<PAGE>

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                          SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                                      FORM 10-K
     (MARK ONE)
               [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

               FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998

               [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                     SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

       FOR TRANSITION PERIOD FROM                    TO


                            COMMISSION FILE NUMBER 0-18690

                                     RADIUS INC.
                (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          CALIFORNIA                                 68-0101300
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)


                  460 E MIDDLEFIELD ROAD
                    MOUNTAIN VIEW, CA                       94043
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)        (ZIP CODE)

                                    (650) 404-6000
                 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:   NONE

      SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  COMMON STOCK

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.  YES   X   NO
                                        ---     -------

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF THE REGISTRANTS KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.  (  )

<TABLE>
<CAPTION>
                                                         AS OF NOVEMBER 30, 1998
                                                         -----------------------
<S>                                                      <C>
AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT BASED ON THE CLOSING
BID PRICE OF SUCH STOCK:                                           $8,644,022

NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:                       5,532,174
</TABLE>

                         DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF REGISTRANT'S DEFINITIVE PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD FEBRUARY 26, 1999 ARE INCORPORATED BY REFERENCE INTO
PART III (ITEMS 10, 11, 12, AND 13) HEREOF.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>

                                     RADIUS INC.
                           1998 ANNUAL REPORT ON FORM 10-K

                                  TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                      Page
                                                                            ----
<S>            <C>                                                          <C>
ITEM 1.        Business . . . . . . . . . . . . . . . . . . . . . . . .        2

ITEM 2.        Properties . . . . . . . . . . . . . . . . . . . . . . .        7
ITEM 3.        Legal Proceedings. . . . . . . . . . . . . . . . . . . .        7
ITEM 4.        Submission of Matters to a Vote of Security Holders. . .        8
ITEM 4A.       Executive Officers of Registrant . . . . . . . . . . . .        8

PART II

ITEM 5.        Market for Registrant's Common Equity and Related
               Shareholder Matters. . . . . . . . . . . . . . . . . . .        9
ITEM 6.        Selected Financial Data. . . . . . . . . . . . . . . . .       10
ITEM 7.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations. . . . . . . . . . . . . . . .       11
ITEM 7A        Quantitative and Qualitative Disclosures about Market
               Risk . . . . . . . . . . . . . . . . . . . . . . . . . .       23
ITEM 8.        Financial Statements and Supplementary Data. . . . . . .       23
ITEM 9.        Changes in and Disagreements With Accountants on Accounting
               and Financial Disclosure . . . . . . . . . . . . . . . .       23

PART III

ITEM 10.       Directors and Executive Officers of the Registrant . . .       24
ITEM 11.       Executive Compensation . . . . . . . . . . . . . . . . .       24
ITEM 12.       Security Ownership of Certain Beneficial Owners and
               Management . . . . . . . . . . . . . . . . . . . . . . .       24
ITEM 13.       Certain Relationships and Related Transactions . . . . .       24

PART IV

ITEM 14.       Exhibits, Financial Statement Schedule, and Reports on
               Form 8-K . . . . . . . . . . . . . . . . . . . . . . . .       25

SIGNATURES      . . . . . . . . . . . . . . . . . . . . . . . . . . . .       30
</TABLE>


Radius, the Radius logo, PressView and PrecisionView, among others are
registered trademarks and/or registered service marks of Radius Inc.  Radius
Edit, EditDV, MotoDV, PhotoDV and Roto, among others, are trademarks and/or
service marks of Radius Inc. or one of it subsidiaries. Other brands or products
contained in this document are trademarks, service marks, registered trademarks
or registered service marks of their respective holders and should be treated as
such.


                                         -1-
<PAGE>

                                        PART I

ITEM 1.   BUSINESS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: The following discussion
contains forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934 that are subject to risks and uncertainties.
Statements indicating that the Company or management "intends", "plans",
"expects," "estimates" or "believes" are forward-looking, as are all other
statements concerning future financial results, product offerings or other
events that have not yet occurred. There are several important factors that
could cause actual results or events to differ materially from those anticipated
by the forward-looking statements contained in this discussion and other
sections of this Form 10-K.

OVERVIEW

     The Company designs, develops, assembles, markets and supports digital
video computer products for creative professionals and consumers who use digital
camcorders.  The Company's current product line includes: multimedia authoring
and editing video systems and software that can acquire and manipulate video and
audio information.

     The primary target markets for the Company's products are video editors,
video producers, and creators of multimedia. These markets encompass creative
professionals involved in such areas as multimedia authoring, video editing,
video and multimedia production and corporate training.

     Historically, substantially all of the Company's products have been
designed for and sold to users of Macintosh computer products (the "Macintosh")
manufactured by Apple Computer, Inc. ("Apple") as Apple products have been the
preferred platform in the Company's target markets.  This past year, the Company
added cross platform (Windows and Macintosh) capabilities to many of the
Company's products in order to market these products to users of the Windows
operating system.  In the last quarter of fiscal 1998, 27% of unit sales were
made to Macintosh only users, 43% were made to Windows only users, and 30% were
made to  cross-platform buyers.

     As shown in the accompanying consolidated financial statements, the Company
has incurred substantial operating losses.  During fiscal 1997 and 1998,
management implemented a number of actions to address its cash flow and
operating issues including; refocusing its efforts on providing solutions for
digital video customers; discontinuing sales of mass market and other low value
added products; divesting a number of businesses and product lines, including
most recently the agreement for the sale and related license of significant
assets of its monitor business to Korea Data Systems America, Inc. ("KDS");
significantly reducing expenses and headcount; and reducing its lease
obligations given its reduced occupancy requirements.  There can be no assurance
that these measures will be sufficient to allow the Company to achieve
profitability.  As of September 30, 1998, the Company had a working capital
deficit of $5.2 million.  The Company intends to finance its working capital
needs through cash generated by operations and borrowings under a working
capital line of credit with Silicon Valley Bank.  The Company may need to
further reduce its operating expenses or seek additional sources of working
capital if software product sales do not increase at the rate assumed in the
Company's current operating plans.

     The Company's executive offices are located at 460 E. Middlefield Road,
Mountain View, CA 94043, and its telephone number is (650) 404-6000.

RECENT DEVELOPMENTS

LICENSING OF AND AGREEMENT TO SELL MONITOR BUSINESS ASSETS TO KOREA DATA SYSTEMS
AMERICA, INC. ("KDS")

     In June 1998, the Company licensed certain technology and assets necessary
to conduct its monitor and color publishing business to KDS, leaving the Company
free to focus on its digital video software business.  The brand name and
trademark RADIUS was one of the assets so licensed because of its primary
association with monitors.  In August 1998, the Company amended and restated
this license and agreed to sell the licensed assets to KDS pursuant to an asset
transfer agreement, subject to certain contingencies, at the discretion of KDS.
The monitor business has accounted for substantially all of the revenues of the
color publishing product line and 55.3% of the Company's revenues during fiscal
1998.  Under the license and asset transfer agreement, Radius has transferred
(by licensing or by assignment if KDS elects to close the asset transfer
agreement) its Radius, Supermac, PressView and certain other trademarks to KDS
and has licensed certain intellectual property pertaining to PressView


                                         -2-
<PAGE>

and PrecisionView monitors.  KDS has not agreed to purchase any inventory or 
other tangible assets of Radius under the license and asset transfer 
agreement.  The expected value of the transaction is $6.2 million paid or to 
be paid in installments, including $0.85 million paid in August 1998 and 
$0.35 million in September 1998 under the amended license and $0.5 million 
under the original license in June 1998.  The remaining amount is payable in 
installments through October 1999.  KDS' performance is guaranteed by a 
Korean corporation and its US affiliate.  The asset transfer agreement is 
expected to close by June 1999, if contingencies are satisfied.  If KDS 
elects to deem such contingencies satisfied and the purchase transaction 
closes, then the Company will be obligated to seek shareholder approval to 
change its corporate name to a name that does not include "Radius".  
Management believes that the corporate name change will facilitate the sale 
and intends to seek shareholder approval of a corporate name change at the 
February 1999 annual meeting, whether or not the sale is concluded, in view 
of the Company's focus on the digital video software business.  The new name 
is expected to more closely reflect the Company's current business 
objectives.  After significant study with the assistance of professional 
advisors, management has recommended that the name be changed to "Digital 
Origin, Inc.".  There can be no assurance that the closing or name change 
will occur.  In the interim, Radius expects to wind down its monitor business 
activities as current supplies of monitors are sold, whether or not the asset 
purchase agreement is closed.  Radius will continue to use the transferred 
trademarks and technology until this transition is completed over the next 
several months.

POTENTIAL NASDAQ SMALLCAP MARKET DELISTING; REVERSE STOCK SPLIT

     The Company's Common Stock is listed on the Nasdaq SmallCap Market pursuant
to an agreement with the NASD which requires that the Company comply with the
continued listing requirements for the Nasdaq SmallCap Market.  Failure to meet
the continued listing requirements in the future would subject the Common Stock
to delisting. For example, companies traded on the Nasdaq SmallCap Market have
been required since March 1998 to maintain a minimum bid price of $1.00 per
share.  For this reason, the Company implemented a one for ten reverse stock
split in March 1998.  There have been periods in 1998 when the Company's Common
Stock has had a minimum bid price below $1.00.  This condition has not been
sustained for a period of time sufficient to cause action by Nasdaq.  However,
there can be no assurance that the Company will continue to meet this or other
listing requirements of Nasdaq.  If the Company's Common Stock is delisted,
there can be no assurance that the Company will meet the requirements for
initial inclusion on the Nasdaq SmallCap Market in the future, particularly in
light of the fact that Nasdaq currently requires traded securities to have a
$4.00 minimum per share bid requirement. Moreover, the NASD is considering the
elimination of the SmallCap Market altogether.  Trading, if any, in the listed
securities after delisting or the elimination of the SmallCap Market would be
conducted in the over-the-counter market in what are commonly referred to as the
"pink sheets."  As a result, investors would find it more difficult to dispose
of, or to obtain accurate quotations as to the value of, the Company's
securities.

TECHNOLOGY PURCHASE FROM POST DIGITAL SOFTWARE, INC.

     On November 23, 1998, the Company acquired certain software and other
intangible property from Post Digital Software, Inc. for (i) an initial payment
of $50,000, (ii) earnout payments equal to at least $50,000 but not exceeding
$700,000 based on subsequent sales of the Company's digital video products
incorporating such software and (iii) a warrant to purchase up to 50,000 shares
of the Company's Common Stock at an exercise price of $1.50 per share.  The
warrant is exercisable over a four year period through November 23, 2002.  The
warrant can be exercised for up to 12,000 shares beginning May 1, 1999, plus an
additional 2,000 shares for each full month that transpires thereafter, up to a
total of 50,000 shares.  Stephen Manousos, a candidate for election to the
Company's Board of Directors at the Company's annual shareholders meeting on
February 26, 1999, is a principal shareholder, officer and director of Post
Digital Software, Inc.  Post Digital Software, Inc. is in the process of winding
up its business.

SALE OF CERTAIN COLOR PUBLISHING TECHNOLOGY

     On December 4, 1998, the Company agreed to sell certain software and 
other intangible property associated with its monitor and color publishing 
business to Splash Technology Holdings, Inc. ("Splash") in consideration of 
$275,000 and the early release of $1.0 million from an escrow established for 
the benefit of Splash when the Company's Color Server Group was sold to 
Splash in January 1996. See Management's Discussion and Analysis of Financial 
Condition - Divestitures". These funds were received on December 16, 1998.  
In the transaction, Splash licensed some of the transferred technology back 
to the Company for a term of two years on a fully paid up basis.

                                         -3-
<PAGE>

PRODUCTS AND APPLICATIONS

     A summary of some of the Company's principal products and their typical
applications is set forth below:

<TABLE>
<CAPTION>
              Product                                   Suggested Retail Price
              -------                                   ----------------------
              <S>                                       <C>
              PhotoDV       (with FireWire)                         $299
              MotoDV        (with FireWire)                         $499
              MotoDV Studio (with FireWire)                         $899
              EditDV        (with FireWire)                         $999
              EditDV Unplugged                                      $ 99
              Software upgrades to:
                 PhotoDV                                            $199
                 MotoDV                                             $399
                 EditDV                                             $799
</TABLE>

The prices listed above are suggested retail prices.  Actual prices could vary
based on purchase volumes, competition, seasonality and promotions or other
sales incentives, among others.

DIGITAL VIDEO SYSTEMS AND SOFTWARE

     Radius offers a number of products for both the multimedia authoring and
the non-linear digital video editing and production market.  Non-linear digital
editing enables video editors to manipulate pictures and sound in a faster,
easier and more cost effective manner than traditional analog tape-based
systems.  Editors can randomly access and digitally "cut and paste" images,
videos and sound clips, avoiding the tedious process of winding and rewinding
linear tape and the subsequent physical cutting and splicing of film segments.

     PhotoDV is a software tool, used as an Adobe Photoshop import plug-in.  It
is available with or without the Radius FireWire card and a digital interface
cable. PhotoDV enables a Digital Video ("DV") camcorder to perform as a still
image camera, in addition to being used to record video.  Pictures are acquired
digitally over FireWire (IEEE 1394) and can be used for Web sites, picture
databases, printed pages, and QuickTime VR scenes.  PhotoDV is available for
both the Macintosh and Windows operating systems.

     MotoDV is an input/output utility that provides a digital method for moving
DV camcorder footage from the camcorder to a personal computer for the purpose
of editing.  MotoDV is targeted at video designers and other creative
professionals who produce video and multimedia content for tape, CD-ROM, and Web
delivery. The MotoDV application remotely controls the DV camcorder or DV video
tape recorder over FireWire and captures DV clips, in real-time or time-lapse
mode. As clips are being captured, MotoDV converts the integrated DV data stream
into QuickTime movies with separate video and audio tracks. These clips can then
be imported into any QuickTime-compliant editing or special effects application,
including Radius EditDV, Adobe Premiere, and Adobe After Effects.  MotoDV is
available for both the Macintosh and Windows operating systems.  MotoDV Studio
builds on MotoDV by including Adobe Premiere for Windows and a set of custom
Radius developed plug-ins and is targeted towards the large installed base that
Adobe has for Premiere.

     EditDV is a digital non-linear editing system which operates on the MacOS
in conjunction with digital camcorders, Apple's QuickTime (an industry standard
architecture of digital media) and FireWire connections.  Users can create
digital video with multiple video and effects tracks, rubber-band audio, and
traditional wipes and fades for fast interactive editing, color modification and
keying.

     EditDV also provides QuickTime-compliant digital video non-linear editing,
compositing and animation capability that facilitates the creation and editing
of digital video content.  EditDV is a non-linear professional digital video
editing solution that features an intuitive user interface, FX templates,
built-in titling, multiple key frames, batch digitizing and picture-in-picture
capabilities.  It also offers a variety of high-quality special effects for
digital video editing including pan-zoom-rotating, chroma


                                         -4-
<PAGE>

keying and compositing.  EditDV Unplugged is an entry level version of EditDV
targeted to the beginning non-linear editor, and is available for both the
Macintosh and Windows operating systems.

     The Company expects to continue to invest significant resources in its
software digital video products during fiscal 1999, including developing cross
platform functionality for the Windows environment, and intends to introduce
various enhancements to these products.

MONITOR AND COLOR PUBLISHING PRODUCTS

     During fiscal 1998, the Company offered two large color reference displays
designed for desktop color publishers and graphic artists.  The PressView SR
series was designed to offer the color accuracy, resolution and clarity needed
for high quality color prepress, media authoring, photography, medical imaging
and scientific image processing.  These color reference displays offer
consistent and accurate color preproofing at resolutions of up to 1600 by 1200
pixels.  The PrecisionView 21 also offers resolutions of up to 1600 by 1200
pixels but at a lower price point.  During fiscal 1998, the Company also offered
the Prosense display calibrator.  Color peripherals tend to vary over time from
their original specifications, thus causing significant color variances.
Display calibrators control the way peripherals produce color, making the color
more consistent and predictable. The Company's Prosense Display Calibrator works
with sensing technology and Macintosh software to measure the actual color
performance of a display and then adjusts information in the Macintosh graphics
card so that the colors will be accurate.  As a result of the KDS transactions,
the Company does not expect to invest significant resources in the development
or distribution of such products in the future.

TECHNOLOGY AND PRODUCT DEVELOPMENT

     The Company's current development focus is on developing digital video
acquisition products and editing tools for the Macintosh and Windows operating
systems.  The Company's research and development efforts are focused on creating
new products and technologies for customers who create, review, approve and
utilize moving video.  Current research and development efforts include:  (i)
performance improvements and cost reductions of current products; (ii)
development of application software to facilitate the creation and manipulation
of video and high resolution still and full motion images;  (iii) development of
technology to enable new methods of displaying and creating digital video
information with greater flexibility, speed, and quality; (iv) development of
technology to permit use of all of the Company's main digital video software
products in the Windows operating environment, including EditDV.

     The Company believes that the competitive nature of the computer industry,
along with the rapid pace of technological evolution, requires that it continue
to introduce innovative products on a timely basis to compete effectively.
During fiscal 1998, 1997 and 1996, the Company's expenditures for research and
development totaled $2.8 million, $5.0 million and  $7.5 million, respectively.
Of these expenditures 68.98%, 28.95% and 11.79%, respectively, were allocated to
the digital video software product line.  To date, all of the Company's research
and development expenditures have been charged to operations as incurred.
Because of its smaller size and narrowing of product focus, the Company does not
anticipate having research and development expenditures equal to earlier levels
and there can be no assurance that the Company will be able to successfully
develop new or enhanced products, commercially successful products, or products
that will not be rendered obsolete by changing technology or new products
introduced by others.  Additionally, should the Company fail to introduce new
products on a timely basis, the Company's operating results could be adversely
affected.  The Company does plan to devote increasing percentages of its
research and development expenditures to products for the Windows or cross
platform markets.  Although these markets are potentially much larger than the
Macintosh market, the Company has less experience in such markets and they are
known to become more competitive over time.    See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Certain Factors
That May Affect the Company's Future Results of Operations -- Technological
Change; Continuing Need to Develop New Products."

MARKETING, SALES AND DISTRIBUTION

     Domestically the Company employs a two-tiered distribution model through 
which it sells its products primarily through a limited number of 
distributors that in turn distribute the Company's products to a variety of 
resellers including superstores, independent dealers, educational resellers, 
systems integrators, value added resellers and mail order resellers.  The 
Company's domestic distributors purchase products at discounts from suggested 
retail prices based on purchase volumes.  The Company also sells directly in 
the United States using its site on the World Wide Web and its toll-free call 
center.  The Company major distributors are:  Ingram Micro, Inc., Pinacor, 
Canon, Broadfield, and Wynit.  The Company's business and financial results 
are highly dependent on the success of these distributors. To assist these 
domestic distributors and to provide

                                         -5-
<PAGE>

marketing, training and technical support, the Company provides sales
representatives in a number of locations in the United States.  Radius also
provides market development funds to give distributors incentives to increase
sales, improve reporting and achieve a product mix favoring higher margin
products.

     Internationally, sales are made through foreign distributors, which 
market, sell and service the Company's products.  During fiscal 1996, the 
Company entered into exclusive distributor arrangements with respect to Japan 
and Europe which resulted in revenues in the form of sales commissions, 
rather than gross sales proceeds.  These commission-based and exclusive 
arrangements have been terminated and all international sales are currently 
reported in terms of gross sales. For fiscal years ended September 30, 1998, 
1997 and 1996, the Company's export sales accounted for approximately 23.4%, 
15.7%, and 50.7% respectively, of the Company's net sales.  See Note 7 of 
Notes to Consolidated Financial Statements.  The Company's export sales are 
subject to certain risks common to international operations, such as currency 
fluctuations and governmental regulation.  During the third quarter of fiscal 
1997, exclusivity with the Japanese distributor was terminated, however, no 
other distribution relationship for Japan has been entered into by the 
Company. During the fourth quarter of fiscal 1998, the Company terminated its 
exclusive distribution contract for Europe. The Company is in the process of 
establishing new distributors in Europe.  During the fourth quarter of fiscal 
1998, the Company appointed a marketing representative for Europe to assist 
the Company in building a network of distributors.  There is no assurance 
that these efforts will increase sales and profits from these markets.  See 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations -- Certain Factors That May Affect the Company's Future Results of 
Operations -- International Sales."

