company’s acquisitions. Customer related intangible assets are amortized using the straight-line method over periods of up to 15
years, trademarks and trade names are amortized using the straight-line method over periods of up to 15 years, and non-compete
agreements are amortized using the straight-line method over periods of up to five years, developed technologies are amortized using
the straight-line method over five years.
h)
Business Combinations
The Company accounts for business acquisitions using the acquisition method as required by FASB Accounting Standards Codification
(“ASC”) Topic 805, Business Combinations. The assets acquired and liabilities assumed in business combinations, including identifiable
intangible assets, are recorded based upon their estimated fair values as of the acquisition date. The excess of the purchase price over
the estimated fair value of the net tangible and identifiable intangible assets acquired is recorded as goodwill. Acquisition expenses are
expensed as incurred. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities
assumed as of the acquisition date, the estimates are inherently uncertain and subject to refinement.
The fair values of intangible assets are generally estimated using a discounted cash flow approach with Level 3 inputs. The estimate of
fair value of an intangible asset is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely
to the intangible asset over its remaining useful life. To estimate fair value, the Company generally uses risk-adjusted cash flows
discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level
and timing of cash flows appropriately reflects market participant assumptions.
For acquisitions that involve contingent consideration, the Company records a liability equal to the fair value of the contingent
consideration obligation as of the acquisition date. The Company determines the acquisition date fair value of the contingent
consideration based on the likelihood of paying the additional consideration. The fair value is generally estimated using projected future
operating results and the corresponding future earn-out payments that can be earned upon the achievement of specified operating
objectives and financial results by acquired companies using Level 3 inputs and the amounts are then discounted to present value. These
liabilities are measured quarterly at fair value, and any change in the fair value of the contingent consideration liability is recognized in
the consolidated statements of comprehensive income. Amounts are generally due annually on November 1st, and 90 days following the
quarter of the final earn-out period of each respective acquisition.
During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets
acquired and liabilities assumed with the corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final
determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized
in the consolidated statements of comprehensive income.
i)
Revenue Recognition
The Company’s revenues are primarily from transportation services, which include providing for the arrangement of freight, both
domestically and internationally, through modes of transportations, such as air freight, ocean freight, truckload, less than truckload and
intermodal. The Company generates its transportation services revenue by purchasing transportation from direct carriers and reselling
those services to its customers.
In general, each shipment transaction or service order constitutes a separate contract with the customer. A performance obligation is
created once a customer agreement with an agreed upon transaction price exists. The transaction price is typically fixed and not
contingent upon the occurrence or non-occurrence of any other event. The transaction price is generally due 30 to 45 days from the date
of invoice. The Company’s transportation transactions provide for the arrangement of the movement of freight to a customer’s
destination. The transportation services, including certain ancillary services, such as loading/unloading, freight insurance and customs
clearance, that are provided to the customer represent a single performance obligation as these promises aren’t distinct in the context of
the contract. This performance obligation is satisfied over time and recognized in revenue upon the transfer of control of the services
over the requisite transit period as the customer’s goods move from point of origin to point of destination. The Company determines the
period to recognize revenue in transit based upon the actual departure date and the delivery date, or estimated pick-up date based on the
actual delivery date and estimated average transit period by mode. Determination of the transit period and the percentage of completion
of the shipment as of the reporting date requires management to make judgments that affect the timing of revenue recognition. The
Company has determined that revenue recognition over the transit period provides a reasonable estimate of the transfer of services to its
customers as it depicts the pattern of the Company’s performance under the contracts with its customers.
52
The Company also provides materials management and distribution (“MM&D”) services for its customers under contracts generally
ranging from a few months to five years and include renewal provisions. These MM&D service contracts provide for inventory
management, order fulfilment and warehousing of the Customer’s product and arrangement of transportation of the customer’s product.
The Company’s performance obligations are satisfied over time as the customers simultaneously receive and consume the services
provided by the Company as they are performed. The transaction price is based on the consideration specified in the contract with the
customer and contains fixed and variable consideration. In general, the fixed consideration component of a contract represents
reimbursement for facility and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis
over the term of the contract. The variable consideration component is comprised of cost reimbursement per unit pricing for time and
pricing for materials used and is determined based on cost plus a mark-up for hours of services provided and materials used and is
recognized over time based on the level of activity volume.
Other services include primarily customs house brokerage (“CHB”) services sold on a standalone basis as a single performance
obligation. The Company recognizes revenue from this performance obligation at a point in time, which is the completion of the services.
Duties and taxes collected from the customer and paid to the customs agent on behalf of the customers are excluded from revenue. The
Company also captures revenue through fees related to the use of its technology platform. The Company’s global trade management
(“GTM”) services revenue includes platform fees, operational fees, and purchase order management fees.
The Company uses independent contractors and third-party carriers in the performance of its transportation services. The Company
evaluates who controls the transportation services to determine whether its performance obligation is to transfer services to the customer
or to arrange for services to be provided by another party. The Company determined it acts as the principal for its transportation services
performance obligation since it is in control of establishing the prices for the specified services, managing all aspects of the shipments
process and assuming the risk of loss for delivery and collection. Such transportation services revenue is presented on a gross basis in
the consolidated statements of comprehensive income.
The Company had certain major customers. For the year ended June 30, 2022, there were no customer whose revenue individually
represented 5% or more of consolidated revenues. For the year ended June 30, 2021, there were no customer whose revenue individually
represented 10% or more of consolidated revenues.
A summary of the Company’s gross revenues disaggregated by major service lines and geographic markets (reportable segments), and
timing of revenue recognition for the years ended June 30, 2022 and 2021, respectively, are as follows:
(In thousands)
Major Service Lines:
Transportation services
Value-added services (1)
Total
Timing of Revenue Recognition:
Services transferred over time
Services transferred at a point in time
Total
$
$
$
$
Year Ended June 30, 2022
United States
Canada
Corporate/
Eliminations
Total
1,266,704 $
16,329
1,283,033 $
149,230 $
28,584
177,814 $
(1,428) $ 1,414,506
44,913
(1,428) $ 1,459,419
—
1,275,452 $
7,581
1,283,033 $
177,814 $
—
177,814 $
(1,428) $ 1,451,838
7,581
(1,428) $ 1,459,419
—
(In thousands)
Major Service Lines:
Transportation services
Value-added services (1)
Total
Timing of Revenue Recognition:
Services transferred over time
Services transferred at a point in time
Total
$
$
$
$
United States
(as restated)
Year Ended June 30, 2021
Canada
Corporate/
Eliminations
Total
(as restated)
772,586 $
8,887
781,473 $
97,418 $
21,410
118,828 $
(489) $
—
(489) $
869,515
30,297
899,812
779,109 $
2,364
781,473 $
118,828 $
—
118,828 $
(489) $
—
(489) $
897,448
2,364
899,812
(1)
Value-added services include MM&D, CHB, GTM and other services.
53
Practical Expedients
The Company has elected to not disclose the aggregate amount of the transaction price allocated to performance obligations that are
unsatisfied as of the end of the period as the Company’s contracts with its transportation customers have an expected duration of one
year or less.
For the performance obligation to transfer MM&D services in contracts with customers, revenue is recognized in the amount for which
the Company has the right to invoice the customer, as this amount corresponds directly with the value provided to the customer for the
Company’s performance completed to date.
The Company also applies the practical expedient that permits the recognition of employee sales commissions related to transportation
services as an expense when incurred since the amortization period of such costs is less than one year. These costs are included in the
consolidated statements of comprehensive income.
Contract Assets
Contract assets represent estimated amounts for which the Company has the right to consideration for the services provided while a
shipment is still in-transit but for which it has not yet completed the performance obligation and has not yet invoiced the customer. Upon
completion of the performance obligations, which can vary in duration based upon the method of transport and billing the customer,
these amounts become classified within accounts receivable. Contract assets were $61,154 and $45,040 as of June 30, 2022 and
June 30, 2021 (as restated), respectively.
Operating Partner Commissions
The Company enters into contractual arrangements with independent agents that operate, on behalf of the Company, an office in a
specific location that engages primarily in arranging, domestic and international, transportation services. In return, the independent agent
is compensated through the payment of sales commissions, which are based on individual shipments. The Company estimates and
accrues the independent agent’s commission obligation ratably as the goods are transferred to the customer.
j)
Defined Contribution Savings Plans
The Company has an employee savings plan under which the Company provides safe harbor matching contributions. For the years
ended June 30, 2022 and 2021, the Company’s contributions under the plan were $1,662 and $1,347, respectively.
k)
Income Taxes
Income taxes are accounted for using the asset and liability method. Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The Company records a liability for unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be
taken in an income tax return. Interest and penalties, if any, are recorded as a component of interest expense or other expense,
respectively. Currently, the Company does not have any accruals for uncertain tax positions.
l)
Share-Based Compensation
The Company grants restricted stock awards, restricted stock units, performance unit awards, and stock options to certain directors,
officers, and employees. The share-based compensation cost is measured at the grant date based on the fair value of the award and is
expensed ratably over the vesting period. The fair value of each restricted stock and performance unit awards is the market price as of
the grant date, and the fair value of each stock option grant is estimated as of the grant date using the Black-Scholes option pricing
model. Determining the fair value of share-based awards at the grant date requires judgment about, among other things, stock volatility,
the expected life of the award, and other inputs. The Company accounts for forfeitures as they occur. The Company issues new shares
of common stock to satisfy option exercises and vesting of awards granted under its stock plans. Share-based compensation expense is
reflected in the consolidated statements of comprehensive income as part of personnel costs.
54
m) Basic and Diluted Income per Share Allocable to Common Stockholders
Basic income per common share is computed by dividing net income allocable to common stockholders by the weighted average number
of common shares outstanding. Diluted income per common share is computed by dividing net income allocable to common
stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would
have been outstanding if the potential common shares, such as restricted stock awards and stock options, had been issued and were
considered dilutive.
n)
Foreign Currency Translation
For the Company’s foreign subsidiaries that prepare financial statements in currencies other than U.S. dollars, the local currency is the
functional currency. All assets and liabilities are translated at year-end exchange rates and all income statement amounts are translated
at the weighted average rates for the period. Translation adjustments are recorded in accumulated other comprehensive (loss) income.
Gains and losses on transactions of monetary items denominated in a foreign currency are recognized in other (expense) income in the
consolidated statements of comprehensive income.
o)
Leases
The Company determines if an arrangement is a lease at inception. Assets and obligations related to operating leases are included in
operating lease right-of-use (“ROU”) assets; current portion of operating lease liability; and operating lease liability, net of current
portion in our consolidated balance sheets. Assets and obligations related to finance leases are included in property, technology, and
equipment, net; current portion of finance lease liability; and finance lease liability, net of current portion in our consolidated balance
sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease
payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present
value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing
rate based on the information available at commencement date is used in determining the present value of lease payments. We use the
implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably
certain that we will exercise that option. Annually, we perform an impairment analysis on ROU assets, and as of June 30, 2022, there
was no impairment to ROU assets.
The Company’s agreements with lease and non-lease components, are all each accounted for as a single lease component. For leases
with an initial term of twelve months or less, the Company elected the exemption from recording ROU assets and lease liabilities for all
leases that qualify, and records rent expense on a straight-line basis over the lease term. Expenses for these short-term leases for the
fiscal years ended June 30, 2022 and 2021 are immaterial.
Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the
lease. We exclude variable payments from lease ROU assets and lease liabilities, to the extent not considered fixed, and instead expense
as incurred. Variable lease costs for the fiscal years ended June 30, 2022 and 2021 are immaterial.
p)
Derivatives
Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair
value of a derivative depends on the intended use of the derivative and the resulting designation.
For derivative instruments designated as cash flow hedges, gains and losses are initially reported as a component of other comprehensive
(loss) income and subsequently recognized in earnings with the corresponding hedged item. Gains and losses representing hedge
components excluded from the assessment of effectiveness are recognized in earnings. As of June 30, 2022 and 2021, the Company
does not have any derivatives designated as hedges.
For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are recognized in other
(expense) income in the consolidated statements of comprehensive income.
q)
Treasury Stock
Treasury stock is reflected as a reduction of stockholders’ equity at cost. As of June 30, 2022, there have been no reissuances of treasury
stock.
55
r)
Reclassifications of Previously Issued Financial Statements
Certain amounts for prior periods have been reclassified in the consolidated financial statements to conform to the current year
presentation. There has been no impact on previously reported net income or shareholders’ equity from such reclassifications.
NOTE 5 – EARNINGS PER SHARE
The computations of the numerator and denominator of basic and diluted income per share are as follows:
(In thousands, except share data)
Numerator:
Net income attributable to Radiant Logistics, Inc.
Denominator:
Weighted average common shares outstanding, basic
Dilutive effect of share-based awards
Year Ended June 30,
2022
2021
(as restated)
$
44,464
$
23,110
49,570,594
1,165,988
49,890,945
1,317,350
Weighted average common shares outstanding, diluted
50,736,582
51,208,295
Potentially dilutive common shares excluded
113,696
122,875
NOTE 6 – LEASES
The Company has operating and finance leases for office space, warehouse space, trailers, and other equipment. Lease terms expire at
various dates through May 2032 with options to renew for varying terms at the Company’s sole discretion. The Company has not
included these options to extend or terminate in its calculation of right-or-use assets or lease liabilities as it is not reasonably certain to
exercise these options.
In July 2022, the Company commenced a new lease for warehouse space in Calgary, Alberta with a 17-month lease term ending
November 30, 2023. The Company also extended the lease for warehouse space in Delta, British Columbia and the lease for warehouse
space in Brampton, Ontario for an additional 3 years ending October 31, 2025.
In August 2022, the Company commenced a new lease for warehouse space in Toronto, Ontario with an 18-month lease term ending
January 31, 2024.
The components of lease expense were as follows:
(In thousands)
Operating:
Operating lease cost
Financing:
Amortization of leased assets
Interest on lease liabilities
Total finance lease cost
Year Ended June 30,
2022
2021
10,202
$
7,762
628
101
729
$
616
137
753
$
$
56
Supplemental cash flow information related to leases was as follows:
(In thousands)
Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows arising from operating leases
Operating cash flows arising from finance leases
Financing cash flows arising from finance leases
Right-of-use assets obtained in exchange for new lease
liabilities:
Operating leases
Finance leases
$
$
Supplemental balance sheet information related to leases was as follows:
(In thousands)
Operating lease:
Operating lease right-of-use assets
Current portion of operating lease liability
Operating lease liability, net of current portion
Total operating lease liabilities
Finance lease:
Property, technology, and equipment, net
Current portion of finance lease liability
Finance lease liability, net of current portion
Total finance lease liabilities
Weighted average remaining lease term:
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
$
$
$
$
Year Ended June 30,
2022
2021
8,695
101
732
11,968
—
$
$
7,455
139
716
33,089
38
June 30,
2022
June 30,
2021
41,111
$
39,022
7,641
37,776
45,417
$
2,039
$
577
1,223
1,800
$
6,989
34,899
41,888
2,663
743
1,809
2,552
5.5 years
3.4 years
6.2 years
4.4 years
4.33%
4.54%
4.05%
4.75%
As of June 30, 2022, maturities of lease liabilities for each of the next five fiscal years ending June 30 and thereafter are as follows:
(In thousands)
2023
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less imputed interest
Total lease liability
Operating
Finance
$
$
10,406
10,104
8,716
7,277
6,748
3,898
2,608
49,757
(4,340)
$
45,417
$
645
571
540
176
—
—
—
1,932
(132)
1,800
57
NOTE 7 – PROPERTY, TECHNOLOGY, AND EQUIPMENT
(In thousands)
Computer software
Trailers and related equipment
Office and warehouse equipment
Leasehold improvements
Computer equipment
Furniture and fixtures
$
Useful Life
3 - 5 years
3 - 15 years
3 - 15 years
(1)
3 - 5 years
3 - 15 years
June 30,
2022
June 30,
2021
26,324 $
6,639
10,307
7,588
4,272
1,514
23,967
6,902
8,650
5,595
3,885
1,720
Property, technology, and equipment
Less: accumulated depreciation and amortization
56,644
(31,821)
50,719
(26,568)
Property, technology, and equipment, net
$
24,823 $
24,151
(1)
The cost is amortized over the shorter of the lease term or useful life.
Depreciation and amortization expenses related to property, technology, and equipment were $7,331 and $6,522 for the years ended
June 30, 2022 and 2021, respectively. Computer software includes approximately $1,032 and $568 of software in development as of
June 30, 2022 and 2021, respectively.
58
NOTE 8 – GOODWILL AND INTANGIBLE ASSETS
Goodwill
The table below reflects the changes in the carrying amount of goodwill for the years ending June 30, 2022 and 2021:
(In thousands)
Balance as of June 30, 2020
Foreign currency translation gain
Balance as of June 30, 2021
Acquisition
Adjustments
Foreign currency translation loss
Balance as of June 30, 2022
$
$
$
Total
72,199
383
72,582
13,760
2,664
(807)
88,199
At June 30, 2022, the Company had $88,199 of goodwill; $67,226 is attributable to the U.S. reporting unit, while $20,973 is attributable
to the Canadian reporting unit. The Company assesses goodwill for impairment annually as of April 1, or more frequently, if events and
circumstances indicate impairment may have occurred.
We considered uncertainties including COVID-19 as part of our determination as to whether any triggering events occurred in the period
after the most recent annual assessment of goodwill for impairment dated April 1, 2022, which would indicate an impairment of goodwill
is more likely than not. Based on our assessment, there were no triggering events identified that would have an adverse impact on our
business; and therefore, no impairment was identified for our goodwill as of June 30, 2022.
As additional facts and circumstances evolve, we continue to observe and assess our reporting units particularly as a direct consequence
of the circumstances surrounding COVID-19. To the extent new information becomes available that impacts our results of operations
and financial condition, we expect to revise our projections accordingly as our estimates of future net after-tax cash flows are highly
dependent upon certain assumptions, including, but not limited to, the amount and timing of the economic recovery globally and
nationally.
Furthermore, the evaluation of impairment of goodwill requires the use of estimates about future operating results. Changes in forecasted
operations can materially affect these estimates, which could materially affect our results of operations and financial condition. The
estimates of expected future cash flows require significant judgment and are based on assumptions we determined to be reasonable;
however, they are unpredictable and inherently uncertain, including, estimates of future growth rates, operating margins and assumptions
about the overall economic climate as well as the competitive environment within which we operate. There can be no assurance that our
estimates and assumptions made for purposes of our impairment assessments as of the time of evaluation will prove to be accurate
predictions of the future, especially in light of the uncertainty surrounding the COVID-19 pandemic. If our assumptions regarding
business plans, competitive environments, or anticipated growth rates are not correct, we may be required to record non-cash impairment
charges in future periods, whether in connection with our normal review procedures periodically, or earlier, if an indicator of an
impairment is present prior to such evaluation.
Intangible Assets
The Company is in the process of rebranding certain trade names. We will rebrand certain trade names in connection with the Company’s
long-term growth strategy and make it more consistent across our business and better serve our customers. We will gradually phase out
certain trade names and will predominantly use Radiant to refer to the Company. The rebranding has resulted in the reduction of the
related useful lives of certain trade names and accelerated amortization expenses starting in June 2022 and to be completed in December
2022.
59
Intangible assets consisted of the following as of June 30, 2022 and 2021, respectively:
(In thousands)
Customer related
Trade names and trademarks
License
Developed technology (1)
Covenants not to compete
Weighted
Average
Amortization
Period
7.2 years
3.8 years
4.8 years
4.4 years
2.6 years
June 30, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
$
$
114,974
15,700
808
4,091
1,433
(78,736) $
(7,670)
(424)
(477)
(1,154)
36,238
8,030
384
3,614
279
$
137,006
$
(88,461) $
48,545
(1)
Developed technology was acquired as one of the assets obtained in the acquisition of Navegate, Inc., which is described in Note 18.
(In thousands)
Customer related
Trade names and trademarks
License
Covenants not to compete
Weighted
Average
Amortization
Period
4.2 years
8.8 years
5.8 years
3.4 years
June 30, 2021
Gross
Carrying
Amount
Accumulated
Amortization
$
102,713
14,280
839
1,433
(70,490) $
(5,993)
(356)
(1,022)
Net
Carrying
Amount
32,223
8,287
483
411
119,265
$
(77,861) $
41,404
$
$
Total amortization expense amounted to $11,385 and $10,120 for the years ended June 30, 2022 and 2021, respectively. Future
amortization expense for each of the next five fiscal years ending June 30 are as follows:
(In thousands)
2023
2024
2025
2026
2027
15,032
9,854
7,863
3,078
2,519
60
NOTE 9 – NOTES PAYABLE
Notes payable consist of the following:
(In thousands)
Revolving Credit Facility
Senior Secured Loans
Unamortized debt issuance costs
Total notes payable
Less: current portion
$
June 30,
2022
June 30,
2021
$
62,525
8,902
(133)
71,294
(4,575)
15,000
13,690
(244)
28,446
(4,446)
Total notes payable, net of current portion
$
66,719
$
24,000
Future maturities of notes payable for each of the next five fiscal years ending June 30 are as follows:
(In thousands)
2023
2024
2025
Total
4,575
4,327
62,525
$
71,427
Revolving Credit Facility
The Company entered into a $150,000 syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit
Agreement dated on March 13, 2020. The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as sole book
runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender
and documentation agent and Bank of America, N. A., KeyBank National Association and Washington Federal Bank, National
Association as lenders (such named lenders are collectively referred to herein as “Lenders”).
The Revolving Credit Facility has a term of five years, matures on March 13, 2025, and is collateralized by a first-priority security
interest in the accounts receivable and other assets of the Company. Borrowings under the Revolving Credit Facility accrue interest (at
the Company’s option), at the Lenders’ base rate plus 1.00% or LIBOR plus 2.00% and can be subsequently adjusted based on the
Company’s consolidated leverage ratio under the facility at the Lenders’ base rate plus 1.00% to 1.75% or LIBOR plus 2.00% to 2.75%.
As of June 30, 2022 and 2021, the interest rates used were 3.50% and 2.10%, respectively.
The Revolving Credit Facility includes a $50,000 accordion feature to support future acquisition opportunities. For general borrowings
under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and minimum
consolidated fixed charge coverage ratio of 1.25. Additional minimum availability requirements and financial covenants apply in the
event the Company seeks to use advances under the Revolving Credit Facility to pursue acquisitions or repurchase its common stock.
As of June 30, 2022, the borrowings outstanding on the Revolving Credit Facility was $62,525 and the Company was in compliance
with all of its covenants. The company entered into a $200,000 syndicated, the revolving credit facility (the “Credit Facility”) pursuant
to a Credit Agreement dated as of August 5, 2022. See Note 21 for additional information.
Senior Secured Loans
In connection with the Company’s acquisition of Radiant Canada (formerly, Wheels International Inc.), Radiant Canada obtained a
CAD$29,000 senior secured Canadian term loan from Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund
IV LP) pursuant to a CAD$29,000 Credit Facilities Loan Agreement. The Company and its U.S. and Canadian subsidiaries are
guarantors of the Radiant Canada obligations thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per
annum. The Company is required to maintain five months interest in a debt service reserve account to be controlled by FPD IV. As of
June 30, 2022, the amount of $625 is recorded as long-term restricted cash in the accompanying consolidated financial statements. The
Company made interest-only payments for the first twelve months followed by monthly principal and interest payments of CAD$390
that will be paid through maturity. As of June 30, 2022, $6,264, was outstanding under this term loan.
61
In connection with the Company’s acquisition of Lomas, Radiant Canada obtained a CAD$10,000 senior secured Canadian term loan
from Fiera Private Debt Fund V LP (formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000 Credit Facilities Loan
Agreement. The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan
matures on June 1, 2024 and accrues interest at a fixed rate of 6.65% per annum. The loan repayment consists of monthly principal and
interest payments of CAD$149. As of June 30, 2022, $2,638 was outstanding under this term loan.
The loans may be prepaid in whole at any time providing the Company gives at least 30 days prior written notice and pays the difference
between (i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond
Yield for the term from the date of prepayment to the maturity date, and (ii) the face value of the principal amount being prepaid.
The covenants of the Revolving Credit Facility, described above, also apply to the FPD IV and FPD V term loans. As of June 30, 2022,
the Company was in compliance with all of its covenants. Restatement described in Note 2 and Note 20 has no impact on the Company’s
compliance with debt covenant ratios. Although the restatement delayed the process of providing audited financial statements to the
lender, a waiver was received to extend the period within which the audited financial statements may be submitted to the lender.
NOTE 10 – DERIVATIVES
All derivatives are recognized on the Company’s consolidated balance sheets at their fair values and consist of interest rate swap
contracts at June 30, 2022 and 2021. On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract
with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20,000 notional amount, for fixed interest cash
outflows at 0.635%. On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap contract with Bank of
America to trade the variable interest cash inflows at one-month LIBOR for a $10,000 notional amount, for fixed interest cash outflows
at 0.5865%. Both interest rate swap contracts mature and terminate on March 13, 2025.
The Company uses an interest rate swap for the management of interest rate risk exposure, as the interest rate swap effectively converts
a portion of the Company’s Revolving Credit Facility from a floating to a fixed rate. The interest rate swap is an agreement between the
Company and Bank of America to pay, in the future, a fixed-rate payment in exchange for Bank of America paying the Company a
variable payment. The net payment obligation is based on the notional amount of the swap contract and the prevailing market interest
rates. The Company may terminate the swap contract prior to its expiration date, at which point a realized gain or loss would be
recognized. The value of the Company’s commitment would increase or decrease based primarily on the extent to which interest rates
move against the rate fixed for each swap. As of June 30, 2022, the derivative instruments had a total notional amount of $30,000 and a
fair value of $1,846 recorded in deposits and other assets in the consolidated balance sheets. As of June 30, 2021, the derivative
instruments had a total notional amount of $30,000 and a fair value of $6 recognized in deposits and other assets on the consolidated
balance sheets. Both interest rate swap contracts are not designated as hedges; gains and losses from changes in fair value are recognized
in other (expense) income in the consolidated statements of comprehensive income. See Note 13 for discussion of fair value of the
derivative instruments.
NOTE 11 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue 5,000,000 shares of preferred stock, par value at $0.001 per share and 100,000,000 shares of
common stock, $0.001 per share. No shares of preferred stock are issued or outstanding at June 30, 2022 or 2021.
Common Stock
The Company’s board of directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock through
December 31, 2023. Under the stock repurchase program, the Company is authorized to repurchase, from time-to-time, shares of its
outstanding common stock in the open market at prevailing market prices or through privately negotiated transactions as permitted by
securities laws and other legal requirements. The program does not obligate the Company to repurchase any specific number of shares
and could be suspended or terminated at any time without prior notice. Under this repurchase program, the Company purchased
1,622,792 shares of its common stock at an average cost of $6.99 per share for an aggregate cost of $11,346 during the fiscal year ended
June 30, 2022. During the fiscal year ended June 30, 2021, the Company purchased 268,969 shares of its common stock at an average
cost of $7.10 per share for an aggregate cost of $1,909.
62
NOTE 12 – VARIABLE INTEREST ENTITY AND RELATED PARTY TRANSACTIONS
RLP is owned 40% by RGL and 60% by RCP, a company for which the Chief Executive Officer of the Company is the sole member.
RLP is a certified minority business enterprise that was formed for the purpose of providing the Company with a national accounts
strategy to pursue corporate and government accounts with diversity initiatives. RCP’s ownership interest entitles it to 60% of the profits
and distributable cash, if any, generated by RLP. The operations of RLP are intended to provide certain benefits to the Company,
including expanding the scope of services offered by the Company and participating in supplier diversity programs not otherwise
available to the Company. In the course of evaluating and approving the ownership structure, operations and economics emanating from
RLP, a committee consisting of the independent Board members of the Company, considered, among other factors, the significant
benefits provided to the Company through association with a minority business enterprise, particularly as many of the Company’s largest
current and potential customers have a need for diversity offerings. In addition, the committee concluded that the economic relationship
with RLP was on terms no less favorable to the Company than terms generally available from unaffiliated third parties.
Certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity
at risk for the entity to finance its activities without additional subordinated financial support from other parties are considered variable
interest entities. The Company has power over significant activities of RLP including the fulfillment of its contracts and financing its
operations. Additionally, the Company also pays expenses and collects receivables on behalf of RLP. Thus, the Company is the primary
beneficiary, RLP qualifies as a variable interest entity, and RLP is consolidated in these consolidated financial statements.
RLP recorded $1,712 and $865 in net income for the fiscal years ended June 30, 2022 and 2021, respectively. RCP’s distributable share
was $1,027 and $519 for the years ended June 30, 2022 and 2021, respectively. The non-controlling interest recorded as a reduction of
net income available to common stockholders in the consolidated statements of comprehensive income represents RCP’s distributive
share.
The following table summarizes the balance sheets of RLP:
(In thousands)
ASSETS
Accounts receivable - Radiant Global Logistics, Inc.
Prepaid expenses and other current assets
LIABILITIES AND PARTNERS’ CAPITAL
Accrued expenses
Partners’ capital
June 30,
2022
2021
$
$
$
$
$
319
3
322
$
$
22
300
322
$
488
1
489
2
487
489
NOTE 13 – FAIR VALUE MEASUREMENT
The accounting guidance for fair value, among other things, defines fair value, establishes a consistent framework for measuring fair
value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring
basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly
transaction between market participants at the reporting date. The framework for measuring fair value consists of a three-level valuation
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable
or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market
assumptions made by the reporting entity. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in
active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1
prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined
by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little, if any, market activity
for the asset or liability. The fair value measurement level within the hierarchy is based on the lowest level of any input that is significant
to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of
unobservable inputs.
Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:
•
Market approach: Prices and other relevant information generated by market transactions involving identical or comparable
assets or liabilities;
63
•
•
Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost); and
Income approach: Techniques to convert future amounts to a single present amount based upon market expectations,
including present value techniques, option-pricing and excess earning models.
Items Measured at Fair Value on a Recurring Basis
The following table sets forth the Company’s financial assets (liabilities) measured at fair value on a recurring basis:
(In thousands)
Contingent consideration
Interest rate swap contracts (derivatives)
Contingent consideration
Interest rate swap contracts (derivatives)
Fair Value Measurements as of
June 30, 2022
Level 3
Total
(5,530) $
1,846
(5,530)
1,846
Fair Value Measurements as of
June 30, 2021
Level 3
Total
(7,263) $
6
(7,263)
6
$
$
The following table provides a reconciliation of the financial assets (liabilities) measured at fair value using significant unobservable
inputs (Level 3):
(In thousands)
Balance as of June 30, 2020
Contingent consideration paid
Change in fair value
Balance as of June 30, 2021
Contingent consideration paid
Change in fair value
Balance as of June 30, 2022
Contingent
Consideration
$
Interest rate
swap contracts
(derivatives)
(4,940) $
2,027
(4,350)
(7,263) $
2,500
(767)
600
—
(594)
6
—
1,840
(5,530) $
1,846
$
$
The Company has contingent obligations to transfer cash payments and equity shares to former shareholders of acquired operations in
conjunction with certain acquisitions if specified operating results and financial objectives are met over the next fiscal year. Contingent
consideration is measured quarterly at fair value, and any change in the fair value of the contingent liability is included in the consolidated
statements of comprehensive income. The change in fair value in each period is principally attributable to a net increase in management’s
estimates of future earn-out payments through the remainder of the earn-out periods.
The Company uses projected future financial results based on recent and historical data to value the anticipated future earn-out payments.
To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs. The Company has classified the
contingent consideration as Level 3 due to the lack of relevant observable market data over fair value inputs. The Company believes the
discount rate used to discount the earn-out payments reflects market participant assumptions. Changes in assumptions and operating
results could have a significant impact on the earn-out amount, up to a maximum of $5,973 through earn-out periods measured through
January 2023, although there are no maximums on certain earn-out payments.
For contingent consideration the following table provides quantitative information about the significant unobservable inputs used in fair
value measurement:
(In thousands)
Contingent consideration
Fair Value
Valuation
Methodology
(5,530) Discounted
$
cash flows
Unobservable Inputs
Actual and projected
EBITDA over three-year
earnout period
Risk adjusted discount
rate
> $14,400
12%
64
As discussed in Note 10, derivative instruments are carried at fair value on the consolidated balance sheets. Interest rate swap contracts
are included in deposits and other assets on June 30, 2022 and 2021.
Fair Value of Financial Instruments
The carrying values of the Company’s cash equivalents, receivables, contract assets, accounts payable, commissions payable, accrued
expenses, and the income tax receivable and payable approximate the fair values due to the relatively short maturities of these
instruments. The carrying value of the Company’s Revolving Credit Facility and notes payable would not differ significantly from fair
value (based on Level 2 inputs) if recalculated based on current interest rates. During the fiscal years ended June 30, 2022 and 2021,
there were no transfers of financial instruments between Level 1, 2, and 3.
NOTE 14 – INCOME TAXES
The significant components of income tax expense (benefit) are as follows:
Total income tax expense
$
12,692
$
The following table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income tax expense:
(In thousands)
Current:
Federal
State
Foreign
Total current
Deferred:
Federal
State
Foreign
Total deferred
Year ended June 30,
2022
2021
(as restated)
$
$
8,802
1,545
4,948
15,295
(2,243)
(350)
(10)
(2,603)
Year ended June 30,
2022
2021
(as restated)
4,916
1,722
2,705
9,343
(3,516)
(619)
743
(3,392)
5,951
6,212
758
896
25
(294)
(1,218)
(425)
(3)
5,951
(In thousands)
Income tax expense at U.S. statutory rate (21%) $
State income taxes, net of federal benefit
Foreign tax rate differential
Permanent differences
Stock-based compensation
PPP loan forgiveness
GILTI & FDII
Other, net
$
12,219
944
842
59
(233)
—
(698)
(441)
Total income tax expense
$
12,692
$
65
The Company’s effective tax rate for the fiscal year ended June 30, 2022 is higher than the U.S. federal statutory rate primarily due to
state income taxes and the jurisdictional mix of the Company’s income before taxes offset by the windfall benefit from exercise of stock
options and the benefit from foreign-derived intangible income. The Company’s effective tax rate for the fiscal year ended June 30,
2021 is lower than the U.S. federal statutory rate primarily due to PPP loan forgiveness, benefit from foreign-derived intangible income
and windfall benefit from exercise of stock options.
Significant components of deferred tax assets and liabilities are as follows:
$
(In thousands)
Deferred tax assets (liabilities):
Allowance for doubtful accounts
Accruals
Share-based compensation
Operating lease liabilities
Operating lease ROU asset
Property, technology, and equipment basis
differences
Goodwill deductible for tax purposes
Intangible assets
Other, net
June 30,
2022
2021
$
594
1,155
1,254
11,985
(11,114)
(2,792)
(3,156)
(3,044)
(1,364)
Net deferred tax liabilities
$
(6,482) $
323
842
1,209
11,049
(10,541)
(2,980)
(492)
(2,816)
(615)
(4,021)
As a result of the Navegate, Inc. acquisition, the Company recorded $5,139 of deferred tax liabilities in the purchase price allocation
described in Note 18.
The Company and its wholly-owned U.S. subsidiaries file a consolidated Federal income tax return. The Company also files unitary or
separate returns in various state, local and non-U.S. jurisdictions based on state, local and non-U.S. filing requirements. The Company
was under examination by the U.S. Internal Revenue Service (the “IRS”) for the tax year ending June 30, 2018. In January 2021, the
IRS issued a letter confirming that the audit was complete and there were no findings as a result. Tax years that remain subject to
examination by the IRS are the years ended June 30, 2019 through June 30, 2022. Tax years that remain subject to examination by state
authorities are the years ended June 30, 2018 through June 30, 2022. Tax years that remain subject to examination by non-U.S. authorities
are the periods ended December 31, 2016 through June 30, 2022. Occasionally acquired entities have tax years that differ from the
Company and are still open under the relevant statute of limitations and therefore are subject to potential adjustment. The Company
does not have any material uncertain tax benefits.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The CARES
Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security
payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical
corrections to tax depreciation methods for qualified improvement property (QIP). The Company did not pay income tax in most
jurisdictions from funds recovered under the Paycheck Protection Program of the CARES Act in May of 2020. Otherwise, the CARES
Act did not have a material impact on the Company’s income tax provision for the year ended June 30, 2021.
NOTE 15 – SHARE-BASED COMPENSATION
On November 17, 2021, the Company’s stockholders, upon recommendation of the Board of the Company, approved the Radiant
Logistics, Inc. 2021 Omnibus Incentive Plan (the “2021 plan”) at the 2021 annual meeting of stockholders. The Board previously
approved the 2021 Plan, subject to approval by the Company’s stockholders, on September 27, 2021.
The 2021 plan became effective immediately upon approval by the Company’s stockholders and will expire on November 16, 2031,
unless terminated earlier by the Board. The 2021 plan replaces the 2012 Radiant Logistics, Inc. Stock Option and Performance Award
Plan (the “2012 plan”). The remaining shares available for grant under the 2012 plan will roll over into the 2021 plan, and no new
awards will be granted under the 2012 plan. The terms of the 2012 plan, as applicable, will continue to govern awards outstanding under
the 2012 plan, until exercised, expired, paid or otherwise terminated or canceled. Other than the 2021 plan, we have no other equity
compensation plans under which equity awards can be granted.
66
The 2021 plan will permit the Company’s Audit and Executive Oversight Committee to grant to eligible employees, non-employee
directors and consultants of the Company non-statutory and incentive stock options, stock appreciation rights (also known as SARs),
restricted stock awards, restricted stock units (also known as RSUs), deferred stock units (also known as DSUs), performance awards,
non-employee director awards, other cash-based awards and other stock-based awards. Subject to adjustment, the maximum number of
shares of our common stock to be authorized for issuance under the 2021 Plan is 3,250,000 shares, plus (i) shares of our common stock
remaining available for issuance under the 2012 plan as of the date of stockholder approval of the 2021 plan, but not subject to
outstanding awards as of such date, plus (ii) the number of additional shares of our common stock subject to awards outstanding under
the 2012 plan as of the date of stockholder approval of the 2021 plan that are subsequently forfeited, cancelled, expire or otherwise
terminate without the issuance of such shares of our common stock after such date (which may otherwise be returned and available for
grant under the term of the 2021 plan).
Restricted Stock Awards
During the years ended June 30, 2022 and 2021, the Company recognized share-based compensation expense related to restricted stock
awards, including performance awards, of $1,728 and $1,039, respectively. As of June 30, 2022, the Company had approximately $3,248
of total unrecognized share-based compensation cost for restricted stock awards and performance unit awards. Such costs are expected
to be recognized over a weighted average period of approximately 1.93 years.
The following table summarizes restricted stock award activity, including performance unit awards, under the plans:
Unvested balance as of June 30, 2021
Vested
Granted
Forfeited
Unvested balance as of June 30, 2022
Number of
Units
Weighted Average
Grant Date Fair
Value
$
704,581
(219,836)
522,281
(44,028)
962,998
$
5.10
4.63
6.94
5.77
6.17
In January 2022, the Company awarded a total of 244,529 performance unit awards to a number of executive officer participants. These
performance unit awards will be vested and paid out based upon the achievement of three-year, pre-established, company and individual
performance goals.
Stock Options
Stock options are granted at exercise prices equal to the fair value of the common stock at the date of the grant and have a term of ten
years. Generally, grants under each plan vest 20% annually over a five-year period from the date of grant. For the years ended
June 30, 2022 and 2021, the Company recognized share-based compensation expense related to stock options of $70 and $32,
respectively. The aggregate intrinsic value of options exercised was $1,407 and $1,920, respectively for the years ended June 30, 2022
and 2021. As of June 30, 2022, the Company had approximately $280 of total unrecognized share-based compensation cost for stock
options. Such costs are expected to be recognized over a weighted average period of approximately 3.93 years.
67
The following table summarizes stock option activity under the plans:
Outstanding as of June 30, 2021
Exercised
Forfeited
Outstanding as of June 30, 2022
Exercisable as of June 30, 2022
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual Life
(Years)
Aggregate
Intrinsic Value
(In thousands)
3.73
2.52
5.52
4.06
3.79
3.56
—
—
3.09
2.63
$
$
$
4,573
1,407
—
3,719
3,719
Number of
Shares
1,414,442
(303,308)
(6,050)
1,105,084
1,025,084
$
$
$
There were no stock options granted during the year ended June 30, 2022. For the year ended June 30, 2021, the weighted average fair
value per share of stock options granted was $3.53. The fair value of each stock option grant is estimated as of the date of grant using
the Black-Scholes option pricing model with the following weighted average assumptions:
Risk-free interest rate
Expected term
Expected volatility
Expected dividend yield
Year ended
June 30, 2021
1.08%
6.5 years
47.50 - 47.97%
0.00%
The following table summarizes outstanding and exercisable options by exercise price range as of June 30, 2022:
Outstanding Options
Exercisable Options
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Life (Years)
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Life (Years)
Exercise Prices
$1.50 - $1.99
$2.00 - $2.49
$2.50 - $2.99
$3.00 - $3.49
$3.50 - $3.99
$4.00 - $4.49
$4.50 - $4.99
$5.00 - $5.49
$5.50 - $5.99
$6.00 - $6.49
$6.50 - $6.99
$7.00 - $7.49
$
Number of
Shares
104,820
6,362
50,000
263,801
110,000
149,609
254,586
55,906
—
—
10,000
100,000
1,105,084
$
1.91
2.21
2.75
3.15
3.76
4.13
4.58
5.21
—
—
6.77
7.45
4.06
Aggregate
Intrinsic Value
(In thousands)
578
$
33
233
1,127
403
492
723
124
—
—
6
—
1.03
1.33
1.67
2.70
3.38
2.52
2.64
2.84
—
—
3.08
8.93
$
104,820
6,362
50,000
263,801
110,000
149,609
254,586
55,906
—
—
10,000
20,000
1.91
2.21
2.75
3.15
3.76
4.13
4.58
5.21
—
—
6.77
7.45
3.79
Aggregate
Intrinsic Value
(In thousands)
578
$
33
233
1,127
403
492
723
124
—
—
6
—
1.03
1.33
1.67
2.70
3.38
2.52
2.64
2.84
—
—
3.08
8.93
3.09
$
3,719
1,025,084
$
2.63
$
3,719
NOTE 16 – COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is involved in various claims and legal actions arising in the ordinary course of business. The Company records accruals
for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and the amount of the
loss, or range of loss, can be reasonably estimated. Legal expenses are expensed as incurred. There were no potentially material legal
proceedings as of June 30, 2022.
68
On December 8, 2021, the Company detected a ransomware incident impacting certain of the Company’s operational and information
technology systems. While the Company’s systems recovery efforts are complete, and the Company’s operations are fully functional,
the incident did result in a loss of revenue as well as certain incremental costs. In addition, following an extensive forensic investigation
by a full team of cybersecurity experts, the Company confirmed that some data extraction related to the Company’s customers and
employees occurred from the Company’s servers before the Company took its systems offline. We notified law enforcement, provided
notice to customers apprising them of the situation and are providing any notices that may be required by applicable law related to
potential Personal Identifiable Information (PII data) exposure. Although the Company acted promptly and as efficiently as possible
any failure of the Company to comply with data privacy or other laws and regulations related to this event could result in claims, legal
or regulatory proceedings, inquiries, or investigations.
Contingent Consideration and Earn-out Payments
The Company’s agreements with respect to previous acquisitions contain future consideration provisions, which provide for the selling
equity owners to receive additional consideration if specified operating objectives and financial results are achieved in future periods.
Earn-out payments are generally due annually on November 1st, and 90 days following the quarter of the final earn-out period for each
respective acquisition.
The following table represents the estimated discounted earn-out payments to be paid in each of the following fiscal years ended June 30:
(In thousands)
Earn-out payments:
Cash
Total estimated earn-out payments
2023
2024
Total
$
$
2,479
2,479
$
$
3,051
3,051
$
$
5,530
5,530
NOTE 17 – OPERATING SEGMENT INFORMATION
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for
evaluation by the chief operating decision-maker or decision-making group in making decisions regarding allocation of resources and
assessing performance. The Company’s chief operating decision-maker is the Chief Executive Officer. The Company has two operating
and reportable segments: United States and Canada.
The Company evaluates the performance of the segments primarily based on their respective revenues and income from operations. In
addition, the Company includes the costs of the Company’s executives, board of directors, professional services, such as legal and
consulting, amortization of intangible assets, and certain other corporate costs associated with operating as a public company as
Corporate.
As of and for Year Ended June 30, 2022
(In thousands)
Revenues
Income from operations
Other income (expense)
Income before income taxes
Depreciation and amortization
Total assets
Property, technology, and equipment, net
Goodwill
As of and for Year Ended June 30, 2021
(In thousands)
Revenues
Income from operations
Other income (expense)
Income before income taxes
Depreciation and amortization
Total assets
Property, technology, and equipment, net
Goodwill
United States
Canada
Corporate/
Eliminations
$
177,814
18,569
233
18,802
3,509
93,507
13,217
20,973
(1,428) $
(16,352)
(1,351)
(17,703)
9,556
—
—
—
Canada
Corporate/
Eliminations
118,828
11,982
(162)
11,820
2,586
66,329
11,417
21,781
$
(489) $
(21,258)
2,863
(18,395)
10,127
—
—
—
$
$
$
$
1,283,033
56,406
678
57,084
5,651
403,844
11,606
67,226
United States
(as restated)
781,473
35,479
676
36,155
3,929
308,199
12,734
50,801
69
Total
1,459,419
58,623
(440)
58,183
18,716
497,351
24,823
88,199
Total
(as restated)
899,812
26,203
3,377
29,580
16,642
374,528
24,151
72,582
NOTE 18 - BUSINESS COMBINATION
On December 3, 2021, and effective as of November 30, 2021, the Company entered into a Stock Purchase Agreement, pursuant to
which it acquired all of the issued and outstanding common shares of Navegate, Inc. (“Navegate”), a Minnesota based, privately held
company from Saltspring Capital, LLC. Navegate is a technology-enabled supply chain management and third-party logistics services
company that combines a robust digital platform and decades of expertise to manage international, cross-border, and domestic freight
from purchase order to final delivery. Navegate’s combination of tech-enabled services, customs brokerage expertise, and a full
complement of international and domestic services significantly reduces costs and leads to better compliance and risk mitigation for its
customers. Navegate will operate as a wholly owned subsidiary of Radiant Logistics, Inc. The goodwill recognized is attributable to
expanded service lines and geographic footprint. The acquisition of Navegate was accounted for as purchases of a business under
ASC 805 Business Combinations.
As consideration for the acquisition, the Company paid $35,000 in cash upon closing. The transaction was financed through proceeds
received from the Company's existing credit facility. The preliminary fair value estimates for the assets acquired and liabilities assumed
are based upon preliminary calculations and valuations. A net working capital settlement of $3,852 was finalized in the third quarter of
fiscal year 2022 and was paid to Saltspring Capital, LLC. The aggregate purchase price of $38,852 was allocated to the assets acquired
and liabilities assumed based upon their estimated fair values at the date of the acquisition.
The following table summarizes the fair value of the consideration transferred for the acquisitions and the allocation of the purchase
price to the fair values of the assets acquired and liabilities assumed at the acquisition date:
(In thousands)
Cash
Net working capital adjustment
Current assets
Technology and equipment, net
Intangible assets
Other long-term assets
Liabilities assumed
Total identifiable net assets
Goodwill
Preliminary Purchase
Price Allocation
Adjustments
Final Purchase Price
Allocation
$
$
35,000
—
19,187
1,434
17,834
1,621
(18,836)
21,240
13,760
35,000
$
$
—
3,852
—
—
1,188
—
—
1,188
2,664
3,852
$
$
35,000
3,852
19,187
1,434
19,022
1,621
(18,836)
22,428
16,424
38,852
The fair values of the intangible assets were estimated by the Company with the assistance of valuation specialists. The fair value was
estimated using a discounted cash flow approach with Level 3 inputs. Under this method, an intangible asset’s fair value is equal to the
present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful
life. To calculate fair value, the Company used risk-adjusted cash flows discounted at rates considered appropriate given the inherent
risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflect market participant
assumptions. The goodwill is recorded in the U.S. operating segment and is expected to be deductible for income tax purposes over a
period of 15 years.
Intangible assets that were acquired and their respective useful lives are as follows:
(In thousands)
Customer related
Developed technology
Trade name
Preliminary Purchase
Price Allocation
Adjustments
Final Purchase Price
Allocation
$
$
12,392
3,942
1,500
17,834
$
$
910
149
129
1,188
$
$
13,302
4,091
1,629
19,022
Useful Life
14.9 years
4.9 years
9.9 years
The seven-month results of operations from Navegate, including $92,392 of revenues, were included in the consolidated financial
statements. Navegate results were immaterial to the condensed consolidated financial statements and thus no proforma presentation was
necessary.
70
NOTE 19 – RANSOMWARE INCIDENT
Some of the Company’s systems were affected by a ransomware incident that encrypted information on its systems and disrupted
customer and employee access to its applications and services. The Company immediately took steps to isolate the impact and prevent
additional systems from being affected, including taking its network offline as a precaution. Promptly upon our detection of this incident,
we initiated response and containment protocols and our security teams, supplemented by leading cyber defense firms, worked to
remediate this incident. We notified law enforcement, contacted our customers to apprise them of the situation and will provide any
notices that may be required by applicable law.
We undertook extensive efforts to identify, contain and recover from this incident quickly and securely. We systematically brought our
information systems back online in a controlled, phased approach. Our teams worked to maintain our business operations and minimize
the impact on our customers, operating partners, and employees.
The total ransomware incident related costs were $684 for the year ended June 30, 2022. These costs were primarily comprised of
various third-party consulting services including forensic experts, legal counsel, and other IT professional expenses including additional
software.
NOTE 20 - QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED)
The Company is providing restated quarterly and year-to-date unaudited consolidated financial information for interim periods occurring
within the year ended June 30, 2021, and the nine-months ended March 31, 2022. See Note 2, Restatement of Previously Issued
Consolidated Financial Statements for further background concerning the events preceding the restatement of financial information in
this Comprehensive Form 10-K.
The restated consolidated balance sheet line items for the first through the third fiscal quarters of 2022 are as follows:
(In thousands)
Contract assets
Total current assets
Total assets
Accounts payable
Operating partner commissions payable
Accrued expenses
Income tax payable
Total current liabilities
Total liabilities
Retained earnings
Total equity
Originally Reported
Adjustment
Restated
Q1
Q2
Q3
Q1
Q2
Q3
Q1
Q2
Q3
$
32,625 $
73,268 $
59,894
$
30,571 $
33,580 $
13,992
$
63,196 $ 106,848 $
73,886
208,187
284,767
342,536
383,074
490,575
554,934
98,374
136,309
164,932
15,645
7,162
134
19,395
10,588
1,411
16,038
11,512
4,271
136,669
184,013
212,193
217,088
321,282
369,749
67,446
74,394
88,733
165,986
169,293
185,185
30,571
30,571
29,212
382
49
227
29,870
29,870
701
701
33,580
33,580
32,675
502
20
94
33,291
33,291
289
289
13,992
13,992
14,489
178
(34)
(157)
14,476
14,476
(484)
(484)
238,758
318,347
356,528
413,645
524,155
568,926
127,586
168,984
179,421
16,027
7,211
361
19,897
10,608
1,505
16,216
11,478
4,114
166,539
217,304
226,669
246,958
354,573
384,225
68,147
74,683
88,249
166,687
169,582
184,701
The restated line items of the consolidated statements of comprehensive income for the three-month periods ended September 30, 2021;
December 31, 2021; and March 31, 2022 are as follows:
(In thousands, except per share data)
Revenues
Cost of transportation and other services
Operating partner commissions
Personnel costs
Income from operations
Income tax expense
Net income
Net income attributable to Radiant Logistics, Inc.
Income per share:
Basic
Diluted
Originally Reported
Q2
$332,768
261,179
31,049
16,688
10,598
(2,646)
7,024
6,948
Q1
$286,115
221,233
28,465
15,616
9,759
(2,229)
7,165
7,079
Q3
$460,899
376,036
31,311
19,907
18,497
(4,527)
15,095
14,339
Adjustment
Q2
$3,010
3,461
120
(29)
(542)
133
(409)
(409)
Q1
$13,283
13,447
(904)
37
703
(173)
530
530
Q3
$(19,589)
(18,187)
(325)
(54)
(1,023)
251
(772)
(772)
Q1
$299,398
234,680
27,561
15,653
10,462
(2,402)
7,695
7,609
Restated
Q2
$335,778
264,640
31,169
16,659
10,056
(2,513)
6,615
6,539
Q3
$441,310
357,849
30,986
19,853
17,474
(4,276)
14,323
13,567
$0.14
$0.14
$0.14
$0.14
$0.29
$0.28
$0.01
$0.01
$(0.01)
$(0.01)
$(0.02)
$(0.01)
$0.15
$0.15
$0.13
$0.13
$0.27
$0.27
71
The restated line items of the consolidated statements of comprehensive income for the six-month period ended December 31, 2021;
and nine-month period ended March 31, 2022 are as follows:
(In thousands, except per share data)
Revenues
Cost of transportation and other services
Operating partner commissions
Personnel costs
Income from operations
Income tax expense
Net Income
Net income attributable to Radiant Logistics, Inc.