     For the fiscal years ended September 30, 1998, 1997 and 1996 one customer
accounted for approximately 53.5%, 66.1%, and 34.3% of the Company's net sales,
respectively.

     Many of the Company's distributors have the right to return products
purchased from the Company.  While the Company provides for estimated product
returns, if in the future the Company were to experience returns from customers
significantly in excess of this estimate, such returns could have a material
adverse effect on the Company's results of operations.

     The Company's marketing programs support worldwide sales and distribution
of its products. The Company's principal marketing activities include active use
of its own web site and others on the world wide web, frequent participation in
industry trade shows and seminars, advertising in major trade publications
worldwide, public relations activities with the trade and business press,
publication of technical articles, distribution of sales literature and product
specifications and communications with its installed base of end users. The
Company's marketing programs are designed to generate sales leads for its
distributors and master resellers as well as to enhance the Company's brand name
recognition.

MANUFACTURING AND SUPPLIERS

     As a result of the Company's outsourcing of manufacturing, substantially
all of the Company's assembly, quality control testing, packaging and other
manufacturing operations are performed by the Company's suppliers, contract
manufacturers, and other subcontractors.  The Company has developed a quality
assurance program with these third parties.  The Company attempts to utilize
standard parts and components available from multiple vendors.  However, certain
components used in the Company's products are available only from sole or
limited suppliers.  Although the Company has been able to obtain an adequate
supply of such components in the past, there can be no assurance that it will be
able to obtain an adequate supply in the future.

COMPETITION

     All markets in which the Company competes are expected to remain highly
competitive.  The Company's principal competitors in the digital video market
include Adobe, Avid Technology, Inc. and Ulead.  The market for the Company's
products is evolving, and it is difficult to predict all future sources of
competition.  For example, Apple is expected to introduce a non linear digital
video editing product during fiscal 1999.  Therefore, the Company could face
significant competition in the future from newly established companies or newly
introduced or improved products of others.  Although Apple and Microsoft are
principally suppliers of general purpose computing platforms and other
applications upon which third parties are encouraged to build more complete
solutions, the Company may  face competition from Apple and Microsoft.  Apple
currently markets a number of products that compete directly or indirectly with
the Company.  Apple and Microsoft also could introduce additional products, add
functionality to their computer systems that is similar to that provided by
certain of the Company's products, or alter their systems' architecture in a
manner that could adversely affect the Company's ability to compete.  See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Certain Factors That May Affect the Company's Future Results of
Operations -- Dependence on and Competition with Apple and Microsoft.


                                         -6-
<PAGE>

     The Company believes that the principal competitive factors for its product
line are product performance, breadth of distribution, brand name recognition,
price and customer support.  There can be no assurance that the Company will be
able to compete successfully with respect to these factors.  In addition, many
of the Company's current and prospective competitors have significantly greater
financial, technical and marketing resources than the Company.  As a result,
there can be no assurance that the Company will compete effectively with current
or future competitors or that competitive pressures faced by the Company will
not have a material adverse affect on the Company's business, financial
condition or results of operations.  See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Certain Factors That May
Affect the Company's Future Results of Operations -- Competition."

EMPLOYEES

     As of October 30, 1998, the Company had approximately 42 full time
employees, 17 of which are in sales and marketing functions, 13 of which are in
research and development, and the balance are in administration (finance,
operations, and senior management).  The Company's success will depend, in large
measure, on its ability to attract, motivate and retain highly qualified
technical, marketing, engineering and management personnel, who are in great
demand.  See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Certain Factors That May Affect the Company's Future
Results of Operations -- Dependence on Key Personnel."  The Company's employees
are not represented by any collective bargaining agreements, and the Company has
never experienced a work stoppage.  The Company believes that its employee
relations are good.

ITEM 2.        PROPERTIES

     The Company's primary facility is located in Mountain View, California 
and consists of leased space of approximately 19,000 square feet.  The 
Company believes that its current facilities are sufficient for its current 
needs.  The lease on the primary facility will expire in April 1999.  The 
Company expects to be able to renew its current lease for a three year  
period for an annual cost that is similar to its current annual costs.  The 
Company has subleased, to another company, a facility of approximately 86,000 
square feet which the Company is currently not using.  This master and 
sublease arrangement expires in December 1998.  The Company has no other 
facilities.

ITEM 3.        LEGAL PROCEEDINGS

(a)  On November 16, 1995, Electronics for Imaging, Inc. ("EFI") filed a suit in
the United States District Court in the Northern District of California alleging
that the Company infringes a patent allegedly owned by EFI.  Although the
complaint does not specify which of the Company's products allegedly infringe
the patent, subsequent pleading indicates that EFI alleges that the Company's
Color Server products infringe.  In January 1996, the Company completed the
divestiture of the Color Server Group to Splash Technology Holdings, Inc.

The Company has filed an answer denying all material allegations and has filed
counterclaims against EFI alleging causes of action for interference with
prospective economic benefit, antitrust violations, and unfair business
practices.  EFI's motion to dismiss or sever the Company's amended counterclaims
was granted in part and the ruling permitted the Company to file an amended
counterclaim for antitrust violations.  The Company has filed an amended
antitrust claim.  The Company believes it has meritorious defenses to EFI's
claims and is defending them vigorously.  In addition, the Company believes it
may have indemnification rights or additional immunity with respect to elements
of EFI's claims.  A motion for summary judgment based on these indemnification
rights disposing of EFI's claims was filed, and the court granted this motion
finding the Company immune from suit under the patent after February 22, 1995.
In March 1998, EFI and the Company agreed to dismiss their remaining claims
against each other pending the outcome of EFI's appeal of this summary judgment
finding.  Pursuant to this agreement, if the Company prevails on appeal, the
remaining claims will be dismissed.  On the other hand, if EFI were to prevail
on appeal, then EFI could refile its claims and the Company would intend to
continue to vigorously defend against such claims and prosecute its own claims
against EFI.  In such event, neither the Company nor Splash Technology Holdings,
Inc. would be able to advance the immunity defense ruled on in the summary
judgment motion, which would require the Company to defend EFI's claims based
upon their merits.  EFI filed its notice of appeal on April 7, 1998, each party
submitted opening briefs, oral argument was heard in December 1998 and the
District Court summary judgement was affirmed by the Federal Circuit Court after
the oral argument.  No further appeal is expected and the case should be
concluded.


(b)  On July 18, 1997, Intelligent Electronics, Inc. ("IE") and its affiliates
filed a suit in the United States District Court for the District of Colorado
alleging a breach of contract and related claims in the approximate amount of
$800,000, maintaining that the Company failed to comply with various return,
price protection, inventory balancing and marketing development funding


                                         -7-
<PAGE>

undertakings.  In 1997, the Company filed an answer to the complaint and cross
claimed against the plaintiffs and in October 1997 additionally cross claimed
against Deutsche Financial, Inc., a factor in the account relationship between
the Company and the plaintiffs, seeking the recovery of approximately $2
million.  The Company continues to investigate these claims as well as cross
claims and expects to vigorously defend and prosecute them as applicable.  The
Company has provided reserves for the full amount of accounts receivable due
from Intelligent Electronics, Inc. and Deutsche Financial, Inc.

(c)  The Company is involved in a number of other judicial and administrative
proceedings incidental to its business.  The Company intends to defend such
lawsuits vigorously and although adverse decisions (or settlements) may occur in
one or more of such cases, the final resolution of these lawsuits, individually
or in the aggregate, is not expected to have a material adverse effect on the
financial position of the Company.  However, depending on the amount and timing
of an unfavorable resolution of these lawsuits, it is possible that the
Company's future results of operations or cash flows could be materially
adversely affected in a particular period.  In addition, the costs of defense,
regardless of the outcome, could have a material adverse effect on the results
of operations and financial condition of the Company.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.


ITEM 4A.  EXECUTIVE OFFICERS OF REGISTRANT

          The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
           NAME               AGE                  POSITION
           ----               ---                  --------
<S>                           <C>          <C>
Mark Housley                  42           Chairman of the Board of Directors,
                                           Chief Executive Officer and President
</TABLE>


     MARK HOUSLEY has been President and Chief Operating Officer of the Company
since January 1997, CEO since August 1997 and Chairman since December 1997.
From March 1995 until October 1996, Mr. Housley was founder and Vice President
of Marketing of Spectrum Wireless, Inc., a manufacturer of wireless
infrastructure products.  From May 1992 until March 1995, Mr. Housley held
various positions of responsibility for the Company and its predecessor SuperMac
Technologies, Inc., including Vice President and General Manager of the
Company's Color Publishing Division.  From October 1990 until May 1992, Mr.
Housley was a Vice President for Siemens AG in Santa Clara, a multinational
manufacturer of electronic equipment, directing product marketing and planning.

     HENRY V. MORGAN was the Chief Financial Officer and Senior Vice President,
Finance and Administration since February 1997.  He resigned from these
positions in September 1998 in order to assume his current duties at Redcreek
Communications, Inc., an Internet start up company.  He remained Secretary to
the Company and was appointed to the Board of Directors in October 1998.

     STEVE PETRACCA was the Senior Vice President of Engineering and Operations
since April 1997.  He resigned from this position in March 1998.



                                         -8-
<PAGE>

                                       PART II

ITEM 5.        MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               SHAREHOLDER MATTERS


     The Company's Common Stock was quoted on the Nasdaq National Market from
August 21, 1991 until July 1, 1996.  The Company's Common Stock is now quoted on
the Nasdaq SmallCap Market under the symbol "RDUS."  The high and low sales
prices for the Common Stock are indicated below, adjusted to reflect the
one-for-ten reverse split effective March 9, 1998.  See "Recent Developments -
Potential Nasdaq SmallCap Market Delisting."

<TABLE>
<CAPTION>
 Year Ended September 30, 1997                     Low               High
 -----------------------------                     ---               ----
 <S>                                               <C>               <C>
 First Quarter                                      $4.69            $18.12
 Second Quarter                                      3.12              5.31
 Third Quarter                                       1.87              4.06
 Fourth Quarter                                      2.50              7.19

 Year Ending September 30, 1998
 ------------------------------
 First Quarter                                       2.81              7.19
 Second Quarter                                      2.25              4.37
 Third Quarter                                       2.37              5.87
 Fourth Quarter                                      0.94              2.94
</TABLE>

     On September 30, 1998, there were approximately 2,207 holders of record of
the Company's Common Stock.

     The price of the Company's Common Stock has fluctuated widely in the past.
Management believes that such fluctuations may have been caused by announcements
of new products, quarterly fluctuations in the results of operations and other
factors, including changes in conditions of the personal computer industry in
general and of Apple Computer in particular, changes in the Company's results of
operations and financial condition and sales of large numbers of shares of
Common Stock by former creditors of the Company.  Stock markets, and stocks of
technology companies in particular, have experienced extreme price volatility in
recent years.  This volatility has had a substantial effect on the market prices
of securities issued by the Company and other high technology companies, often
for reasons unrelated to the operating performance of the specific companies.
Due to the factors referred to herein, the dynamic nature of the Company's
industry, general economic conditions, and other factors, the Company's future
operating results and stock prices may be subject to significant volatility in
the future. Such stock price volatility for the Common Stock has in the past
provoked securities litigation, and future volatility could provoke litigation
in the future that could divert substantial management resources and have an
adverse effect on the Company's results of operations.

     The Company has never declared or paid any cash dividends on its Common
Stock.  The Company anticipates that it will retain any future earnings for use
in its business or the retirement of debt and does not anticipate paying any
cash dividends on its Common Stock in the foreseeable future.


                                         -9-
<PAGE>

ITEM 6.           SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                              SEPTEMBER 30, (1)
                                               --------------------------------------------------------------------------------
                                                 1998             1997              1996               1995             1994
                                                 ----             ----              ----               ----             ----
                                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                            <C>              <C>               <C>               <C>               <C>
CONSOLIDATED STATEMENTS OF
     OPERATIONS DATA:
Total net sales                                $  15,668        $  31,150         $  90,290         $ 308,133         $ 324,805
Cost of sales                                      9,921           31,032            77,382           302,937           276,948
                                               ---------        ---------         ---------         ---------         ---------
     Gross profit                                  5,747              118            12,908             5,196            47,857
Operating expenses:
     Research and development                      2,801            5,002             7,478            19,310            33,956
     Selling, general and administrative           7,107           21,355            25,886            90,068            94,731
                                               ---------        ---------         ---------         ---------         ---------
         Total operating expenses                  9,908           26,357            33,364           109,378           128,687
                                               ---------        ---------         ---------         ---------         ---------
Loss  from operations                             (4,161)         (26,239)          (20,456)         (104,182)          (80,830)
Other income (expense), net                       12,353           30,600            24,032            (3,045)             (376)
Interest expense                                    (459)          (2,777)           (3,736)           (3,023)             (869)
Litigation settlement                                  -                -                 -           (12,422)                -
                                               ---------        ---------         ---------         ---------         ---------
Income (loss) before income taxes                  7,733            1,584              (160)         (122,672)          (82,075)
Provision (benefit) for income taxes              (1,000)             316               815             9,070            (4,600)
                                               ---------        ---------         ---------         ---------         ---------
Net income (loss)                              $   8,733        $   1,268         $    (975)        $(131,742)        $ (77,475)
                                               ---------        ---------         ---------         ---------         ---------
                                               ---------        ---------         ---------         ---------         ---------

Preferred stock dividend                               -              272                 -                 -                 -
                                               ---------        ---------         ---------         ---------         ---------
Net income (loss) applicable to
      common shareholders                      $   8,733        $     996         $    (975)        $(131,742)        $ (77,475)
                                               ---------        ---------         ---------         ---------         ---------
                                               ---------        ---------         ---------         ---------         ---------


Net income (loss) per common share:
Basic net income (loss) per share applicable
     to common shareholders *                  $    1.58        $    0.18         $   (0.46)        $  (87.54)        $  (56.97)
                                               ---------        ---------         ---------         ---------         ---------
                                               ---------        ---------         ---------         ---------         ---------
Diluted net income (loss) per share applicable
     to common shareholders *                  $    1.57        $    0.18         $   (0.46)        $  (87.54)        $  (56.97)
                                               ---------        ---------         ---------         ---------         ---------
                                               ---------        ---------         ---------         ---------         ---------

Shares used in per share computation:
Shares used in computing basic net income
     (loss) per share *                            5,522            5,389             2,125             1,505             1,360
                                               ---------        ---------         ---------         ---------         ---------
                                               ---------        ---------         ---------         ---------         ---------

Shares used in computing diluted net income
     (loss) per share *                            5,557            5,522             2,125             1,505             1,360
                                               ---------        ---------         ---------         ---------         ---------
                                               ---------        ---------         ---------         ---------         ---------

<CAPTION>

                                                                                 SEPTEMBER 30, (1)
                                                   ----------------------------------------------------------------------------
                                                     1998               1997            1996            1995             1994
                                                     ----               ----            ----            ----             ----
                                                                                   (IN THOUSANDS)
                                                   <S>                <C>             <C>             <C>              <C>
CONSOLIDATED BALANCE SHEET DATA
Working capital (Working capital deficiency)       $ (5,216)          $  7,909        $  8,476        $(59,334)        $ 29,856
Total assets                                          6,556             26,272          45,526          87,878          126,859
Long-term debt---noncurrent portion                       -                  -          22,213           1,331            2,857
Convertible preferred stock                               -                  -           3,000               -                -
Shareholders' equity (Net capital deficiency)      $ (5,083)          $  8,158        $  3,960        $(57,117)        $ 35,691
</TABLE>


*   Reflects the one-for-ten reverse stock split effective March 9, 1998.


                                         -10-
<PAGE>

(1)  The Company's fiscal year ends on the Saturday closest to September 30 and
includes 53 weeks in fiscal years 1993 and 1998.  All other fiscal years
presented are 52 weeks.  During fiscal 1995, the Company changed its fiscal year
end from the Sunday closest to September 30 to the Saturday closest to September
30 for operational efficiency purposes.  For consistency of presentation, all
fiscal periods in this Form 10-K are reported as ending on a calendar month end.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATION

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: The following discussion
contains forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934 that are subject to risks and uncertainties.
Statements indicating that the Company or management "intends", "plans",
"expects," "estimates" or "believes" are forward-looking, as are all other
statements concerning future financial results, product offerings or other
events that have not yet occurred. There are several important factors that
could cause actual results or events to differ materially from those anticipated
by the forward-looking statements contained in this discussion and other
sections of this Form 10-K. Such factors include, but are not limited to: the
Company's ability to achieve profitability; receipt of timely installment
payments from KDS; the Company's ability to repay its indebtedness to Silicon
Valley Bank; the Company's ability to successfully renew its lease of space for
its main offices in Mountain View; the Company's ability to successfully
conclude its litigation with IE; the success of the Company's digital video
software products on which the Company expects to be substantially dependent;
the success of the Apple Macintosh computer line and operating system, the
success of Apple, as well as the Company's ability to compete successfully with
Apple in its markets, including the non linear digital video editing software
market; the success of Apple's Quicktime technology for Windows; favorable
licensing terms for Quicktime from Apple; the Company's ability to successfully
develop, introduce and market new software products, including products for the
Windows operating system, to keep pace with technological innovation,
particularly in light of its limited financial resources; the Company's ability
to compete in the digital video software market, including with Apple; the
ability of the Company's manufacturers and suppliers to deliver components and
manufacture the Company's products; the Company's reliance on international
sales and its new distributor arrangements with respect to Europe and Japan; and
the Company's ability to attract and retain its key personnel.

RESULTS OF OPERATIONS

     The following table sets forth for the years indicated certain operational
data as a percentage of net sales (may not add due to rounding).

<TABLE>
<CAPTION>

                                                           YEAR ENDED SEPTEMBER 30,
                                                 --------------------------------------------
                                                   1998              1997              1996
                                                   ----              ----              ----
<S>                                              <C>                <C>               <C>
Total net sales                                   100.0%            100.0%            100.0%
Cost of sales                                      63.3              99.6              85.7
                                                  -----             -----             -----
       Gross profit                                36.7               0.4              14.3
Operating Expenses:
   Research and development                        17.9              16.1               8.3
   Selling, general, and administrative            45.3              68.5              28.7
                                                  -----             -----             -----
       Total operating expenses                    63.2              84.6              37.0
                                                  -----             -----             -----
Loss from operations                              (26.5)            (84.2)            (22.7)
Other income (expense), net                        78.8              98.2              26.6
Interest expense                                   (2.9)             (8.9)             (4.1)
                                                  -----             -----             -----
Income (loss) before income taxes                  49.4               5.1              (0.2)
Provision (benefit) for income taxes               (6.3)              1.0               0.9
                                                  -----             -----             -----
Net income (loss)                                  55.7%              4.1%             (1.1)%
                                                  -----             -----             -----
                                                  -----             -----             -----
</TABLE>



                                         -11-
<PAGE>

FISCAL 1998 TO FISCAL 1997

     NET SALES.  The Company's net sales for fiscal 1998 decreased 50% to $15.7
million from $31.2 million for fiscal 1997. The decline is due primarily to the
following factors: the Company's efforts to refocus its efforts on its digital
video software product lines while discontinuing the development of its color
publishing, accelerated color graphics products and its DOS on Mac products; and
a decline in fourth quarter sales of its color publishing products due to the
agreement for the license of significant assets of its monitor business to Korea
Data Systems America, Inc. ("KDS").  The color display products had $8.7 million
in sales for fiscal 1998 as compared to $16.6 million for fiscal 1997.  As a
result of these factors, product sales decreased 45.9% in fiscal 1998 from
fiscal 1997. Commissions and royalties decreased in fiscal 1998 by 77.3% to $1.1
million from $4.9 million in fiscal 1997 due to the termination of the exclusive
distributor relationships in Europe and Japan and due to the expiration of the
royalty agreement with Umax Computer Corporation in March 1998.  Also as a
result of the distributor relationships in Japan and Europe, the Company's
export sales for fiscal 1998 declined to $3.7 million as compared to $4.9
million for fiscal 1997.  The Company anticipates that sales in Asia will remain
weak for the near future.  Sales growth in the Asia market has been impacted by
certain factors including weaker economic conditions and stronger dollar versus
the local currencies.