Income per share:
Basic
Diluted
Originally Reported
Adjustment
Restated
Six Months Ended
December 31,
2021
Nine Months
Ended
March 31, 2022
Six Months Ended
December 31,
2021
Nine Months
Ended
March 31, 2022
Six Months Ended Nine Months Ended
December 31,
2021
March 31, 2022
$618,884
482,411
59,514
32,304
20,355
(4,874)
14,189
14,027
$1,079,783
858,447
90,825
52,211
38,853
(9,402)
29,284
28,366
$0.28
$0.28
$0.57
$0.56
$16,292
16,909
(784)
8
163
(41)
121
121
$—
$—
$(3,297)
(1,278)
(1,109)
(46)
(861)
211
(651)
(651)
$(0.02)
$(0.01)
$635,176
499,320
58,730
32,312
20,518
(4,915)
14,310
14,148
$0.28
$0.28
$1,076,486
857,169
89,716
52,165
37,992
(9,191)
28,633
27,715
$0.55
$0.55
While the adjustments changed contract assets, accounts payable, and operating partner commissions payable line items in the
consolidated cash flow statements, they did not have an impact on total net cash provided by operating activities, net cash used in
investing activities, or net cash provided by (used for) financing activities for any of the applicable periods.
The restated line items of the consolidated cash flow statements for the three-months ended September 30, 2021; six-month period
ended December 31, 2021; and nine-month period ended March 31, 2022 are as follows:
Originally Reported
Three
Months
Ended
September
30, 2021
Six Months
Ended
December
31, 2021
Nine
Months
Ended
March 31,
2022
Three
Months
Ended
September
30, 2021
Adjustment
Six Months
Ended
December
31, 2021
Nine
Months
Ended
March 31,
2022
Three
Months
Ended
September
30, 2021
Restated
Six Months
Ended
December
31, 2021
Nine
Months
Ended
March 31,
2022
$7,165
$14,189
$29,284
$530
$121
$(651)
$7,695
$14,310
$28,633
(In thousands)
OPERATING ACTIVITIES:
Net income
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH (USED FOR) OPERATING ACTIVITIES
CHANGES IN OPERATING ASSETS AND
LIABILITIES:
Contract assets
(4,897)
(44,123)
(30,725)
(13,283)
(16,293)
Income tax receivable/payable
(2,583)
(3,421)
(553)
173
40
3,296
(211)
(18,180)
(60,416)
(27,429)
(2,410)
(3,381)
(764)
Accounts payable
10,055
40,952
69,832
13,447
16,908
(1,279)
23,502
57,860
68,553
Operating partner commissions payable
Accrued expenses, other liabilities, and operating
lease liability
1,866
5,616
2,259
(904)
(784)
(1,109)
962
4,832
1,150
(1,528)
(2,467)
(4,980)
37
—
8
—
(46)
—
(1,491)
(2,459)
(5,026)
(15,797)
(19,652)
(6,938)
Net cash (used for) operating activities
(15,797)
(19,652)
(6,938)
72
The restated consolidated balance sheet line items for the fiscal quarters during 2021 are as follows:
(In thousands)
Contract assets
Income tax receivable
Total current assets
Total assets
Accounts payable
Operating partner commissions payable
Accrued expenses
Income tax payable
Total current liabilities
Total liabilities
Retained earnings
Total equity
Originally Reported
Q2
Q3
Q1
Adjustment
Q2
Q1
Q3
Q1
Restated
Q2
Q3
$17,684
$21,651
$26,038
$5,176
$6,031
$13,589
$22,860
$27,682
$39,627
974
—
—
134,463
146,787
160,964
288,862
300,208
328,354
72,277
10,781
7,944
—
76,620
13,519
6,618
384
84,597
12,294
7,705
357
103,791
110,594
119,180
150,328
154,972
177,331
40,512
44,324
49,308
138,534
145,236
151,023
64
5,240
5,240
4,669
784
(14)
—
5,439
5,439
(199)
(199)
—
6,031
6,031
5,513
47
23
110
5,693
5,693
338
338
—
1,038
—
—
13,589
13,589
12,657
1,384
(23)
(105)
13,913
13,913
(324)
(324)
139,703
152,818
174,553
294,102
306,239
341,943
76,946
11,565
7,930
—
82,133
13,566
6,641
494
97,254
13,678
7,682
252
109,230
116,287
133,093
155,767
160,665
191,244
40,313
44,662
48,984
138,335
145,574
150,699
The restated line items of the consolidated statements of comprehensive income for the three-month periods ended September 30, 2020;
December 31, 2020; and March 31, 2021 are as follows:
(In thousands, except per share data)
Revenues
Cost of transportation and other services
Operating partner commissions
Personnel costs
Selling, general and administrative expenses
Income from operations
Income tax expense
Net income
Net income attributable to Radiant Logistics, Inc.
Income per share:
Basic
Diluted
Originally Reported
Adjustment
Restated
Q1
Q2
Q3
Q1
Q2
Q3
Q1
Q2
Q3
$175,877
$218,805
$236,532
$(1,423)
129,911
163,504
179,732
18,589
12,777
5,654
4,787
24,036
13,735
5,568
6,027
(1,078)
(1,402)
3,229
3,088
3,888
3,812
23,761
14,229
6,688
5,448
(976)
5,061
4,984
(991)
598
(51)
(715)
(264)
65
(199)
(199)
$855
843
(736)
37
—
711
(174)
537
537
$7,558
$174,454
$219,660
$244,090
7,144
1,337
(46)
—
(877)
215
(662)
(662)
128,920
164,347
186,876
19,187
12,726
4,939
4,523
23,300
13,772
5,568
6,738
(1,013)
(1,576)
3,030
2,889
4,425
4,349
25,098
14,183
6,688
4,571
(761)
4,399
4,322
$0.06
$0.06
$0.08
$0.07
$0.10
$0.10
$—
$—
$0.01
$0.02
$(0.01)
$(0.02)
$0.06
$0.06
$0.09
$0.09
$0.09
$0.08
The restated line items of the consolidated statements of comprehensive income for the six-month period ended December 31, 2020;
and nine-month period ended March 31, 2021 are as follows:
(In thousands, except per share data)
Revenues
Cost of transportation and other services
Operating partner commissions
Personnel costs
Selling, general and administrative expenses
Income from operations
Income tax expense
Net Income
Net income attributable to Radiant Logistics, Inc.
Income per share:
Basic
Diluted
Originally Reported
Six Months
Ended
December 31,
2020
Nine Months
Ended
March 31, 2021
Adjustment
Six Months
Ended
December 31,
2020
Nine Months
Ended
March 31, 2021
Restated
Six Months
Ended
December 31,
2020
Nine Months
Ended
March 31, 2021
$
$
$
394,682 $
293,416
42,625
26,512
11,224
10,812
(2,479)
7,117
6,900
$
631,214
473,148
66,386
40,741
17,910
16,261
(3,455)
12,178
11,884
0.14 $
0.14 $
0.24
0.23
$
$
(568) $
(149)
(138)
(14)
(717)
449
(110)
338
338
0.01 $
0.01 $
$
6,990
6,995
1,199
(60)
(715)
(429)
105
(324)
(324)
394,114 $
293,267
42,487
26,498
10,507
11,261
(2,589)
7,455
7,238
638,204
480,143
67,585
40,681
17,195
15,832
(3,350)
11,854
11,560
—
—
$
$
0.15 $
0.15 $
0.24
0.23
73
While the adjustments changed contract assets, accounts payable, and operating partner commissions payable line items in the
consolidated cash flow statements, they did not have an impact on total net cash provided by operating activities, net cash used in
investing activities, or net cash provided by (used for) financing activities for any of the applicable periods.
The restated line items of the consolidated cash flow statements for the three-months ended September 30, 2020; six-month period
ended December 31, 2020; and nine-month period ended March 31, 2021 are as follows:
(In thousands)
OPERATING ACTIVITIES:
Net income
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING
ACTIVITIES
CHANGES IN OPERATING ASSETS AND
LIABILITIES:
Contract assets
Income tax receivable/payable
Accounts payable
Operating partner commissions payable
Accrued expenses, other liabilities, and operating
lease liability
Originally Reported
Three
Months
Ended
September
30, 2020
Six Months
Ended
December
31, 2020
Nine
Months
Ended
March 31,
2021
Three
Months
Ended
September
30, 2020
Adjustment
Six Months
Ended
December
31, 2020
Nine
Months
Ended
March 31,
2021
Three
Months
Ended
September
30, 2020
Restated
Six Months
Ended
December
31, 2020
Nine
Months
Ended
March 31,
2021
$3,229
$7,117
$12,178
$(199)
$338
$(324)
$3,030
$7,455
$11,854
(1,364)
(5,312)
(9,688)
(5,176)
(6,031)
(13,589)
(6,540)
(11,343)
(23,277)
(185)
7,453
1,650
1,204
1,197
12,355
20,530
4,387
3,162
(377)
(3,518)
(4,221)
(64)
4,669
784
(14)
—
110
(105)
(249)
1,314
1,092
5,513
12,657
12,122
17,868
33,187
47
23
—
1,384
2,434
4,434
4,546
(23)
—
(391)
(3,495)
(4,244)
13,444
1,913
3,699
Net cash provided by operating activities
13,444
1,913
3,699
NOTE 21 - SUBSEQUENT EVENTS
Revolving Credit Facility
The Company entered into a $200,000 syndicated, revolving credit facility (the “Credit Facility”) pursuant to a Credit Agreement dated
as of August 5, 2022. The Credit Facility was entered into with Bank of America, N.A. and BMO Capital Markets Corp. as joint book
runners and joint lead arrangers, Bank of America, N.A. as Administrative Agent, Swingline Lender and Letter of Credit Issuer, Bank
of Montreal as syndication agent, KeyBank National Association and MUFG Union Bank, N.A. as co-documentation agents and Bank
of America, N. A., Bank of Montreal, KeyBank National Association, MFUG Union Bank, N.A. and Washington Federal Bank, National
Association as lenders (such named lenders are collectively referred to herein as “Lenders”). This replaces the $150,000 Revolving
Credit Facility dated March 13, 2020, disclosed within Note 9.
The Credit Facility has a term of five years and is collateralized by a first-priority security interest in the accounts receivable and other
assets of the Company and the guarantors named below on a parity basis with the security interest held by Fiera Private Debt Fund IV
LP and Fiera Private Debt Fund V LP described below. Borrowings under the Credit Facility accrue interest (at the Company’s option),
at a) the Lenders’ base rate plus 0.75% and can be subsequently adjusted based on the Company’s consolidated net leverage ratio under
the facility at the Lenders’ base rate plus 0.5% to 1.50%: b) Term SOFR plus 1.65% and can be subsequently adjusted based on the
Company’s consolidated net leverage ratio under the facility at Term SOFR plus 1.40% to 2.40%; and c) Term SOFR Daily Floating
Rate plus 1.65% and can be subsequently adjusted based on the Company’s consolidated net leverage ratio under the facility at Term
SOFR Daily Floating Rate plus 1.40% to 2.40%. The guarantors of the Credit Facility are Adcom Express, Inc., Radiant Road & Rail,
Inc., DBA Distribution Services, Inc., Radiant Trade Services, Inc., Radiant Transportation Services, Inc., Radiant Off-Shore Holdings
LLC, Service by Air, Inc., International Freight Systems (of Oregon), Inc., Green Acquisition Company, Inc., Highways & Skyways,
Inc., Radiant Global Logistics (CA), Inc., On Time Express, Inc., Radiant Customs Services, Inc., 2062698 Ontario Inc., Radiant Global
Logistics (Canada) Inc., Radiant Logistics Global Services, Inc., Navegate, Inc., Radiant World Trade Services, Inc., Centrade, Inc.,
Navegate Logistics, Ltd., Radiant Logistics Domestic Services, Inc., Navegate Domestic, LLC, and Radiant Logistics Partners, LLC.
The Credit Facility includes a $75,000 accordion feature to support future acquisition opportunities. For general borrowings under the
Credit Facility, the Company is subject to the maximum consolidated net leverage ratio of 3.00 and minimum consolidated interest
coverage ratio of 3.00. Additional minimum availability requirements and financial covenants apply in the event the Company seeks to
use advances under the Credit Facility to pursue acquisitions or repurchase its common stock. Restatement described in Note 2 and Note
20 has no impact on the Company’s compliance with debt covenant ratios. Although the restatement delayed the process of providing
audited financial statements to the Lenders, a waiver was received to extend the period within which audited financial statements may
be submitted to the Lenders.
74
Amendment and Restatement of Existing Fiera Private Debt Fund IV LP Term Loan and Existing Fiera Private Debt Fund V
LP Term Loan
The Company currently has two term loan facilities outstanding; one with Fiera Private Debt Fund IV LP (formerly, Integrated Private
Debt Fund IV LP), as lender, for CAD$29,000 and the other with Fiera Private Debt Fund V LP (formerly, Integrated Private Debt Fund
V LP), as lender, for CAD$10,000. On August 5, 2022, concurrently with entering into the new Credit Facility, the Company amended
and restated each such term loan to make the financial and other covenants in such term loans consistent with those contained in the
new Credit Facility.
Leases
In July 2022, the Company commenced a new lease for warehouse space in Calgary, Alberta with a 17-month lease term ending
November 30, 2023. The Company also extended the lease for warehouse space in Delta, British Columbia and the lease for warehouse
space in Brampton, Ontario for an additional 3 years ending October 31, 2025.
In August 2022, the Company commenced a new lease for warehouse space in Toronto, Ontario with an 18-month lease term ending
January 31, 2024.
In September 2022, the Company entered into a new lease for warehouse space in Brampton, Ontario commencing in November 2022.
The lease term expires in January 2033.
In January 2023, the Company entered into an agreement to lease an additional floor at its office in Renton, Washington. The lease term
expires in November 2033.
Total undiscounted future lease payments for the above-mentioned leases are approximately $34,931.
Rebranding of Trade Names
The Company is in the process of rebranding certain trade names. We will rebrand certain trade names in connection with the Company’s
long-term growth strategy and make it more consistent across our business and better serve our customers. We will gradually phase out
certain trade names and will predominantly use Radiant to refer to the Company. The rebranding has resulted in the reduction of the
related useful lives of certain trade names and accelerated amortization expenses starting in June 2022 and over the next fiscal year.
Acquisition of Cascade Enterprises of Minnesota, Inc.
On October 1, 2022, the Company acquired the assets and operations of its of Cascade Enterprises of Minnesota, Inc. (“Cascade”) a
Minneapolis, Minnesota based, privately held company that has operated under the Company's Airgroup brand since 2007. Cascade will
continue to operate under the Airgroup brand through the remainder of 2022 and is expected to transition to the Radiant brand in early
2023 as Cascade is combined with existing Company owned operations in the Minneapolis and will be able to leverage the Company’s
global trade management platform to strengthen our purchase order and vendor management service offering. As consideration for the
acquisition, the Company paid $3,250 in cash upon closing, and the seller is entitled to additional contingent consideration payable in
subsequent periods based on future performance of the acquired operation.
The following table summarizes the fair value of the consideration transferred for the acquisitions and the allocation of the purchase
price to the fair values of the assets acquired and liabilities assumed at the acquisition date:
(In thousands)
Cash
Contingent consideration
Deposits and other assets
Operating lease right-of-use asset
Intangible assets, net
Operating lease liability
Total identifiable net assets
Goodwill
Purchase Price Allocation
$3,250
1,987
3
34
3,468
(34)
3,471
1,766
$5,237
75
The fair values of the intangible assets were estimated by the Company with the assistance of valuation specialists. The fair value was
estimated using a discounted cash flow approach with Level 3 inputs. Under this method, an intangible asset’s fair value is equal to the
present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful
life. To calculate fair value, the Company used risk-adjusted cash flows discounted at rates considered appropriate given the inherent
risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflect market participant
assumptions. The goodwill is recorded in the U.S. operating segment and is expected to be deductible for income tax purposes over a
period of 10 years.
Intangible assets acquired and their respective useful lives are estimated as follows:
(In thousands)
Customer related
Purchase Price Allocation
$3,468
3,468
Useful Life
10 years
The preliminary fair value estimates for the assets acquired and liabilities assumed are based upon preliminary calculations and
valuations. The estimates and assumptions are subject to change as additional information is obtained for the estimates during the
respective measurement periods (up to one year from the acquisition date). The primary areas of the preliminary estimates not yet
finalized relate to identifiable intangible assets.
Repurchase of Common Stock
Pursuant to the stock repurchase program described in Note 11, we have purchased 839,864 shares of Common Stock subsequent to
June 30, 2022 and through February 27, 2023 for a total cost of $5,000 inclusive of transaction costs, bringing the total Common
Stock repurchased under the plan to 3,364,472 shares.
76
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that
such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.
An evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) or 15d-15(e)
of the Exchange Act) as of June 30, 2022, was carried out by our management under the supervision and with the participation of our
CEO and CFO. This evaluation of disclosure controls and procedures determined that they were ineffective as of June 30, 2022 due to
the existence of material weaknesses described below.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule
13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our principal executive
officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting.
In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) Internal Control — Integrated Framework (2013).
Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the U.S. Our
internal control over financial reporting includes those policies and procedures, which:
(i)
(ii)
(iii)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the U.S., and that receipts and expenditures of the Company
are being made only in accordance with authorization of our management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on our consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Based on management’s assessment, utilizing the criteria of the 2013 COSO Framework, and on the restatement of previously issued
consolidated financial statements discussed further in Note 2 in the consolidated financial statements, we concluded that, as of June 30,
2022, our internal controls over financial reporting were not effective due to the material weakness, discussed below, that existed as of
June 30, 2022 and 2021.
We have excluded Navegate, Inc., since it was acquired during the current fiscal year, on December 3, 2021, from the assessment of the
effectiveness of internal control over financial reporting as of June 30, 2022. Total assets and total revenues of Navegate, Inc. represent
5.8% and 6.3%, respectively, of the related consolidated financial statement amounts as of and for fiscal year ended June 30, 2022.
A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be
prevented or detected on a timely basis.
Material Weakness over Recording and Processing of Revenue Transactions and Remediation Efforts
As of June 30, 2021, we concluded that a material weakness existed in our internal control over financial reporting related to the
recording and processing of revenues transactions, including the timing of the Company’s estimated accrual of in-transit revenues and
related costs. This material weakness relates to the conditions that led to the restatement of previously issued consolidated financial
statements as discussed in Note 2 of the consolidated financial statements.
77
In response to this material weakness, the Company began taking corrective action during fiscal year 2022 to address the material
weakness and provide reasonable assurance that future errors in revenue transactions would be prevented and/or detected in a timely
manner. The Company’s corrective actions included, but were not limited to, working with operating partners to understand their
processes and controls, setting up additional communications with company owned and operating partner stations regarding revenue
transactions, and performing additional review procedures at the corporate offices of revenue recorded at the stations.
As of June 30, 2022, remediation is on-going. As such, we concluded the Company does not have effective internal controls over the
recording and processing of revenues. Specifically, the controls as currently designed are not sufficient to prevent or detect a material
misstatement in revenues as the design of the controls lacks the level of precision necessary to ensure the completeness and accuracy of
revenue.
The Company is again vigorously working to affect the appropriate corrective actions to remediate the material weakness during the
fiscal year 2023 to strengthen our internal controls over the recording of revenues.
Remediation of Material Weaknesses Previously Reported
Information Technology General Controls
As of December 31, 2021, we concluded that a material weakness existed in our internal control over information technology general
controls. In December 2021, the Company became aware that it was exposed to a cyber incident in its Information Technology
environment which interrupted systems and affected operations. Management concluded that although there was no misstatement
identified as a result of this issue, the controls related to our IT environment were not designed and/or operated effectively to prevent
unauthorized access to our IT systems supporting financial information processing.
In response to this material weakness, the Company immediately engaged cyber security experts to assist management in remediating
the IT general control material weakness. As a result of cyber security experts’ evaluation, it was determined that the IT systems accessed
were not in-scope systems for the Company’s assessments of its internal controls over financial reporting. Under the guidance of the
cyber security experts, the Company made technology investments to strengthen its Information Technology security infrastructure.
Additionally, the Company implemented additional controls including, but not limited to, whitelisting known Internet Protocol (IP)
addresses and implementing Multi-factor Authentication (MFA) to limit access to our network from unknown IP addresses.
Considering the measures taken and implemented by the Company, and the Company’s review of the changes, Management has
concluded that the material weakness over information technology general controls has been remediated as of June 30, 2022.
Operating Partner Commissions
As of June 30, 2021, we concluded that a material weakness existed in our internal control over financial reporting related to the
calculation of operating partner commissions. Although there was no misstatement identified as a result of this issue, there was the
potential that the controls in place at that time would not have prevented or detected a material misstatement in operating partner
commissions as the design of the controls lacked the level of precision that ensures the completeness and accuracy of operating partner
commissions. Specifically, the Company did not design and maintain effective controls to review in sufficient detail the commission
rates utilized to pay operating partners.
In response to this material weakness, the Company took corrective action during fiscal year 2022 to address the material weakness and
provide reasonable assurance that future errors in operating partner commissions would be prevented and/or detected in a timely manner.
The Company’s corrective actions included adding additional review procedures including: i). confirming operating partner commission
rates directly with operating partners and/or agreeing rates to operating partner contracts to ensure the accuracy of commission rates
used to calculate and pay operating partner commissions, and ii). enhancing control procedures to include the quarterly review of any
changes made to an operating partner’s commission rates.
Based on the measures taken and implemented, and the results of the Company’s review of operating partner commission rates and
changes, Management has concluded that the material weakness over operating partner commissions has been remediated as of June 30,
2022.
Changes in Internal Control over Financial Reporting
Except for the material weaknesses described above, there have not been any other changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended
June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
78
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
79
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
Set forth below are the names, ages, and positions of our current directors and executive officers as of February 27, 2023, and
biographical information for each of our current directors and executive officers. There are no family relationships among any of our
directors or executive officers.
Name
Bohn H. Crain
Richard P. Palmieri
Michael Gould
Kristin Toth Smith
Todd E. Macomber
Arnold Goldstein
John W. Sobba
Age
59
69
58
48
58
68
66
Position with Radiant Logistics
Chairman of our Board of Directors and Chief Executive Officer
Lead Independent Director
Independent Director
Independent Director
Senior Vice President and Chief Financial Officer
Senior Vice President and Chief Commercial Officer
Senior Vice President and General Counsel
Bohn H. Crain, age 59. Mr. Crain founded the Company and has served as our Chief Executive Officer and Chairman of our Board of
Directors since October 2005. Mr. Crain brings approximately 25 years of industry and capital markets experience in transportation and
logistics. Since January 2005, Mr. Crain has served as the Managing Member of Radiant Capital Partners, LLC, an entity he formed to
execute a consolidation strategy in the transportation and logistics sector. Prior to founding Radiant, Mr. Crain served as the Executive
Vice President and the Chief Financial Officer of Stonepath Group, Inc. from January 2002 until December 2004. In 2001, Mr. Crain
served as the Executive Vice President and Chief Financial Officer of Schneider Logistics, Inc., a third-party logistics company, and
from 2000 to 2001 he served as the Vice President and Treasurer of Florida East Coast Industries, Inc., a New York Stock Exchange
listed company engaged in railroad and real estate businesses. Between 1989 and 2000, Mr. Crain held various vice president and
treasury positions for CSX Corp., a Fortune 500 transportation company listed on the New York Stock Exchange, and several of its
subsidiaries. Mr. Crain earned a Bachelor of Arts in Business Administration with an emphasis in Accounting from the University of
Texas.
Richard P. Palmieri, age 69. Mr. Palmieri was appointed as a director in March 2014. He has been the Managing Partner of ANR
Partners, LLC, a management and financial consulting firm, since 2012. Prior to this, from 2007 to 2012, Mr. Palmieri served as the
President of Canon Financial Services, Inc., the captive finance subsidiary of Canon USA. From 2003 to 2006, he was the President of
Schneider Financial Services, a financial services subsidiary of a large, privately held transportation and logistics company. From 1998
to 2003, he served as a Managing Director and co-head of the Transportation and Logistics investment banking group at Credit Suisse
Group. From 1993 to 1998, he served as a Managing Director and co-head of the Transportation and Logistics investment banking group
at Deutsche Securities. Before this, he served in various finance and management positions at several large companies, including
Whirlpool Financial Corporation, PacifiCorp Credit and GE Capital. Mr. Palmieri received a Bachelor of Science in Accounting from
Wagner College. As a result of these and other professional experiences, Mr. Palmieri possesses particular knowledge and experience
in logistics and financial management that strengthen the Board’s collective qualifications, skills, and experience.
Michael Gould, age 58. Mr. Gould was appointed as a director in July 2016. Mr. Gould is a seasoned information technology executive,
currently serving as the Chief Operating Officer for Zonar Systems, a subsidiary of Continental, AG. Prior to Zonar Systems Mr. Gould
served as Senior Vice President, Oracle Consulting in North America at Oracle Corporation. Prior to this, from 2008 to 2015, Mr. Gould
led the Americas Technology Services Consulting Organization for Hewlett-Packard Company (“HP”) as the Vice President and General
Manager. Prior to HP, Mr. Gould served in various roles at Oracle, BearingPoint and BEA. He holds a Bachelor of Science degree in
Mechanical Engineering from Texas A&M University and a Master of Business Administration from Santa Clara University. As a result
of these and other professional experiences, Mr. Gould possesses particular knowledge and experience in management and technology
that strengthen the Board’s collective qualifications, skills and experience.
80
Kristin Toth Smith, age 48. Ms. Smith was appointed as a director in June 2021. She has been the President and Board Member at
Fernished, Inc., a furniture and home décor subscription service, since January 2021 and held the position of Chief Operating Officer
from August 2019 until December 2020. She previously held leadership positions at start-up ventures including Zulily, an omnichannel
e-commerce platform and Dolly, an on-demand last-mile delivery and moving service, where she held the position of Chief Operating
Officer from October 2015 to May 2019. Prior to her extensive startup experience, Smith led several teams at Amazon in operations and
retail, including inbound transportation, same-day delivery, movies and television, and the demand side of the business of Amazon’s
digital music team, including Marketing, Product Management, Site Merchandising, Pricing, Business Development, and Design teams
responsible for the launch of Amazon’s digital music cloud-based offering. Before joining Amazon, Smith held various leadership
positions at Dell Computer Corp., where she led various teams to build technology infrastructure and software for the radical re-design
of desktop manufacturing and supply chain. She serves on a number of non-profit boards as well as several advisory boards for startups
(mostly women-founded and -led companies). She is the Board Chair for University of Michigan’s Center for Entrepreneurship, was a
contributing author for Women in Tech (Sasquatch Books). She holds a Bachelor of Science in Engineering and Master of Science in
Engineering in Industrial Engineering and Operations Research from the Tauber Institute for Global Operations at the University of
Michigan, a Master of Science in Civil and Environmental Engineering from Massachusetts Institute of Technology, and a Master of
Business Administration from Massachusetts Institute of Technology’s Sloan School of Management through the Leaders for Global
Operations fellowship program. As a result of these and other professional experiences, Ms. Smith possesses deep experience in
transportation and logistics, with an emphasis on emerging e-commerce and last-mile platforms, that strengthen the Board’s collective
qualifications, skills, and experience.
Todd E. Macomber, age 58. Mr. Macomber has served as our Senior Vice President and Chief Financial Officer since March 2011, as
our Senior Vice President and Chief Accounting Officer since August 2010, and as our Vice President and Corporate Controller since
December 2007. Prior to joining us, Mr. Macomber served as Senior Vice President and Chief Financial Officer of Biotrace International,
Inc., a subsidiary of Biotrace International PLC, an industrial microbiology company listed on the London Stock Exchange. Mr.
Macomber earned a Bachelor of Arts, emphasis in Accounting from Seattle University.
Arnold Goldstein, age 68. Mr. Goldstein has served as our Senior Vice President and Chief Commercial Officer since June 30, 2016.
Mr. Goldstein also has significant experience within the transportation industry, having served as Chief Operating Officer of Service by
Air, which was acquired by the Company in June 2015, and in various leadership roles at Hellman World Wide Logistics from May
2006 to February 2015. Mr. Goldstein earned a Bachelor of Arts in Psychology from the University of Rhode Island and a Master of
Business Administration from Bryant University.
John W. Sobba, age 66. Mr. Sobba has served as our Senior Vice President and General Counsel since May 2018. Prior to joining the
Company, Mr. Sobba was in a private law practice from 2008 to 2018, handling a number of general commercial, real estate and business
matters for clients within the technology, transportation, outdoor gear and apparel industries. Mr. Sobba was in the private practice of
law with the law firms of Dorsey & Whitney and later with Foster Pepper, from 2004 through 2008. He earned a Bachelor of Arts degree
from the University of Oregon, a Juris Doctor from Seattle University, a Master of Taxation from Boston University and a Master of
Business Administration from the University of Washington.
Director Independence
Under the NYSE American continued listing standards, independent directors must comprise a majority of a listed company’s board of
directors. In addition, the NYSE American continued listing standards require that, subject to specified exceptions, each member of a
listed company’s audit, compensation, and nominating and corporate governance committees be independent. Audit committee members
must also satisfy heightened independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934 (Exchange Act),
and compensation committee members must satisfy heightened independence criteria set forth in the NYSE American rules. Under the
NYSE American rules, a director will only qualify as an “independent director” if the company’s board of directors affirmatively
determines that the director has no material relationship with the company, either directly or indirectly, that would interfere with the
exercise of independent judgment in carrying out the responsibilities of a director.
The Board has undertaken a review of its composition, the composition of its Board committees, and the independence of each director.
Based upon information requested from and provided by each of our directors concerning his or her background, employment, and
affiliations, including family relationships with us, our senior management, and our independent registered public accounting firm, the
Board has determined that all but one of our directors, Bohn H. Crain, are independent directors under the standards established by the
Securities and Exchange Commission (SEC) and the NYSE American. In making this determination, the Board considered the current
and prior relationships that each non-employee director has with Radiant Logistics and all other facts and circumstances the Board
deemed relevant in determining their independence.
81
Committees of the Board of Directors
We currently have one standing committee of the Board, the Audit and Executive Oversight Committee, which was formed in 2012.
The Board may establish other Board committees as it deems necessary or appropriate from time to time.
Audit and Executive Oversight Committee
The standing committee of the Board of Directors is the Audit and Executive Oversight Committee, which was formed in 2012. The
Audit and Executive Oversight Committee fulfills the consolidated oversight functions typically associated with audit, compensation
and nominating and governance committees.
The Audit and Executive Oversight Committee operates under a written charter that is reviewed annually. In September 2021, the Board
of Directors amended and restated the Company’s Audit and Executive Oversight Committee Charter to reflect the restructuring of the
roles of authority granted to each member of the Audit and Executive Oversight Committee and to include the oversight of the
development and implementation of corporate governance policies for the Company. The amended and restated Charter is available on
our website at www.radiantdelivers.com.
The Audit and Executive Oversight Committee held five formal meeting and took action by written consent two times during fiscal year
2022. The members of the Audit and Executive Oversight Committee are Messrs. Gould, Palmieri (Chair), and Ms. Smith.
Audit Committee Function
The Audit and Executive Oversight Committee, pursuant to its written charter, among other matters, performs traditional Audit
Committee functions and oversees (i) our financial reporting, auditing, and internal control activities; (ii) the integrity and audits of our
financial statements; (iii) our compliance with legal and regulatory requirements; (iv) the qualifications and independence of our
independent auditors; (v) the performance of our internal audit function and independent auditors; and (vi) our overall risk exposure and
management. Richard Palmieri is responsible for oversight of the Audit Committee functions of the Audit and Executive Oversight
Committee.
Additionally, the Committee:
•
•
•
•
•
•
is responsible for the appointment, retention, and termination of our independent auditors, and determines the compensation
of our independent auditors;
reviews with the independent auditors the plans and results of the audit engagement;
evaluates the qualifications, performance, and independence of our independent auditors;
has sole authority to approve in advance all audit and non-audit services by our independent auditors, the scope and terms
thereof, and the fees therefor;
reviews the adequacy of our internal accounting controls; and
meets at least quarterly with our executive officers, internal audit staff, and our independent auditors in separate executive
sessions.
The Audit and Executive Oversight Committee charter authorizes the Audit and Executive Oversight Committee to retain independent
legal, accounting, and other advisors as it deems necessary to carry out its responsibilities. The Audit and Executive Oversight
Committee reviews and evaluates, at least annually, the performance of the Audit and Executive Oversight Committee, including
compliance with its charter.
Financial Literacy and Financial Experts
The Board has determined that each member of the Audit and Executive Oversight Committee is “financially literate” under the
continued listing requirements of the NYSE American and satisfies the heightened independence criteria for audit committee members
set forth in Rule 10A-3 under the Exchange Act.
82
Compensation Committee Function
We do not have a standing Compensation Committee. The Audit and Executive Oversight Committee fulfills the compensation
committee functions. The Audit and Executive Oversight Committee reviews the compensation philosophy, strategy of the Company
and consults with the Chief Executive Officer, as needed, regarding the role of our compensation strategy in achieving our objectives
and performance goals and the long-term interests of our stockholders. The Audit and Executive Oversight Committee has direct
responsibility for approving the compensation of our Chief Executive Officer and makes recommendations to the Board with respect to
our other executive officers. The term “executive officer” has the same meaning specified for the term “officer” in Rule 16a-1(f) under
the Exchange Act. Michael Gould is responsible for oversight of the Compensation Committee functions of the Audit and Executive
Oversight Committee.
Our Chief Executive Officer sets the compensation of anyone whose compensation is not set by the Board.
The Committee, pursuant to its written charter, among other matters:
•
•
•
•
•
•
•
assists the Board in developing and evaluating potential candidates for executive officer positions and overseeing the
development of executive succession plans;
administers, reviews, and makes recommendations to the Board regarding our compensation plans, including the Radiant
Logistics, Inc. 2012 Stock Option and Performance Award Plan, 2021 Omnibus Incentive Plan, and Management Incentive
Compensation Plan (MICP), and administers or oversees all such plans and discharges any responsibilities imposed on the
Committee by such plans, including, without limitation, the grant of equity-based awards to officers and employees;
reviews and approves on an annual basis our corporate goals and objectives with respect to compensation for executive
officers and, at least annually, evaluates each executive officer’s performance in light of such goals and objectives to set his
or her annual compensation, including salary, bonus, and equity and non-equity incentive compensation, subject to approval
by the Board;
reviews and approves any employment, severance, change of control, retention, retirement, deferred compensation,
perquisite, or similar compensatory agreements, plans, programs, or arrangements with executive officers;
provides oversight of management’s decisions regarding the performance, evaluation, and compensation of other officers;
reviews our incentive compensation arrangements to confirm that incentive pay does not encourage unnecessary risk-taking,
and reviews and discusses, at least annually, the relationship between risk management policies and practices, business
strategy, and our executive officers’ compensation; and
reviews the results of advisory stockholder votes on executive compensation and considers whether to recommend
adjustments to our executive compensation policies and practices as a result of such votes and other stockholder input on
executive compensation matters.
The Audit and Executive Oversight Committee may retain compensation consultants, outside counsel and other advisors as the Board
deems appropriate to assist it in discharging its duties. In April 2015, the Audit and Executive Oversight Committee hired Mercer (US)
Inc. to perform an executive compensation study and provide it with guidance regarding the Company’s executive compensation
program. Mercer provided the Audit and Executive Oversight Committee with compensation data with respect to similarly sized logistics
and freight-forwarding companies and consulted with the Audit and Executive Oversight Committee about a variety of issues related to
competitive compensation practices and incentive plan design. This information helped us to evaluate and modify our equity and cash
compensation awards and practices through fiscal year 2020 to remain consistent with industry standards and to achieve our employee
retention objectives.
During fiscal year 2021, the Committee engaged Meridian Compensation Partners to perform an updated executive compensation study,
develop an updated a peer group and provide it with guidance regarding the Company’s executive compensation program. Meridian
completed the development of a Peer Group listing for Radiant Logistics and then conducted an analysis of our NEO positions compared
to similar positions at Peer Group companies. Meridian also conducted an analysis of our Board of Directors compensation compared
to the Peer Group companies. This information was used to develop our current compensation programs for Executives and Directors
during fiscal year 2021. As well, these trends and this information is being used by the Audit and Executive Oversight Committee to
determine whether to make any additional changes to the Company's overall compensation policies during fiscal year 2022.
During fiscal year 2022, Meridian Compensation Partners did not provide any services to the Company unrelated to executive or director
compensation. After considering the relevant factors, the Committee determined that no conflicts of interest have been raised in
connection with the services Meridian Compensation Partners performed for the Committee in 2022.
The Committee reviews and evaluates, at least annually, the performance of the Committee, including compliance with its charter.
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The Board has determined that each of the Committee members satisfies the heightened independence criteria for compensation
committee members under the continued listing requirements of the NYSE American. In addition, each of the Committee members is a
“non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.
Nominating and Governance Committee Function
We do not have a standing Nominating and Governance Committee. The Audit and Executive Oversight Committee fulfills the
nominating and governance committee functions. The Audit and Executive Oversight Committee identifies and recommends to the
Board individuals qualified to be nominated for election to the Board and recommends to the Board the members and Chairperson for
each Board committee. Kristin Toth Smith is responsible for oversight of the Nominating and Governance Committee functions of the
Audit and Executive Oversight Committee.
The Committee, pursuant to its written charter, among other matters:
•
•
•
•
•
•
•
•
•
identifies individuals qualified to become members of the Board and reviews with the Board the Board’s composition as a
whole to ensure that it has the requisite and desired expertise, experience, qualifications, attributes and skills and that its
membership consists of persons with sufficiently diverse and independent backgrounds;
develops and recommends to the Board for its approval qualifications for director candidates and periodically reviews these
qualifications with the Board;
makes recommendations to the Board regarding director retirement age, tenure and refreshment policies;
reviews the committee structure of the Board and recommends directors to serve as members or chairs of each Board
committee;
reviews and recommends Board committee slates annually and recommends additional Board committee members to fill
vacancies as needed;
develops and recommends to the Board a set of corporate governance guidelines and, at least annually, reviews such
guidelines and recommends changes to the Board for approval as necessary;
considers and oversees corporate governance issues as they arise from time to time and develops appropriate
recommendations for the Board;
reviews and approves the Company’s policies and practices pertaining to ESG issues and monitors the Company’s
performance relative to such policies and practices; and
oversees the annual self-evaluations of the Board, each Board committee, and management.
The Committee charter authorizes the Committee to retain a search firm or other advisors to assist in the identification and evaluation
of director candidates, including the sole authority to approve the search firm’s or other advisors’ fees and other retention terms.
The Committee reviews and evaluates, at least annually, the performance of the Committee, including compliance with its charter.
Director Qualifications and Nomination Process
The Board seeks to ensure that the Board is composed of members whose particular expertise, experience, qualifications, attributes, and
skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively. We do not have a standing
Nominating Committee. The Audit and Executive Oversight Committee fulfills the nominating committee functions. New directors are
approved by the Board after recommendation by the Audit and Executive Oversight Committee.
In selecting nominees for director, without regard to the source of the recommendation, the Audit and Executive Oversight Committee
believes that each director nominee should be evaluated based on his or her individual merits, taking into account the needs of the
Company and the composition of the Board. Members of the Board should have the highest professional and personal ethics, consistent
with our values and standards and Code of Ethics. At a minimum, a nominee must possess integrity, skill, leadership ability, financial
sophistication, and capacity to help guide us. Nominees should be committed to enhancing stockholder value and should have sufficient
time to carry out their duties and to provide insight and practical wisdom based on their experiences. Their service on other boards of
public companies should be limited to a number that permits them, given their individual circumstances, to responsibly perform all
director duties. In addition, the Audit and Executive Oversight Committee considers all applicable statutory and regulatory requirements
and the requirements of any exchange upon which our common stock is listed or to which it may apply in the foreseeable future.
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The Audit and Executive Oversight Committee will typically employ a variety of methods for identifying and evaluating nominees for
director. The Audit and Executive Oversight Committee regularly assesses the appropriate size of the Board and whether any vacancies
on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Audit and
Executive Oversight Committee will consider various potential candidates for director. Candidates may come to the attention of the
Audit and Executive Oversight Committee through current directors, stockholders, or other companies or persons. The Audit and
Executive Oversight Committee does not evaluate director candidates recommended by stockholders differently than director candidates
recommended by other sources. Director candidates may be evaluated at regular or special meetings of the Audit and Executive
Oversight Committee and may be considered at any point during the year.
We do not have a formal policy with regard to the consideration of diversity in identifying director nominees, but the Audit and Executive
Oversight Committee strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the
appropriate talent, skills, and expertise to oversee our businesses. In evaluating director nominations, the Audit and Executive Oversight
Committee seeks to achieve a balance of knowledge, experience, and capability on the Board. In connection with this evaluation, the
Audit and Executive Oversight Committee will make a determination of whether to interview a prospective nominee based upon the
Board’s level of interest. If warranted, one or more members of the Audit and Executive Oversight Committee, and others as appropriate,
will interview prospective nominees in person or by telephone. After completing this evaluation and any appropriate interviews, the
Audit and Executive Oversight Committee will recommend the director nominees after consideration of all its directors’ input. The
director nominees are then selected by a majority of the independent directors on the Board, meeting in executive session and considering
the Audit and Executive Oversight Committee’s recommendations.
The Company’s Corporate Governance Principles contain a retirement policy that requires no person shall be nominated to the Board
to serve as a director after such person’s 74th birthday. The principles are intended to serve as a flexible framework within which the
Board may conduct its business.
The Board elected Ms. Smith to the Board, effective June 3, 2021, upon the recommendation of the Audit and Executive Oversight
Committee. Mr. Gould led our search for a new director. The Nominating and Governance Committee functions, including our
commitment to environmental, social and governance principles, will be led by Ms. Smith.
In addition to stockholders’ general nominating rights provided in our Bylaws, stockholders may recommend director candidates for
consideration by the Board. The Audit and Executive Oversight Committee will consider director candidates recommended by
stockholders if the recommendations are sent to the Board in accordance with the procedures for other stockholder proposals pursuant
to applicable rules and regulations and our Bylaws. All director nominations submitted by stockholders to the Board for its consideration
must include all of the required information set forth in our Bylaws and the following additional information:
•
•
•
•
any information relevant to a determination of whether the nominee meets the criteria described above;
any information regarding the nominee relevant to a determination of whether the nominee would be considered independent
under SEC rules or, alternatively, a statement that the nominee would not be considered independent;
a statement, signed by the nominee, verifying the accuracy of the biographical and other information about the nominee that
is submitted with the recommendation and consenting to serve as a director if so elected; and
if the recommending stockholder, or group of stockholders, has beneficially owned more than five percent (5%) of our
voting stock for at least one year as of the date the recommendation is made, evidence of such beneficial ownership.
During fiscal year 2022, we made no material changes to the procedures by which stockholders may recommend nominees to the Board,
as described in our Proxy Statement for our 2021 Annual Meeting of Stockholders.
Code of Ethics
Our Code of Business Conduct and Ethics, which applies to all of our directors, executive officers and employees, is available in the
“About—Governance” section of our website located at www.radiantdelivers.com. In addition, printed copies of our Code of Business
Conduct and Ethics are available upon written request to Attn: Human Resources, Radiant Logistics, Inc., Triton Towers Two, 700 S.
Renton Village Place, Seventh Floor, Renton, Washington 98057. Any waiver of our Code of Business Conduct and Ethics for our
employees may be made only by our CEO and, with respect to or director or executive officers, our Board of Directors and will be
promptly disclosed as required by law and NYSE rules. We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K and
applicable NYSE rules regarding amendments to or waivers from any provision of our Code of Business Conduct and Ethics by posting
such information in the “About—Governance” section of our website located at www.radiantdelivers.com.
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ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
INTRODUCTION
This Compensation Discussion and Analysis (“CD&A”) addresses the principles underlying our policies and decisions with respect to
the compensation of our executive officers who are named in the “Summary Compensation Table” and material factors relevant to these
policies and decisions. This CD&A should be read together with the related tables and disclosures that follow. When reading this CD&A,
please note that we are a “smaller reporting company” under the federal securities laws and are not required to provide a “Compensation
Discussion and Analysis” of the type required by Item 402 of SEC Regulation S-K and this CD&A is simply intended to supplement
our SEC-required disclosures.
Our named executive officers for the fiscal year ended June 30, 2022 are listed below. We sometimes refer to these individuals
collectively as our named executive officers or “NEOs” and our Chief Executive Officer as our “CEO.” The following four officers are
our only executive officers.
Name
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John W. Sobba
EXECUTIVE SUMMARY
Who We Are
Age
59
58
68
66
Position with Radiant Logistics
Chief Executive Officer and Chairman of our Board of Directors
Senior Vice President and Chief Financial Officer
Senior Vice President and Chief Commercial Officer
Senior Vice President and General Counsel
We operate as a third-party logistics company, providing technology-enabled global transportation and value-added logistics solutions
primarily to customers based in the United States and Canada. We service a large and diversified account base across a range of industries
and geographies, which we support from an extensive multi-brand network of over 100 operating locations (including 25 Company-
owned offices) across North America as well as an integrated international service partner network located in other key markets around
the globe. As a third-party logistics company, we generally do not own the transportation assets but we have a vast carrier network of
asset-based transportation companies, including motor carriers, railroads, airlines, and ocean lines.
Through our operating locations across North America, we offer domestic and international air and ocean freight forwarding services
and freight brokerage services. Our primary transportation services involve arranging shipments, on behalf of our customers, of
materials, products, equipment, and other goods that are generally larger than shipments handled by integrated carriers of primarily
small parcels, such as FedEx, DHL and UPS, including arranging and monitoring all aspects of material flow activity utilizing advanced
information technology systems. We also provide other value-added supply chain services, including order fulfillment, inventory
management, and warehouse and distribution services, and customs brokerage services to complement our core transportation service
offering.
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Fiscal Year 2022 Business Highlights
FINANCIAL
$1,459.4
million
$306.3
million
$44.5
million
$58.2
million
$80.9
million
OPERATIONAL
STRATEGIC
$2.4
million
21
acquisitions
Revenues
Achieved a record $1,459.4 million in total revenues, a 62.2% ↑ year-over-year
Non-GAAP Adjusted Gross Profit
Achieved a record $306.3 million in Non-GAAP adjusted gross profit, a 38.3% ↑ year-over-year
Net Income
Achieved record net income of $44.5 million, a 92.6% ↑ year-over-year, or $0.9 per basic and $0.88
per fully diluted share
Non-GAAP Adjusted Net Income
Achieved record non-GAAP adjusted net income of $58.2 million, a 69.2% ↑ year-over-year, or
$1.18 per basic and $1.15 per fully diluted share
Non-GAAP Adjusted EBITDA and Adjusted EBITDA Margin
Achieved Non-GAAP Adjusted EBITDA of $80.9 million, a 65.8% ↑ year-over-year, and non-
GAAP Adjusted EBITDA Margin of 26.4%, ↑ 437 basis points year-over-year
Strong Network of Company-Owned Locations and Agents
Maintains a strong network of over 25 company-owned locations and over 100 strategic operating partners
(agents) in the United States and Canada as well as additional global partners to facilitate international
shipments
Compelling Multi-Modal Service Offering
Continues to build out a strong compelling multi-modal service offering, leveraging our technology and
bundling value-added logistics solutions with our core transportation service offerings
Highly Diversified Customer Base
Cultivates significant long-standing customer relationships across the platform, with no one customer
representing more than 5% of our revenues
2022 Investment in Robust and Advanced Technology Offerings and Platform
Provides robust and advanced technology offerings to our customers, while providing advanced
technology to our operations, strategic operating partners and management. During fiscal year 2022, we
invested over $2.4 million on technology enhancements and software systems to increase our operating
efficiency and improve technology offerings.
Proven Growth Platform
Continues to deliver profitable growth with a track record of executing and integrating 21 acquisitions
since our inception in 2006.
Reconciliation of non-GAAP financial measures to the most comparable U.S. GAAP measures are included elsewhere in this
Annual Report on Form 10-K.
Fiscal Year 2022 Compensation Actions and Outcomes
Our compensation program is aligned with our pay philosophy of aligning executive pay with performance and executive financial
interest with stockholder financial interest and is designed to provide a mix of both fixed and variable incentive compensation and to
reward a mix of different performance measures. In April 2021, the Audit and Executive Oversight Committee engaged a compensation
consultant to, among other things, perform an executive benchmarking analysis of our executive compensation. As a result of this
analysis, we introduced in fiscal year 2022 the use of performance unit awards as an additional component of our Long-Term Incentive
Plan, as discussed in more detail below under “—Our Named Executive Officer Compensation—Long-Term Incentives – Equity
Awards.”
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Our fiscal year 2022 compensation actions and incentive plan outcomes based on our performance are summarized below:
Pay Element
Base Salary
Short-Term Incentives
Fiscal Year 2022 Actions
• Base salary provides a source of fixed income that reflects scope and responsibility of the position
held while ensuring a meaningful percentage of the executives’ overall compensation opportunity
is in the form of performance-based compensation.
• Base salary increases ranging from 10.4% to 15.4% during fiscal year 2022.
• Our Short-Term Incentive Program (STIP) allows our NEOs to participate on a pro rata basis along
with other STIP participants in a quarterly profit pool calculated as a percentage of our quarterly
adjusted EBITDA, with such percentage determined by the Audit and Executive Oversight
Committee. Historically, this percentage has been a constant 5% but this remains within the
discretion of the Audit and Executive Oversight Committee.
• The NEOs’ opportunity to participate in the STIP is expressed as a percentage of their base salary
and is subject to further adjustment based on their achievement relative to individual performance
goals. The target STIP award opportunity percentages for our NEOs remained the same as in prior
years and were 50% of base salary for our CEO and 35% for our other NEOs.
• The NEOs received the following quarterly bonus payouts for fiscal year 2022:
Named Executive
Officer
Bohn H. Crain
Todd E.
Macomber
Arnold Goldstein
John Sobba
185,361
180,933
• Our fiscal year 2022 Long-Term Incentive Program (LTIP) consisted of 31% time vested restricted
stock unit awards, which were determined based on achievement of pre-established company and
individual goals, and 69% performance share units.
Total
($)
438,018
3Q
($)
129,284
4Q
($)
144,490
2Q
($)
86,598
1Q
($)
77,646
37,304
36,126
53,234
53,234
61,375
56,365
33,448
35,208
183,089
53,234
59,496
36,911
33,448
Long-Term Incentives
• The NEOs’ opportunity to participate in the LTIP is expressed as a percentage of their base salary.
The LTIP award opportunities for our NEOs remained the same as in prior fiscal years and were
50% of base salary for our CEO and 35% for our other NEOs.
• The RSU awards vest in full on the third year anniversary of the grant date.
• After the completion of fiscal year 2021, in September 2021, our NEOs received the following
RSU awards, which were determined based on achievement of pre-established company and
individual goals for fiscal year 2021:
Name Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
Target LTIP Award
Opportunity
(% of Base Salary)
50%
35%
35%
35%
Number of RSUs (#)
Grant Date
Fair Value ($)
37,674
16,229
16,229
16,229
244,128
105,164
105,164
105,164
• In fiscal year 2022, our NEOs received the following PSU awards, which will vest and be paid out
in shares of our common stock based on achievement of a combination of company and individual
performance goals achieved over a three-year period:
Named Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
Number of PSUs
(#)
87,209
34,200
34,200
34,200
Grant Date Fair value
($)
645,347
253,080
253,080
240,084
Other Compensation
Related Actions
• Approximately 96% of the votes cast at our 2021 Annual Meeting of Stockholders were in favor
of our annual say-on-pay vote.
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COMPENSATION PHILOSOPHY
The Audit and Executive Oversight Committee is guided in its pay decisions by several principles and factors, with our fundamental
executive compensation philosophy being the alignment of executive pay with performance, and the alignment of the interests of
executives with those of stockholders.
The objectives of our executive compensation program are designed to ensure that we:
•
•
•
Attract and retain highly talented and dedicated executives;
Provide a compensation structure that properly incentivizes our executives to execute on our business strategy of
maximizing operational efficiencies, emphasizing customer relationships, and driving long term Company growth; and
Reinforce a positive culture that rewards entrepreneurial drive while maintaining a meaningful performance/variable based
component of our overall compensation plan to align with the scalable nature of our overall cost-structure.
The Audit and Executive Oversight Committee has approved the use of a formal peer group to provide market reference points to
consider when benchmarking executive compensation, outside director compensation, short- and long-term incentive design, and
corporate governance practices.
The Audit and Executive Oversight Committee believes that our compensation program should be transparent and easy to understand,
with the majority of executive pay being at risk and being performance-based, with predetermined financial metrics aligned with our
business strategy. We also believe in recognizing individual performance through the establishment of strategic/non-financial goals (for
example, ESG) reflecting our corporate culture, values and stockholder interests.