     Revenue is recognized when products are shipped.  Sales to certain 
distributors are subject to agreements allowing certain rights of return and 
price protection on unsold merchandise held by these distributors.  The 
Company provides for estimated returns at the time of shipment and for price 
protection following price declines.  Revenue earned under royalty or 
commission agreements is recognized in the period in which it is earned.

     As a result of the KDS transaction, the Company anticipates significantly
lower overall net sales in the immediate future.  Future sales will be
predominately attributable to sales of software products since the Company's
digital video product line is primarily software.  Revenue recognition related
to software product sales is as follows:  Revenue from the sale of software, net
of estimated returns, is recognized upon either shipment of the physical product
or delivery of electronic product, at which time, collectibility is probable and
the Company has no remaining obligations.

     In May 1997, the Financial Accounting Standards Board approved the American
Institute of Certified Public Accountants Statement of Position, "Software
Revenue Recognition" (SOP 97-2).  SOP 97-2 provides revised and expanded
guidance on software revenue recognition and applies to all entities that earn
revenue from licensing, selling or otherwise marketing computer software.  SOP
97-2 is effective for transactions entered into in fiscal years beginning after
December 15, 1997.  The application of SOP 97-2 is not expected to have a
material impact on the Company's results of operations.

     The sale of the software products for digital video camcorders (PhotoDV
introduced in April 1997 and MotoDV introduced in September 1997 and EditDV
introduced in November 1997) have increased during 1998. There can be no
assurance that sales of these software products will continue to increase or
that they will increase to a sufficient extent to offset the elimination of
hardware sales.

     Effective January 1, 1998, the Company modified its relationships with its
distributors in Japan and Europe for its digital video software products. Rather
than paying commissions to Radius for products sold, they purchase products
from the Company at a discount from the price list.  Commissions will still be
paid on the sales of the Company's other products sold through these
distributors, although the Company believes that these sales will not be
material.

     One customer accounted for 53.5% of the Company's net sales for fiscal
1998.  For fiscal 1997 the same distributor accounted for 66.1% of the Company's
net sales.

     GROSS PROFIT.  The Company's gross profit margin was 36.7% for fiscal 1998,
as compared with 0.4% for fiscal 1997. This increase was a result of the
Company's decision to refocus its business on higher margin digital video
software products.  Included in fiscal 1997 cost of sales are one-time charges
of $9.7 million consisting principally of inventory write downs of $7.7 million
and reserves for excess purchase order commitments of $2.0 million for inventory
in excess of anticipated demand.  These charges reflect decreases in demand and
the Company's decision to refocus its business.  Excluding these one-time
charges, gross profit margin in fiscal 1997 was 31.5%.

     The Company expects the gross profit margins will be higher in the future
due to the impact of the decreased sales of monitor products and focus on sales
of higher gross margin software products.  Additionally, the Company is taking
further steps to reduce product costs and control expenses.  However, there can
be no assurance that the Company's gross margins will improve or remain at
current levels.


                                         -12-
<PAGE>

     RESEARCH AND DEVELOPMENT EXPENSES.  Research and development expenses
decreased from $5.0 million or 16.1% of net sales for fiscal 1997 to $2.8
million or 17.9% of net sales for fiscal 1998.  The Company decreased its
research and development expenses primarily by reducing expenses related to
headcount resulting from the Company's efforts to refocus its business.  The
increase in research and development expenses expressed as a percentage of net
sales for fiscal 1998 was primarily attributable to the decrease in net sales
and the Company's refocusing on higher margin products, rather than high volume,
lower margin products.  The Company expects that decreases in its research and
development expenses due to the  de-emphasis in its monitor business will be
offset by increases in the expenses for the digital video product line and
therefore, expects to devote approximately $3.0 million to research and
development during the entire fiscal 1999.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses decreased from $21.4 million or 68.6% of net sales for
fiscal 1997 to $7.1 million or 45.4% of net sales for fiscal 1998. Included in
these expenses for fiscal 1997 is a $2.6 million charge to increase the
allowance for doubtful accounts due to accounts which the Company determined
were unlikely to be collected in full.  Adjusting for these charges and
reductions, selling, general and administrative expenses would have been $18.8
million or 60.3% of net sales in fiscal 1997.  The Company decreased its fiscal
1998 selling, general and administrative expenses in absolute and percentage
terms primarily by reducing expenses related to headcount resulting from the
Company's efforts to refocus its business.  Although the Company expects
selling, general and administrative expenses to increase gradually over time,
the Company does not expect them to approach historical levels in absolute
amount.

     OTHER INCOME (EXPENSE), NET.  Other income was $12.4 million for fiscal
1998 compared to $30.6 million for fiscal 1997.  The other income for fiscal
1998 was due to the sale of 570,139 shares of Splash Common Stock compared to
996,875 shares of Splash Common Stock in fiscal 1997.  Fiscal 1998 also includes
$1.6 million related to the KDS license.

     INTEREST EXPENSE.  Interest expense was $0.5 million for fiscal 1998 as
compared to $2.8 million for fiscal 1997.  This decrease was due to lower
average borrowings primarily as a result of the repayment of the working capital
line of credit to IBM Credit.

     PROVISION FOR INCOME TAXES.  The Company recorded a reversal of accrual for
income taxes of $1.0 million for fiscal 1998 compared to a provision of $0.3
million for fiscal 1997.  The reversal reflects the fact that exposure in
certain foreign jurisdictions, as a result of the passage of time, has become
remote.  The provision for fiscal 1997 differs from the provision computed
utilizing the combined statutory rate in effect during the period primarily as a
result of the impact of foreign taxes offset by the impact of previously unused
net operating losses and the reversal of existing deferred tax assets.

     FASB Statement 109, Accounting for Income Taxes, provides for the
recognition of deferred tax assets if realization of such assets is more likely
than not.  The Company's valuation allowance reduced the deferred tax asset to
the amount realizable.  The Company has provided a full valuation allowance
against its net deferred tax assets due to uncertainties surrounding their
realization.  Due to the net losses reported in prior years and as a result of
the material changes in operations, predictability of earnings in future periods
is uncertain.  The Company will evaluate the realizability of the deferred tax
assets on a quarterly basis.

     As a result of the issuance of Common Stock and Series A Convertible
Preferred Stock in exchange for certain liabilities of the Company in September
1996, the Company experienced a "change in ownership" as defined under
Section 382 of the Internal Revenue Code.  Accordingly, utilization of
substantial net operating losses and tax credit carryforwards will be subject to
an approximate $2.0 million annual limitation due to the ownership change
limitations provided by the Internal Revenue Code of 1986 (and similar state
provisions), except under limited circumstances.  This limitation will result in
the expiration of all of the tax credit carryforwards and a substantial portion
of the net operating loss carryforwards without full utilization.  See Note 5 of
Notes to Consolidated Financial Statements.

     NET INCOME (LOSS).  As a result of the above factors, the Company had net
income of $ 8,733,000 in fiscal 1998 compared to a net income of $996,000 for
fiscal 1997.

FISCAL 1997 TO FISCAL 1996

     NET SALES.  The Company's net sales for fiscal 1997 decreased 65.5% to
$31.2 million from $90.3 million for fiscal 1996. The decline is due to the
following factors: the Company's efforts to refocus its business on higher
margin products; the divestiture of certain business units, such as its Color
Server Copy Group which had $7.0 million in sales for fiscal 1996; entering into
distributor arrangements for Japan and Europe effective April 1, 1996 and July
1, 1996, respectively, which relationships provide for the Company to recognize
as net sales, a percentage of the sales price of each product sold by those
distributors as compared to the entire sales price of the product which was
recognized by the Company as net sales prior to the appointment of these
distributors; uncertainty regarding the viability of the Apple Macintosh product
line; and the slow development of the 3D graphics market due to limited
applications software availability. As a result of these factors, product sales
decreased 70.2% in fiscal 1997 from fiscal 1996. Commissions and royalties
increased in fiscal 1997 by 125.5% to $4.9 million from $2.2 million in


                                         -13-
<PAGE>

fiscal 1996 due to the distributor relationships in Europe and Japan and due to
royalties paid by Umax Computer Corporation under its license agreement for the
MacOS compatible systems signed in February 1996. Also as a result of the
distributor relationships in Japan and Europe, the Company's export sales for
fiscal 1997 declined to 15.7% of net sales as compared to 50.7% of net sales for
fiscal 1996.

     One customer accounted for 66.1% of the Company's net sales for fiscal
1997.  For fiscal 1996 the same distributor accounted for 34.3% of the Company's
net sales.

     GROSS PROFIT.  The Company's gross profit margin was 0.4% for fiscal 1997,
as compared with 14.3% for fiscal 1996. Included in fiscal 1997 cost of sales
are one-time charges of $9.7 million consisting principally of inventory write
downs of $7.7 million reflecting current market conditions for the Company's
products and reserves for excess purchase order commitments of $2.0 million for
inventory in excess of anticipated demand.  These charges reflect decreases in
demand and the Company's decision to refocus its business.  Included in fiscal
1996 cost of sales was a one-time charge of $3.5 million resulting from the
Company's financial restructuring completed in September 1996. Excluding these
one time charges, gross profit margin in fiscal 1997 was 31.5% compared to 18.3%
in fiscal 1996.  This increase was a result of the Company's decision to refocus
its business on higher margin products.

     RESEARCH AND DEVELOPMENT EXPENSES.  Research and development expenses
decreased from $7.5 million or 8.3% of net sales for fiscal 1996 to $5.0 million
or 16.1% of net sales for fiscal 1997.  The Company decreased its research and
development expenses primarily by reducing expenses related to headcount
resulting from the Company's efforts to refocus its business and business
divestitures.  The increase in research and development expenses expressed as a
percentage of net sales for fiscal 1997 was primarily attributed to the decrease
in net sales and the Company's refocusing on higher margin products, rather than
high volume, lower margin products.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses decreased from $25.9 million or 28.7% of net sales for
fiscal 1996 to $21.4 million or 68.6% of net sales for fiscal 1997. Included in
these expenses for fiscal 1997 is a $2.6 million charge to increase the
allowance for doubtful accounts due to accounts which the Company determined
were unlikely to be collected in full. Included in these expenses for fiscal
1996 was a reduction of $0.9 million in restructuring reserves to reflect the
then current requirements. Adjusting for these charges and reductions, selling,
general and administrative expenses would have been $18.8 million or 60.3% of
net sales in fiscal 1997, compared to $26.8 million or 29.7% of net sales in
fiscal 1996. The Company decreased its selling, general and administrative
expenses primarily by reducing expenses related to headcount resulting from the
Company's efforts to refocus its business and business divestitures. The
increase in selling, general and administrative expenses expressed as a
percentage of net sales was primarily attributed to the decrease in net sales
and the Company's refocusing on higher margin products, rather than high volume,
lower margin products.

     OTHER INCOME (EXPENSE), NET.  Other income was $30.6 million for fiscal
1997 compared to $24.0 million for fiscal 1996.  The other income for fiscal
1997 was due to the sale of 996,875 shares of Splash Common Stock in August
1997.  The other income in fiscal 1996 was primarily due to approximately $23.8
million resulting from the Company's divestitures of three business lines,
including the Color Server Group.

     INTEREST EXPENSE.  Interest expense was $2.8 million for fiscal 1997 as
compared to $3.7 million for fiscal 1996.  This decrease was due to lower
average borrowings.

     PROVISION FOR INCOME TAXES.  The Company recorded a provision for income
taxes of $316,000 for fiscal 1997 as compared to $815,000 for fiscal 1996.  The
provision for fiscal 1997 differs from the provision computed utilizing the
combined statutory rate in effect during the period primarily as a result of the
impact of foreign taxes offset by the impact of previously unbenefited net
operating losses and the reversal of existing deferred tax assets.  The
provision for fiscal 1996 differs from the provision computed utilizing the
combined statutory rate in effect during the period primarily as a result of the
impact of foreign taxes.

     NET INCOME (LOSS).  As a result of the above factors, the Company had net
income of $996,000 in fiscal 1997 compared to a net loss of $975,000 for fiscal
1996.  The Color Server Group had net income of approximately $0.9 million for
fiscal 1996.  Had this business not been included in the calculation of the
Company's net loss for fiscal 1996, the Company would have had a net loss of
approximately $1.9 million.

RESTRUCTURING, MERGER AND OTHER CHARGES

     During fiscal 1994 and 1995, three restructuring and other charges were
recorded. SuperMac recorded a $16.6 million restructuring charge during December
1993 in connection with a program to realign its inventory and facility and
personnel resources.  Subsequently, the two companies merged and incurred a
restructuring charge of $43.4 million.  In September 1995,


                                         -14-
<PAGE>

Radius recorded $57.9 million restructuring charge in connection with the
Company's efforts to refocus and streamline its business.  A discussion of each
of these events follows.

     SUPERMAC DECEMBER 1993 RESTRUCTURING AND OTHER CHARGES:  In December 1993,
SuperMac recorded charges of $16.6 million in connection with a program to
adjust inventory levels, eliminate excess facilities, terminate certain projects
and contract arrangements and reduce the number of employees.  The charges (in
thousands) are included in: cost of sales ($13,352); research and development
($2,000); and selling, general and administrative expenses ($1,238).  There have
been no material changes in the restructuring plan or in the estimates of the
restructuring costs.  The remaining balance of $236,000 at September 30, 1995 in
its restructuring reserve, which related to facility costs, was eliminated in
fiscal 1996.

     RADIUS FISCAL 1994 MERGER RELATED RESTRUCTURING AND OTHER CHARGES.  In the
fourth quarter of fiscal 1994, the Company recorded charges of $43.4 million in
connection with the Merger of Radius and SuperMac Technology Inc.  These charges
include the discontinuance of duplicative product lines and related assets;
elimination of duplicative facilities, property and equipment and other assets;
and personnel severance costs as well as transaction fees and costs incidental
to the merger.  The charges (in thousands) are included in: net sales ($3,095);
cost of sales ($25,270); research and development ($4,331); and selling, general
and administrative expenses ($10,711).  The remaining balance of $44,000 in its
restructuring reserve, which related to facility costs, was eliminated in fiscal
1997.

     RADIUS FISCAL 1995 RESTRUCTURING AND OTHER CHARGES.  In September 1995,
Radius recorded charges of $57.9 million in connection with the Company's
efforts to restructure its operations by refocusing its business on the color
publishing and multimedia markets.  The charges primarily included a writedown
of inventory and other assets.  Additionally, the charges included expenses
related to the cancellation of open purchase orders, excess facilities and
employee severance. The charges (in thousands) are included in cost of sales
($47,004), and selling, general and administrative expense ($10,861).  The
remaining balance of $20,000 in its restructuring reserve, which related to
employee severance costs, was eliminated in fiscal 1998.

DIVESTITURES

     COLOR SERVER GROUP DIVESTITURE.  In January 1996, the Company completed the
sale of its Color Server Group ("CSG") to Splash Merger Company, Inc. (the
"Buyer"), a wholly owned subsidiary of Splash Technology Holdings, Inc.
("Splash"), a corporation formed by various investment entities associated with
Summit Partners. The Company received approximately $17.2 million in cash and
4,282 shares of Splash's 6% Series B Redeemable and Convertible Preferred Stock
(the "Series B Preferred Stock"). An additional $4.7 million was placed in
escrow to secure certain post-closing and indemnification obligations. In April
1996, approximately $2.3 million was released from this escrow to the Company
and the Company also received approximately $1.5 million as a result of
post-closing adjustments. As of September 30, 1998, $2.0 million remained in
this escrow.  See Note 14 to Consolidated Financial Statements.  The shares of
Series B Preferred Stock were converted into shares of Splash Common Stock in
connection with the initial public offering of Splash. Such stock was pledged to
IBM Credit in order to secure the Company's obligations to IBM Credit under the
restructured loan agreement with IBM Credit.  In connection with the
restructuring of the terms of its loan agreement with IBM Credit, the Company
granted IBM Credit an option to purchase 428 shares of Series B Preferred Stock
at a nominal amount (174,113 shares of Splash Common Stock after conversion).
The Company has certain indemnification obligations in connection with the
patent lawsuit brought by Electronics for Imaging, Inc. (See Note 3 to
Consolidated Financial Statements).  The net proceeds of the CSG transaction
were paid to Silicon Valley Bank ("SVB"), in order to repay the Company's
indebtedness to SVB, and to IBM Credit, in order to reduce the Company's
outstanding indebtedness to IBM Credit. As of July 1998, IBM Credit had
exercised all its option to purchase Splash Common Stock and the working capital
line of credit with IBM Credit was fully repaid in fiscal 1998.

     PORTRAIT DISPLAY LABS.  In January 1996, the Company entered into a series
of agreements with Portrait Display Labs, Inc. ("PDL"). The agreements assigned
the Company's pivoting technology to PDL and canceled PDL's on-going royalty
obligation to the Company under an existing license agreement in exchange for a
one-time cash payment. The Company did not receive any material amount of
payments under such license agreement. PDL also granted the Company a limited
license back to the pivoting technology. Under these agreements, PDL also
settled its outstanding receivable to the Company by paying the Company $500,000
in cash and issuing to the Company 214,286 shares of PDL's Common Stock. The
cash proceeds were paid to IBM Credit.  The Company does not expect to realize
any material value from PDL's Common Stock.

     UMAX DATA SYSTEMS, INC.  In February 1996, the Company sold its MacOS
compatible systems business to UMAX Computer Corporation ("UCC"), a company
formed by UMAX Data Systems, Inc. ("UMAX"). The Company received approximately
$2.3 million in cash and debt relief and 1,492,500 shares of UCC's Common Stock,
representing approximately 19.9% of UCC's then outstanding shares of UCC Common
Stock. The cash proceeds were paid to IBM Credit and the shares of UCC Common
Stock were pledged to IBM Credit.  In March 1998, due to Apple Computer's
reversal in MacOS licensing policy, the Company sold the Common Stock of Umax
Computer Corporation held by it to Umax Data Systems, Inc. for $550,000.


                                         -15-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalents decreased approximately $0.2
million during fiscal 1998 to approximately $0.6 million at September 30, 1998,
as compared with the fiscal 1997 ending balance of cash and cash equivalents of
$0.8 million.  Approximately $0.1 million of the $0.6 million of cash and cash
equivalents available at September 30, 1998 was restricted under a letter of
credit.  The decrease in the Company's cash and cash equivalents during fiscal
1998 was primarily attributable to funding of operating losses of the Company.

     As of September 30, 1998, the Company's total assets had decreased to $6.6
million from $26.3 million on September 30, 1997.  The Company's liabilities
exceeded its assets.  This was due primarily to the substantial decline in the
trading price of Splash Common Stock from $38.75 as of the end of fiscal 1997 to
an average of $19.52 which was realized on the sale of the Splash Common Stock
during fiscal 1998.  The proceeds of the sale of the Splash Common Stock were
used to repay in full the working line of credit with IBM Credit, and to fund
the operating losses of the Company.

     Under the license and asset transfer agreement with KDS, Radius has
transferred  (by licensing or by assignment if KDS elects to close the asset
transfer agreement) its Radius, Supermac, PressView and certain other trademarks
to KDS and has licensed certain intellectual property pertaining to PressView
and PrecisionView monitors.  KDS has not agreed to purchase any inventory or
other tangible assets of Radius under these agreements.  The expected value of
the transaction is $6.2 million which is payable in installments, including
$0.85 million paid in August 1998 and $0.35 million in September 1998 and $0.5
million in June 1998.  The remaining amount is payable in installments through
October 1999. KDS' performance is guaranteed by a Korean corporation and its US
affiliate.  The asset transfer agreement is expected to close by June 1999, if
contingencies are satisfied. These installment payment obligations have been
pledged to secure a $4.2 million line of credit from Silicon Valley Bank.  There
can be no assurance that the closing will occur or that installment payments
under the license will be timely made.

     The Company had agreed with KDS to continue to support the sale of monitors
through the Company's sales force during August and September 1998 in return for
$55,000 a month and a sharing of the gross margin from the sale of the monitor
products during this period.  The Company will provide a diminishing level of
support until KDS has fully assumed all relevant activities.  KDS will reimburse
the Company for this support.

     The Company believes that the cash flows from KDS, results of operations
and other sources of financing will be sufficient to fund operations for at
least the next 12 months.  However, there can be no assurances that the sale of
software products will continue to increase to a sufficient extent to offset the
loss of revenues and gross margin from the monitor business or that the
installment payments will be timely made.  The Company may need to further
reduce its operating expenses or seek additional sources of working capital if
software product sales do not increase at the rate assumed in the Company's
current operating plans.  The Company and its management believes that it can
further reduce such operating expenses, if necessary, and that other sources of
financing will be available.

     The Company's principal sources of liquidity currently are cash generated
by operations, if any, and up to $4.2 million working capital line of credit
provided by Silicon Valley Bank which is secured by the installment payment
obligations of the KDS transaction.  Under the terms of the $4.2 million working
capital line of credit, the amount available to borrow will be decreased by
eighty percent of the payments made by KDS, since the borrowing base under the
working capital line of credit is eighty percent of the unpaid balance of KDS'
installment obligations.  As the borrowing base is dependent on the continued
payment of monthly installments, there can be no assurance that it will be
sufficient to allow the Company to borrow up to the full amount of the working
capital line of credit.

     The Company anticipates that it will not have significant cash available
for expenditures other than for its ordinary course of business operating
expenses.  In the event the Company were unable to generate sufficient net sales
or if the Company incurs unforeseen operating expenses, it may not be able to
meet its operating expenses without additional financing.  See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Certain Factors That May Affect the Company's Future Results of Operations --
Need for Additional Financing; Loan Restrictions."

     Capital expenditures were approximately $0.1 million during fiscal 1998,
$0.1 million in fiscal 1997 and $0.2 million in fiscal 1996 and were primarily
for leasehold improvements and upgrading the Company's management information
systems.  The Company expects this level of expenditures to continue in fiscal
1999 barring unexpected developments. See Management's Discussion and Analysis
of Financial Condition and Results of Operation -- Certain Factors That May
Affect the Company's Future Results of Operations --  Impact Year 2000.

     At September 30, 1998, the Company's principal commitments consisted of
obligations under a loan agreement with Silicon Valley Bank and its obligations
under building leases.  See Notes 2 and 3 to Consolidated Financial Statements.
The


                                         -16-
<PAGE>

Company is also a party to various litigation proceedings, the costs of
defending or the outcome of which could adversely affect the Company's
liquidity.  See "Business -- Legal Proceedings."

CERTAIN FACTORS THAT MAY AFFECT THE COMPANY'S FUTURE RESULTS OF OPERATIONS

     A number of uncertainties exist that could affect the Company's future
operating results, including, without limitation, the following:

CONTINUING OPERATING LOSSES

     The Company experienced operating losses in each of its prior five fiscal
years.  In the future, the Company's ability to achieve and subsequently sustain
profitable operations will depend upon a number of factors, including the
Company's ability to control costs; the Company's ability to service its
outstanding indebtedness to Silicon Valley Bank; timely receipt of the KDS
transaction installment payments; the Company's ability to generate sufficient
cash from operations or obtain additional funds to fund its operating expenses;
the Company's ability to successfully market its software products; the
Company's ability to develop innovative and cost-competitive new products and to
bring those products to market in a timely manner; the commercial acceptance of
Apple computers and the MacOS and the rate and mix of Apple computers and
related products sold; the Company's ability to successfully develop and market
products for the Microsoft Windows and NT operating systems in a timely manner;
competitive factors such as new product introductions, product enhancements and
aggressive marketing and pricing practices; general economic conditions; the
Company's ability to successfully negotiate a lease renewal for its main office
facility, and negotiate a settlement or other favorable conclusion of the EFI
and IE litigation; and other factors.  For these and other reasons, there can be
no assurance that the Company will be able to achieve or subsequently maintain
profitability in the near term, if at all.

FLUCTUATIONS IN OPERATING RESULTS

     The Company has experienced substantial fluctuations in operating results.
The Company's customers generally order on an as-needed basis, and the Company
has historically operated with relatively small backlogs.  Quarterly sales and
operating results depend heavily on the volume and timing of bookings received
during the quarter, which are difficult to forecast.  A substantial portion of
the Company's revenues are derived from sales made late in each quarter, which
increases the difficulty in forecasting sales accurately.  Since the end of the
Company's 1995 fiscal year, shortages of available cash have restricted the
Company's ability to purchase inventory and have delayed the Company's receipt
of products from suppliers and increased shipping and other costs.  Furthermore,
because of its financial condition, the Company believes that many suppliers are
hesitant to continue their relationships with or extend credit terms to the
Company and potential new suppliers are reluctant to provide goods to the
Company.  The Company recognizes sales upon shipment of product, and allowances
are recorded for estimated uncollectable amounts, returns, credits and similar
costs, including product warranties and price protection.  Due to the inherent
uncertainty of such estimates, there can be no assurance that the Company's
forecasts regarding bookings, collections, rates of return, credits and related
matters will be accurate.  A significant portion of the operating expenses of
the Company are relatively fixed in nature, and planned expenditures are based
primarily on sales forecasts which, as indicated above, are uncertain.  Any
inability on the part of the Company to adjust spending quickly enough to
compensate for any failure to meet sales forecasts or to receive anticipated
collections, or any unexpected increase in product returns or other costs, could
also have an adverse impact on the Company's operating results.  As a strategic
response to a changing competitive environment, the Company has elected, and, in
the future, may elect from time to time, to make certain pricing, service or
marketing decisions or acquisitions that could have a mateial adverse effect on
the Company's business, results of operations and financial condition.  The
Company also completed a variety of business divestitures during fiscal 1996,
1997 and 1998, restructured the terms of its indebtedness to IBM Credit and
issued a substantial amount of equity in the Company to its creditors in
satisfaction of approximately $45.9 million in claims and indebtedness during
the fourth quarter of fiscal 1996 and has licensed (and agreed to sell) its
monitor business in August 1998. In addition, the Company is focusing its
efforts on developing and marketing software products, an area in which it has
limited experience.  As a result, the Company believes that period-to-period
comparisons of its results of operations will not necessarily be meaningful and
should not be relied upon as any indication of future performance.  Due to all
of the foregoing factors, it is likely that in some future quarter the Company's
operating results will be below the expectations of public market analysts and
investors.  In such event, the price of the Company's Common Stock would be
likely to be materially adversely affected.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

                                         -17-
<PAGE>
NEED FOR ADDITIONAL FINANCING; LOAN RESTRICTIONS

     As of September 30, 1998, the Company had a working capital deficit of 
$5.2 million.  The Company intends to finance its working capital needs 
through cash generated by operations and borrowings under a working capital 
line of credit with Silicon Valley Bank.  Because the Company has experienced 
operating losses in each of its prior five fiscal years and has liabilities 
in excess of assets, the Company must significantly reduce operating expenses 
and/or significantly increase net sales in order to finance its working 
capital needs with cash generated by operations.  There can be no assurance 
that the Company will be able to successfully fund its working capital needs 
internally.

     Although the Silicon Valley Bank loan provides for a working capital line
of credit of up to $4.2 million, the Company will only be able to borrow amounts
up to the "borrowing base" which is defined as eighty percent of the unpaid
portion of the KDS transaction installment payments.  Once the line of credit
has been reduced to zero, the Company does not expect that it will be a source
of working capital in the future.

     In the event that cash from operations and the working capital line of
credit are insufficient to fund the Company's working capital needs, the Company
may need to raise additional capital through public or private financing,
strategic relationships or other arrangements. There can be no assurance that
the Company will be able to raise additional capital on commercially reasonable
terms or at all.  The failure of the Company to raise capital when needed would
have a material adverse effect on the Company's business, operating results and
financial condition.  If the additional funds are raised through the issuance of
equity securities, the percentage ownership of the Company of its then-current
shareholders would be reduced.  Furthermore, such equity securities might have
rights, preferences or privileges senior to those of the Company's Common Stock.

DEPENDENCE ON AND COMPETITION WITH APPLE

     Although the Company has begun to market certain products for the Windows
environment, it is expected that sales of products for Apple computers will
continue to represent a significant portion of the Company's sales for fiscal
1999.  Apple has lost significant market share over recent years.  The Company's
operating results would be adversely affected if these trends should continue or
if other developments were to adversely affect Apple's business.  Furthermore,
any continued difficulty that may be experienced by Apple in the development,
manufacturing, marketing or sale of its computers, or other disruptions to, or
uncertainty in the market regarding Apple's business, resulting from these or
other factors, could result in further reduced demand for Apple computers, which
in turn could materially and adversely affect sales of the Company's products.

     As software applications for the color publishing and multimedia markets
become more available on platforms other than Macintosh, it is likely that these
other platforms will continue to gain acceptance in these markets.  For example,
newer versions of the Windows operating environment support high performance
graphics and video applications similar to those offered on the Macintosh.
There is a risk that this trend will reduce the support given to Macintosh
products by third party developers and could substantially reduce demand for
Macintosh products and peripherals over the long term.

     A number of the Company's products compete with products marketed by Apple.
As a competitor of the Company, Apple could in the future take steps to hinder
the Company's development of compatible products and slow sales of the Company's
products.  The Company's business is based in part on supplying products that
meet the needs of high-end customers that are not fully met by Apple's products.
As Apple improves its products or bundles additional hardware or software into
its computers, it reduces the market for Radius products that provide those
capabilities. In the past, the Company has developed new products as Apple's
progress has rendered existing Company products obsolete.  However, in light of
the Company's current financial condition there can be no assurance that the
Company will continue to develop new products on a timely basis or that any such
products will be successful.  In order to develop products for the Macintosh on
a timely basis, the Company depends upon access to advance information
concerning new Macintosh products.  A decision by Apple to cease sharing advance
product information with the Company would adversely affect the Company's
business.

     New products anticipated from and introduced by Apple could cause customers
to defer or alter buying decisions due to uncertainty in the marketplace, as
well as presenting additional direct competition for the Company. In addition,
Apple may introduce a non linear digital video software editing program during
fiscal 1999 which could adversely affect and reduce sales of EditDV.  In the
past, transitions in Apple's products have been accompanied by shortages in
those products and in key components for them, leading to a slowdown in sales of
those products and in the development and sale by the Company of compatible
products.

                                         -18-
<PAGE>
DEPENDENCE ON AND COMPETITION WITH MICROSOFT

     New products introduced by Microsoft could cause customers to defer or
alter buying decisions due to uncertainty in the marketplace, as well as present
additional competition for the Company. In addition, it is possible that the
introduction of new Microsoft products with improved performance capabilities
may create uncertainties in the market concerning the need for the performance
enhancements provided by the Company's products and could reduce demand for such
products.

COMPETITION

     The markets for the Company's products are highly competitive, and the
Company expects competition to intensify.  Many of the Company's current and
prospective competitors have significantly greater financial, technical,
manufacturing and marketing resources than the Company.  The Company believes
that its ability to compete will depend on a number of factors, including the
amount of financial resources available to the Company, its ability to repay its
indebtedness, success and timing of new product developments by the Company and
its competitors, product performance, price and quality, breadth of distribution
and customer support.  There can be no assurance that the Company will be able
to compete successfully with respect to these factors.  In addition, the
introduction of lower priced competitive products could result in price
reductions that would adversely affect the Company's results of operations.
See "Business -- Competition."

DEPENDENCE ON LIMITED NUMBER OF MANUFACTURERS AND SUPPLIERS

     The Company outsources the manufacturing and assembly of its products to
third party manufacturers.  Although the Company uses a number of
manufacturer/assemblers, each of its products is manufactured and assembled by a
single manufacturer.  The failure of a manufacturer to ship the quantities of a
product ordered by the Company could cause a material disruption in the
Company's sales of that product.  In the past the Company has experienced
substantial delays in its ability to fill customer orders due to the inability
of certain manufacturers to meet their volume and schedule requirements.  There
can be no assurance that manufacturers will not require special terms in order
to continue their relationship with the Company.

     The Company is also dependent on sole or limited source suppliers for
certain key components used in its products.  Certain other components are
purchased from sole or limited source suppliers. The Company purchases these
sole or limited source components primarily pursuant to purchase orders placed
from time to time in the ordinary course of business and has no guaranteed
supply arrangements with sole or limited source suppliers.  Therefore, these
suppliers are not obligated to supply products to the Company for any specific
period, in any specific quantity or at any specific price, except as may be
provided in a particular purchase order.

     Although the Company expects that these suppliers will continue to meet its
requirements for the components, there can be no assurance that they will do so,
particularly in light of the Company's financial condition. The Company's
reliance on a limited number of suppliers involves a number of risks, including
the absence of adequate capacity, the unavailability or interruption in the
supply of key components and reduced control over delivery schedules and costs.
The Company expects to continue to rely on a limited number of suppliers for the
foreseeable future.  If these suppliers became unwilling or unable to continue
to provide these components the Company would have to develop alternative
sources for these components which could result in delays or reductions in
product shipments which could have a material adverse effect on the Company's
business, operating results and financial condition.  Certain suppliers, due to
the Company's shortages in available cash, have put the Company on a cash or
prepay basis and/or required the Company to provide security for their risk in
procuring components or reserving manufacturing time, and there is a risk that
suppliers will discontinue their relationship with the Company.

     The introduction of new products presents additional difficulties in
obtaining timely shipments from suppliers.  Additional time may be needed to
identify and qualify suppliers of the new products.  Also, the Company has
experienced delays in achieving volume production of new products due to the
time required for suppliers to build their manufacturing capacity.  An extended
interruption in the supply of any of the components for the Company's products,
regardless of the cause, could have an adverse impact on the Company's results
of operations.


                                         -19-
<PAGE>

TECHNOLOGICAL CHANGE; CONTINUING NEED TO DEVELOP NEW PRODUCTS

     The video applications industry is characterized by rapidly changing
technology, often resulting in short product life cycles and rapid price
declines.  The Company believes that its success will be highly dependent on its
ability to develop innovative and cost-competitive new products and to bring
them to the marketplace in a timely manner.  Should the Company fail to
introduce new products on a timely basis, the Company's operating results could
be adversely affected.  As a result of the Company's financial condition, it has
had to significantly reduce its research and development expenditures.  For the
1998 fiscal year, the Company spent approximately $2.8 million, for the 1997
fiscal year, the Company spent approximately $5.0 million on research and
development as compared with approximately $7.5 million for the 1996 fiscal
year.  Continued reduction in the available cash resources of the Company could
result in the interruption or cancellation of research and product development
efforts which would have a material adverse effect on the business, operating
results and financial condition of the Company.

     The Company anticipates that the video editing industry will follow the
pattern of the professional publishing industry in which desktop publishing
products, including those produced by Radius, replaced more expensive,
proprietary products, and the Company also anticipates that this evolution will
lead to an increase in the purchase and use of video editing products, in
particular digital video editing products for use with digital video camcorders.
As a result, the Company has devoted significant resources to this product line.
There can be no assurance that this evolution will occur in the digital video
editing industry as expected by the Company, or that even if it does occur that
it will not occur at a slower pace than anticipated.  There can also be no
assurance that any digital video editing products developed by the Company will
achieve consumer acceptance or broad commercial success.  In the event that the
increased use of such video editing products does not occur or in the event that
the Company is unable to successfully develop and market such products, the
Company's business, operating results and financial condition would be
materially adversely affected, particularly in light of the fact that the
Company has licensed or sold its remaining hardware product lines over the last
three years.

DEPENDENCE ON INDIRECT DISTRIBUTION CHANNELS

     The Company's primary means of distribution is through a limited number of
third-party distributors that are not under the direct control of the Company.
Furthermore, the Company relies on one primary distributor for its sales in
Japan and is creating a new distribution network in Europe.  The Company
maintains only a small direct sales force.  As a result, the Company's business
and financial results are highly dependent on the amount of the Company's
products that is ordered by these distributors.  Such orders are in turn
dependent upon the continued viability and financial condition of these
distributors as well as on their ability to resell such products and maintain
appropriate inventory levels.  Furthermore, many of these distributors generally
carry the product lines of a number of companies, are not subject to minimum
order requirements and can discontinue marketing the Company's products at any
time.  Accordingly, the Company must compete for the focus and sales efforts of
these third parties.  In addition, due in part to the historical volatility of
the personal computer industry, certain of the Company's distributors have from
time to time experienced declining profit margins, cash flow shortages and other
financial difficulties.  The future growth and success of the Company will
continue to depend in large part upon its indirect distribution channels.  If
its distributors were to experience financial difficulties, the Company's
results of operations could be adversely affected.

INTERNATIONAL SALES

     Prior to the second fiscal quarter of 1996, the Company's international
sales were primarily made through distributors and the Company's subsidiary in
Japan.  Effective April 1, and July 1, 1996 the Company appointed distributors
for Japan and Europe, respectively.  Effective January 1, 1998, the Company
modified its relationships with these distributors for its digital video
software products. Rather than paying commissions to Radius for products sold,
they purchase products from the Company at a discount from the price list.
Commissions will still be paid on the sales of the Company's other products sold
through these distributors, although the Company believes that these sales will
not be material.  Although such distribution arrangements are no longer
exclusive, no other distributor has yet been retained in either area.

     The Company expects that international sales, primarily in Europe, will
represent a significant portion of its business activity and that it will be
subject to the normal risks of international sales such as currency
fluctuations, longer payment cycles, export controls and other governmental
regulations and, in some countries, a lesser degree of intellectual property
protection as compared to that provided under the laws of the United States.
Sales in Japan could be affected by the economic conditions in that region,
which are currently unfavorable.  Sales in Asian markets, which are also
unfavorable, have not been, and the Company does not expect them to be, material
in the future outside of Japan.  Furthermore, a reduction in sales efforts or
financial viability of the distributors could adversely affect the Company's net
sales and its ability to provide service and support


                                         -20-
<PAGE>

to Japanese and European customers.  Additionally, fluctuations in exchange
rates could affect demand for the Company's products.  If for any reason
exchange or price controls or other restrictions on foreign currencies are
imposed, the Company's business, operating results and financial condition could
be materially adversely affected.

DEPENDENCE ON KEY PERSONNEL

     The Company's success depends to a significant degree upon the continued
contributions of its key management, marketing, product development and
operational personnel and the Company's ability to retain and continue to
attract highly skilled personnel.  The Company currently has one Executive
Officer.  The Company does not carry any key person life insurance with respect
to any of its personnel.  Competition for employees in the computer industry is
intense, and there can be no assurance that the Company will be able to attract
and retain qualified employees.  Many members of the Company's senior management
team have departed since 1997, including its former President and Chief
Executive Officer, two Chief Financial Officers and four other Vice Presidents,
and the Company has also had substantial layoffs and other employee departures.
Because of the Company's financial difficulties and the very tight labor market
for technical personnel, it has become increasingly difficult for it to hire new
employees and retain key management and current employees.  The failure of the
Company to attract and retain key personnel would have a material adverse effect
on the Company's business, operating results and financial condition.

DEPENDENCE ON PROPRIETARY RIGHTS

     The Company relies on a combination of patent, copyright, trademark and
trade secret protection, nondisclosure agreements and licensing arrangements to
establish and protect its proprietary rights.  The Company has a number of
patents and patent applications and intends to file additional patent
applications as it considers appropriate.  There can be no assurance that
patents will issue from any of these pending applications or, if patents do
issue, that any claims allowed will be sufficiently broad to protect the
Company's technology.  In addition, there can be no assurance that any patents
that may be issued to the Company will not be challenged, invalidated or
circumvented, or that any rights granted thereunder would provide proprietary
protection to the Company.  The Company has a number of trademarks and trademark
applications.  There can be no assurance that litigation with respect to
trademarks will not result from the Company's use of registered or common law
marks, or that, if litigation against the Company were successful, any resulting
loss of the right to use a trademark would not reduce sales of the Company's
products in addition to the possibility of a significant damages award.
Although the Company intends to defend its proprietary rights, policing
unauthorized use of proprietary technology or products is difficult, and there
can be no assurance that the Company's efforts will be successful.  The laws of
certain foreign countries may not protect the proprietary rights of the Company
to the same extent as do the laws of the United States.