The Audit and Executive Oversight Committee employs a total compensation approach in establishing executive compensation
opportunities, consisting of base salary, a short-term incentive program (our STIP) consisting of quarterly cash incentives, a long-term
incentive program (our LTIP) consisting of annual equity grants of restricted stock units that vest in full after a three-year vesting period
and a long-term performance based program consisting of performance units that vest based on a combination of company and individual
performance goals achieved over a three-year period, a competitive benefits package and limited perquisites.
Our compensation program is designed to provide a mix of both fixed and variable incentive compensation and to reward a mix of
different performance measures. The variable short-term incentive and long-term incentive portions of compensation are designed to
reward both annual performance (under the short-term incentive program) and longer-term performance (under the long-term incentive
program). We believe this design mitigates any incentive for short-term risk-taking that could be detrimental to our long-term interests.
SAY-ON-PAY VOTE
At our 2021 Annual Meeting of Stockholders, our stockholders had the opportunity to vote on an advisory say-on-pay proposal.
Approximately 96% of the votes cast were in favor of our say-on-pay proposal. We believe these favorable results affirmed stockholder
support of our approach to executive compensation and did not believe it was necessary to, and, therefore, did not, make any significant
structural changes to our executive compensation program in response to the say-on-pay vote results.
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OUR ENGAGEMENT AND RESPONSIVENESS
We regularly seek stockholder input on our executive compensation program and then incorporate that feedback to further enhance the
program. Some of the compensation related actions we have recently taken in response to stockholder feedback are described below.
What We Heard
What We Did
Align the interest of executive officers with
those of stockholders.
Emphasize long-term performance-based
incentives.
Increase disclosure on executive
compensation.
Ensure the recovery of incentive
compensation based on incorrect
calculations that resulted in a financial
restatement.
Perform a compensation risk assessment.
Disclose CEO pay ratio.
Adopt or disclose an anti-hedging/pledging
policy.
Adopt a no tax gross-up policy.
We adopted stock ownership and retention guidelines applicable to our NEOs to
ensure that their interests would be closely aligned with those of our stockholders.
All of our NEOs are in compliance with these guidelines.
We have an anti-hedging/pledging policy.
Our founder and CEO owns approximately 21.1% of our outstanding common stock.
Beginning in fiscal year 2022, we revised our LTIP to provide for new performance
unit awards which will vest based upon achievement of a combination of company
and individual performance goals as measured over a three-year period. The
performance unit awards are in addition to our restricted stock unit awards which
are granted on an annual basis and are determined based, in large part, on the
achievement of annual company and individual performance goals, and once granted
do not vest until the three-year anniversary of the grant date. The performance unit
awards constitute at least 70% of our CEO’s target LTIP opportunity for fiscal year
2022.
As a smaller reporting company, we are not required to include a Compensation
Discussion and Analysis section in our Annual Report on Form 10-K nor the more
extensive executive compensation tables. Starting in 2021, in response to
stockholder feedback, we substantially increased and improved our executive
compensation disclosure in this Annual Report on Form 10-K, with an eye towards
transparency despite the fact that we are not required to provide these disclosures.
In September 2021, we adopted a separate more robust clawback policy covering
cash and equity incentive compensation applicable to current and former executives.
As a smaller reporting company, we are not required to perform a compensation risk
assessment. Starting in 2021, in response to stockholder feedback, we performed a
compensation risk assessment which concluded that our compensation policies,
practices and programs, along with our governance structure, work together in a
manner so as to encourage our executives (and employees) to pursue growth
strategies that emphasize stockholder value creation, but not to take unnecessary or
excessive risks that could threaten the value of our Company.
As a smaller reporting company, we are not required to disclose a CEO pay ratio.
Starting in 2021, in response to stockholder feedback, we calculated and disclosed
a CEO pay ratio in accordance with SEC rules and regulations under “—CEO Pay
Ratio”.
We have increased substantially our disclosure of our anti-hedging/pledging policy
in this Annual Report on Form 10-K.
In September 2021, we adopted a new tax gross-up policy that prohibits tax gross-
ups, other than the grandfathered provision in the employment agreement with our
founder and CEO.
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COMPENSATION HIGHLIGHTS AND BEST PRACTICES
Our compensation practices include many best pay practices that support our executive compensation objectives and principles, and
benefit our stockholders.
What We Do
What We Don’t Do
Maintain a competitive compensation package
Structure our executive officer compensation so that a
No guaranteed salary increases or bonuses
No excessive perquisites
significant portion of pay is at risk
Emphasize long-term performance in our equity-based
No repricing of stock options unless approved by
incentive awards
stockholders
Maintain a robust clawback policy
Require a double-trigger for equity acceleration upon a
No pledging of Radiant securities
No short sales or derivative transactions in Radiant stock,
change of control
including hedges
Have robust stock ownership and retention guidelines
Hold an annual say-on-pay vote
No current payment of dividends on unvested awards
No excise or other tax gross-ups (other than the
grandfathered arrangement with our founder and CEO)
EXECUTIVE STOCK OWNERSHIP GUIDELINES
In September 2021, we established the following stock ownership and retention guideline, which are intended to further align the
interests of our named executive officers with those of our stockholders.
Chief Executive Officer
Other Named Executive Officers
Position
Guideline
Four times base salary
One times base salary
Each NEO has five years to reach the officer’s stock ownership target. Until the applicable stock ownership guideline is achieved as
described above, each NEO subject is required to retain an amount equal to 100% of the net shares received as a result of the vesting of
restricted stock, restricted stock units or other equity-based awards or the exercise of stock options. “Net shares” are those shares that
remain after shares are sold or netted to pay the exercise price of stock options (if applicable) and any applicable withholding or estimated
taxes associated with the restricted stock, restricted stock unit, stock option, or other equity-based incentive award. All of our NEOs are
in compliance with our stock ownership guidelines as of November 14, 2022.
Named Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
Target Stock
Ownership as a
Multiple of Base Salary
4x
1x
1x
1x
In
Compliance?
Yes
Yes
Yes
Yes
Ownership %
21.1%
Less than 1%
Less than 1%
Less than 1%
Actual Stock Ownership as
a Multiple of Base Salary
184x
10x
2x
1x
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ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
Our executive compensation program consists of several key elements, which are described in the table below, along with the key
characteristics of, and the purpose for, each element and key fiscal year 2022 changes. We describe each key element of our executive
compensation program in more detail in the following pages, along with the compensation decisions made in fiscal year 2022.
Element
Key Characteristics
Purpose
Key Fiscal Year 2022 Changes
Base Salary
(Fixed, Cash)
A fixed amount, paid in cash
periodically throughout the year and
reviewed annually and, if
appropriate, adjusted.
Short-Term Incentive Plan (STIP)
(Variable, Cash)
Long-Term Incentive Plan (LTIP)
(Variable, Restricted Stock Units
and Performance Units)
Perquisites
Retirement Benefits
A variable, short-term element of
compensation that is payable
quarterly in cash, based on adjusted
EBITDA and achievement of pre-
established individual goals.
A variable, long-term element of
compensation is provided, which
was composed of 31% RSU awards
and 69% PSU awards during the
fiscal year ended June 30, 2022.
The RSU awards are based on
achievement of pre-established
company and individual goals and
vest in full on the three-year
anniversary of the grant date.
The performance awards will vest
upon the achievement of three-year
performance goals and be paid out
in shares of our common stock.
Includes an automobile allowance
and Company-provided life and
disability insurance premiums.
Includes a qualified defined
contribution retirement plan with a
discretionary Company match.
Base salary increases ranging from
10.4% to $15.4% during fiscal year
2022.
No changes.
Fiscal year 2022 incorporated new
performance unit awards payable
upon achievement of three-year
performance goals.
Provides a source of fixed income
that is market competitive and
reflects scope and responsibility of
the position held while providing a
meaningful percentage of an
executive’s overall compensation
opportunity in the form of
performance-based compensation.
Motivates and rewards our
executives for increased adjusted
EBITDA and achievement of
individual performance goals while
supporting our variable-cost based
business model.
Aligns the interests of our
executives with our stockholders;
encourages our executives to focus
on long-term company financial
performance measures that are
deemed strategically and
operationally important to our
Company; promotes retention of our
executives; and encourages
significant ownership of our
common stock.
Assists in allowing our executives
to more efficiently utilize their time
and support them in effectively
contributing to our Company
success.
Provides an opportunity for
employees to save and prepare
financially for retirement.
No changes.
No changes.
COMPETITIVE CONSIDERATIONS AND USE OF MARKET DATA
Background
In April 2015, the Audit and Executive Oversight Committee hired Mercer (US) Inc. to perform an executive compensation study and
provide it with guidance regarding our executive compensation program. Mercer provided the Audit and Executive Oversight Committee
with compensation data with respect to similarly sized logistics and freight-forwarding companies and consulted with the Audit and
Executive Oversight Committee about a variety of issues related to competitive compensation practices and incentive plan design. This
information helped us to evaluate and modify our equity and cash compensation awards and practices to remain consistent with industry
standards and to achieve our employee retention objectives. Through fiscal year 2021, these trends and this information was used by the
Audit and Executive Oversight Committee to determine whether to make any additional changes to our overall compensation policies
and program.
In December 2020, the Audit and Executive Oversight Committee engaged Meridian Compensation Partners to perform an executive
compensation study and provide guidance regarding our executive compensation program, especially in light of the feedback we
received from our stockholders on improvements that could be made to our program. Many of the recent changes we made to our
executive compensation program in response to stockholder feedback were made with the input and assistance of Meridian
Compensation Partners.
92
Peer Group
As part of Meridian Compensation Partners’ review of our executive compensation program, and specifically analyzing the market
competitiveness and reasonableness of our program, Meridian Compensation Partners recommended a peer group based on the following
three factors:
Industry
Revenue
Market Capitalization
Based on these factors, the following 26 companies were selected by the Audit and Executive Oversight Committee, upon
recommendation of Meridian Compensation Partners, in February 2021 as members of our peer group for purposes of benchmarking
the market competitiveness and reasonableness of our executive compensation program:
Air Transport Services Group, Inc.
Allegiant Travel Company
ArcBest Corporation
Atlas Air Worldwide Holdings, Inc.
Blackbaud, Inc.
CAI International, Inc.
Covenant Logistics Group, Inc.
CSG Systems International, Inc.
Daseke, Inc.
Eagle Bulk Shipping Inc.
Echo Global Logistics, Inc.
ExlService Holdings, Inc.
Forward Air Corporation
Genco Shipping and Trading Limited
Heartland Express, Inc.
Hub Group, Inc.
Manhattan Associates, Inc.
Marten Transport, Ltd.
MicroStrategy Incorporated
P.A.M. Transportation Services, Inc.
Pangaea Logistics Solutions, Ltd.
Pegasystems Inc.
Saia, Inc.
Universal Logistics Holdings, Inc.
USA Truck, Inc.
Werner Enterprises, Inc.
All of these peer group companies are public companies. We compete with some of these peers for employees and customers in various
markets. As of February 2021, when the peer group was recommended by Meridian Compensation Partners, we ranked at the 37th
percentile of our peer group for revenue and at the 21st percentile for market capitalization. In constructing this peer group, the Audit
and Executive Oversight Committee also considered whether to include companies that disclosed Radiant Logistics as a peer, companies
that appear in the peer groups of our peer companies and companies that proxy advisory firms consider a peer of ours in their latest
voting recommendations reports.
Use of Peer Group Information and Competitive Positioning
One of the objectives of our executive compensation philosophy is to design our executive compensation program to ensure that we
attract and retain highly-talented and dedicated executives. To assist us in meeting this objective, we strive to compensate our executive
officers in a manner that is competitive but also reasonable when considering our revenue and market capitalization relative to other
members of our peer group. To ensure the competitiveness and reasonableness of our executive compensation packages relative to our
industry, the Audit and Executive Oversight Committee periodically evaluates our peer group and an analysis of our executive
compensation program vis a vis our peer group, with the aid of an independent external compensation consultant and management, and
uses this information as one input in helping to determine appropriate pay levels.
In reviewing this benchmarking data, however, the Audit and Executive Oversight Committee recognizes that this information is not
always appropriate as a stand-alone tool for setting compensation. This could be due to an imperfection in the peer group information
or due to aspects of our business and objectives that may be unique to us. For example, the Audit and Executive Oversight Committee
believes the February 2021 peer group of 26 companies as recommended by Meridian Compensation Partners is a less-than-ideal
comparator group for purposes of benchmarking our executive compensation program since Radiant Logistics is ranked at the 37th
percentile of our peer group for revenue and at the 21st percentile for market capitalization. This was primarily driven by the difficulty
in creating a peer group due to limited number of viable peers in our industry with similarly sized revenues and market capitalization.
As a result, the Audit and Executive Oversight Committee does not explicitly target any percentile when assessing and setting executive
compensation. Instead, the Audit and Executive Oversight Committee intends to analyze the specific competitiveness of any individual
executive’s pay considering factors like not only the benchmarking data, but also the executive’s experience, skills and capabilities,
contributions as a member of the executive management team, and contributions to our overall performance. We believe these others
factors and considerations are more important at this time for our Company than peer group positioning to attract and retain the best
executive talent to achieve our business strategies and objectives. The Audit and Executive Oversight Committee did note that our NEO
base salaries, target short-term incentive opportunities, target total cash compensation and target long-term incentive opportunities, are
below the 50th percentile, which the Audit and Executive Oversight Committee considered reasonable given the company’s revenues
and market capitalization relative to its peers.
Accordingly, every year, we review each executive’s base salary and STIP and LTIP opportunities to determine whether they should be
adjusted. Along with individual performance, we also consider primarily movement of salaries and other aspects of executive
compensation in the market and trends, as well as our financial results from the prior fiscal year to determine appropriate compensation
adjustments.
93
NAMED EXECUTIVE OFFICER COMPENSATION
Base Salary
Purpose: Base salary is designed to compensate our NEOs at a fixed level of compensation that provides some financial certainty and
security for our NEOs, and also serves as a retention tool throughout the executive’s career.
Fiscal Year 2022 Review: The fiscal year 2022 base salaries were increased.
Named Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John W. Sobba
Fiscal Year 2021 Base
Salary ($)
325,000
200,000
200,000
200,000
Fiscal Year 2022 Base Salary ($)
Change (%)
375,000
225,000
225,000
220,833
15.4%
12.5%
12.5%
10.4%
Short-Term Incentive Plan - Quarterly Cash Bonuses
Purpose: Our Short-Term Incentive Plan (STIP), or quarterly cash bonus program, is paid under our Management Incentive
Compensation Plan, or MICP, and is designed to provide incentive compensation that supports our variable cost-based business strategy
and emphasizes pay-for-performance by tying reward opportunities to company and individual performance.
STIP Awards and Plan Mechanics: Our STIP allows our NEOs to participate on a pro rata basis along with other STIP participants in a
quarterly profit pool calculated as a percentage of our quarterly adjusted EBITDA. The opportunity of our NEOs to participate in the
STIP is expressed as a percentage of their base salary and is subject to further adjustment based on their achievement relative to
individual performance goals. The target STIP award opportunity percentages for our NEOs remained the same as in prior years and
were 50% of base salary for our CEO and 35% for our other NEOs.
Since the quarterly bonus pool under the MICP in which our NEOs participate is determined based on a percentage of our quarterly
adjusted EBITDA and there is no maximum limit to the size of the pool, our executives are incentivized to increase our profitability,
although discretion could be exercised by the Audit and Executive Oversight Committee to decrease or otherwise adjust the size of the
pool or individual payouts if determined appropriate. Primarily because of this discretion, as well as multiple other factors, including
the design of the MICP, our other compensation policies and programs, and our controls and approval process, we do not believe the
MICP creates unnecessary risk taking by our executives or other employees.
Payments under our MICP are paid quarterly as opposed to annually in order to instill a sense of urgency in progressing the company’s
objectives while reinforcing and rewarding the entrepreneurial culture of the company.
Fiscal Year 2022 STIP Awards: The fiscal year 2022 target short-term incentive opportunities of all of our NEOs were unchanged from
their fiscal year 2021 target short-term incentive opportunities.
Named Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John W. Sobba
Fiscal Year 2022 Target
Bonus Percentage
50% of base salary
35% of base salary
35% of base salary
35% of base salary
Fiscal Year 2022 Target Bonus
Percentage
50% of base salary
35% of base salary
35% of base salary
35% of base salary
Change (%)
0.0%
0.0%
0.0%
0.0%
The fiscal year 2022 target short-term incentive opportunities for our NEOs were paid quarterly based on our adjusted EBITDA
performance for each fiscal quarter of fiscal year 2022 and their pro rata participation along with other STIP participants in the quarterly
profit pool, which for fiscal year 2022 was calculated as 5% percent of our quarterly adjusted EBITDA. For purposes of the corporate
quarterly bonus pool under the MICP, adjusted EBITDA was defined as our cumulative net income for such fiscal quarter, excluding
the effects of interest, taxes, and the “non-cash” effects of depreciation and amortization on long-term assets, as well as all depreciation
charges related to technology and equipment, and all amortization charges (including amortization of leasehold improvements), and
further adjusted to exclude changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition
and lease termination costs, foreign currency transaction gains and losses, extraordinary items, share-based compensation expense,
litigation expenses unrelated to our core operations, gain on forgiveness of debt, materials, management and distribution start-up costs
and other non-cash charges, as derived from our consolidated audited financial statements, and as determined by the Audit and Executive
Oversight Committee in good faith. Note that this definition of adjusted EBITDA is essentially the same as our reported adjusted
EBITDA with the exception that it adds back in the accrued bonus under the MICP.
94
Our adjusted EBITDA as calculated pursuant to our STIP for each quarter of our fiscal year 2022 was as follows (in millions):
1Q Adjusted EBITDA
($)
15.3
2Q Adjusted EBITDA
($)
16.7
3Q Adjusted EBITDA
($)
22.6
4Q Adjusted EBITDA
($)
26.4
Our NEOs received the following quarterly bonus payouts under our MICP during fiscal year 2022:
Named Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
1Q
($)
77,646
33,448
33,448
35,208
2Q
($)
86,598
36,911
37,304
36,126
3Q
($)
129,284
53,234
53,234
53,234
4Q
($)
144,490
59,496
61,375
56,365
Total
($)
438,018
183,089
185,361
180,933
The CEO’s share of each quarterly bonus pool was determined based on a formula of his target STIP opportunity and his individual
performance and was approved by the Audit and Executive Oversight Committee.
In addition to participating in the STIP under the MICP, Arnold Goldstein, our Senior Vice President and Chief Commercial Officer,
also receives additional compensation in connection with his management of our Vertical Sales Organization. This compensation is
based on calculated as 1% of the Net Contribution of the Vertical Sales Organization, where Net Contribution is calculated as the gross
profit attributed the Vertical Sales Associates less any associated costs for agent station commissions, bad debts and corporate overheads
and net of the costs of the Vertical Sales Associates. Accordingly, Mr. Goldstein received the following additional payments under this
plan during fiscal year 2022:
1Q
($)
28,732
2Q
($)
28,737
3Q
($)
16,803
4Q
($)
66,099
Total
($)
140,371
Long-Term Incentive Plan - Annual Equity Grants
Purpose: Our long-term incentive program (LTIP), which is a component of our MICP, is designed to provide for incentive
compensation that supports our variable cost-based business strategy and emphasizes pay-for-performance by tying reward opportunities
to carefully determined and articulated performance goals at corporate, business unit, operating location and/or individual levels.
LTIP Awards and Mechanics: The opportunity of a NEO to participate in the LTIP is expressed as a percentage of the NEO’s base
salary. Our LTIP for our NEOs for the past several years has consisted of RSU awards based on achievement of pre-established company
and individual goals that vest in full on the three-year anniversary of the grant date. Beginning in fiscal year 2022, our LTIP also consists
of performance unit awards in addition to RSU awards, as discussed in more detail below under “—LTIP Awards for Fiscal Year 2022.”
These performance unit awards constitute at least 70% of our CEO’s target LTIP opportunity for fiscal year 2022.
LTIP Awards for Fiscal Year 2022: After completion of fiscal year 2021, in September 2021, our NEOs received RSU awards, which
were determined based on achievement of pre-established company and individual goals for fiscal year 2021. For our NEO’s, 90% of
their RSU award opportunity was based on the Company’s achievement relative to budgeted adjusted EBITDA, as measured on a
consolidated basis, and 10% of the RSU opportunity was based on their achievement relative to individual goals. The Audit and
Executive Oversight Committee believes it is important to include an adjusted EBITDA performance metric in both our STIP and LTIP
because of our emphasis on overall core profitability. The performance factor for each NEO for purposes of determining the number of
RSUs granted after completion of fiscal year 2021 in September 2021 was 150% which reflects the Company’s achievement relative to
budgeted adjusted EBITDA, as approved by the Audit and Executive Oversight Committee, and achievement relative to individual
goals, as determined by the Audit and Executive Oversight Committee in the case of our CEO, and by the CEO, in the case of our other
NEOs.
Named Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
Fiscal Year 2021
Adjusted EBITDA
Goal ($)
27.1 mil.
27.1 mil.
27.1 mil.
27.1 mil.
Fiscal Year 2021
Actual EBITDA
($)
48.8 mil
48.8 mil
48.8 mil
48.8 mil
95
Company Financial
Goal Achievement
(90% Weighting)
180%
180%
180%
180%
Individual Goal
Achievement (10%
Weighting)
180%
180%
180%
180%
150%
150%
150%
150%
Performance Factor
(100%)
The LTIP award opportunities for RSU awards for our NEOs in fiscal year 2022 remained the same as in prior fiscal years and were
50% of base salary for our CEO and 35% for our other NEOs. RSU awards will vest in full on the three-year anniversary of the grant
date.
Name Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
Target LTIP Award Opportunity
(% of Base Salary)
50%
35%
35%
35%
Number of RSUs (#)
37,674
16,229
16,229
16,229
Grant Date
Fair Value ($)
244,128
105,164
105,164
105,164
Beginning in fiscal year 2022, our LTIP awards consisted of performance unit and RSU awards. The performance unit awards are
granted in early fiscal year 2022 and ultimately vest and be paid out based upon the achievement of three-year performance goals. The
RSU awards will continue to be granted after completion of a fiscal year and be based on the achievement of pre-established company
and individual goals for such fiscal year and will vest in full on the three-year anniversary of the grant date. The target number of
performance units for each NEO will be determined by a percentage of the NEO’s base salary, which percentage for our CEO is expected
to be 150% and for our NEOs is expected to be 100%. The target performance unit awards constitute at least 70% of our CEO’s target
LTIP opportunity for fiscal year 2022.
Named Executive Officer
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
Fiscal Year 2022 Target
Bonus Percentage
150% of base salary
100% of base salary
100% of base salary
100% of base salary
Number of PSUs (#)
87,209
34,200
34,200
34,200
Grant Date Fair Vale
($)
645,347
253,080
253,080
240,084
All Other Compensation - RLP Distributions
On June 28, 2006, we joined with Radiant Capital Partners, LLC (“RCP”), an affiliate of Mr. Crain, our CEO, to form Radiant Logistics
Partners, LLC (“RLP”). RLP commenced operations in 2007 as a minority-owned business enterprise for the purpose of enabling us to
expand the scope of our service offerings to include participation in certain supplier diversity programs that otherwise would not have
been available to us. RLP is owned 60% by Mr. Crain and 40% by us. In the course of evaluating and approving the ownership structure,
operations and economics emanating from RLP, a committee consisting of the independent Board member of the Company considered,
among other factors, the significant benefits provided to us through association with a minority business enterprise, particularly as many
of our largest current and potential customers have a need for diversity offerings. In addition, the committee concluded the economic
relationship with RLP was on terms no less favorable to us than terms generally available from unaffiliated third parties. Mr. Crain’s
share of distributed earnings from RLP are included in the “All Other Compensation” column of the Summary Compensation Table.
Other Benefits
In fiscal year 2022, our NEOs had the opportunity to participate in a qualified defined contribution retirement plan on the same basis as
our other employees. We believe this plan provides an opportunity for our executives to plan for and meet their retirement savings needs.
We do not provide any pension arrangements, nonqualified defined contribution, or other deferred compensation plans.
We provide our NEOs with modest perquisites to attract and retain them and to allow them to more efficiently utilize their time and to
support them in effectively contributing to the success of our Company. The perquisites provided to our NEOs during fiscal year 2022
included an automobile allowance and Company-provided life and disability insurance premiums. We believe these benefits are an
important part of our overall compensation program and help us accomplish our goal of attracting, retaining, and rewarding top executive
talent.
96
EMPLOYMENT AGREEMENTS, SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS, AND POST-
TERMINATION RESTRICTIONS
The compensation paid to our NEOs is governed, in part, by written employment agreements with them, which are described below
under “Executive Compensation—Employment and Other Agreements.” The purpose of these agreements is to define the essential
terms of these executives’ employment relationships in a manner that will protect our business and other interests and the interests of
the executive, including in the event his employment is terminated upon certain events. The severance provisions in the agreement are
intended to induce these executives to continue employment with our Company and to retain them and provide consideration to them
for certain restrictive covenants that apply following a termination of employment. Additionally, we entered into these agreements
because they provide us valuable protection by subjecting these executives to restrictive covenants that prohibit the disclosure of
confidential information during and following their employment and limit their ability to engage in competition with us or otherwise
interfere with our business relationships following a termination of their employment. The receipt of any severance by these executives,
other than our CEO, is conditioned upon his execution of a broad release of claims.
To encourage continuity, stability, and retention when considering the potential disruptive impact of an actual or potential corporate
transaction, we have established change of control arrangements, including provisions in our employment agreements with our NEOs,
which are described below under “Executive Compensation—Potential Post-Termination and Chane in Control Payments.” These
provisions provide our NEOs certain payments and benefits in the event of a termination of their employment in connection with a
change of control. These additional payments and benefits will not be triggered just by a change of control, but require a termination
event not within the control of the executive, and thus are known as “double trigger” change of control arrangements. These “double
trigger” change of control protections are intended to induce executives to accept or continue employment with our Company, provide
consideration to executives for certain restrictive covenants that apply following termination of employment, and provide continuity of
management in connection with a threatened or actual change of control transaction. If the employment of our CEO is terminated by us
without cause or by him for good reason following a change of control or if the employment of one of our other NEOs is terminated by
us without cause or by him for good reason within nine months following a change of control, the executive will be entitled to receive
a severance payment and certain benefits. In the case of our NEOs, other than our CEO, the receipt of any severance is conditioned upon
the executive’s execution of a release of claims.
We believe these change of control arrangements with our NEOs are an important part of our executive compensation program in part
because they mitigate some of the risk for executives working in a smaller public company where there is a meaningful likelihood that
the company may be acquired. Change of control benefits are intended to attract and retain qualified executives who, absent these
arrangements and in anticipation of a possible change of control of our Company, might consider seeking employment alternatives to
be less risky than remaining with our Company through the transaction. We believe that relative to our Company’s overall value, our
potential change of control benefits are relatively small and are aligned with current peer company practices.
RISK ASSESSMENT
As a result of our assessment on risk in our compensation programs, we concluded that our compensation policies, practices, and
programs and related compensation governance structure work together in a manner so as to encourage our employees, including our
NEOs, to pursue growth strategies that emphasize stockholder value creation, but not to take unnecessary or excessive risks that could
threaten the value of our Company.
As part of our assessment, we noted in particular the following:
•
•
•
annual base salaries for employees are not subject to performance risk and, for most non-executive employees, constitute
the largest part of their total compensation;
short-term incentives are in the form of quarterly cash bonuses that are limited in amount, to some extent, by virtue of the
calculation of the total quarterly bonus pools, which equal a certain percentage of our adjusted EBITDA for the quarter,
assuming we meet a certain threshold quarterly adjusted EBITDA goal; and
a significant portion of performance-based compensation is in the form of long-term equity incentives, which do not
encourage unnecessary or excessive risk because they vest over a three-year period of time, thereby focusing our employees
on our long-term interests.
97
CLAWBACK POLICY
In September 2021, our Board of Directors adopted a separate more robust clawback and forfeiture policy. The policy covers all current
and former executive officers of the Company. Pursuant to the policy, the Board of Directors may in its sole discretion recover certain
cash and/or equity-based incentive compensation that is approved, awarded or granted to a covered executive on or after September 27,
2021 if there is a material negative restatement of our financial statements or in the event a Covered Executive engaged in egregious
conduct that is substantially detrimental to the Company.
EXCISE TAX GROSS-UP POLICY
As part of our response to feedback from our stockholders, the Board of Directors adopted a stand-alone policy prohibiting gross-ups
for the excise tax imposed by Sections 280(g) and 4999 of the U.S. Internal Revenue Code, as well as the reimbursement of NEOs for
such excise tax, with respect to any cash and/or equity-based incentive compensation that constitute golden parachute payments made
from and after July 1, 2021, with the exception of any gross-up payments as may be provided in the employment agreement with our
founder and CEO.
ANTI-HEDGING/PLEDGING/SPECULATIVE INVESTMENTS POLICY
Radiant Logistics considers it improper and inappropriate for those employed by or associated with Radiant Logistics to engage in short-
term or speculative transactions in our securities or in other transactions in our securities that may lead to inadvertent violations of the
insider trading laws. Accordingly, trading in our securities is subject to the following additional guidance, as set forth in our Insider
Trading Policy, for all officers, directors, employees and agents (collectively referred to as insiders):
•
•
•
•
•
Short Sales: Short sales (i.e., the sale of a security that must be borrowed to make delivery) and “selling short against the
box” (i.e., a sale with a delayed delivery) with respect to Company securities are prohibited.
Derivative Securities and Hedging Transactions: Insiders are prohibited from engaging in transactions in publicly-traded
options, such as puts and calls, and other derivative securities with respect to the Company’s securities. This prohibition
extends to any hedging or similar transaction designed to decrease the risks associated with holding Company securities.
Using Company Securities as Collateral for Loans: Unless approved in advance by the Company’s Board of Directors,
insiders may not pledge Company securities as collateral for loans.
Holding Company Securities in Margin Accounts: Unless approved in advance by the Company’s Board of Directors,
insiders may not hold Company securities in margin accounts.
Placing Open Orders with Brokers: Except in accordance with an approved trading plan, insiders should exercise caution
when placing open orders, such as limit orders or stop orders, with brokers, particularly where the order is likely to remain
outstanding for an extended period of time. Open orders may result in the execution of a trade at a time when insiders are
aware of material nonpublic information or otherwise are not permitted to trade in Company securities, which may result in
inadvertent insider trading violations. If an insider is subject to blackout periods or pre-clearance requirements, such insider
should so inform any broker with whom he or she places any open order at the time it is placed.
TAX CONSIDERATIONS
Prior to the enactment of the Tax Cuts and Jobs Act (“Tax Act”), in designing our executive compensation program, we considered the
deductibility of executive compensation under Code Section 162(m). The Tax Act, among other things, repealed the exemption from
Code Section 162(m)’s $1 million deduction limit for “performance-based” compensation for taxable years beginning after December
31, 2017, other than with respect to certain “grandfathered” arrangements entered into prior to November 2, 2017. Some of our
compensation plans were designed with the intention of satisfying the requirements for “performance-based” compensation as defined
in Code Section 162(m) prior to the effective date of the Tax Act so that such awards would be exempt from the Code Section 162(m)
deduction limitation. While we designed these plans to operate in this manner, the exemption is no longer available for performance-
based awards paid in tax years beginning after 2017 (other than with respect to certain “grandfathered” arrangements as noted above).
Further, as to any grandfathered arrangements, the Audit and Executive Oversight Committee may administer the plans in a manner that
does not satisfy the Code Section 162(m) performance-based compensation requirements in order to achieve a result that the Audit and
Executive Oversight Committee determines to be appropriate, including by revising performance goals and/or adjustment events as
needed to ensure our pay practices continue to align with performance.
98
HOW WE MAKE COMPENSATION DECISIONS
There are several elements to our executive compensation decision-making, which we believe allow us to most effectively implement
our compensation philosophy. The Audit and Executive Oversight Committee, its independent external compensation consultant, and
management all have a role in decision-making for executive compensation. The following table summarizes their roles and
responsibilities.
Responsible Party
Roles and Responsibilities
Audit and Executive Oversight
Committee
• Oversees all aspects of our executive compensation program.
• Annually reviews and approves our corporate goals and objectives relevant to CEO
(Comprised solely of independent
directors and reports to the Board of
Directors)
Independent External Compensation
Consultant
(Independent under NYSE American
continued listing standards and reports to
the Audit and Executive Oversight
Committee)
Chief Executive Officer
(With the support of other members of the
management team)
compensation.
• Evaluates CEO’s performance in light of such goals and objectives, and determines
and approves his compensation based on this evaluation.
• Determines and approves all executive officer compensation, including salary,
bonus, and equity and non-equity incentive compensation.
• Administers our equity and incentive compensation plans and reviews and
approves equity awards and executive incentive payouts.
• Reviews our incentive compensation arrangements to confirm that incentive pay
does not encourage unnecessary risk-taking.
• Evaluates market competitiveness of each executive’s compensation.
• Evaluates proposed changes to our executive compensation program.
• Assists the Board in developing and evaluating potential candidates for executive
officer positions and overseeing the development of executive succession plans.
• Has sole authority to hire consultants, approve their fees, and determine the nature
and scope of their work.
• Provides advice and guidance on the appropriateness and competitiveness of our
executive compensation program relative to our performance and market practice.
• Examines our executive compensation program to ensure that each element
supports our business strategy.
• Assists in selection of peer companies and gathering competitive market data.
• Provides advice with respect to our equity-based compensation plans.
• Reviews performance of other executive officers and makes recommendations
with respect to their compensation.
• Confers with the Audit and Executive Oversight Committee and compensation
consultant concerning design and development of compensation and benefit plans.
• Provides no input or recommendations with respect to his own compensation.
99
Audit and Executive Oversight Committee Report
The Audit and Executive Oversight Committee, which performs the equivalent functions of a compensation committee, has reviewed
and discussed the foregoing “Compensation Discussion and Analysis” with our management. Based on this review and these discussions,
the Audit and Executive Oversight Committee has recommended to the Board of Directors that the “Compensation Discussion and
Analysis” be included in this Annual Report on Form 10-K.
AUDIT AND EXECUTIVE OVERSIGHT COMMITTEE
Richard P. Palmieri, Chair
Michael Gould
Kristin Smith
Executive Compensation
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by our principal executive officer, our principal financial officer, and our two
remaining executive officers during the past three fiscal years.
Name and Principal Position
Year
Salary
($)(1)
Bonus
($)(2)
Stock Awards
($)(3)
Bohn H. Crain
Chairman of the Board
and Chief Executive
Officer
Todd E. Macomber
Senior Vice President
Chief Financial Officer
and Treasurer
Arnold Goldstein
Senior Vice President
and Chief Commercial
Officer
John Sobba
Senior Vice President
and General Counsel
2022
2021
2020
2022
2021
2020
2022
2021
2020
2022
2021
2020
370,731
258,125
285,625
224,615
194,154
191,231
224,616
194,154
191,231
220,577
194,154
191,231
—
—
—
—
50,000
—
—
200,000
—
—
30,000
—
889,474
162,085
212,022
358,244
69,820
91,331
358,244
69,820
91,331
345,248
69,820
91,331
Non-Equity
Incentive Plan
Compensation
($)(4)
360,287
279,117
136,331
246,351
120,236
58,727
252,744
120,236
58,727
153,326
120,236
58,727
All Other
Compensation
($)(5)
1,163,715
1,061,805
1,278,947
24,567
26,295
17,345
167,027
151,763
112,686
24,826
24,739
20,193
Total
($)
2,784,207
1,761,132
1,912,925
853,777
460,505
358,634
1,002,631
735,973
453,975
743,977
438,949
361,482
(1) Salary amounts reflect base salary earned during the fiscal year. The increase were 15.4% for Mr. Crain, 12.5% for Mr. Macomber and Mr. Goldstein,
$10.4% for Mr. Sobba. See “Compensation Discussion and Analysis—Named Executive Officer Compensation—Base Salaries.”
(2) Although we typically do not pay discretionary bonuses that are subjectively determined to any NEOs we did so during fiscal year 2021 to reward
extraordinary performance by Messrs. Macomber, Goldstein and Sobba that was not reflected by their payouts under our STIP. Quarterly cash bonuses
under our STIP are reported in the “Non-Equity Incentive Plan Compensation” column and are based on performance, which is measured against pre-
established Adjusted EBITDA goals and individual performance. See “Compensation Discussion and Analysis—Named Executive Officer
Compensation—Short-Term Incentive Plan—Quarterly Cash Bonuses.”
(3) Amounts reported represent the grant date fair value of RSU and PSU awards granted to our NEOs, computed in accordance with Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. These are not amounts paid to or realized by the NEOs.
We caution that the amounts reported in the table for stock awards and, therefore, total compensation may not represent the amounts that each NEO
will actually realize from the awards. Whether, and to what extent, an NEO realizes value will depend on a number of factors, including Company
performance and stock price. The grant date fair value of the PSU awards assumes target levels of performance. The grant date fair value of the 2022
PSU awards assuming maximum levels of performances are as follows: Mr. Bohn Crain ($645,347); Mr. Todd Macomber ($253,080); Mr. Arnold
Goldstein ($253,080) and Mr. John Sobba ($240,084). See “Compensation Discussion and Analysis—Named Executive Officer Compensation—Long-
Term Incentives” for a description of our long-term incentive awards for fiscal year 2022.
100
(4) Amounts reported represent payouts under our STIP and for each year reflect the amounts earned for that fiscal year but paid during the following
fiscal year. See “Compensation Discussion and Analysis—Named Executive Officer Compensation—Short-Term Incentive Plan—Quarterly Cash
Bonuses” for a description of our incentive plan and payouts for fiscal year 2022.
(5) Amounts reported in this column for fiscal year 2022 are described in the table below:
Name
Distributed Share of
RCP Earnings
($)(a)
Company Match
401(k)
Contributions
($)
Automobile
Allowance
($)
Life and
Disability
Insurance
Premiums
($)
Commissions
($)
Total Other
Compensation
($)
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
1,140,000
—
—
—
10,675
11,819
13,716
11,860
12,000
12,000
12,000
12,000
1,040
748
940
965
—
—
140,371
—
1,163,715
24,567
167,027
24,825
(a) See the section entitled “Compensation Discussion and Analysis—Named Executive Officer Compensation—Other Compensation” and “Certain
Relationships and Transactions with Related Persons” for information regarding the distributed share of earnings attributed to RCP.
EMPLOYMENT AGREEMENTS
CEO Employment Agreement
On January 13, 2006, we entered into an employment agreement with Bohn H. Crain to serve as our Chief Executive Officer. On
December 31, 2008, we and Mr. Crain entered into a letter agreement for the purpose of (i) amending the employment agreement to
ensure compliance with the requirements of Section 409A of the Code, and (ii) revising the general renewal period of the agreement of
one year to five years in the event of a change in control. On June 11, 2011, we and Mr. Crain entered into a letter agreement for the
purpose of amending the employment agreement to (1) extend the agreement through December 31, 2016, (2) increase the renewal
periods of the agreement from one to three years, and (3) increase Mr. Crain’s base salary. The amended agreement provides for an
annual base salary of $325,000, a performance bonus of up to 50% of the base salary based upon the achievement of certain target
objectives, and a discretionary merit bonus that can be awarded at the discretion of our Board of Directors. Pursuant to our MICP, Mr.
Crain will be evaluated with a target bonus, based upon achievement of corporate and individual objectives, of 50% of base
compensation. The amended agreement contains severance and change of control provisions, as described in more detail under “—
Potential Post-Termination and Change in Control Payments,” and standard and customary non-solicitation, non-competition, work
made for hire, and confidentiality provisions. During fiscal year 2022, the Board of Directors approved an increase to Mr. Crain's base
salary, to an amount of $425,000 annually, effective on January 1, 2022.
Other NEO Employment Agreements
Effective May 14, 2012, we entered into an employment agreement with Todd E. Macomber, the Company’s Senior Vice President and
Financial Officer. Under his employment agreement, Mr. Macomber is entitled to receive an annual base salary in the amount of
$200,000, subject to annual review. Mr. Macomber is also entitled to participate in the Company’s stock option program and annual
incentive compensation program, pursuant to which he may earn a discretionary bonus with an initial target of 35% of his annual base
salary. Mr. Macomber is also eligible to participate in such life insurance, hospitalization, major medical and other health and other
benefits offered by the Company to other similar executives. He is also eligible for a $1,000 per month car allowance benefit and to
participate in the Company’s 401(k) plan and is entitled to three weeks of paid vacation per year. During fiscal year 2022, the Board of
Directors approved an increase to Mr. Macomber's base salary, to an amount of $250,000 annually, effective on January 1, 2022.
Effective February 6, 2015, we entered into an employment agreement with Arnold Goldstein, the Company’s Senior Vice President
and Chief Commercial Officer. Under his employment agreement, Mr. Goldstein is entitled to receive an annual base salary in the
amount of $200,000, subject to annual review. Mr. Goldstein is also entitled to participate in the Company’s stock option program and
annual incentive compensation program, pursuant to which he may earn a discretionary bonus with an initial target of 35% of his annual
base salary. Mr. Goldstein is also eligible to participate in such life insurance, hospitalization, major medical and other health and other
benefits offered by the Company to other similar executives. He is also eligible for a $1,000 per month car allowance benefit and to
participate in the Company’s 401(k) plan and is entitled to three weeks of paid vacation per year. During fiscal year 2022, the Board of
Directors approved an increase to Mr. Goldstein's base salary, to an amount of $250,000 annually, effective on January 1, 2022.
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Effective April 27, 2018, we entered into an employment agreement with John Sobba, the Company’s Senior Vice-President and General
Counsel. Under his employment agreement, Mr. Sobba is entitled to receive an annual base salary in the amount of $200,000, subject
to annual review. Mr. Sobba is also entitled to participate in the Company’s stock option program and annual incentive compensation
program, pursuant to which he may earn a discretionary bonus with an initial target of 35% of his annual base salary. Mr. Sobba is also
eligible to participate in such life insurance, hospitalization, major medical and other health and other benefits offered by the Company
to other similar executives. He is also eligible for a $1,000 per month car allowance benefit and to participate in the Company’s 401(k)
plan and is entitled to three weeks of paid vacation per year. During fiscal year 2022, the Board of Directors approved an increase to
Mr. Sobba's base salary, to an amount of $250,000 annually, effective on February 1, 2022.
All of these agreements also contain standard and customary severance and change of control provisions, as described in more detail
under “—Potential Post-Termination and Change in Control Payments,” as well as standard and customary non-solicitation, non-
competition, work made for hire, and confidentiality provisions.
GRANTS OF PLAN-BASED AWARDS DURING FISCAL YEAR 2022
The table below provides information concerning grants of plan-based awards to each of our NEOs during the fiscal year ended June 30,
2022. Non-equity incentive plan awards were granted under our Management Incentive Compensation Plan, the material terms of which
are described under “Compensation Discussion and Analysis—Named Executive Officer Compensation—Short-Term Incentive-
Quarterly Cash Bonuses.” Stock awards in the form of RSU awards were granted under our stockholder-approved plan, the Radiant
Logistics, Inc. 2012 Stock Option and Performance Award Plan, and stock awards in the form of PSU awards were granted under our
stockholder-approved plan, the Radiant Logistics, Inc. 2021 Omnibus Incentive Plan. The material terms of these awards are described
under “Compensation Discussion and Analysis—Named Executive Officer Compensation—Long-Term Incentives – Annual Equity
Grants” and in the notes to the table below.
Estimated Future Payouts under Non-
Equity Incentive Plan Awards(1)
Estimated Future Payouts under Equity
Incentive Plan Awards(2)
Name
Grant Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
All Other Stock
Awards: Number of
Shares of Stock or
Unites(3)
(#)
Grant Date Fair
Value Stock and
Option Awards(4)
($)
N/A
93,750
78,750
39,375
43,605
187,500
—
9/8/2021
1/4/2022
—
9/8/2021
1/4/2022
Bohn H. Crain
Cash award
RSU award
PSU award
Todd E. Macomber
Cash award
RSU award
PSU award
Arnold Goldstein
Cash award
RSU award
PSU award
John Sobba
Cash award
—
RSU award
105,164
RSU
240,084
(1) Amounts reported represent potential future payouts under our MICP. Actual payouts under this plan are reflected in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table.
—
9/8/2021
2/25/2022
—
9/8/2021
1/4/2022
—
244,128
645,347
—
105,164
253,080
—
105,164
253,080
—
37,674
87,209
—
16,229
34,200
—
16,229
34,200
—
16,229
34,200
130,814
51,300
34,200
51,300
34,200
51,300
87,209
17,100
17,100
34,200
17,100
78,750
38,646
39,375
77,292
N/A
N/A
N/A
(2) Amounts reported represent PSU awards. These performance unit awards will be vested and paid out based upon the achievement of three-year, pre-
established, company and individual performance goals.
(3) Amounts reported represent RSU awards. The RSU awards will vest in full on the three-year anniversary of the grant date, subject to the executive’s
continued employment with us.
(4) Amounts reported represent the grant date fair value of the RSU awards granted to our NEOs, computed in accordance with FASB ASC Topic 718.
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OUTSTANDING EQUITY AWARDS AS OF JUNE 30, 2022
The following table sets forth information with respect to all outstanding equity awards held by our NEOs as of June 30, 2022.
Option Awards
Stock Awards
Name
Bohn H. Crain
Todd E. Macomber
Arnold Goldstein
John Sobba
Number of
Securities
Underlying
Unexercised
Options
Exercisable (#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
($)
Option
Exercise
Price
($)
Option
Expiration Date
Number of
Shares of Units
of Stock that
Have Not
Vested(1)
(#)
Market
Value of
Shares or
Unites of
Stock that
Have Not
Vested
($)
2,377
—
5.03
5/12/2025(2)
1,175
1,886
1,917
2,207
1,196
2,070
926
—
—
—
—
—
—
—
4.50
3.07
3.00
2.22
4.10
3.29
5.03
2/12/2025(7)
5/13/2024(8)
2/11/2024(9)
11/12/2023(10)
11/11/2024(11)
9/23/2024(12)
5/12/2025(2)
125,000.00
—
4.58
2/16/2025(13)
87,209 (3)
37,674 (4)
32,482 (5)
38,065 (6)
647,091
279,541
241,016
282,442
34,200.00 (3)
16,229.00 (4)
13,992.00 (5)
16,397.00 (6)
34,200.00 (3)
16,229.00 (4)
13,992.00 (5)
16,397.00 (6)
34,200.00 (14)
16,229.00 (4)
16,397.00 (5)
13,992.00 (6)
253,764
120,419
103,821
121,666
253,764
120,419
103,821
121,666
240,084
120,419
121,666
103,821
(1) Amounts reported represent the value of RSU awards based on the number of shares of Radiant common stock underlying the RSU awards that
have not vested multiplied by the closing price of our common stock on June 30, 2022, which was $7.42, as reported by the NYSE American.
(2) The stock options were granted on May 12, 2015 and vest in equal annual installments over a five-year period commencing on the date of the grant.
(3) Consists of PSU awards that were granted January 4, 2022 and subject to performance-based vesting conditions.
(4) Consists of RSU awards that were granted on September 8, 2021 and vest on September 15, 2024.
(5) Consists of RSU awards that were granted September 22, 2020 and vest on September 22, 2023.
(6) Consists of RSU awards that were granted September 10, 2019 and vest on September 15, 2022.
(7) The stock options were granted on February 12, 2015 and vest in equal annual installments over a five-year period commencing on the date of the
grant.
(8) The stock options were granted on May 13, 2014 and vest in equal annual installments over a five-year period commencing on the date of the grant.
(9) The stock options were granted on February 11, 2014 and vest in equal annual installments over a five-year period commencing on the date of the
grant.
(10) The stock options were granted on November 12, 2013 and vest in equal annual installments over a five-year period commencing on the date of
the grant.
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(11) The stock options were granted on November 11, 2014 and vest in equal annual installments over a five-year period commencing on the date of
the grant.
(12) The stock options were granted on September 23, 2014 and vest in equal annual installments over a five-year period commencing on the date of
the grant.
(13) The stock options were granted on February 16, 2015 and vest in equal annual installments over a five-year period commencing on the date of the
grant.
(14) Consists of PSU awards that were granted February 25, 2022 and subject to performance-based vesting conditions.
OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2022
The table below provides information regarding option awards that were exercised and stock awards that vested for each of our NEOs
during the fiscal year ended June 30, 2022.
Name
Bohn H. Crain
Stock Options
Restricted stock units
Todd E. Macomber
Stock Options
Restricted stock units
Arnold Goldstein
Stock Options
Restricted stock units
John Sobba
Stock Options
Restricted stock units
Option Awards(1)
Stock Awards(2)
Number of Shares
Acquired on Exercise
(#)
Value Realized on
Exercise
($)
Number of Shares
Acquired on Vesting
(#)
Value Realized on
Vesting
($)
70,161
367,292
—
—
—
—
—
—
33,643
216,661
14,492
93,328
14,492
93,328
2,415
15,553
(1) The value realized on exercise represents the gross number of shares acquired on exercise multiplied by the market price of our shares on the
exercise date, as reported by the NYSE American, less the per share exercise price.
(2) The value realized on vesting of the RSU awards held by each of the NEOs represents the gross number of shares acquired, multiplied by the
closing sale price of our shares on the vesting date or the last trading day prior to the vesting date if the vesting date was not a trading day, as
reported by the NYSE American.
POTENTIAL POST-TERMINATION AND CHANGE IN CONTROL PAYMENTS
Employment Agreements
The employment agreements with our NEOs contain severance provisions, including in connection with a change of control, intended
to induce these executives to continue employment with our Company and to retain them and provide consideration to them for certain
restrictive covenants that apply following a termination of employment. The receipt of any severance by these executives, other than
our CEO, is conditioned upon his execution of a broad release of claims.
Under our employment agreement with our CEO, we may terminate the agreement at any time for cause. If we terminate the agreement
due to Mr. Crain’s disability, Mr. Crain’s unvested options will immediately vest and we must continue to pay to Mr. Crain, for an
additional one year period, his base salary (reduced by any disability insurance payments he receives) and pro-rated bonuses as well as
fringe benefits, including participation in pension, profit sharing and bonus plans as applicable, and life insurance, hospitalization, major
medical, paid vacation and expense reimbursement. If Mr. Crain terminates the agreement for good reason or we terminate for any
reason other than for cause, Mr. Crain’s unvested options will immediately vest and we must continue to pay Mr. Crain for the remaining
term of the employment agreement his base salary and the greater of the most recent bonus or target bonus as well as fringe benefits.
104
The employment agreement also contains a change of control provision. If Mr. Crain’s employment is terminated following a change
of control (other than for cause or by Mr. Crain without good reason), then we must pay him (i) a termination payment equal to 2.99
times his basic compensation (the sum of his base salary, bonus and fringe benefits) at the annual rate in effect on the date of termination
of his employment, (ii) any bonus amounts to which he would have been entitled for a period of three years following the date of
termination equal to the greater of his most recent bonus or his target bonus, (iii) any unpaid expenses and benefits, and (iv) for a period
of three years provide him with all fringe benefits he was receiving on the date of termination of his employment or the economic
equivalent of such benefits. In addition, all of his unvested stock options will immediately vest as of the termination date of his
employment due to a change of control. In the event compensation payable to Mr. Crain upon our change of control causes him to be
subject to an excise tax under section 4999 of the Code, he will receive a “gross up” payment in an amount such that after the payment
by Mr. Crain of all taxes imposed upon the gross up payment, Mr. Crain will retain an amount of the gross up payment equal to such
excise tax. A change of control is generally defined as the occurrence of any one of the following:
•
•
•
•
•
any “person” (as the term “person” is used in Section 13(d) and Section 14(d) of the Securities Exchange Act of 1934),
except for our chief executive officer, becoming the beneficial owner, directly or indirectly, of our securities representing
50% or more of the combined voting power of our then outstanding securities;
a contested proxy solicitation of our stockholders that results in the contesting party obtaining the ability to vote securities
representing 50% or more of the combined voting power of our then-outstanding securities;
a sale, exchange, transfer or other disposition of 50% or more in value of our assets to another Person or entity, except to
an entity controlled directly or indirectly by us;
a merger, consolidation or other reorganization involving us in which we are not the surviving entity and in which our
stockholders prior to the transaction continue to own less than 50% of the outstanding securities of the acquirer immediately
following the transaction, or a plan is adopted involving our liquidation or dissolution other than pursuant to bankruptcy or
insolvency laws; or
during any period of twelve consecutive months, individuals who at the beginning of such period constituted the Board
cease for any reason to constitute at least the majority thereof unless the election, or the nomination for election by our
stockholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were
directors at the beginning of the period.