     The Company has received, and may receive in the future, communications
asserting that its products infringe the proprietary rights of third parties,
and the Company is engaged and has been engaged in litigation alleging that the
Company's products infringe others' patent rights.  As a result of such claims
or litigation, it may become necessary or desirable in the future for the
Company to obtain licenses relating to one or more of its products or relating
to current or future technologies, and there can be no assurance that it would
be able to do so on commercially reasonable terms.  See "Business --
Litigation."

IMPACT OF YEAR 2000

     The year 2000 Issue ("Y2K Issue") is the result of computer programs being
written using two digits rather than four to define the applicable year.  Any of
the Company's computer programs or hardware that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
The Company's plan to resolve the Y2K Issue involves the following four phases:
assessment, remediation, testing, and implementation.  To date, the Company has
fully completed its assessment of all internal systems and products that could
be significantly affected.  The assessment of risks associated with suppliers
and distributors is not yet complete.

     Based on recent assessments of its information management and accounting
systems, the Company has determined that it will be required to modify or
replace significant portions of its software and certain hardware so that those
systems will properly utilize dates beyond December 31, 1999.  The Company
presently believes that with such modifications, the Y2K Issue can be mitigated
without a material adverse impact on the Company.  However, if such
modifications and replacements are not timely made, the Y2K Issue could have a
material impact on the operations of the Company.  None of these systems
interoperate directly with the systems of suppliers or distributors.


                                         -21-
<PAGE>

     Based on a review of its product line, the Company has determined that
primarily all of the products it has sold and will continue to sell do not
require remediation to be Year 2000 compliant, as primarily all operate in
conjunction with the MacOS.  Accordingly, the Company does not believe that the
Y2K Issue presents a material risk with respect to the Company's products.

     The Company is approximately 50% through the remediation phase with respect
to its information management and accounting systems and expects to complete
software and hardware replacement no later than September 30, 1999.  Once the
software and hardware is replaced for a system, the Company begins testing and
implementation.  These phases run concurrently for different systems.  The
Company has completed 50% of its testing.  Completion of the testing phase for
all significant software systems is expected by January 31, 1999, with all
remediated systems fully tested and implemented by December 31, 1999.

     None of the Company systems interface directly with significant third party
suppliers.  The Company is starting the process of working with third party
suppliers and distributors to ensure that any Company systems that could
interface directly with third parties are Year 2000 compliant by December 31,
1999.  Remediation and testing of all significant systems is expected no later
than December 31, 1999.  The Company believes that its key suppliers, two of
whom are sole sources, are in the process of making their billing systems Year
2000 compliant.  The Company is not aware of any supplier or distributor with a
Y2K Issue that would materially impact the Company's results of operations,
liquidity, or capital resources.  However, the Company has no means of ensuring
that such suppliers and distributors will be Year 2000 ready.  The inability of
suppliers and distributors to complete their Year 2000 resolution process in a
timely fashion could materially impact the Company.  There are no vendors that
could not be replaced in a reasonable period of time, except for transport
vendors.  The failure of Fedex, UPS, Airborne and the U.S. Mail would impact
direct sales.  The effect of this occurrence is not determinable.

     The Company will utilize both internal and external resources to reprogram,
or replace, test, and implement the software and operating equipment for Year
2000 compliance.  The total future cost of the Year 2000 compliance is estimated
at $200,000 to $600,000 and is being funded through net cash flows or capital
leases.  Some of these expenditures were likely to have been made in the
ordinary course of upgrading and replacing obsolete systems without regard to
the Y2K Issue.  Through fiscal 1998, the Company has incurred less than $100,000
related to all phases of the Year 2000 project and $100,000 has been budgeted
for fiscal 1999, under the assumption that most of the new system cost will be
funded via leasing.

     Management of the Company believes it has an effective program in place to
resolve those aspects of the Y2K Issue within its control in a timely manner.
As noted above, the Company has not completed all necessary phases of the Year
2000 program.  In the event that the Company does not complete these phases, the
Company would be unable in some degree to take customer orders, manufacture and
ship products, invoice customers and collect payments.  In addition, disruptions
in the economy generally resulting from Year 2000 issues could also materially
adversely affect the Company.  The Company could be subject to litigation for
computer systems product failure, for example, equipment shutdown or failure to
properly date business records.  Furthermore, although Management is not aware
of any Y2K Issue with products sold, there can be no assurance that the use of
such products alone or in conjunction with other products will not malfunction
and expose the Company to liability.  The amount of potential liability and lost
revenue associated with these risks cannot be reasonably estimated at this time.

     The Company has contingency plans for certain critical applications and is
working on such plans for others.  These contingency plans involve, among other
actions, manual workarounds, increasing inventories, and adjusting staffing
strategies.  All of the Company's production, shipping, purchasing, billing and
inventory functions could be accomplished via outsource vendors that are
currently readily available, although there can be no assurance that such
vendors will be available on reasonable terms as the millenium approaches.





                                         -22-
<PAGE>

ITEM 7A        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not applicable.

ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The index to the Company's Financial Statements, Financial Schedules, and
the Report of the Independent Auditors appears in Part IV of this Form 10-K.

ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                    FINANCIAL DISCLOSURE

     Not Applicable.





                                         -23-
<PAGE>

                                       PART III



ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

       The information concerning the Company's directors required by Item 10
is incorporated by reference herein to section entitled "Proposal No. 1 -
Election of Directors" of the Proxy Statement for its 1999 Annual Meeting of
Shareholders (the "Proxy Statement").  The information concerning the Company's
executive officers required by Item 10 is incorporated by reference to Item 4A
in Part 1 hereof entitled "Executive Officers of Registrant."

       With the exception of the information specifically stated as being
incorporated by reference from the Company's Proxy Statement in Part III of this
Annual Report on Form 10-K, the Company's Proxy Statement is not to be deemed as
filed as part of this report.  The Proxy Statement will be filed with the
Securities and Exchange Commission within 120 days of the Company's fiscal year
end.

ITEM 11.         EXECUTIVE COMPENSATION

       The information required by Item 11 is incorporated herein by reference
to the sections entitled "Executive Compensation" and "Proposal No. 1 - Election
of Directors--Compensation of Directors" of the Proxy Statement.

       With the exception of the information specifically stated as being
incorporated by reference from the Company's Proxy Statement in Part III of this
Annual Report on Form 10-K, the Company's Proxy Statement is not to be deemed as
filed as part of this report.  The Proxy Statement will be filed with the
Securities and Exchange Commission within 120 days of the Company's fiscal year
end.

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                      AND MANAGEMENT

       The information required by Item 12 is incorporated herein by reference
to the section entitled "Security Ownership of Certain Beneficial Owners and
Management" of the Proxy Statement.

       With the exception of the information specifically stated as being
incorporated by reference from the Company's Proxy Statement in Part III of this
Annual Report on Form 10-K, the Company's Proxy Statement is not to be deemed as
filed as part of this report.  The Proxy Statement will be filed with the
Securities and Exchange Commission within 120 days of the Company's fiscal year
end.

ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       The information required by Item 13 is incorporated herein by reference
to the section entitled "Certain Transactions" of the Proxy Statement.

       With the exception of the information specifically stated as being
incorporated by reference from the Company's Proxy Statement in Part III of this
Annual Report on Form 10-K, the Company's Proxy Statement is not to be deemed as
filed as part of this report.  The Proxy Statement will be filed with the
Securities and Exchange Commission within 120 days of the Company's fiscal year
end.


                                         -24-
<PAGE>

                                       PART IV


ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                 REPORTS ON FORM 8-K

 (a) (1)    FINANCIAL STATEMENTS.  The Company's financial statements filed
herewith are as follows:

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
            <S>                                                             <C>
            Report of Ernst & Young LLP, Independent Auditors                 31

            Consolidated Balance Sheets at September 30, 1998 and 1997        32

            Consolidated Statements of Operations for the Years Ended
            September 30, 1998, 1997 and 1996                                 33

            Consolidated Statements of Convertible Preferred Stock and
            Shareholders' Equity for the Years Ended September 30, 1998,
            1997, and 1996                                                    34

            Consolidated Statements of Cash Flows for the Years Ended
            September 30, 1998, 1997, and 1996                                35

            Notes to Consolidated Financial Statements                        36

<CAPTION>

(a) (2)     FINANCIAL STATEMENT SCHEDULES.  The Company's financial
            statement schedule filed herewith is as follows:
                                                                            Page
                                                                            ----
            <S>                                                             <C>
            Schedule II: Valuation and Qualifying Accounts                    52
</TABLE>

            All other financial statement schedules are omitted because the
            information called for is not present in amounts sufficient to
            require submission of the schedules or because the information
            required is shown either in the financial statements or the notes
            thereto.

(a) (3)     The following exhibits are filed herewith or incorporated by
            reference herein:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     EXHIBIT TITLE
------                     -------------
<S>         <C>  <C>
2.01        --   Agreement and Plan of Reorganization dated May 20, 1994
                 between Radius Inc. and SuperMac Technology, Inc. (1)

2.02        --   Modification Agreement dated July 21, 1994 to Agreement and
                 Plan of Reorganization between Radius Inc. and SuperMac
                 Technology, Inc. (1)

2.07        --   Merger Agreement (the "Merger Agreement") dated as of December
                 21, 1995 among Radius Inc., Splash Technology, Inc., Summit
                 Subordinated Debt Fund, L.P., Summit Ventures IV, L.P., Summit
                 Investors II, L.P., Splash Technology Holdings, Inc. and
                 Splash Merger Company, Inc. (4)

2.08        --   Amendment No. 1 to Merger Agreement dated as of January 30,
                 1996. (4)
</TABLE>


                                         -25-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     EXHIBIT TITLE
------                     -------------
<S>         <C>  <C>
3.01        A    Registrant's Sixth Amended and Restated Articles of
                 Incorporation. (5)

            B    Certificate of Amendment of Registrant's Sixth Amended and
                 Restated Articles of Incorporation. (3)

            C    Certificate of Amendment of Registrant's Sixth Amended and
                 Restated Articles of Incorporation. (17)

            D    Certificate of Determination of Preferences of Series A
                 Convertible Preferred Stock of Radius Inc. (17)

3.02        --   Registrant's Bylaws. (6)

4.01        --   Specimen Certificate for shares of Common Stock of the
                 Registrant. (7)

4.03        A    Warrant dated September 13, 1995 between IBM Credit
                 Corporation and the Registrant. (17)

            B    Warrant dated October 13, 1996, between Mitsubishi Electronics
                 America, Inc. and the Registrant. (18)

4.04        --   Form of Registration Rights Agreement between the Registrant
                 and certain shareholders. (17)

            A    The Registrant's Sixth Amended and Restated Articles of
                 Incorporation. (5)

            B    Certificate of Amendment of Registrant's Sixth Amended and
                 Restated Articles of Incorporation. (3)

            C    Certificate of Amendment of Registrant's Sixth Amended and
                 Restated Articles of Incorporation.
                 (See exhibit 3.01)

            D    Certificate of Determination of Preferences of Series A
                 Convertible Preferred Stock of Radius Inc.
                 (See exhibit 3.01).

4.05        --   The Registrant's Bylaws. (6)

4.06        --   *Non-Plan Stock Option Grant to Charles W. Berger. (8)

10.01       A    *Registrant's 401(k) Savings and Investment Plan. (9)

            B    *Amendment to Registrant's 401(k) Savings and Investment
                 Plan. (3)

            C    *Registrant's 401(k) Savings and Investment Plan Loan
                 Policy. (3)

10.02       --   *Registrant's 1995 Stock Option Plan. (3)

10.03       --   *Form of Stock Option Agreement and Exercise Request as
                 currently in effect under 1995 Stock Option Plan. (3)

10.04       --   *Registrant's 1990 Employee Stock Purchase Plan and related
                 documents. (10)

10.05       --   *Registrant's 1994 Directors' Stock Option Plan. (3)

10.06       --   Form of Indemnity Agreement with Directors. (7)
</TABLE>


                                         -26-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     EXHIBIT TITLE
------                     -------------
<S>         <C>  <C>
10.08       A    Credit Agreement by and among Radius Inc., the certain
                 financial institutions, and International Business Machines
                 Credit Corporation, dated February 17, 1995. (11)

            B    Acknowledgment, Waiver and Amendment to Radius Inc. Inventory
                 and Working Capital Financing Agreement by and between Radius
                 Inc. and International Business Machines Credit Corporation
                 dated December 14, 1995. (3)

            C    Amended and Restated Working Capital and Term Loan Agreement
                 dated as of August 30, 1996 between IBM Credit Corporation and
                 the Registrant.  (18)

            D    Amended and Restated Working Capital and Term Loan Agreement
                 dated as of May 12, 1997 between IBM Credit Corporation and
                 the Registrant.  (19)

            E    Amended and Restated Working Capital and Term Loan Agreement
                 dated as of November 10, 1997 between IBM Credit Corporation
                 and the Registrant. (24)

            F    Amended and Restated Working Capital and Term Loan Agreement
                 dated as of January 8, 1998 between IBM Credit Corporation and
                 the Registrant. (21)

            G    Amended and Restated Working Capital and Term Loan Agreement
                 dated as of April 16, 1998 between IBM Credit Corporation and
                 the Registrant. (22)

10.09       A    Lease Agreement by and between Registrant and the Equitable
                 Life Assurance Society of the United States dated June 22,
                 1988, as amended by the Commencement of Term Agreement dated
                 February 13, 1989 and Amendment No. One dated July 20, 1989,
                 and related documents (1710 Fortune Drive, San Jose,
                 California offices). (7)

            B    Second Amendment to Lease dated January 27, 1993 amending
                 Lease Agreement by and between Registrant and the Fortune
                 Drive Partners (successor in interest to the Equitable Life
                 Assurance Society of the United States) dated June 22, 1988
                 (1710 Fortune Drive, San Jose, California offices). (12)

10.13       --   *SuperMac Technology, Inc.'s 1988 Stock Option Plan ("Option
                 Plan"). (15)

10.14       --   *SuperMac Technology, Inc.'s Form of Incentive Stock Option
                 Agreement under the Option Plan. (15)

10.15       --   *SuperMac Technology, Inc.'s Form of Supplemental Stock Option
                 Agreement under the Option Plan. (15)

10.16       --   *SuperMac Technology, Inc.'s Form of Early Exercise Stock
                 Purchase Agreement under the Option Plan. (15)

10.17       --   Distribution Agreement between Radius Inc. and Ingram Micro,
                 Inc. dated June 5, 1991 as amended on April 1, 1992, May 31,
                 1995 and July 14, 1995.  (16)

10.18       --   *Employment Agreement by and between Registrant and Mark
                 Housley dated December 20, 1996.  (20)

10.19            Asset Purchase Agreement dated as of August 7, 1998 between
                 Korea Data Systems America, Inc. and the Registrant. (23)

10.20       --   Amended and Restated License Agreement dated as of August 7,
                 1998 between Korea Data Systems America, Inc. and the
                 Registrant. (23)
</TABLE>


                                         -27-
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     EXHIBIT TITLE
------                     -------------
<S>         <C>  <C>
10.21       --   Credit Agreement by and among Radius Inc., the certain
                 financial institutions, and Silicon Valley Bank, dated August
                 28, 1998.

10.22       --   Asset Purchase Agreement dated as of November 23, 1998 between
                 Post Digital Software, Inc. and the Registrant.

10.23       --   Asset Sale Agreement dated as of December 4, 1998 between
                 Splash Technology Holdings, Inc. and the Registrant.

10.24       --   Supplement to the License and Asset Purchase Agreement dated
                 December 4, 1998 between Korea Data Systems America, Inc. and
                 the Registrant.


21.01       --   List of Registrant's subsidiaries.

23.01       --   Consent of Ernst & Young LLP, Independent Auditors.

27.01       --   Financial Data Schedule (EDGAR version only)
</TABLE>

---------------

(1)    Incorporated by reference to exhibits to the Company's Amendment No. 2
       (File No. 33-79732) to Form S-4 filed on July 25, 1994.

(4)    Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on February 13, 1996

(5)    Incorporated by reference to exhibits to the Company's Report on Form
       10-K filed on December 24, 1990.

(6)    Incorporated by reference to exhibits to the Company's Registration
       Statement on Form S-8 filed on April 29, 1992 (File No. 33-47525).

(7)    Incorporated by reference to exhibits to the Company's Registration
       Statement on Form S-1 (File No. 33-35769) which became effective on
       August 16, 1990.

(8)    Incorporated by reference to exhibits to the Company's Registration
       Statement on Form S-8 filed on November 15, 1993 (File No. 33-71636).

(9)    Incorporated by reference to exhibits to the Company's Report on Form
       10-K filed on December 28, 1992.

(10)   Incorporated by reference to exhibits to the Company's Report on Form
       10-K filed on December 30, 1991.

(11)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on May 10, 1995.

(12)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on August 18, 1993.

(13)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on August 12, 1992.


(15)   Incorporated by reference to exhibits to SuperMac Technology, Inc.'s
       Registration Statement on Form S-1, as amended (File No. 33-46800),
       which became effective on May 15, 1992.

(16)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on August 15, 1995.


                                         -28-
<PAGE>

(17)   Incorporated by reference to the Company's Registration Statement on
       Form S-1 (File No. 333-12417) filed on September 20, 1996.

(18)   Incorporated by reference to Amendment No. 1 to the Company's
       Registration Statement on Form S-1 (File No. 333-12417) filed on
       November 12, 1996.

(19)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on August 12, 1997.

(20)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on February 11, 1997.

(21)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on February 10, 1998.

(22)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on May 12, 1998.

(23)   Incorporated by reference to exhibits to the Company's Report on Form
       10-Q filed on August 11, 1998.

(24)   Incorporated by reference to exhibits to the Company's Report on Form
       10-K filed on January 9, 1998.


* management contracts or compensatory plans required to be filed as an exhibit
to Form 10-K.
----------------



(b)    REPORTS ON FORM 8-K.

       No report on Form 8-K was filed during the last quarter of fiscal 1998.

(c)    EXHIBITS - See (a) (3) above.

       FINANCIAL STATEMENT SCHEDULES -  See (a) (2) above.



                                         -29-
<PAGE>

                                      SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                          RADIUS INC.


                                          By:  /s/ Mark Housley
                                              -------------------------------
                                               Mark Housley
                                               Chairman of the Board of
                                               Directors, Chief Executive
                                               Officer and President

                                  POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Mark Housley
and Henry V. Morgan, jointly and severally, his true and attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign
amendments to this Report on Form 10-K, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause to
be done by virtue hereof.

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:

<TABLE>
<CAPTION>

NAME                                                   TITLE                                     DATES
----                                                   -----                                     -----
<S>                                            <C>                                               <C>

PRINCIPAL EXECUTIVE OFFICER:


  /s/ Mark Housley                             Chairman of the Board of Directors,               December 23, 1998
------------------------------------------     Chief Executive Officer and President
Mark Housley

PRINCIPAL FINANCIAL OFFICER
AND CHIEF ACCOUNTING OFFICER:


  /s/ Edwin Silliman                           Interim Chief Financial Officer                   December 23, 1998
------------------------------------------
Edwin Silliman


DIRECTORS:


  /s/ Michael D. Boich                         Director                                          December 23, 1998
------------------------------------------
Michael D. Boich


  /s/ Charles W. Berger                        Director                                          December 23, 1998
------------------------------------------
Charles W. Berger


/s/ Henry V. Morgan                            Director, Secretary                               December 23, 1998
------------------------------------------
Henry V. Morgan

/s/ John C. Kirby                              Director                                          December 23, 1998
------------------------------------------
John C, Kirby
</TABLE>



                                         -30-
<PAGE>

                  REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS AND SHAREHOLDERS
RADIUS INC.