Notwithstanding the foregoing, a change of control is not deemed to have occurred (i) in the event of a sale, exchange, transfer or other
disposition of substantially all of our assets to, or a merger, consolidation or other reorganization involving, us and any entity in which
our chief executive officer has, directly or indirectly, at least a 25% equity or ownership interest, or (ii) in a transaction otherwise
commonly referred to as a “management leveraged buy-out.”
Other NEO Employment Agreements
Under the employment agreement with each of our other NEOs, the executive is entitled to six months of severance in the form of salary
continuation payments, plus continuation of the medical benefits (and his car allowance in the case of Mr. Goldstein and Mr. Sobba), in
the event his employment is terminated as a result of death, disability, or by us for any reason other than cause; or twelve months of
severance if, within nine months following a change of control, he voluntarily terminates his employment for good reason or his
employment is terminated by us. In addition, if his employment is terminated by him for Good Reason or by us within nine months
following a change of control, the vesting of any equity awards will be deemed to have been accelerated to include an additional period
of 12 months.
For the purposes of these employment agreements, a “change of control” will be deemed to occur if there occurs a sale, exchange,
transfer or other disposition of substantially all of our assets to another entity, except to an entity controlled directly or indirectly by us,
or a merger, consolidation or other reorganization of the Company in which we are not the surviving entity, or a plan of liquidation or
dissolution of the Company other than pursuant to bankruptcy or insolvency laws. For the further purpose of the employment agreements,
“good reason” will be deemed to occur upon either: (i) a breach of the agreement by us; or (ii), a reduction in salary without the
executive’s consent, unless any such reduction is otherwise part of an overall reduction in executive compensation experienced on a pro
rata basis by other similarly situated employees.
105
Other Change in Control Arrangements
The Radiant Logistics, Inc. 2012 Stock Option and Performance Award Plan and Radiant Logistics, Inc. 2021 Omnibus Incentive Plan
under which awards have been granted to our NEOs contains “change of control” provisions. Under each plan, without limiting the
authority of the Audit and Executive Oversight Committee to adjust awards, if a “change of control” of Radiant Logistics (as defined in
the plan) occurs, then, unless otherwise provided in the award or other agreement, if an award is continued, assumed, or substituted by
the successor entity, the award will not vest or lapse solely as a result of the change of control but will instead remain outstanding under
the terms pursuant to which it has been continued, assumed, or substituted and will continue to vest or lapse pursuant to such terms.
Potential Payments to Named Executive Officers
The table below shows potential payments to our NEOs, not otherwise earned, under various scenarios involving a termination of
employment, including in connection with a change of control, and upon a change of control without a termination of employment,
assuming a June 30, 2022 termination date. All equity awards are valued at the closing price of our common stock on June 30, 2022,
which was $7.42, as reported by the NYSE American.
Name
Benefit
Bohn H. Crain
Severance Pay(2)
Incentive Pay(3)
RSU Award Vesting(4)
PSU Award Vesting(9)
Other Benefits(5)
280G Tax Gross-up(6)
Todd E. Macomber Severance Pay(7)
Arnold Goldstein
John Sobba
Incentive Pay
RSU Award Vesting(4)
PSU Award Vesting(9)
Other Benefits(8)
Severance Pay(7)
Incentive Pay
RSU Award Vesting(4)
PSU Award Vesting(9)
Other Benefits(8)
Severance Pay(7)
Incentive Pay
RSU Award Vesting(4)
PSU Award Vesting(9)
Other Benefits(8)
Termination without
Cause or for Good
Reason Outside a
Change of Control
($)
Termination
without Cause or
for Good Reason
in Connection
with a Change of
Control
($)
Voluntary
Termination
Retirement
($)
Death or
Disability
($)
Change of
Control(1)
($)
187,500
438,018
N/A
N/A
23,715
N/A
112,500
N/A
N/A
N/A
12,283
112,500
N/A
N/A
N/A
13,328
110,417
N/A
N/A
N/A
12,413
1,121,250
2,623,728
803,000
647,091
142,052
1,942,127
225,000
N/A
345,906
253,764
24,567
225,000
N/A
345,906
253,764
26,656
220,833
N/A
345,906
240,084
24,825
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
373,960
438,018
268,634
N/A
23,715
N/A
112,500
N/A
115,717
N/A
12,283
112,500
N/A
115,717
N/A
13,328
220,833
N/A
115,717
N/A
12,413
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(1) Assumes equity awards are continued, assumed, or substituted with equivalent awards by the successor entity.
(2) Represents: (a) the continuation of executive’s annual base salary for the remaining term of the executive’s employment agreement (December 31,
2022) in the event of a termination without cause or for good reason outside a change in control; (b) 2.99 times the executive’s annual base salary
in the event of a termination without cause or for good reason in connection with a change in control; and (c) the executive's annual base salary in
the event of a termination for disability, reduced by the amount of employer funded disability insurance payments received by the executive.
(3) Represents: (a) the greater of the most recent bonus or target bonus in the event of a termination without cause or for good reason outside a change
in control; (b) 2.99 times the executive’s bonus in effect at the time of termination plus 3 years’ bonus payments at the greater of his most recent
bonus or his target bonus in the event of a termination without cause or for good reason in connection with a change in control; and (c) the
executive's bonus in the event of a termination for disability.
(4) Represents: (a) the acceleration of all unvested RSUs in the event of a termination without cause or for good reason in connection with a change in
control; and (b) in the case of RSUs that have been held for one (1) year or more after the date of grant, the acceleration of one-third of the unvested
RSUs granted to the executive in 2020 and two-thirds of the unvested RSUs granted to the executive in 2019 in the event of a termination for death
or disability.
106
(5) Represents: (a) the executive's annual fringe benefits in the event of a termination without cause or for good reason outside a change in control; (b)
2.99 times the executive’s annual fringe benefits in the event of a termination without cause or for good reason in connection with a change in
control plus three years of continuing fringe benefits or the economic equivalent; and (c) the executive's annual fringe benefits in the event of a
termination for disability.
(6)
In January 2006, we entered into an employment agreement with our founder and CEO which contains a “grandfathered” excise tax gross up
provision. In the event compensation payable to Mr. Crain upon a change of control causes him to be subject to an excise tax under section 4999
of the Code, he will receive a “gross up” payment in an amount such that after the payment by Mr. Crain of all taxes imposed upon the gross up
payment, Mr. Crain will retain an amount of the gross up payment equal to such excise tax.
(7) Represents: (a) six months of the executive’s annual base salary in the event of a termination without cause or for good reason outside a change in
control; (b) the executive’s annual base salary in the event of a termination without cause or for good reason in connection with a change in control;
and (c) six months of the executive's annual base salary in the event of a termination for disability.
(8) Represents: (a) six months of the executive’s annual fringe benefits in the event of a termination without cause or for good reason outside a change
in control; (b) the executive’s annual fringe benefits in the event of a termination without cause or for good reason in connection with a change in
control; and (c) six months of the executive's annual fringe benefits in the event of a termination for disability.
(9) Represents: the acceleration of all unvested PSUs in the event of a termination without cause or for good reason in connection with a change in
control based and paid out with respect to each Performance Goal based on target performance.
CEO PAY RATIO DISCLOSURE
Under Section 953(b) of the Dodd-Frank Act and Item 402(u) of SEC Regulation S-K, we are providing the ratio of the annual total
compensation of Bohn H. Crain, our CEO, to the median of the annual total compensation of all employees of our company (other than
our CEO). This ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment
records and the methodology described below. The SEC rules for identifying the “median employee” and calculating the pay ratio based
on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to
make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other
companies may not be comparable to the pay ratio reported by us, as other companies may have different employment and compensation
practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their pay ratios.
For fiscal year 2022:
•
•
•
•
the annual total compensation of our CEO was $2,784,207;
the annual total compensation of the employee identified at median of our Company (other than our CEO) was $63,383;
based on this information, the ratio of the annual total compensation of our CEO to the annual total compensation of our
median employee (identified in accordance with SEC rules and as described in greater detail below) was estimated to be
44:1; and
excluding the portion of all other compensation attributable to Radiant Capital Partners, LLC payments of $1,140,000, the
CEO pay ratio was estimated to be 26:1 (See discussion regarding Radiant Capital Partners, LLC under heading All Other
Compensation – RLP Distributions).
To identify our median employee and to calculate the annual total compensation of our median employee and that of our CEO, we used
the following methodology, assumptions, and estimates:
•
Identification of Median Employee. To identify our median employee, we used the following methodology: we selected
June 30, 2021 as the date to identify our employee population and “median employee.” We determined that, as of that date,
our entire employee population, excluding our CEO, consisted of 689 total employees. In determining this population, we
considered the employees of our subsidiaries and all of our employees other than our CEO, whether employed on a full-
time, part-time, temporary, or seasonal basis. We are using the same median employee in our pay ratio calculation as last
year as we believe our employee population has not significantly changed, subject to us being able to omit any employees
that became our employees in fiscal year 2022 as the result of a business acquisition. Our employee population data
described above does not include approximately 88 employees of Navegate, Inc., which we acquired as of November 30,
2021. We also did not include any contractors or other non-employee workers in our employee population. In addition,
under the de minimis exemption to the pay ratio rule, we excluded all of our employees in each of Mexico (5), Hong Kong
(1) and the Philippines (16), which in total are 22 employees, or approximately 3.2% of our total employee population,
excluding the CEO. To identify the “median employee” from our employee population, we selected W-2 earnings as the
most appropriate measure of compensation. To make them comparable, the W-2 earnings for newly hired permanent
employees who had worked less than a year were annualized.
107
•
•
Calculation of Median Employee’s Annual Total Compensation. In accordance with applicable SEC rules, we calculated
2022 annual total compensation for this median employee using the same methodology we use for our named executive
officers, as set forth in our Summary Compensation Table included on page 100 of this Annual Report on Form 10-K.
Calculation of CEO’s Annual Total Compensation. With respect to the 2022 annual total compensation of our CEO, we
used the amount set forth in the “Total” column of our Summary Compensation Table included on page 100 of this Annual
Report on Form 10-K.
AUDIT AND EXECUTIVE OVERSIGNT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Audit and Executive Oversight Committee has or had any relationship requiring disclosure under Item 404
of SEC Regulation S-K or has ever been an officer or employee of Radiant Logistics or any of our subsidiaries. None of our executive
officers serves, or in the past has served, as a member of the Compensation Committee, or other committee serving an equivalent
function, of any entity that has one or more executive officers who serve as members of the Board or the Audit and Executive Oversight
Committee.
Director Compensation
OVERVIEW
Our non-employee director compensation program generally is designed to attract and retain experienced and knowledgeable directors
and to provide equity-based compensation to align the interests of our directors with those of our stockholders. In fiscal year 2022, our
non-employee director compensation was comprised of equity compensation, in the form of annual RSU awards and initial option award
to new directors, and cash compensation, in the form of annual retainers. Each of these components is described in more detail below.
Bohn H. Crain, as an employee director, does not receive any additional compensation for his services as a director.
DIRECTOR COMPENSATION PROCESS
The Board of Directors has delegated to the Audit and Executive Oversight Committee the responsibility, among other things, to review
and recommend to the Board of Directors any proposed changes in non-employee director compensation. In connection with such
review, the Audit and Executive Oversight Committee is assisted in performing its duties by our Human Resources Department.
In December 2020, the Audit and Executive Oversight Committee engaged Meridian Compensation Partners to review our non-
employee director compensation program in addition to our executive compensation program. The review by Meridian Compensation
Partners consisted of, among other things, analysis of board compensation trends and a competitive assessment based on a selected
group of 14 companies operating in the United States that are more similarly situated to us from a revenue and market capitalization
perspective. The 14 companies used in this director benchmarking analysis were part of the same peer group of 26 companies used for
the executive compensation analysis. The Audit and Executive Oversight Committee considered this data in determining whether to
recommend any changes to our non-employee director compensation program. Overall, the review by Meridian Compensation Partners
showed that our non-employee director compensation program was significantly below the market median.
DIRECTOR COMPENSATION PROGRAM
The following table sets forth the cash component of our non-employee director compensation program for fiscal year 2022.
Board Member Retainer
Audit and Executive Oversight Committee Chair Premium
Compensation Committee Function Premium
Nominating Governance Committee Function Premium
Lead Independent Director
($)
36,000
9,000
9,000
9,000
12,500
In addition to cash compensation, our non-employee directors have an opportunity to receive annual RSU awards, based on their annual
cash compensation and the Company’s performance relative to a budgeted adjusted EBITDA. The annual RSU awards for fiscal year
2022 were granted on November 17, 2021 under the Radiant Logistics, Inc. 2021 Omnibus Incentive Plan and vest in full on the three-
year anniversary of the grant date.
108
We also reimburse our non-employee directors for reasonable out-of-pocket expenses incurred in connection with the performance of
their duties as directors, including, without limitation, travel expenses in connection with their attendance in-person at Board and Board
committee meetings.
SUMMARY DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2022
The following table sets forth information concerning the compensation of our non-employee directors during the fiscal year ended June
30, 2022. Bohn H. Crain is not compensated separately for his service as a director, and his compensation is discussed under “Executive
Compensation.”
Name
Fees Earned or
Paid in Cash
($)
Option Awards
($)
Michael Gould
Kristin Toth Smith
Richard P. Palmieri
45,000
44,000
57,500
Stock Awards
(1)(2)
($)
58,861
4,411
58,861
—
—
—
All Other Compensation(3)
($)
Total
($)
103,861
—
48,411
—
116,361
—
(1) As of June 30 2022, Ms. Smith held unvested options to purchase 100,000 shares.
(2) The amounts reflected represent the grant date fair value of RSU awards for 7,126 shares for Mr. Gould, and Mr. Palmieri, and 534 shares for Ms.
Smith computed in accordance with FASB ASC Topic 718.
We do not provide perquisite and other personal benefits to our non-employee directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Stock Ownership
SIGNIFICANT BENEFICIAL OWNERS
The table below sets forth information as to individuals and entities (other than officers or directors) that have reported to the SEC or
have otherwise advised us that they are a beneficial owner, as defined by the SEC’s rules and regulations, of more than five percent of
our outstanding common stock.
Class of Securities
Common Stock
Common Stock
Common Stock
Common Stock
2,870,541
Name and Address of Beneficial Owner Number of Shares Beneficially Owned
BlackRock, Inc(2)
55 East 52nd Street
New York, NY 10055
Dimensional Fund Advisors LP(3)
6300 Bee Cave Road, Building One,
Austin, TX 78746
Wellington Trust Company, NA(4)
280 Congress Street
Boston, MA 02210
Wellington Group Holding, LLP(5)
280 Congress Street
Boston, MA 02210
2,514,112
2,514,112
2,565,789
Percent of Class(1)
5.8%
5.1%
5.04%
5.04%
(1) Percent of class is based on 48,144,683 shares of our common stock outstanding as of November 14, 2022.
(2) Based solely on information contained in a Schedule 13G of BlackRock, Inc., a parent holding company, filed with the SEC on February 3, 2022,
reflecting beneficial ownership as of December 31, 2021. BlackRock, Inc. reported aggregate beneficial ownership 2,870,541 shares and sole voting
authority with respect to 2,737,607 shares. BlackRock, Inc. does not have shared voting or dispositive power over any of the shares.
(3) Based solely on information contained in a Schedule 13G of Dimensional Fund Advisors LP., a parent holding company, filed with the SEC on
February 8, 2022, reflecting beneficial ownership as of December 31, 2021, with sole investment discretion with respect to 2,565,789 shares and
sole voting authority with respect to 2,498,272 shares. Dimensional Fund Advisors LP. does not have shared voting or dispositive power over any
of the shares.
109
(4) Based solely on information contained in a Schedule 13G of Wellington Trust Company, NA., a parent holding company, filed with the SEC on
February 7, 2022, reflecting beneficial ownership as of December 31, 2021. Wellington Trust Company, NA. reported aggregate beneficial
ownership 2,514,112 shares. It also reported sole voting power and shared dispositive power with respects to such shares.
(5) Based solely on information contained in a Schedule 13G of Wellington Group Holding, LLP., a parent holding company, filed with the SEC on
February 4, 2022, reflecting beneficial ownership as of December 31, 2021. Wellington Group Holding, LLP. reported aggregate beneficial
ownership 2,514,112 shares. It also reported sole voting power and shared dispositive power with respects to such shares.
SECURITY OWNERSHIP BY MANAGEMENT
The table below sets forth information known to us regarding the beneficial ownership of our common stock as of November 14, 2022,
by:
•
•
•
each of our directors;
each of the individuals named in the “Summary Compensation Table” under “Executive Compensation” beginning on page
100; and
all of our directors and executive officers as a group.
To our knowledge, each person named in the table has sole voting and investment power with respect to all of the securities shown as
beneficially owned by such person, except as otherwise set forth in the notes to the table and subject to community property laws, where
applicable. The number of shares beneficially owned represents the number of shares the person “beneficially owns,” as determined by
the rules of the SEC. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting
power and/or investment power. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such
stockholder has the right to acquire within 60 days after that date through (i) the vesting of restricted stock units or the exercise of any
option, warrant, or right; (ii) the conversion of a security; (iii) the power to revoke a trust, discretionary account, or similar arrangement;
or (iv) the automatic termination of a trust, discretionary account, or similar arrangement.
Class of Securities
Name of Beneficial Owner
Title/Position
Number of Shares
Beneficially Owned(1)(2)
Percent of
Class(3)
Common Stock
Bohn H. Crain
Common Stock
Michael Gould
Common Stock
Todd E. Macomber
Common Stock
Richard P. Palmieri
Common Stock
Arnold Goldstein
Common Stock
John Sobba
Common Stock
Common Stock
Kristin Toth Smith
All officers and directors as a group
(7 persons)
Chairman of the Board and Chief
Executive Officer
Director
Senior Vice President, Chief
Financial Officer and Treasurer
Director
Senior Vice President and Chief
Commercial Officer
Senior Vice President and General
Counsel
Director
10,150,877
766,936
316,798
230,235
137,404
14,230
—
21.1%
1.6%
*
*
*
*
*
11,616,480
23.9%
* Indicates beneficial ownership of less than 1% of the total outstanding common stock.
(1) Includes for the persons listed below the following shares of common stock issuable upon the vesting of restricted stock unit awards within 60 days
of November 14, 2022:
Name
Richard P. Palmieri
Michael Gould
Number of Restricted Stock Units
8,768
8,768
(2) Includes for the persons listed below the following shares of common stock issuable upon the exercise of vesting options within 60 days of November
Name
14, 2022:
Bohn H. Crain
Michael Gould
Todd E. Macomber
Arnold Goldstein
Richard P. Palmieri
Number of Shares Issuable Upon Exercise of Vested Options
2,377
100,000
11,377
125,000
200,000
(3) Percent of class is based on 48,144,683 shares of our common stock outstanding as of November 14, 2022.
110
Securities Authorized for Issuance Under Equity Compensation Plans
The table below provides information about our common stock that may be issued under our equity compensation plans as of June 30,
2022.
Plan Category
Equity compensation plans not approved by security holders
Equity compensation plans approved by security holders
Number of
Securities
Remaining
Available for Future
Issuance under
Equity
Compensation Plans
(Excluding
Securities Reflected
in Column (a))
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and
Rights(1) (b)
Number of Securities to
be Issued upon Exercise
of Outstanding Options,
Warrants, and Rights (a)
899
1,104,185
1,105,084
$1.63
$4.11
383,674
4,373,073
4,756,747
Total
(1) RSU award do not have exercise prices and, therefore, have been excluded from the weighted-average exercise price calculation in column (b).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Party Transactions
POLICIES AND PROCEDURES FOR REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS
Our Audit and Executive Oversight Committee is responsible for the oversight of related party transactions. In accordance with the
Audit and Executive Oversight Committee’ Charter, the Company is prohibited from entering into a related party transaction unless
such transaction is approved by the Audit and Executive Oversight Committee after a review of the transaction by the Audit and
Executive Oversight Committee for potential conflicts of interest. A transaction will be considered a “related party transaction” if the
transaction would be required to be disclosed under Item 404 of SEC Regulation S-K. Related party transactions, if any, are reviewed
quarterly by the Audit and Executive Oversight Committee.
TRANSACTIONS WITH RELATED PERSONS
For the period beginning on July 1, 2021, to the date on which this Annual Report on Form 10-K is filed with the SEC, the following
are our current arrangements with a related party:
Employment and Other Agreements with Named Executive Officers
We have entered into an employment agreement with each of our named executive officers. These agreements were entered into with
these individuals in connection with their capacities as officers and provide for salary, bonus, and other benefits, including the grant of
equity awards, and severance upon a termination of employment under certain circumstances. Please see the sections above entitled
“Executive Compensation—Employment Agreements” for a description of these agreements.
Other Related Party Transactions
On June 28, 2006, we joined with Radiant Capital Partners, LLC, an affiliate of Mr. Crain, our founder and Chief Executive Officer, to
form Radiant Logistics Partners, LLC. RLP commenced operations in 2007 as a minority-owned business enterprise for the purpose of
enabling us to expand the scope of our service offerings to include participation in certain supplier diversity programs that would have
otherwise not been available to us. RLP is owned 60% by Mr. Crain and 40% by us.
In the course of evaluating and approving the ownership structure, operations and economics emanating from RLP, a committee
consisting of the independent Board member of the Company considered, among other factors, the significant benefits provided to us
through association with a minority business enterprise, particularly as many of our largest current and potential customers have a need
for diversity offerings. In addition, the committee concluded the economic relationship with RLP was on terms no less favorable to us
than terms generally available from unaffiliated third parties.
111
For the fiscal year ended June 30, 2022, RLP recorded $1,758,774 in commission revenues earned from members of the affiliated group
and reported a profit of $1,711,910. For the fiscal year ended June 30, 2021, RLP recorded $699,194 in commission revenues earned
from members of the affiliated group and reported a profit of $864,874.
Director Independence
Under the NYSE American continued listing standards, independent directors must comprise a majority of a listed company’s board of
directors. In addition, the NYSE American continued listing standards require that, subject to specified exceptions, each member of a
listed company’s audit, compensation, and nominating and corporate governance committees be independent. Audit committee members
must also satisfy heightened independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934 (Exchange Act),
and compensation committee members must satisfy heightened independence criteria set forth in the NYSE American rules. Under the
NYSE American rules, a director will only qualify as an “independent director” if the company’s board of directors affirmatively
determines that the director has no material relationship with the company, either directly or indirectly, that would interfere with the
exercise of independent judgment in carrying out the responsibilities of a director.
The Board has undertaken a review of its composition, the composition of its Board committees, and the independence of each director.
Based upon information requested from and provided by each of our directors concerning his or her background, employment, and
affiliations, including family relationships with us, our senior management, and our independent registered public accounting firm, the
Board has determined that all but one of our directors, Bohn H. Crain, are independent directors under the standards established by the
Securities and Exchange Commission (SEC) and the NYSE American. In making this determination, the Board considered the current
and prior relationships that each non-employee director has with Radiant Logistics and all other facts and circumstances the Board
deemed relevant in determining their independence.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit, Audit-Related, Tax, and Other Fees
The fees billed for professional services provided by Moss Adams in fiscal year 2022 were:
Type of Fees
Fiscal years ended
June 30, 2022
Audit fees
Audit related fees
Tax fees
All other fees
Total Fees
$1,706,253
—
—
—
$1,706,253
In the above table, in accordance with the definitions of the SEC, “Audit Fees” consisted of fees for the audit of our consolidated
financial statements included in our Annual Reports to Stockholders, reviews of the unaudited financial statements included in our
Quarterly Reports on Form 10-Q, and consultation concerning financial accounting and reporting standards, as well as services normally
provided in connection with statutory and regulatory filings or engagements, comfort letters, consents, and assistance with documents
filed with the SEC. Audit Fees also included fees for the audit of the effectiveness of our internal control over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act. “Audit-Related Fees” consisted of fees for assurance and related services. “Tax
Fees” consisted of fees billed for permissible tax consulting, planning, and compliance services. “All Other Fees” consisted of
subscription fees for products and services no described in any other category.
Pre-Approval Policies and Procedures
The Audit and Executive Oversight Committee is responsible for selecting, appointing, evaluating, compensating, retaining, and
overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit and Executive
Oversight Committee has established policies and procedures in its charter regarding pre-approval of any audit and non-audit service
provided to Radiant Logistics by our independent registered public accounting firm and the fees and terms thereof. Briefly, any audit or
non-audit service provided to us by our independent registered public accounting firm must be pre-approved by the Audit and Executive
Oversight Committee.
The Audit and Executive Oversight Committee considers the compatibility of the provision of other services provided by Moss Adams
and BDO with the maintenance of its independence. The Audit and Executive Oversight Committee approved all audit and non-audit
services provided by Moss Adams and BDO in fiscal year 2022 and fiscal year 2021.
112
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
List of Documents Filed as part of this Report
(1) All Financial Statements and Supplemental Information
The Company’s consolidated financial statements filed in this Annual Report on Form 10-K are included in Part II, Item 8.
(2) Financial Statement Schedules
Not applicable.
(3) Exhibits
The exhibits required by Item 601 of Regulation S-K are included under Item 15(b) below.
113
(b)
Exhibits
Exhibit
Number
2.1
Description
Filed/
Furnished
Herewith
Arrangement Agreement among Radiant Logistics,
Inc., Radiant Global Logistics ULC and Wheels
Group Inc.
3.1 & 4.1 Certificate of Incorporation
to Registrant’s Certificate of
3.2 & 4.2 Amendment
Incorporation
(Certificate of Ownership and
Merger Merging Radiant Logistics, Inc. into Golf
Two, Inc. dated October 18, 2005)
Incorporated by Reference
Period
Ending
Exhibit
Number
Filing
Date
2.1
1/23/15
3.1
3.1
9/20/02
10/18/05
Form
8-K
SB-2
8-K
3.3 & 4.3 Amended and Restated Bylaw of Radiant Logistics,
8-K
3.1
10/2/19
Inc. (October 1, 2019)
3.4 & 4.4 Certificate of Amendment of Certificate of
10-Q 12/31/12
3.1
2/12/13
4.5
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
Incorporation
Description of Company’s Common Stock
X
Employment Agreement
dated
Executive
January 13, 2006 by and between Radiant
Logistics, Inc. and Bohn H. Crain
Letter Agreement dated June 10, 2011; amending
the Employment Agreement between Radiant
Logistics, Inc. and Bohn H. Crain+
Employment Agreement dated May 14, 2012 by
and between Radiant Logistics, Inc. and Todd
Macomber+
Employment Agreement dated November 20, 2015
by and between Radiant Logistics, Inc. and Joseph
Bento+
Employment Agreement dated February 2, 2015 by
and between Radiant Logistics, Inc. and Arnold
Goldstein+
Employment Agreement dated April 27, 2018 by
and between Radiant Logistics, Inc. and John W.