We have audited the accompanying consolidated balance sheets of Radius Inc. as
of September 30, 1998 and 1997, and the related consolidated statements of
operations, convertible preferred stock and shareholders' equity, and cash flows
for each of the three years in the period ended September 30, 1998.  Our audits
also included the financial statement schedule listed in the Index at Item 14
(a).  These financial statements and schedule are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Radius
Inc. at September 30, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
September 30, 1998, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.



                                          /s/  ERNST & YOUNG LLP

San Jose, California
October 30, 1998




                                         -31-
<PAGE>

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

September 30  (in thousands)
                                                                                  1998             1997
                                                                                  ----             ----
<S>                                                                             <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                    $    600         $     773
   Accounts receivable, net of allowance for doubtful accounts
     of $3,894 in 1998 and $4,758 in 1997                                            364             2,168
   Note receivable from Korea Data Systems America, Inc.                           4,500                 -
   Inventories                                                                       803               805
   Investment in Splash Technology Holdings, Inc.                                      -            22,093
   Prepaid expenses and other current assets                                         156               184
                                                                                --------         ---------
   Total current assets                                                            6,423            26,023

Property and equipment, net                                                          133               249
                                                                                --------         ---------
                                                                                $  6,556         $  26,272
                                                                                --------         ---------
                                                                                --------         ---------


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                             $  1,971         $   4,511
   Accrued payroll and related expenses                                              324             1,320
   Other accrued liabilities                                                       2,069             3,228
   Deferred income                                                                 4,833                 -
   Accrued income taxes                                                            1,102             2,111
   Accrued restructuring and other charges                                             -             2,033
   Short-term borrowings                                                           1,340             4,638
   Obligations under capital leases                                                    -               273
                                                                                --------         ---------
   Total current liabilities                                                      11,639            18,114

Shareholders' Equity (Net Capital Deficiency):
   Preferred stock, no par value, 2,000 authorized; none
     issued and outstanding in 1998 and 1997                                           -                 -
   Common stock, no par value; 100,000 shares authorized;
     issued and outstanding--5,524 shares in 1998 and
     5,502 shares in 1997                                                        169,102           168,994
   Accumulated deficit                                                          (174,239)         (182,972)
   Unrealized gain on available-for-sale securities                                    -            22,093
   Accumulated translation adjustment                                                 54                43
                                                                                --------         ---------

   Total shareholders' equity (Net capital deficiency)                            (5,083)            8,158
                                                                                ---------        ---------
                                                                                $  6,556         $  26,272
                                                                                --------         ---------
                                                                                --------         ---------
See accompanying notes.
</TABLE>



                                         -32-
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

For years ended September 30
(in thousands, except per share data)

                                                             1998              1997             1996
                                                             ----              ----             ----
<S>                                                        <C>               <C>              <C>
Net sales                                                  $  14,564         $ 26,276         $  88,129
Commissions and royalties                                      1,104            4,874             2,161
                                                           ---------         --------         ---------
         Total net sales                                      15,668           31,150            90,290

Cost of sales                                                  9,921           31,032            77,382
                                                           ---------         --------         ---------
         Gross profit                                          5,747              118            12,908
                                                           ---------         --------         ---------
Operating expenses:
   Research and development                                    2,801            5,002             7,478
   Selling, general and administrative                         7,107           21,355            25,886
                                                           ---------         --------         ---------
         Total operating expenses                              9,908           26,357            33,364
                                                           ---------         --------         ---------
Loss from operations                                          (4,161)         (26,239)          (20,456)
Other income, net                                             12,353           30,600            24,032
Interest expense                                                (459)          (2,777)           (3,736)
                                                           ---------         --------         ---------
Income (loss) before income taxes                              7,733            1,584              (160)
Provision (benefit) for income taxes                          (1,000)             316               815
                                                           ---------         --------         ---------

Net income (loss)                                          $   8,733         $  1,268         $    (975)
                                                           ---------         --------         ---------
                                                           ---------         --------         ---------

Preferred stock dividend                                           -              272                 -
                                                           ---------         --------         ---------
Net income (loss) applicable to
  common shareholders                                      $   8,733         $    996         $    (975)
                                                           ---------         --------         ---------
                                                           ---------         --------         ---------

Net income (loss) per common share:
   Basic net income (loss) per share applicable
     to common shareholders                                $    1.58         $   0.18         $   (0.46)
                                                           ---------         --------         ---------
                                                           ---------         --------         ---------
   Diluted net income (loss) per share applicable
     to common shareholders                                $    1.57         $   0.18         $   (0.46)
                                                           ---------         --------         ---------
                                                           ---------         --------         ---------

Shares used in computing net income
 (loss) per common share:
   Shares used in computing basic net income
     (loss) per common share                                   5,522            5,389             2,125
                                                           ---------         --------         ---------
                                                           ---------         --------         ---------
   Shares used in computing diluted net income
     (loss) per common share                                   5,557            5,522             2,125
                                                           ---------         --------         ---------
                                                           ---------         --------         ---------
</TABLE>
See accompanying notes.



                                         -33-
<PAGE>

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

For the years ended September 30, 1998, 1997 and 1996
(in thousands)

                                                                                             Shareholder's Equity
                                                                             --------------------------------------------------

                                                                                            Accumulated   Unrealized
                                                                                              Deficit      Gain on
                                                            Convertible                         and       Available-     Total
                                                             Preferred         Common       Translation    for-Sale   Shareholders'
                                                               Stock            Stock        Adjustment   Securities     Equity
                                                            ----------       ------------------------------------------------------
<S>                                                         <C>              <C>            <C>           <C>         <C>
Balance at September 30, 1995                               $       -        $  125,813      $(182,930)   $        -  $   (57,117)
   Issuance of 12 shares of common stock
     under Stock Option Plans                                       -               406             -              -          406
   Issuance of 2 shares of common stock
     under Employee Stock Purchase Plan                             -                24             -              -           24
   Issuance of 3,629 shares of common
     stock to Creditors                                             -            42,503             -              -       42,503
   Issuance of 75 shares of preferred stock to IBM              3,000                 -             -              -            -
   Issuance of 84 shares of common stock
     in partial settlement of litigation                            -                 -             -              -            -
   Unrealized gain on available-for-sale securities                 -                 -             -         19,152       19,152
   Currency translation adjustment                                  -                 -           (33)             -          (33)
   Net loss                                                         -                 -          (975)             -         (975)
                                                            ---------        -----------------------------------------------------

Balance at September 30, 1996                                   3,000           168,746      (183,938)        19,152        3,960
   Issuance of 53 shares of common stock
     under Stock Option Plans                                       -               200            -               -          200
   Issuance of 8 shares of common stock under
     Employee Stock Purchase Plan                                   -                48            -               -           48
   Redemption of 75 shares of preferred stock
     held by IBM                                               (3,000)                -            -               -            -
   Unrealized gain on available-for-sale securities                 -                 -            -           2,941        2,941
   Currency translation adjustment                                  -                 -           13               -           13
   Dividends paid on convertible preferred stock                    -                 -         (272)              -         (272)
   Net income                                                       -                 -        1,268               -        1,268
                                                            ---------        ----------------------------------------------------


Balance at September 30, 1997                                       -           168,994     (182,929)         22,093        8,158
   Issuance of 22 shares of common stock
     under Stock Option Plans                                       -               108            -               -          108
   Unrealized gain on available-for-sale securities                 -                 -            -         (22,093)     (22,093)
   Currency translation adjustment                                  -                 -           11               -           11
   Net income                                                       -                 -        8,733               -        8,733
                                                            ---------        ----------------------------------------------------

Balance at September 30, 1998                               $       -        $  169,102   $ (174,185)     $        -  $     (5,083)
                                                            ---------        ----------------------------------------------------
                                                            ---------        ----------------------------------------------------
</TABLE>
See accompanying notes.



                                         -34-
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
For years ended September 30
(in thousands)                                                       1998             1997                 1996
                                                                     ----             ----                 ----
<S>                                                             <C>                 <C>               <C>
Cash flows from operating activities:
   Net income (loss)                                            $   8,733           $   1,268         $   (975)
   Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
       Depreciation and amortization                                  149                 801             1,453
       Gain on the sale of Splash Common Stock in 1997
         and 1998 and the Color Server Group in 1996              (10,011)            (30,779)          (20,638)
       Gain on the monitor license to KDS                          (1,615)                  -                 -
       Gain on the sale of Umax Common Stock                         (534)                  -                 -
       Non-cash restructuring and other charges                         -               2,162                 -
       Loss on disposal of fixed assets                                22                 500               258
     (Increase) decrease in assets:
         Accounts receivable                                        2,679               3,342            56,698
         Allowance for doubtful accounts                             (864)              2,626            (6,269)
         Note receivable                                           (4,500)                  -                 -
         Inventories                                                    2              12,047               811
         Prepaid expenses and other current assets                     28                 182             1,970
         Income tax receivable                                          -                 514                 5
       Increase (decrease) in liabilities:
         Accounts payable                                          (2,540)               (493)          (19,874)
         Accrued payroll and related expenses                        (996)             (1,492)           (3,007)
         Other accrued liabilities                                 (1,159)                205           (10,817)
         Deferred income                                            4,833                   -                 -
         Accrued income taxes                                      (1,009)               (116)              562
         Accrued restructuring and other charges                   (2,033)               (420)          (16,588)
                                                                ----------        ------------        ----------
           Total adjustments                                      (17,548)            (10,921)          (15,436)
                                                                ----------        ------------        ----------
              Net cash used in operating activities                (8,815)             (9,653)          (16,411)
                                                                ----------        -----------         ---------

Cash flows from investing activities:
   Capital expenditures                                               (55)                (55)             (175)
   Deposits and other assets                                            -                  50               467
   Net proceeds from the sale of Splash Common Stock in
     1998 and 1997 and the Color Server Group in 1996              10,011              30,779            20,163
   Proceeds from the monitor license to KDS                         1,615                   -                 -
   Net proceeds from the sale of Umax Common Stock                    534                   -                 -
                                                                ---------         -----------         ---------
         Net cash provided by investing activities                 12,105              30,774            20,455
                                                                ---------         -----------         ---------

Cash flows from financing activities:
   Principal payment of short-term borrowings, net                 (3,298)              2,716            (4,782)
   Principal payment of long-term borrowings, net                       -             (21,940)                -
   Redemption of preferred stock and related dividend                   -              (3,272)                -
   Issuance of common stock                                           108                 248               430
   Principal payments under capital leases                           (273)             (1,074)           (1,478)
                                                                ----------        ------------        ----------
         Net cash used in financing activities                     (3,463)            (23,322)           (5,830)
                                                                ----------        ------------        ----------
Net decrease in cash and cash equivalents                            (173)             (2,201)           (1,786)
Cash and cash equivalents, beginning of year                          773               2,974             4,760
                                                                ---------         -----------         ---------
Cash and cash equivalents, end of year                          $     600         $       773         $   2,974
                                                                ---------         -----------         ---------
                                                                ---------         -----------         ---------
</TABLE>
See accompanying notes.




                                         -35-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE ONE.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  ORGANIZATION AND BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of Radius
  Inc. ("Radius" or the "Company") and its wholly-owned subsidiaries after
  elimination of significant intercompany transactions and balances.

  FINANCIAL STATEMENT ESTIMATES

         The preparation of financial statements in conformity with generally
  accepted accounting principles requires management to make estimates and
  assumptions that affect the reported amounts of assets, liabilities, revenues
  and expenses. Such estimates include the level of allowance for potentially
  uncollectible receivables and sales returns; inventory reserves for obsolete,
  slow-moving, or non-salable inventory; and estimated cost for installation,
  warranty and other customer support obligations. Actual results could differ
  from these estimates.

  MANAGEMENT'S BUSINESS RECOVERY PLANS

         As shown in the accompanying consolidated financial statements, the
  Company has incurred recurring operating losses.  During fiscal 1996, 1997
  and 1998, management implemented a number of actions to address its cash flow
  and operating issues, including: restructuring its outstanding indebtedness
  to trade creditors and its secured creditor; refocusing its efforts on
  providing solutions for digital video customers; discontinuing sales of mass
  market and other low value added products; divesting a number of businesses
  and product lines, including most recently the agreement for the sale and
  related license of significant assets of its monitor business to Korea Data
  Systems America, Inc. significantly reducing expenses and personnel
  headcount; and subleasing unoccupied portions of its facility leases
  commensurate with its reductions in operations.  All revenue in the years
  ended September 30, 1996 and 1997 and approximately $13.0 million in the year
  ended September 30, 1998, relates to businesses and product lines that have
  been disposed of over the last three years.  Approximately $2.6 million of
  revenue in the year ended September 30, 1998 relates to digital video-related
  software.  See Notes 3 and 10.

         The Company's relatively limited cash resources have restricted the
  Company's ability to purchase inventory which in turn has limited its ability
  to procure and sell products and has resulted in additional costs for
  expedited deliveries. The adverse effect on the Company's results of
  operations due to its limited cash resources can be expected to continue
  until such time as the Company is able to return to profitability, or
  generate additional cash from other sources.

         During fiscal 1999, additional funds may be needed to finance ongoing
  operations and to implement the Company's development plans and for other
  purposes.  The Company plans to generate cash from operations and borrowings
  under a working capital line of credit of $4.2 million with Silicon Valley 
  Bank secured by the $5.2 million note issued by Korea Data Systems America, 
  Inc. (KDS), and is investigating possible financing and strategic partnering 
  opportunities. The Company and its management believes that it can further 
  reduce such operating expenses, if necessary, and that other sources of 
  financing will be available.  The note issued to KDS relates to a license 
  agreement under which income is being recognized as cash is received.

  FISCAL YEAR

         The Company's fiscal year ends on the Saturday closest to September 30
  and includes 53 weeks in fiscal 1998.  All other fiscal years presented
  include 52 weeks. For consistency of presentation, all fiscal periods in this
  Form 10-K are reported as ending on a calendar month end


                                         -36-
<PAGE>

  FOREIGN CURRENCY TRANSLATION

       The Company translates the assets and liabilities of its foreign
  subsidiaries into dollars at the rates of exchange in effect at the end of
  the period and translates revenues and expenses using rates in effect during
  the period.  Gains and losses from these balance sheet translations are
  accumulated as a separate component in the Consolidated Balance Sheets.
  Foreign currency transaction gains or losses, which are included in the
  results of operations, are not material.

  INVENTORIES

       Inventories are stated at the lower of cost or market.  Cost is
  determined using standard costs that approximate cost on a first-in,
  first-out basis.  The Company reviews the levels of its inventory in light of
  current and forecasted demand to identify and provide reserves for obsolete,
  slow-moving, or non-salable inventory.  Inventories consist of the following
  (in thousands):

<TABLE>
<CAPTION>
                                                           September 30,
                                                  ------------------------------
                                                     1998                1997
                                                     ----                ----
           <S>                                     <C>                <C>
           Raw materials                           $     20           $       -
           Work in process                              238                 176
           Finished goods                               545                 629
                                                   --------           ---------
                                                   $    803           $     805
                                                   --------           ---------
                                                   --------           ---------
</TABLE>

  PROPERTY AND EQUIPMENT

       Property and equipment is stated at cost and consists of the following
  (in thousands):

<TABLE>
<CAPTION>
                                                           September 30,
                                                   ----------------------------
                                                     1998                1997
                                                     ----                ----
           <S>                                     <C>                <C>
           Computer equipment                      $  6,423           $  18,170
           Machinery and equipment                      120                 553
           Furniture and fixtures                       354                 626
           Leasehold improvements                       439                 439
                                                   --------           ---------
                                                      7,336              19,788
           Less accumulated depreciation
              and amortization                       (7,203)            (19,539)
                                                   ---------          ---------
                                                   $    133           $     249
                                                   --------           ---------
                                                   --------           ---------
</TABLE>

       Depreciation has been provided for using the straight-line method over
  estimated useful lives of three to five years.  Leasehold improvements have
  been fully amortized.

  CARRYING VALUE OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

       In accordance with FASB Statement No. 121, Accounting for the Impairment
  of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, the Company
  records impairment losses on long-lived assets when events and circumstances
  indicate that the assets might be impaired and the undiscounted cash flows
  estimated to be generated by those assets are less than the carrying amounts
  of those assets.  Based on the Company's estimate of future undiscounted cash
  flows, the Company expects to recover the carrying amounts of its long-lived
  assets.  Nonetheless, it is reasonably possible that the estimate of
  undiscounted cash flows may change in the near term resulting in the need to
  write-down those assets to fair value.

  REVENUE RECOGNITION

       Revenue is recognized when products are shipped.  Sales to certain
  resellers are subject to agreements allowing certain rights of return and
  price protection on unsold merchandise held by these resellers.  The Company
  provides for estimated returns at the time of shipment and for price
  protection following price declines.  Revenue earned under royalty or
  commission agreements is recognized in the period in which it is earned.


                                         -37-
<PAGE>

       Revenue from the sale of software, net of estimated returns, is
  recognized upon either shipment of the physical product or delivery of
  electronic product, at which time, collectibility is probable and the Company
  has no remaining obligations.

       In May 1997, the Financial Accounting Standards Board approved the
  American Institute of Certified Public Accountants Statement of Position,
  "Software Revenue Recognition" (SOP 97-2).  SOP 97-2 provides revised and
  expanded guidance on software revenue recognition and applies to all entities
  that earn revenue from licensing, selling or otherwise marketing computer
  software.  SOP 97-2 is effective for transactions entered into in fiscal
  years beginning after December 15, 1997.  The application of SOP 97-2 is not
  expected to have a material impact on the Company's results of operations.

  WARRANTY EXPENSE

       The Company provides at the time of sale for the estimated cost to
  repair or replace products under warranty.  The warranty period commences on
  the end user date of purchase and is normally one year for displays and
  digital video products and for the life of the product for graphics cards.

  ADVERTISING EXPENSES

       The Company expenses advertising expenses as incurred.

  NET INCOME (LOSS) PER SHARE

       The Company adopted Statement of Financial Accounting Standards (SFAS)
  No. 128 in fiscal 1998.  This statement requires the presentation of basic
  and diluted net income per share.  Basic net income per share is computed
  using the weighted average number of common shares outstanding during the
  period.  Diluted net income per share is computed using the weighted average
  number of common and dilutive common shares outstanding during the period.
  Dilutive common equivalent shares consist of employee stock options using the
  treasury stock method.  The Company has restated all prior period per share
  data presented as required by SFAS No. 128.  Restated numbers as computed
  using the diluted method under SFAS No. 128 approximate those computed using
  the primary method as defined in Accounting Principals Board Opinion No. 15.

       Assuming the conversion of accounts payable and other creditor debt into
  common stock in the fourth quarter of fiscal 1996 had occurred at the
  beginning of fiscal 1996, the supplemental basic and diluted loss per share
  for fiscal 1996 would have been $0.02 per share.

  CASH AND CASH EQUIVALENTS

       The Company considers all highly liquid investments with a maturity from
  date of purchase of three months or less to be cash equivalents; investments
  with maturities between three and twelve months are considered to be
  short-term investments.  Cash equivalents are carried at cost, which
  approximates market.  There were no short-term investments as of September
  30, 1998 or 1997.   Approximately $0.1 million of the $0.6 million of cash at
  September 30, 1998 was restricted under various letters of credit.

  OFF BALANCE-SHEET RISK AND CONCENTRATION OF CREDIT RISK

       The Company sells its products to distributors in the United States and
  in various foreign countries.  The Company performs on-going credit
  evaluations of its customers and generally does not require collateral.  The
  Company maintains reserves for potential credit losses.

  FAIR VALUE DISCLOSURES

       The carrying values of cash and cash equivalents and short-term
  borrowings approximate their fair values as of September 30, 1998.  The fair
  value of short-term borrowings are estimated to approximate their carrying
  value as the borrowings are subject to variable interest rates.