Sobba+
Operating Agreement of Radiant Logistics
Partners, LLC dated June 28, 2006
Radiant Logistics, Inc. Management Incentive
Compensation Plan (As Amended and Restated
Effective as of July 1, 2021)
Radiant Logistics, Inc. 2021 Omnibus Incentive
Plan
Form of Employee Restricted Stock Unit Award
Agreement for use with the Radiant Logistics, Inc.
2021 Omnibus Incentive Plan
114
8-K
10.7
1/18/06
8-K
10.1
6/10/11
8-K
10.2
5/14/12
10-K
6/30/16
10.5
9/13/16
10-K
6/30/16
10.6
9/13/16
8-K
10.1
5/11/18
8-K
10.4
5/14/12
8-K
8-K
8-K
10.1
10/4/21
10.1
11/23/21
10.2
11/23/21
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
Form of Employee Restricted Stock Unit Award
Agreement (Canada) for use with the Radiant
Logistics, Inc. 2021 Omnibus Incentive Plan
Form of Non-Employee Director Restricted Stock
Unit Award Agreement for use with the Radiant
Logistics, Inc. 2021 Omnibus Incentive Plan
Form of Employee Performance Unit Award
Agreement for use with the Radiant Logistics, Inc.
2021 Omnibus Incentive Plan
Form of Employee Non-Statutory Option Award
Agreement for use with the Radiant Logistics, Inc.
2021 Omnibus Incentive Plan
Form of Non-Employee Director Non-Statutory
Option Award Agreement for use with the Radiant
Logistics, Inc. 2021 Omnibus Incentive Plan
Discretionary Management Incentive
Compensation Plan effective July 1, 2012+
Radiant Logistics, Inc. 2012 Stock Option and
Performance Award Plan+
Form of Incentive Stock Option Award Agreement
under the Radiant Logistics, Inc. 2012 Stock Option
and Performance Award Plan+
Form of Restricted Stock Award Agreement under
the Radiant Logistics, Inc. 2012 Stock Option and
Performance Award Plan+
Form of SAR Award Agreement under the Radiant
Logistics, Inc. 2012 Stock Option and Performance
Award Plan+
Form of Non-qualified Stock Option Award
Agreement under the Radiant Logistics, Inc. 2012
Stock Option and Performance Award Plan+
Form of Restricted Stock Unit Award Agreement
under the Radiant Logistics, Inc. 2012 Stock Option
and Performance Award Plan+
Form of Non-qualified Stock Option Award
Agreement (Director) under the Radiant Logistics,
Inc. 2012 Stock Option and Performance Award
Plan+
Form of Restricted Stock Unit Award Agreement
(Director) under the Radiant Logistics, Inc. 2012
Stock Option and Performance Award Plan+
Form of Canadian Restricted Stock Unit Award
Agreement under the Radiant Logistics, Inc. 2012
Stock Option and Performance Award Plan+
Form of Canadian Non-qualified Stock Option
Award Agreement under the Radiant Logistics, Inc.
2012 Stock Option and Performance Award Plan+
115
8-K
8-K
8-K
8-K
8-K
10.3
11/23/21
10.4
11/23/21
10.5
11/23/21
10.6
11/23/21
10.7
11/23/21
8-K
10.5
5/14/12
DEF 14A
Annex A 10/9/12
10-Q 12/31/12
10.5
2/12/13
10-Q 12/31/12
10.7
2/12/13
10-Q 12/31/12
10.8
2/12/13
10-Q 9/30/16
10.1
11/9/16
10-Q
9/30/16
10.2
11/9/16
10-Q 9/30/16
10.3
11/9/16
10-Q 9/30/16
10.4
11/9/16
10-Q 12/31/16
10.1
2/8/17
10-Q 12/31/16
10.2
2/8/17
10.27
10.28
10.29
10.30
10.31
Credit Agreement, dated August 5, 2022, by and
among Radiant Logistics, Inc. and Radiant Global
Logistics, Inc., as the Borrowers, the subsidiaries of
the Borrowers, and Bank of America, N.A., Bank of
Montreal, KeyBank National Association, MUFG
Union Bank, N.A., the Lenders, Bank of America,
N.A. and BMO Capital Markets Corp.
$29,000,000 Credit Facilities Amended and
Restated Loan Agreement dated August 5, 2022 by
and among Radiant Global Logistics (Canada) Inc.,
2062698 Ontario Inc., Radiant Logistics, Inc.,
Radiant Global Logistics, Inc., Adcom Express,
Inc., Radiant Road & Rail, Inc., DBA Distribution
Services, Inc., Radiant Trade Services, Inc., Radiant
Transportation Services, Inc., Radiant Off-Shore
Holdings LLC, Service by Air, Inc., International
Freight Systems
Inc., Green
Acquisition Company, Inc., Highways & Skyways,
Inc., Radiant Global Logistics (CA), Inc., On Time
Express, Inc., Radiant Customs Services, Inc.,
Radiant Logistics Global Services, Inc., Navegate,
Inc., Radiant World Trade Services, Inc., Centrade,
Inc., Navegate Logistics, Ltd., Radiant Logistics
Domestic Services, Inc., Navegate Domestic, LLC,
and Radiant Logistics Partners, LLC, and Fiera
Private Debt Fund IV LP.
(of Oregon),
$10,000,000 Credit Facilities Amended and
Restated Loan Agreement dated August 5, 2022 by
and among Radiant Global Logistics (Canada) Inc.,
2062698 Ontario Inc., Radiant Logistics, Inc.,
Radiant Global Logistics, Inc., Adcom Express,
Inc., Radiant Road & Rail, Inc., DBA Distribution
Services, Inc., Radiant Trade Services, Inc., Radiant
Transportation Services, Inc., Radiant Off-Shore
Holdings LLC, Service by Air, Inc., International
Inc., Green
Freight Systems
Acquisition Company, Inc., Highways & Skyways,
Inc., Radiant Global Logistics (CA), Inc., On Time
Express, Inc., Radiant Customs Services, Inc.,
Radiant Logistics Global Services, Inc., Navegate,
Inc., Radiant World Trade Services, Inc., Centrade,
Inc., Navegate Logistics, Ltd., Radiant Logistics
Domestic Services, Inc., Navegate Domestic, LLC,
and Radiant Logistics Partners, LLC, and Fiera
Private Debt Fund V LP
(of Oregon),
First Lien Pari Passu Intercreditor Agreement,
dated as of August 5, 2022, by and among Bank of
America, M.A., Fiera Private Debt Fund IV LP and
Fiera Private Debt Fund V LP, and acknowledged
and agreed to by Radiant Logistics, Inc.
Credit Agreement, dated March 13, 2020, by and
among Radiant Logistics, Inc., the Subsidiaries of
the Borrower Party Hereto, and Bank of America,
N.A., Bank of Montreal Chicago Branch, MUFG
Union Bank, N.A., the Lenders Party Hereto, BofA
Securities, Inc.
116
8-K
10.1
8/11/22
8-K
10.2
8/11/22
8-K
10.3
8/11/22
8-K
10.4
8/11/22
8-K
10.1
3/19/20
$29,000,000 Credit Facilities Amended and
Restated Loan Agreement, dated March 13, 2020,
by and among Radiant Global Logistics (Canada)
Inc., 2062698 Ontario Inc., Clipper Exxpress
Company, Radiant Logistics, Inc., Radiant Global
Logistics, Inc., Radiant Transportation Services,
Inc., Radiant Logistics Partners LLC, Adcom
Express, Inc., DBA Distribution Services, Inc.,
International Freight Systems (of Oregon), Inc.,
Radiant Off-Shore Holdings LLC, Green
Acquisition Company, Inc., On Time Express, Inc.,
Radiant Global Logistics (CA), Inc., Radiant Trade
Services, Inc., Service By Air, Inc., Radiant
Customs Services, Inc., and Fiera Private Debt
Fund IV LP
$10,000,000 Credit Facility Amended and Restated
Loan Agreement, dated March 13, 2020, by and
among Radiant Global Logistics (Canada) Inc. and
2062698 Ontario Inc., Clipper Exxpress Company,
Radiant Logistics, Inc., Radiant Global Logistics,
Inc., Radiant Transportation Services, Inc., Radiant
Logistics Partners LLC, Adcom Express, Inc., DBA
Distribution Services, Inc., International Freight
Systems (of Oregon), Inc., Radiant Off-Shore
Holdings LLC, Green Acquisition Company, Inc.,
On Time Express, Inc., Radiant Global Logistics
(CA), Inc., Radiant Trade Services, Inc., Service By
Inc.,
Inc., Radiant Customs Services,
Air,
Highways & Skyways, Inc., and Fiera Private Debt
Fund V LP
First Lien Pari Passu Intercreditor Agreement,
dated as of March 13, 2020, by and among Bank of
America, M.A., Fiera Private Debt Fund IV LP and
Fiera Private Debt Fund V LP, and acknowledged
and agreed to by Radiant Logistics, Inc.
8-K
10.2
3/19/20
8-K
10.3
3/19/20
8-K
10.4
3/19/20
Code of Business Conduct and Ethics+
10-KSB
14.1
3/17/06
10.32
10.33
10.34
14.1
21.1
23.1
23.2
31.1
31.2
32.1
Subsidiaries of the Registrant
Consent of Moss Adams, LLP
Consent of BDO USA, LLP
Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance
101.SCH Inline XBRL Taxonomy Extension Schema
101.CAL Inline XBRL Taxonomy Extension Calculation
101.DEF
Inline XBRL Taxonomy Extension Definition
101.LAB Inline XBRL Taxonomy Extension Label
117
X
X
X
X
X
X
X
X
X
X
X
101.PRE
Inline XBRL Taxonomy Extension Presentation
104
Cover Page Interactive Data (embedded within the
Inline XBRL document)
X
X
+Compensatory plans or arrangements
ITEM 16. FORM 10-K SUMMARY
None.
118
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 27, 2023
RADIANT LOGISTICS, INC.
(Registrant)
By: /s/ Bohn H. Crain
Bohn H. Crain
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signatures
/s/ Richard P. Palmieri
Richard P. Palmieri
/s/ Michael Gould
Michael Gould
/s/ Kristin Toth Smith
Kristin Toth Smith
/s/ Bohn H. Crain
Bohn H. Crain
/s/ Todd E. Macomber
Todd E. Macomber
Title
Director
Director
Director
Chairman and Chief Executive Officer
(Principal Executive Officer)
Senior Vice President and Chief
Financial Officer
(Principal Financial and Accounting Officer)
Date
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
February 27, 2023
119
RADIANT LOGISTICS, INC.
DESCRIPTION OF SECURITIES REGISTERED PURSUANT TO SECTION 12 OF
THE SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.5
Radiant Logistics, Inc., a Delaware corporation (the “Company,” “we,” “us” and “our”), has only one class of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended: our common stock, par value $0.001 per share (“common stock”).
The following description of our common stock is a summary and does not purport to be complete. It is subject to and qualified in its
entirety by reference to our Certificate of Incorporation, as amended (our “Charter”), and our Amended and Restated Bylaws (our
“Bylaws”), which are filed as exhibits to our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 and are incorporated
by reference herein. We encourage you to read our Charter, our Bylaws and the applicable provisions of the General Corporation Law
of the State of Delaware (the “DGCL”) for additional information.
Authorized Shares
We have authority to issue 100,000,000 shares of common stock, $0.001 par value per share. As of February 20, 2023, we had 48,181,256
shares of common stock issued and outstanding.
We are authorized to issue 5,000,000 shares of preferred stock, par value $0.001 per share of which none are outstanding. Our board of
directors has the authority, without further action by our stockholders, to issue shares of preferred stock in one or more series, and to
fix, as to any such series, any dividend rate, redemption price, preference on liquidation or dissolution, sinking fund terms, conversion
rights, voting rights, and any other preference or special rights and qualifications. Any or all of the rights and preferences selected by
our board of directors may be greater than the rights of our common stock. The issuance of preferred stock could adversely affect the
voting power of holders of common stock and the likelihood that holders of common stock will receive dividend payments and payments
upon liquidation.
Voting Rights
The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the
stockholders, including the election of directors, and do not have cumulative voting rights.
Dividends
Holders of shares of our common stock are entitled to dividends as and when declared by our Board of Directors from funds legally
available therefor, and upon our liquidation, dissolution or winding-up are entitled to share ratably in all assets remaining after payment
of liabilities. We have not paid any dividends on our common stock and do not anticipate paying any dividends on our common stock
in the foreseeable future. Our ability to pay dividends is limited by the terms of our credit facilities (subject to limited exceptions). As
such, it is our present policy to retain earnings, if any, for use in the development of our business.
Liquidation
Subject to any preferential rights of any then outstanding preferred stock, in the event of our liquidation, dissolution or winding up,
holders of our common stock are entitled to share ratably in the assets remaining after payment of liabilities and the liquidation
preferences of any then outstanding preferred stock.
Rights and Preferences
Our common stock does not carry any preemptive rights enabling a holder to subscribe for, or receive shares of, any class of our common
stock or any other securities convertible into shares of any class of our common stock, or any redemption rights. Our common stock
also does not have any conversion rights, and there are no sinking fund provisions applicable to our common stock.
Stock Exchange Listing
Our common stock is listed and traded on the NYSE American under the symbol “RLGT.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Broadridge Corporate Issuer Solutions, Inc. The transfer agent and registrar’s
address is 1717 Arch Street, Suite 1300, Philadelphia, Pennsylvania 19103.
Exhibit 4.5
Anti-Takeover Effects of Certain Provisions of our Charter and Bylaws and the DGCL
Provisions of the DGCL could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove
incumbent officers and directors. These provisions, summarized below, are expected to discourage types of coercive takeover practices
and inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the
benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation
of these proposals could result in an improvement of their terms.
Delaware Anti-Takeover Statute. We are subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 prohibits
a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three
years following the time the person became an interested stockholder, unless (with certain exceptions) the business combination or the
transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business
combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder.
Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the
determination of interested stockholder status did own) 15 percent or more of a corporation’s voting stock. The existence of this provision
would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the Board, including
discouraging attempts that might result in a premium over the market price for the shares of Common Stock.
No Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless a
corporation’s certificate of incorporation provides otherwise. The Company Certificate prohibits cumulative voting.
Limitation of Liability and Indemnification of Officers and Directors. The DGCL authorizes corporations to limit or eliminate the
personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as
directors. Our certificate of incorporation provides that no director shall have any liability for monetary damages for breaches of
directors’ fiduciary duties as directors. Our bylaws include provisions that indemnify, to the fullest extent allowable under the DGCL,
the personal liability of directors or officers for monetary damages for actions taken as a director or officer of the Company, or for
serving at our request as a director or officer or in another position at another corporation or enterprise, as the case may be. The bylaws
also provide that we must indemnify and advance expenses to our directors and officers, subject to our receipt of an undertaking from
the indemnitee as may be required under the DGCL. We are also expressly authorized to carry directors’ and officers’ insurance to
protect the Company and our directors, officers, employees and agents from certain liabilities.
The limitation of liability and indemnification provisions in our certificate of incorporation and our bylaws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the
likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us
and our stockholders. We may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and
damage awards against directors and officers pursuant to these indemnification provisions. There is currently no pending material
litigation or proceeding involving any of our directors, officers, employees or agents for which indemnification is sought.
Authorized but Unissued Shares of Common Stock. Our authorized but unissued shares of common stock will be available for future
issuance without approval by the holders of common stock. We may use additional shares for a variety of corporate purposes, including
future public offerings to raise additional capital, employee benefit plans and as consideration for or to finance future acquisitions,
investments or other purposes. The existence of authorized but unissued shares of common stock could render more difficult or
discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Advance Notice Requirement. Stockholder proposals to be brought before an annual meeting of our stockholders must comply with
advance notice procedures. These advance notice procedures require timely notice and apply in several situations, including stockholder
proposals relating to the nominations of persons for election to the Board of Directors. These requirements could make it more difficult
for a stockholder to bring a proposal before an annual meeting.
Undesignated Preferred Stock. Our certificate of incorporation authorizes undesignated preferred stock. As a result, our board may,
without the approval of our stockholders, issue shares of preferred stock with super voting, special approval, dividend or other rights or
preferences on a discriminatory basis that could impede the success of any attempt to acquire us. These and other provisions may have
the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of the Company.
Election and Removal of Directors. Our certificate of incorporation requires that directors may be removed for cause and only with the
approval of the holders of at least 75% of our outstanding shares entitled to vote in the election of directors. Any vacancy on our Board
of Directors, including vacancies resulting from increasing the size of our Board of Directors, may be filled by a majority of the
remaining directors in office. The foregoing provisions could make our acquisition by a third party, a change in our incumbent directors,
or a similar change of control more difficult by limiting the methods available for removing directors.
Amendments to Organizational Documents
The DGCL provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a
corporation’s certificate of incorporation or bylaws. However, our bylaws provide that our stockholders may make additional bylaws
and may alter and repeal any bylaws by the affirmative vote of the holders of two-thirds of the outstanding shares of stock entitled to
vote upon the election of directors. This provision could have the effect of delaying, deferring or preventing a change in control of the
Company.
Exhibit 4.5
Subsidiaries of
Radiant Logistics, Inc.
Name of Subsidiary
Radiant Global Logistics, Inc. (formerly Airgroup Corporation)
Radiant Logistics Partners LLC (40% owned by Radiant Global Logistics, Inc.)
International Freight Systems (of Oregon), Inc.
Highways & Skyways, Inc.
Adcom Express, Inc.
DBA Distribution Services, Inc.
Radiant Transportation Services, Inc. (formerly Radiant Logistics Global Services, Inc.)
On Time Express, Inc.
Radiant Road & Rail, Inc. (formerly Clipper Exxpress Company)
Radiant Global Logistics (CA), Inc. (formerly Wheels MSM US, Inc.)
Service By Air, Inc.
Radiant Customs Services, Inc.
Service By Air Limited
Green Acquisition Company, Inc.
Radiant Trade Services, Inc.
Radiant Off-Shore Holdings LLC
RGL Mexico LLC
Radiant Global Logistics (HK) Limited
Radiant Global Logistics (MX) S. de R.L. de C.V.
Radiant Global Logistics (Canada), Inc. (formerly Wheels International Inc.)
2062698 Ontario Inc.
Centrade, Inc.
Navegate Domestic LLC
Navegate (Hong Kong) Limited Management
Navegate Inc.
Navegate International Logistics (Shanghai) Co., Ltd
Navegate Logistics, Ltd.
Navegate Supply Chain (Shanghai) Co., Ltd
Radiant Support Services (PH) Inc.
Radiant Logistics Domestic Services, Inc.
Radiant World Trade Services, Inc.
Exhibit 21.1
State of Incorporation or Organization
Washington
Delaware
Oregon
Kentucky
Minnesota
New Jersey
Delaware
Arizona
Delaware
Delaware
New York
New York
Prince Edward Island, Canada
Washington
Washington
Washington
Washington
Hong Kong
Mexico
Ontario, Canada
Ontario, Canada
Minnesota
South Dakota
Hong Kong
South Dakota
Shanghai
Minnesota
Shanghai
Philippines
Delaware
Minnesota
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-264498, No. 333-
203821, and No. 333-179868) and Form S-8 (No. 333-261351, No. 333-190683, and No. 333-179869) of Radiant
Logistics, Inc. (the “Company”), of our report dated February 27, 2023, relating to the consolidated financial statements of
the Company as of and for the year ended June 30, 2022, and the effectiveness of internal control over financial reporting
of the Company as of June 30, 2022 (which report expresses an unqualified opinion on the consolidated financial
statements and an adverse opinion on the effectiveness of internal control over financial reporting due to a material
weakness) appearing in this Annual Report on Form 10-K of the Company for the year ended June 30, 2022.
Exhibit 23.1
/s/ Moss Adams LLP
Seattle, Washington
February 27, 2023
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.2
Radiant Logistics, Inc.
Renton, Washington
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-264498, 333-203821, and
333-179868) and Form S-8 (Nos. 333-261351, 333-190683, and 333-179869) of Radiant Logistics, Inc. of our report dated September
20, 2021, except for the effects of the restatement discussed in Note 2, as to which the date is February 27, 2023, relating to the 2021
consolidated financial statements, which appear in this Form 10--K.
/s/ BDO USA, LLP
Seattle, Washington
February 27, 2023
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.1
I, Bohn H. Crain, certify that:
1. I have reviewed this annual report on Form 10-K of Radiant Logistics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. As a certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to me by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 27, 2023
By: /s/ Bohn H. Crain
Chief Executive Officer
(Principal Executive Officer)
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2
I, Todd E. Macomber, certify that:
1. I have reviewed this annual report on Form 10-K of Radiant Logistics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. As a certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to me by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 27, 2023
By: /s/ Todd E. Macomber
Chief Financial Officer
(Principal Accounting Officer)
Certifications Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350)
Exhibit 32.1
Pursuant to 18 U.S.C. Section 1350, each of the undersigned officers of Radiant Logistics, Inc. (the “Company”) hereby certifies that,
to his knowledge, the Company’s Annual Report on Form 10-K for the period ended June 30, 2022 (the “Report”) fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 27, 2023
By: /s/ Bohn H. Crain
Bohn H. Crain
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Todd E. Macomber
Todd E. Macomber
Chief Financial Officer
(Principal Accounting Officer)
Reconciliation of Non-GAAP Financial Measures
The table below is provided to reconcile certain financial disclosures in the letter to Shareholders, page 1.
(In thousands)
Year Ended June 30:
2022
2020
2019
2018
$
$
$
$
$
Net income (loss) attributable to Radiant Logistics, Inc.
Income tax expense
Depreciation and amortization
Net interest expense
EBITDA
Share-based compensation
Change in fair value of contingent consideration
Acquisition related costs
Ransomware incident related costs, net
Litigation costs
Gain on litigation settlement, net
Transition, lease termination, and other costs
Change in fair value of interest rate swap contracts
Gain on forgiveness of debt
Foreign currency transaction loss (gain)
MM&D start-up costs
Adjusted EBITDA
2021
(as restated)
23,110
5,951
16,642
2,531
48,234
1,071
4,350
42
—
535
(25)
—
594
(5,987)
189
—
49,003
44,464
12,692
18,716
3,191
79,063
1,798
767
596
684
568
—
—
(1,840)
—
(718)
—
80,918
10,541
3,157
16,571
2,826
33,095
1,663
1,752
577
—
1,061
—
586
(600)
—
125
—
38,259
16,346
4,800
15,209
2,973
39,328
1,612
(1,207)
316
—
754
—
117
—
—
(160)
—
40,760
10,188
73
14,389
3,075
27,725
1,514
(1,176)
239
—
346
—
176
—
—
8
410
29,242
$
$
$
$
$
Our GAAP-based net income will be affected by non-cash charges relating to the amortization of customer-related intangible assets and other intangible
assets attributable to completed acquisitions. Under applicable accounting standards, purchasers are required to allocate the total consideration in a business
combination to the identified assets acquired and liabilities assumed based on their fair values at the time of acquisition. The excess of the consideration paid
over the fair value of the identifiable net assets acquired is to be allocated to goodwill, which is tested at least annually for impairment. Applicable accounting
standards require that we separately account for and value certain identifiable intangible assets based on the unique facts and circumstances of each acquisition.
As a result of our acquisition strategy, our net income will include material non-cash charges relating to the amortization of customer related intangible assets
and other intangible assets acquired in our acquisitions. Although these charges may increase as we complete more acquisitions, we believe we will be growing
the value of our intangible assets (e.g., customer relationships). Thus, we believe that earnings before interest, taxes, depreciation and amortization, or EBITDA,
is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business.
EBITDA is a non-GAAP measure of income and does not include the effects of preferred stock dividends, interest and taxes, and excludes the “non-cash” effects
of depreciation and amortization on long-term assets. Companies have some discretion as to which elements of depreciation and amortization are excluded in
the EBITDA calculation. We exclude all depreciation charges related to technology and equipment, all amortization charges (including amortization of leasehold
improvements), and other intangible assets. We then further adjust EBITDA to exclude changes in contingent consideration, expenses specifically attributable to
acquisitions, severance and lease termination costs, foreign exchange gains and losses, extraordinary items, share-based compensation expense, non-recurring
litigation expenses, and other non-cash charges. Adjusted EBITDA is then normalized by excluding non-recurring transition costs. While management considers
EBITDA, adjusted EBITDA, and normalized adjusted EBITDA useful in analyzing our results, it is not intended to replace any presentation included in our
consolidated financial statements.
CORPORATE HEADQUARTERS
Triton Towers Two
700 S. Renton Village Place
Seventh Floor
Renton, WA 98057
Tel: (800) 843-4784
www.radiantdelivers.com
ANNUAL MEETING
May 23, 2023
Corporate Headquarters
CORPORATE GOVERNANCE
Copies of the Company’s 2022 Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, Proxy Statement
and this Annual Report are available online
at https://financials.radiantdelivers.com or
to shareholders without charge upon written
request to our Secretary at the Company’s
principal address or by calling (800) 843-4784.
Corporate Governance Principles, the Audit and
the Executive Oversight Committee Charter
and the Company’s Code of Ethics. Copies of
these documents are available to shareholders
without charge upon written request to our
Secretary at the Company’s principal address.
The Company is required to file as an Exhibit to
its Form 10-K for each fiscal year certifications
under the Sarbanes-Oxley Act signed by the
Chief Executive Officer and the Chief Financial
Officer. In addition, the Company is required
to submit a certification signed by the Chief
Executive Officer to the NYSE American within
30 days following the Annual Meeting of
Shareholders. Copies of the certifications will
be posted promptly upon filing.
COMMON STOCK
Listed on NYSE American
Symbol: RLGT
INVESTOR RELATIONS CONTACT
JP Deenihan
VP Marketing & Communications
communications@radiantdelivers.com
(800) 843-4784
STOCK TRANSFER AGENT
Questions regarding stock holdings, certificate
placement/transfer and address changes should
be directed to:
Broadridge Corporate Issuer Solutions, Inc.
1717 Arch Street
STE 1300
Philadelphia, PA 19103
(855) 418-5054
ONLINE ANNUAL REPORT
https://radiantdelivers.com/about/financials
In addition, on the Company’s Corporate
Governance website at
www.radiantdelivers.com/about,
shareholders can view the Company’s
SHAREHOLDER RELATIONS CONTACT
Todd Macomber
Chief Financial Officer
(800) 843-4784
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“
Whatever comes
next, Radiant
stands ready to
deliver....
”
THE RADIANT FAMILY OF BRANDS
THE RADIANT FAMILY OF BRANDS
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FOR MORE INFORMATION, PLEASE VISIT:
www.radiantdelivers.com/about/financials