                                         -38-
<PAGE>

       Estimated fair value amounts have been determined by the Company using
  available market information and appropriate valuation methodologies.
  However, considerable judgment is required in interpreting market data to
  develop the estimates of fair value.  Accordingly, the estimates presented
  herein are not necessarily indicative of the amounts that the Company could
  realize in a current market exchange.

  RECENT ACCOUNTING PRONOUNCEMENTS

       In June 1997, the Financial Accounting Standards Board ("FASB") issued
  Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
  Comprehensive Income".  SFAS 130 establishes standards for reporting
  comprehensive income in a financial statement.  Comprehensive income items
  include changes in equity (net assets) not included in net income.  Examples
  are foreign currency translation adjustments and unrealized gains/losses on
  available for sale securities.  This disclosure prescribed by SFAS 130 is
  required beginning with the quarter ending December 31, 1998.  Adoption of
  SFAS No. 130 is not anticipated to have a material impact on the Company's
  financial statements.

       In June 1997, FASB issued SFAS 131, "Disclosures about Segments of an
  Enterprise and related Information."  This statement establishes standards
  for the way companies report information about operating segments in
  financial statements.  It also establishes standards for related disclosures
  about products and services, geographic areas and major customers.  The
  Company has not yet determined the impact, if any, of adopting this standard.
  The disclosures prescribed by SFAS 131 are required in fiscal year 1999.

  RECLASSIFICATIONS

       Certain amounts in the September 30, 1996 financial statements have been
  reclassified to conform to the current year presentation.


NOTE TWO.  BORROWINGS

  LINE OF CREDIT ARRANGEMENT

       In August 1998, the Company entered into a $4.2 million working capital
  line of credit agreement with Silicon Valley Bank secured by the $5.2 million
  note issued by Korea Data Systems America, Inc. (KDS).  The borrowing base
  under the working capital line of credit is eighty percent of the balance on
  the KDS note held by the Company.  Under the terms of the working capital
  line of credit, the amount available to borrow will be decreased to an amount
  equal to eighty percent of the unpaid balance of KDS' installment
  obligations.  As the borrowing base is dependent on the continued payment of
  monthly installments required by the note, there can be no assurance that it
  will be sufficient to allow the Company to borrow up to the full amount of
  the working capital line of credit. Interest is paid at the rate of 1.25% per
  month of 125% of the average daily outstanding balance of the loan.  In
  addition, a one time administrative fee of .50% of 125% of each advance
  amount is also paid to Silicon Valley Bank.  As of September 30, 1998, the
  outstanding loan balance was $1.3 million and is included as short-term
  borrowings in the accompanying Consolidated Balance Sheet.

       In February 1995, the Company and IBM Credit Corp. ("IBM Credit")
  entered into a $30.0 million Inventory and Working Capital Financing
  Agreement (the "Loan Agreement"). The Loan Agreement permitted advances for
  inventory and working capital up to the lesser of $30.0 million or 85% of
  eligible receivables ("Inventory and Working Capital Advances"). In September
  1995, IBM Credit advanced an additional $20.0 million under the Loan
  Agreement to finance the manufacturing of the Company's MacOS compatible
  products (the "MacOS Advances").

       Immediately prior to the consummation of the restructuring of its
  unsecured and secured debt in September 1996 (the "Plan"), amounts
  outstanding to IBM Credit were approximately $26.4 million (See Note 11). In
  connection with the Plan, IBM Credit received 750,000 shares of the Company's
  Series A Convertible Preferred Stock and warrants to purchase 60,000 shares
  of Common Stock in consideration of the cancellation of $3.0 million of
  indebtedness to IBM Credit and for an additional advance of approximately
  $470,000.  In addition, IBM Credit restructured the terms of the remaining
  approximately $23.4 million indebtedness into a working line of credit and a
  term loan.  The term loan was repaid and the Convertible Preferred Stock was
  redeemed in August 1997 with the proceeds from the sale of 996,875 shares of
  the 1,741,127 shares of Splash Common Stock owned by the Company.


                                         -39-
<PAGE>

  During fiscal 1998, IBM exercised the option to purchase 174,113 shares of
  Splash Common Stock and a portion of the proceeds of the sale of the
  remaining 570,139 shares owned by the Company were used to repay in full the
  working line of credit with IBM Credit.


NOTE THREE.  COMMITMENTS AND CONTINGENCIES

  LEASES

       The Company leases facilities in Mountain View, California, where it has
  established its headquarters operations, and in San Jose, California, under
  operating leases.

       Future annual minimum lease payments under all noncancelable operating
  leases at September 30, 1998, are as follows (in thousands):

<TABLE>
<CAPTION>
                                             Gross                      Net
                                           Operating     Sublease    Operating
                                            Leases        Income       Leases
                                            ------        ------       ------
   <S>                                     <C>           <C>         <C>
   1999                                        $352         $155         $197

                                              -----        -----      -------
      Total minimum lease payments             $352                      $197
                                              -----                  --------
                                              -----                  --------
      Total sublease income                                 $155
                                                           -----
                                                           -----
</TABLE>

       Rent expense charged to operations amounted to approximately $0.5
  million, $0.6 million and $1.5 million for the fiscal years ended September
  30, 1998, 1997 and 1996, respectively.  The rent expense amounts for fiscal
  1998, 1997 and 1996 exclude a provision for remaining lease obligations on
  excess facilities.

       Sublease income for fiscal 1998, 1997 and 1996 was approximately $0.8
  million, $1.3 million and $1.2 million, respectively.

  CONTINGENCIES

       (a)  On November 16, 1995, Electronics for Imaging, Inc. ("EFI") filed a
  suit in the United States District Court in the Northern District of
  California alleging that the Company infringes a patent allegedly owned by
  EFI.  Although the complaint does not specify which of the Company's products
  allegedly infringe the patent, subsequent pleading indicates that EFI alleges
  that the Company's Color Server products infringe.  In January 1996, the
  Company completed the divestiture of the Color Server Group to Splash
  Technology Holdings, Inc.

       The Company has filed an answer denying all material allegations, and
  has filed counterclaims against EFI alleging causes of action for
  interference with prospective economic benefit, antitrust violations, and
  unfair business practices.  EFI's motion to dismiss or sever the Company's
  amended counterclaims was granted in part and the ruling permitted the
  Company to file an amended counterclaim for antitrust violations.  The
  Company has filed an amended antitrust claim.  The Company believes it has
  meritorious defenses to EFI's claims and is defending them vigorously.  In
  addition, the Company believes it may have indemnification rights or
  additional immunity with respect to elements of EFI's claims.  A motion for
  summary judgment based on these indemnification rights disposing of EFI's
  claims was filed, and the court granted this motion finding the Company
  immune from suit under the patent after February 22, 1995.  In March 1998,
  EFI and the Company agreed to dismiss their remaining claims against each
  other pending the outcome of EFI's appeal of this summary judgment finding.
  Pursuant to this agreement, if the Company prevails on appeal, the remaining
  claims will be dismissed.  On the other hand, if EFI were to prevail on
  appeal, then EFI could refile its claims and the Company would intend to
  continue to vigorously defend against such claims and prosecute its own
  claims against EFI.  In such event, neither the Company nor Splash Technology
  Holdings, Inc. would be able to advance the immunity defense ruled on in the
  summary judgment motion, which would require the Company to defend EFI's
  claims based upon their merits.  EFI filed its notice of appeal on April 7,
  1998, each party submitted opening briefs, oral argument was heard in
  December 1998 and the District Court summary judgement was affirmed by the
  Federal Circuit Court after the oral argument.  No further appeal is expected
  and the case should be concluded.


                                         -40-
<PAGE>

       (b)  On July 18, 1997, Intelligent Electronics, Inc. and its affiliates
  filed a suit in the United States District Court for the District of Colorado
  alleging a breach of contract and related claims in the approximate amount of
  $800,000, maintaining that the Company failed to comply with various return,
  price protection, inventory balancing and marketing development funding
  undertakings.  In 1997, the Company filed an answer to the complaint and
  cross-claimed against the plaintiffs and in October 1997 additionally cross
  claimed against Deutsche Financial, Inc., a factor in the account
  relationship between the Company and the plaintiffs, seeking the recovery of
  approximately $2 million.  The Company continues to investigate these claims
  as well as cross claims and expects to vigorously defend and prosecute them
  as applicable.  The Company has provided for the full amount of accounts
  receivable due from Intelligent Electronics, Inc. and Deutsche Financial,
  Inc.

       (c)  The Company is involved in a number of other judicial and
  administrative proceedings incidental to its business.  The Company intends
  to defend such lawsuits vigorously and although adverse decisions (or
  settlements) may occur in one or more of such cases, the final resolution of
  these lawsuits, individually or in the aggregate, is not expected to have a
  material adverse effect on the financial position of the Company.  However,
  depending on the amount and timing of an unfavorable resolution of these
  lawsuits, it is possible that the Company's future results of operations or
  cash flows could be materially adversely affected in a particular period.  In
  addition, the costs of defense, regardless of the outcome, could have a
  material adverse effect on the results of operations and financial condition
  of the Company.


NOTE FOUR. SHAREHOLDERS' EQUITY

  STOCK SPLITS

       A one-for-ten reverse split of the Company's Common Stock became
  effective March 9, 1998.  All references to share and per share data for all
  periods presented have been adjusted to give effect to this split.

  SHARES SUBJECT TO ISSUANCE

       As of September 30, 1998, the Company was subject to issuing
  approximately 10,000 shares of Common Stock associated with the settlement of
  a securities class action lawsuit in fiscal 1995.

  STOCK OPTIONS

       The Company's 1986 Stock Option Plan, as amended (the "1986 Plan"),
  authorized the issuance of up to 297,500 shares of common stock upon the
  exercise of incentive stock options or nonqualified stock options that may
  be granted to officers, employees, directors, consultants and independent
  contractors.  Under the 1986 Plan, options are exercisable, subject to
  vesting, for a term of up to ten years after the date of grant.  The 1986
  Plan expired in October 1996 and provided for options to be granted at prices
  ranging from 50% to 100% of the fair market value of the common stock on the
  date of grant, as determined by the Board of Directors.  Vesting of shares is
  also determined by the Board of Directors at the date of grant.  Outstanding
  grants of options to purchase 21,446 shares of Common Stock continue to be
  exercisable according to the terms of the grants, and all unused shares under
  the 1986 Plan are reserved for issuance under the 1995 Stock Option Plan.

       The Company's 1995 Stock Option Plan (the "1995 Plan") authorizes the
  issuance of up to 769,892 shares of common stock upon the exercise of
  incentive stock options or nonqualified stock options that may be granted to
  officers, employees, directors, consultants and independent contractors.
  Shares available for grant under the 1995 Plan include 143,231 shares which
  were not issued under the 1986 Plan.  Under the 1995 Plan, options are
  exercisable, subject to vesting, for a term of up to ten years after the
  grant date.  Options may be granted at prices ranging from 85% to 100% of the
  fair market value of the common stock on the date of grant, as determined by
  the Board of Directors.  Vesting of shares is also determined by the Board of
  Directors at the date of grant.  As of September 30, 1998, 571,416 options
  were outstanding under the 1995 Plan.  The 1995 Plan will expire in December
  2005.

       Pursuant to the 1994 merger with SuperMac Technologies, Inc., Radius
  assumed 97,524 outstanding options originally issued under the SuperMac 1988
  Stock Option Plan (the "SuperMac Plan").  These options will be administered
  in accordance with the SuperMac Plan until all options are exercised or
  expired.  As of September


                                         -41-
<PAGE>

  30, 1998, 762 options remain outstanding under the SuperMac Plan and are
  exercisable, subject to vesting, for a term of up to ten years after the date
  of grant.

       The Company has also reserved 19,000 shares of common stock for issuance
  to non-employee directors pursuant to options granted under the 1994
  Directors' Stock Option Plan (the "1994 Plan"), including 9,000 shares which
  were not issued under the Company's 1990 Directors' Stock Option Plan.  Such
  options may only be nonqualified stock options, must be exercised within ten
  years from the date of grant, and must be granted in accordance with a
  non-discretionary formula.  Under this formula, each new director receives an
  option to purchase 1,000 shares when that director is first appointed to the
  Board and an option to purchase 250 shares on each anniversary of such
  director's appointment.  As of September 30, 1998, 1,750 options were
  outstanding under this plan at exercise prices ranging from $3.438 to $108.75
  per share.  Of the options granted under the 1994 Plan, 627 are exercisable
  at September 30, 1998.

       Prior to the approval of the 1994 Plan, the 1990 Directors' Stock Option
  Plan (the "Prior Plan") was in effect.  As of September 30, 1998, the Prior
  Plan had 1,000 options outstanding at $97.50.  Such options are nonqualified
  stock options, must be exercised within five years from the date of grant,
  and were granted in accordance with a non-discretionary formula.  Options
  unissued under the Prior Plan become available for grant under the 1994 Plan.

       In March 1993, the Company granted a nonqualified stock option to one
  former officer to purchase a total of 25,000 shares of common stock outside
  the Company's 1986 Stock Option Plan at an exercise price of $77.50 per
  share.  This stock option was subsequently repriced to $4.688.  This option
  is exercisable for a term of ten years and vests over a fifty month period
  commencing on the date of grant.  During fiscal 1994, 15 of these shares were
  exercised by the officer, and as of September 30, 1998, the remaining 24,985
  shares were exercisable.

       During fiscal 1998, the Company granted, outside of the Company's Stock
  Option Plans, 50,000 nonqualified stock options to an employee for an
  exercise price of $2.625, the fair market value of the Company's Common Stock
  on the relevant date.  These options are exercisable for a term of ten years
  and vest over a two year period commencing on the date of grant.


                                         -42-
<PAGE>

       The following table summarizes the consolidated activity under all of
  the Company's plans:

<TABLE>
<CAPTION>

                                                                                                 Weighted
                                                      Shares Under                               Average
                                                          Option           Exercise Price     Exercise Price
                                                      ------------         --------------     --------------
         <S>                                          <C>                 <C>                 <C>
         Outstanding at September 30, 1995                 200,739        $13.60 - $289.60        $102.60
              Granted                                      120,546        $12.80 - $ 44.40        $ 23.60
              Exercised                                    (11,152)       $13.60 - $ 23.70        $ 23.70
              Canceled                                    (193,317)       $13.60 - $255.80        $ 70.70
                                                      -------------
         Outstanding at September 30, 1996                 116,816        $12.80 - $172.50        $ 43.40
              Granted                                      712,211        $ 2.80 - $  5.90        $  4.00
              Exercised                                    (52,579)       $ 3.40 - $  4.70        $  4.70
              Canceled                                     (92,851)       $ 2.80 - $172.50        $ 28.00
                                                      -------------
         Outstanding at September 30, 1997                 683,597        $ 2.80 - $108.75        $  4.20
              Granted                                      458,957        $ 1.56 - $  6.25        $  2.87
              Exercised                                    (21,935)       $ 3.44 - $  4.69        $  4.14
              Canceled                                    (275,759)       $ 2.81 - $  6.25        $  3.77
                                                      -------------
         Outstanding at September 30, 1998                 844,860        $ 1.56 - $108.75        $  3.62
                                                      -------------
                                                      -------------
</TABLE>

The following table summarizes information concerning 
outstanding and exercisable options at September 30, 1998:

<TABLE>
<CAPTION>
                                         Options Outstanding                           Options Exercisable
                       ------------------------------------------------------     -----------------------------

                                             Weighted
                                              Average            Weighted                             Weighted
      Range of            Options            Remaining           Average             Options           Average
      Exercise          Outstanding         Contractual          Exercise          Exercisable        Exercise
       Prices                                   Life               Price                                Price
  ----------------     -------------        ------------       -------------       -----------       ----------
  <S>                  <C>                  <C>                <C>                 <C>               <C>
  $ 1.56 - $  3.88           455,408          9.39 Years           $ 2.87              118,607         $ 2.88
  $ 4.06 - $  5.31           387,952          8.40 Years           $ 4.18              347,536         $ 4.17
  $19.38 - $108.75             1,500          6.30 Years           $86.35                1,314         $91.62
  ----------------     -------------                                               -----------
  $ 1.56 - $108.75           844,860          8.93 Years           $ 3.62              467,457         $ 4.09
                       -------------                                               -----------
                       -------------                                               -----------
</TABLE>


       The Company accounts for stock options in accordance with FASB Statement
  No. 123, Accounting for Stock-Based Compensation ("FAS 123").  Under FAS 123,
  the Company may continue following existing accounting rules or adopt a new
  fair value method of valuing stock-based awards.  The Company has elected to
  continue to follow APB Opinion No. 25, "Accounting for Stock Issued to
  Employees" ("APB 25") and related interpretations in accounting for its stock
  options plans and the Employee Stock Purchase Plan and has not adopted the
  alternative fair value method of accounting provided under FAS 123.  Under
  APB 25, because the exercise price of the Company's employee stock options
  equals the market price of the underlying stock on the date of grant, no
  compensation expense is recognized.

       Pro forma information regarding net income and earnings per share is
  required by FAS 123, which also requires that the information be determined
  as if the Company has accounted for its employee stock options granted
  subsequent to September 30, 1995 under the fair value method of that
  Statement.  The weighted-average grant-date fair value of options granted in
  fiscal 1998 was $2.18.  The fair value of options was estimated at the


                                         -43-
<PAGE>

  date of grant using a Black-Scholes option pricing model with the following
  weighted-average assumptions for fiscal years 1998, 1997 and 1996,
  respectively: risk free interest rate of approximately 5.5%, 6% and 6%;
  dividend yield of 0% for all years; volatility factors of the expected market
  price of the Company's Common Stock of 1.148, 1.077 and 1.077 and a
  weighted-average expected life of the option of four years.

       For purposes of pro forma disclosures, the estimated fair values of the
  options are amortized to expense over the related vesting periods.  The
  Company's pro forma net income (loss) for 1997 and 1996 was not materially
  different from reported amounts.

       The Company's pro forma information for 1998 follows (in thousands
  except for income per share information):

<TABLE>
<CAPTION>

                                                                                        Year ended
                                                                                    September 30, 1998
                                                                                    ------------------
                <S>                                                                 <C>
                Net income applicable to common
                    shareholders as reported                                               $8,733
                                                                                           ------
                                                                                           ------
                Pro forma net income applicable
                    to common shareholders for FAS 123                                     $8,089
                                                                                           ------
                                                                                           ------

                Pro forma net income per common share:
                Pro forma basic net income per share applicable
                    to common shareholders                                                  $1.46
                                                                                            -----
                                                                                            -----
                Pro forma diluted net income per share
                    applicable to common shareholders                                       $1.46
                                                                                            -----
                                                                                            -----

                Shares used in computing pro forma net income per common
                    share:
                Shares used in computing pro forma basic net
                    income per common share                                                 5,522
                                                                                            -----
                                                                                            -----
                Shares used in computing pro forma diluted
                    net income per common share                                             5,557
                                                                                            -----
                                                                                            -----
</TABLE>


       Since FAS 123 is applicable only to options granted subsequent to
  September 30, 1995, its pro forma effect will not be fully reflected until
  fiscal year 2002.

  EMPLOYEE STOCK PURCHASE PLAN

       The Company has an employee stock purchase plan under which
  substantially all employees may purchase common stock through payroll
  deductions at a price equal to 85% of its fair market value as of certain
  specified dates.  Stock purchases under this plan are limited to 10% of an
  employee's compensation, and in no event may exceed $21,250 per year.  The
  Company suspended the operation of its employee stock purchase plan in fiscal
  1997 and expects to be able to resume operation of the plan during fiscal
  1999.  At September 30, 1998, 15,900 shares remain available for issuance
  under the plan.


                                         -44-
<PAGE>

NOTE FIVE.  FEDERAL AND STATE INCOME TAXES

  The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                 Year ended September 30,
                                           -----------------------------------
                                           1998            1997           1996
                                           ----            ----           ----
                                                     (in thousands)
          <S>                           <C>           <C>             <C>
          Federal:

            Current                     $      -      $      50       $      -


          Foreign:

            Current                       (1,000)           251            765

          State:

            Current                           -              15             50
                                        --------      ---------       --------

                                        $ (1,000)     $     316       $    815
                                        ---------     ---------       --------
                                        ---------     ---------       --------
</TABLE>


       Deferred income taxes reflect the net tax effects of temporary
  differences between the carrying amounts of assets and liabilities for
  financial reporting purposes and the amounts used for income tax purposes.
  Significant components of the Company's deferred tax assets and liabilities
  are as follows:

<TABLE>
<CAPTION>

                                                                         September 30,
                                                                  ---------------------------
                                                                    1998               1997
                                                                    ----               ----
                                                                        (in thousands)
<S>                                                                <C>             <C>
Deferred tax assets:

         Net operating loss carryforwards                         $  25,017        $  19,687
         Reserves and accruals not currently tax deductible           3,232            8,542
         Capitalized research & development expenditures              2,769            4,399
         Inventory write-downs                                        1,275            4,835
         Other                                                        1,082            3,122
                                                                  ---------        ---------
         Total deferred tax assets                                   33,375           40,585
         Valuation allowance for deferred tax assets                (33,375)         (40,585)
                                                                  ----------         --------
         Deferred tax assets                                      $       -        $       -
                                                                  ---------        ---------
                                                                  ---------        ---------
</TABLE>


       FASB Statement 109, Accounting for Income Taxes, provides for the
  recognition of deferred tax assets if realization of such assets is more
  likely than not. The Company's valuation allowance reduced the deferred tax
  asset to the amount realizable. The Company has provided a full valuation
  allowance against its net deferred tax assets due to uncertainties
  surrounding their realization. Due to the net losses reported in prior years
  and as a result of the material changes in operations, predictability of
  earnings in future periods is uncertain. The Company will evaluate the
  realizability of the deferred tax asset on a quarterly basis.


                                         -45-
<PAGE>

       The provision for income taxes differs from the amount computed by
  applying the statutory federal income tax rate to income before taxes.  The
  sources and tax effects of the differences are as follows:

<TABLE>
<CAPTION>

                                                              Year ended September 30,
                                                      -----------------------------------------
                                                       1998              1997             1996
                                                       ----              ----             ----
                                                                    (in thousands)
     <S>                                          <C>               <C>             <C>
     Expected tax at statutory rate               $   2,707         $     554       $      (56)
     Change in valuation allowance                   (2,707)             (504)             241
     Reversal of previously accrued foreign taxes    (1,000)                -                -
     State income tax, net of federal tax benefit         -                15               50
     Other                                                -               251              580
                                                  ---------         ---------       ----------
                                                  $  (1,000)        $     316       $      815
                                                  ----------        ---------       ----------
                                                  ----------        ---------       ----------
</TABLE>


       During the fourth quarter of fiscal 1998, the Company reversed
  approximately $1.0 million of previously accrued foreign taxes as a result of
  reduced tax exposures in certain foreign jurisdictions.

       As of September 30, 1998, the Company had net operating loss
  carryforwards for federal and state income tax purposes of approximately
  $62.0 million and $65.0 million, respectively.  The federal loss
  carryforwards will expire beginning in 2011, if not utilized and the state
  loss carryforwards will expire beginning in 1999, if not utilized.

       As a result of the issuance of Common Stock and Series A Convertible
  Preferred Stock in exchange for certain liabilities of the Company in
  September 1996, the Company experienced a "change in ownership" as defined
  under Section 382 of the Internal Revenue Code.  Accordingly, utilization of
  net operating loss and tax credit carryforwards generated prior to September
  1996 will be subject to an annual limitation of approximately $2.0 million
  due to the ownership change limitations provided by the Internal Revenue Code
  of 1986 and similar state provisions, except under limited circumstances.


NOTE SIX.  STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                             Year ended September 30,
                                                   -----------------------------------------
                                                   1998              1997              1996
                                                   ----              ----              ----
                                                                (in thousands)
     <S>                                         <C>               <C>              <C>
     Supplemental disclosure of cash
       flow information:
     Cash paid during the year for:
       Interest                                  $     495         $   2,988        $    3,792
                                                 ---------         ---------        ----------
                                                 ---------         ---------        ----------
       Income taxes                              $       9         $       8        $      253
                                                 ---------         ---------        ----------
                                                 ---------         ---------        ----------
     Supplemental schedule of noncash
       investing and financing activities:
          Common and preferred stock issued
            to creditors                         $       -         $       -        $   45,503
                                                 ---------         ---------        ----------
                                                 ---------         ---------        ----------
          Conversion of short-term borrowings
            to long-term borrowings              $       -         $       -        $   21,940
                                                 ---------         ---------        ----------
                                                 ---------         ---------        ----------
</TABLE>



                                         -46-
<PAGE>

NOTE SEVEN.  EXPORT SALES AND MAJOR CUSTOMERS

       The Company's export sales were approximately $3.7 million, $4.9 million
  and $45.8 million in the fiscal years ended September 30, 1998, 1997 and
  1996, respectively, and included export sales to Europe of approximately $1.3
  million, $1.8 million and $21.2 million, respectively.  The Pacific, Asia,
  and Latin America region sales were approximately $2.4 million, $3.1 million
  and $24.6 million for fiscal years ended September 30, 1998, 1997 and 1996,
  respectively. During fiscal 1996, the Company entered into exclusive
  distributor arrangements with respect to Japan and Europe and earns royalties
  and commissions under such arrangements.  In fiscal 1998, the Company
  modified its relationships with its distributors in Japan and Europe for its
  digital video software products and terminated the exclusivity provisions.
  These products are purchased from the Company at a discount from the price
  list and no commissions are paid.  For the fiscal year ended September 30,
  1998, the Company earned approximately $0.5 million and $0.2 million in
  royalties and commissions from Europe and Japan, respectively, which are
  included in the above amounts.

       One customer accounted for approximately 53.5%, 66.1% and 34.3% of the
  Company's net sales during the years ended September 30, 1998, 1997 and 1996,
  respectively.


NOTE EIGHT.  RESTRUCTURING AND OTHER CHARGES

  RADIUS FISCAL 1995 RESTRUCTURING AND OTHER CHARGES

       In September 1995, Radius recorded charges of $57.9 million in
  connection with the Company's efforts to refocus its business on the color
  publishing and multimedia markets.  The charges primarily included a
  writedown of inventory and other assets.  Additionally, it included expenses
  related to the cancellation of open purchase orders, excess facilities and
  severance.  The charges are included in cost of sales ($47.0 million), and
  selling, general and administrative expense ($10.9 million).  The remaining
  balance of $20,000 in its restructuring reserve, which related to employee
  severance costs, was eliminated in fiscal 1998.


NOTE NINE.  TECHNOLOGY LICENSING FROM REPLY CORPORATION

       On March 31, 1997, the Company licensed certain technology from Reply
  Corporation ("Reply") that allowed the Company to develop and market PCI bus
  adapter cards featuring Windows compatibility to users of Macintosh products.
  First customer shipments of these products were made during the third fiscal
  quarter of 1997.  Effective in the third fiscal quarter, the Company
  purchased such technology along with certain assets and inventory.  The
  purchase price of such assets and inventory was approximately $401,000,
  although the Company is required to pay a royalty fee based upon the number
  of products sold which incorporate such technology.  The Company pays a
  royalty for Radius products containing the acquired technology in the amount
  of 5% of net revenue until cumulative royalties exceed $1.5 million, when the
  rate is reduced to 3%, until cumulative royalties of $2.5 million are paid,
  after which no royalty is due.  In September 1997, the Company discontinued
  the development of its DOS on Mac products and shipments of related products
  were terminated in the first quarter of fiscal 1998.  As of September 30,
  1998, the Company has paid an aggregate of approximately $86,000 in
  royalties.  Additionally, the Company issued a warrant to Reply to purchase
  50,000 shares of the Company's Common Stock at a price of $12.50 per share
  exercisable over a forty-two month period.  The Company has agreed with
  representatives of the current holders of the warrant to repurchase the
  warrant for $10,000, subject to final documentation.


                                         -47-
<PAGE>

NOTE TEN.  BUSINESS DIVESTITURES

       COLOR SERVER GROUP.  In January 1996, the Company completed the sale of
  its Color Server Group ("CSG") to Splash Merger Company, Inc. (the "Buyer"),
  a wholly owned subsidiary of Splash Technology Holdings, Inc. ("Splash").  In
  fiscal 1996, the Company received approximately $21.0 million in cash and, as
  of September 30, 1998, an additional $2.0 million is being maintained in
  escrow to secure certain indemnification obligations.  The Company also
  received 4,282 shares of Splash's 6% Series B Redeemable and Convertible
  Preferred Stock which were converted into shares of Splash's Common Stock
  outstanding in connection with the initial public offering of Splash.  In
  June 1996, the Company granted IBM Credit, its secured lender, an option to
  purchase 174,113 shares of Splash Common Stock in connection with the
  restructuring of the terms of its loan agreement with IBM Credit (also, see
  Note 11).  The remaining shares of Splash Common Stock were also pledged to
  IBM Credit.  As of July 1998, IBM Credit had exercised its option of Splash
  Common Stock in full and the working capital line of credit with IBM Credit
  was fully repaid in fiscal 1998.

       PORTRAIT DISPLAY LABS.  In January 1996, the Company entered into a
  series of agreements with Portrait Display Labs, Inc. ("PDL").  Under these
  agreements, PDL settled its outstanding receivable to the Company by paying
  the Company $500,000 in cash and issuing to the Company 214,286 shares of
  PDL's Common Stock.  The cash proceeds were paid to IBM Credit. Due to an
  expected recapitalization of PDL, the Company's interests became deeply
  subordinated to new investors in PDL.  Therefore, the Company does not
  anticipate that it will realize any future material benefit from its
  investment in PDL.  These shares are not valued for financial statement
  purposes.

       UMAX DATA SYSTEMS, INC.  In February 1996, the Company sold its MacOS
  compatible systems business to UMAX Computer Corporation ("UCC"), a company
  formed by UMAX Data Systems, Inc. ("UMAX").  The Company received
  approximately $2.3 million in cash and debt relief and 1,492,500 shares of
  UCC's Common Stock, representing approximately 19.9% of UCC's then
  outstanding shares of UCC Common Stock.  The cash proceeds were paid to IBM
  Credit. In March 1998, due to Apple's recent reversal in MacOS licensing
  policy, the Company sold the Common Stock of Umax Computer Corporation held
  by it to Umax Data Systems, Inc. for $550,000.


NOTE ELEVEN.  STOCK ISSUED TO CREDITORS

       In September 1996, the Company, IBM Credit and its unsecured creditors
  consummated a restructuring of the Company's outstanding indebtedness
  pursuant to which the Company's creditors received equity in satisfaction of
  their claims (the "Plan").  The Company issued 3,629,420 shares of Common
  Stock in satisfaction of approximately $45.9 million in unsecured claims
  (including a $1.0 million reserve for unknown or unresolved claims) and
  repaid approximately $1.9 million of unsecured claims, most of which were
  less than $50,000, at an average discount of approximately 75% of the amount
  of the claim.  Of these shares of Common Stock issued pursuant to the Plan,
  79,128 were issued to the Radius Creditors Trust for the purpose of
  satisfying unresolved or unknown claims.  As of September 30, 1997, all
  shares of Common Stock held by the Radius Creditors Trust had been disbursed
  to various claimants.  The Company also issued 750,000 shares of its Series A
  Convertible Preferred Stock (convertible into an aggregate of 552,303 shares
  of Common Stock) and warrants to purchase 60,000 shares of Common Stock to
  IBM Credit in satisfaction of $3.0 million indebtedness and in consideration
  of restructuring its remaining approximately $23.4 million indebtedness to
  IBM Credit.  The Company also issued warrants to purchase 5,000 shares of
  Common Stock to Mitsubishi in consideration of the extension of open credit
  terms to the Company.  The warrants expire October 13, 2000.  The Company
  also issued to its unsecured creditors, who received Common Stock, Rights
  ("Rights") to receive up to an additional 1,104,606 shares of Common Stock in
  the event that the Series A Convertible Preferred Stock is converted into
  Common Stock (including 24,082 Rights issued to the Radius Creditors Trust).
  All outstanding shares of the Convertible Preferred Stock were redeemed in
  September 1997.  Because such Series A Convertible Preferred Stock was
  redeemed prior to conversion of any shares of such Preferred Stock into
  Common Stock, no shares of CommonStock will be issuable pursuant to the
  Rights.  All such Rights have expired.

       Considering the value of the Common and Preferred Stock issued or
  issuable to the creditors, the percentage of the Company's ownership issued
  to the creditors, the large blocks of stock issued to a certain few


                                         -48-
<PAGE>

  creditors, Common Stock warrants issued and other costs, such as cash
  settlements, legal and accounting expenses and the option to IBM Credit to
  purchase 10% of the Company's investment in Splash, and considering
  appropriate discounts on the stock issued, the Company concluded that the
  value of consideration given up was equal to the indebtedness forgiven.   As
  a result, the accompanying financial statements do not include any
  extraordinary gain or loss resulting from the execution of the Plan.


NOTE TWELVE.  LICENSING OF ASSETS TO KOREA DATA SYSTEMS AMERICA , INC.

       In June 1998, the Company licensed certain technology and assets
  necessary to conduct its monitor and color publishing business to KDS,
  leaving the Company free to focus on its digital video software business.
  The brand name and trademark RADIUS was one of the assets so licensed because
  of its primary association with monitors.  In August 1998, the Company
  amended and restated this license and agreed to sell the licensed assets to
  KDS pursuant to an asset transfer agreement, subject to certain contingencies
  at the discretion of KDS. The monitor business has accounted for
  substantially all of the revenues of the color publishing product line and
  55.3% of the Company's revenues during fiscal 1998.  Under the license and
  asset transfer agreement, Radius has transferred  (by licensing or by
  assignment if KDS elects to close the asset transfer agreement) its Radius,
  Supermac, PressView and certain other trademarks to KDS and has licensed
  certain intellectual property pertaining to PressView and PrecisionView
  monitors.  KDS has not agreed to purchase any inventory or other tangible
  assets of Radius under the license and asset transfer agreement.  The
  expected value of the transaction is $6.2 million paid or to be paid in
  installments, including $0.85 million paid in August 1998 and $0.35 million
  in September 1998 under the amended license and $0.5 million under the
  original license in June 1998.  The remaining amount is payable in
  installments through October 1999.  These installment payment obligations
  have been pledged to secure a $4.2 million line of credit from Silicon Valley
  Bank.  KDS' performance is guaranteed by a Korean corporation and its US
  affiliate.  The agreement is expected to close by June 1999 if contingencies
  are satisfied.  In the interim, Radius has licensed KDS the use of its
  monitor trademarks and specific technology and expects to wind down its
  monitor business activities as current supplies of monitors are sold, whether
  or not the asset purchase agreement is completed.  In the event that the
  asset purchase agreement is not completed, the license agreement will
  continue as a perpetual license.  Radius will continue to use the transferred
  trademarks and technology until the transition is completed over the next
  several months and expects to focus on its digital video line of business
  during this transition period. Additionally, the Company had agreed with KDS
  to continue to support the sale of the monitors through the Company's sales
  force during August and September in return for $55,000 a month and a sharing
  of the gross margin from the sale of the monitor products during this period.
  The Company will provide a diminishing level of support until KDS has fully
  assumed all relevant activities.  KDS will reimburse the Company for this
  support.

       As of September 30, 1998, the remaining balance receivable under the
  agreement was $4.5 million which is included as note receivable and deferred
  revenue in the accompanying Consolidated Balance Sheet.  The Company will
  recognize other income under the license agreement as cash is received on the
  note.


                                         -49-
<PAGE>

NOTE THIRTEEN.   COMPUTATION OF PER SHARE COMMON INCOME (LOSS)


The following table presents the calculation of basic and diluted earnings per
share as required under SFAS 128:

<TABLE>
<CAPTION>

                                                                 1998           1997              1996
                                                               --------       --------          ---------
                                                               (in thousands, except per-share amounts)
<S>                                                            <C>            <C>               <C>
NUMERATOR:
   Numerator for basic and diluted earnings per share -
     income (loss) available to common stockholders             $ 8,733         $  996           $  (975)
                                                               --------       --------          ---------
                                                               --------       --------          ---------

DENOMINATOR:
   Denominator for basic earnings per share - weighted-average
     shares outstanding                                           5,522          5,389             2,125

   Effect of dilutive securities:
     Employee stock options                                          35            133                 -
                                                               --------       --------          --------
   Dilutive potential common shares                                  35            133                 -
   Denominator for diluted earnings per share - adjusted
     weighted-average shares outstanding                          5,557          5,522             2,125
                                                               --------       --------          --------
                                                               --------       --------          --------

Basic earnings (loss) per share                                 $  1.58         $ 0.18           $ (0.46)
                                                               --------       --------          ---------
                                                               --------       --------          ---------

Diluted earnings (loss) per share                               $  1.57         $ 0.18           $ (0.46)(1)
                                                               --------       --------          ---------
                                                               --------       --------          ---------
</TABLE>


(1)    Diluted earnings per share does not reflect any potential shares
       relating to employee stock options or the convertible preferred stock
       due to a loss reported for the period, in accordance with FAS 128.  The
       assumed issuance of any additional shares would be antidilutive.

Diluted earnings per share in 1998 and 1997 also does not include certain stock
options as those options are at exercise prices in excess of fair market value,
750,446 and 341,252, respectively.

For additional disclosure regarding the employee stock options, see Note 4.




                                         -50-
<PAGE>

NOTE FOURTEEN.  SUBSEQUENT EVENTS (UNAUDITED)

TECHOLOGY PURCHASE FROM POST DIGITAL SOFTWARE, INC.


       On November 23, 1998, the Company acquired certain software and other
intangible property from Post Digital Software, Inc. for (i) an initial payment
of $50,000, (ii) earnout payments equal to at least $50,000 but not exceeding
$700,000 based on subsequent sales of the Company's digital video products
incorporating such software and (iii) a warrant to purchase up to 50,000 shares
of the Company's Common Stock at an exercise price of $1.50 per share.  The
warrant is exercisable over a four year period through November 23, 2002.  The
warrant can be exercised for up to 12,000 shares on May 1, 1999, plus an
additional 2,000 shares for each full month that transpires thereafter, up to a
total of 50,000 shares.

SALE OF CERTAIN COLOR PUBLISHING TECHNOLOGY

       On December 4, 1998, the Company agreed to sell certain software and 
other intangible property associated with its monitor and color publishing 
business to Splash Technology Holdings, Inc. ("Splash") in consideration of 
$275,000 and the early release of $1.0 million from an escrow established for 
the benefit of Splash when the Company's Color Server Group was sold to 
Splash in January 1996.  These funds were received on December 16, 1998. In 
the transaction, Splash licensed some of the transferred technology back to 
the Company for a term of two years on a fully paid up basis. See Note 10.

CONCLUSION OF LITIGATION WITH ELECTRONICS FOR IMAGING, INC.

       On December 8, 1998, the appeal by EFI was briefed and was argued to the
court.  On December 9, 1998, in a per curium order, the Federal Circuit Court
affirmed the summary judgment by the district court in favor of the Company.  No
further appeal is expected and the case should be concluded.  See Note 3.  As a
result, the Company has requested the release of all remaining funds from the
escrow established in connection with the disposition of the Color Server Group
to Splash.  See Note 10.



                                         -51-
<PAGE>

     SCHEDULE II --- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>

                                            Balance at      Charged to   Charged                         Balance
                                            beginning       costs and    to other                        at end of
         Description                        of period       expenses     accounts     Deductions(1)      period
         -----------                        ---------       --------     --------     -------------      ----------
<S>                                         <C>             <C>          <C>          <C>                <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Year ended September 30, 1996           $8,502           $   91       $0           $6,461            $2,132

     Year ended September 30, 1997           $2,132           $4,706       $0           $2,080            $4,758

     Year ended September 30, 1998           $4,758           $   30       $0           $  894            $3,894
</TABLE>
-----------------------------

(1)     Uncollectible accounts written off.




                                      -52-