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EXHIBIT 99.1
CAUTIONARY STATEMENTS--ADDITIONAL IMPORTANT FACTORS TO BE CONSIDERED
The Company's future results could differ materially from those discussed in
this document. Factors that could contribute to such differences include, but
are not limited to, the following:
RAPID TECHNOLOGICAL CHANGE. The software industry is characterized by rapid
change and uncertainty due to new and emerging technologies. The pace of change
has recently accelerated due to the Internet, online services, networking, and
new programming languages. There can be no assurance that DRA will be successful
in developing or acquiring product enhancements and new products necessary to
keep pace with the changing technologies.
CUSTOMER ACCEPTANCE. While the Company performs extensive usability and
beta-testing of its new products, user acceptance and market penetration rates
ultimately dictate the success of development and marketing efforts. Ultimately,
user acceptance can only be determined after the product goes into commercial
distribution. The Company began commercial distribution of two modules of its
next-generation system, Taos, in September 1999 and of one additional module in
August 2000. All released modules are currently in use at customer sites, and
the Company is closely monitoring and soliciting customer feedback on its
performance in a production environment.
CONTRACTS WITH GOVERNMENTAL ENTITIES. A substantial portion of the Company's
business is conducted with governmental entities. Both the award and execution
of its governmental contracts are subject to numerous conditions, including the
availability and appropriation of sufficient funding.
PRODUCT SHIP SCHEDULES. Because a substantial portion of the Company's revenues
for each quarter is attributable to a limited number of orders and tends to be
realized toward the end of each quarter, even short delays in new-product
releases or delays in the customers' procurement processes can cause results to
fluctuate substantially. Because of the complexities inherent in developing
software products as sophisticated as those sold by the Company and the lengthy
testing periods associated with such products, no assurance can be given that
future product introductions by the Company will not be delayed. In the future,
the Company's revenues will be increasingly dependent on sales of Taos. The core
modules of Taos achieved general release in September 1999, and one additional
module did so in August 2000.
The Company's next-generation system, Taos, is in general release and is
currently in use at several libraries. During the development of Taos, the
Company has pursued contractual arrangements with library systems desiring to
purchase Taos upon its completion. These contracts include terms that are
modified from time to time by agreement between the parties, including terms
with respect to the anticipated installation dates for the various modules of
the Taos system, but libraries are not obligated to agree to such amendments.
Due to delays in certain contractual installation schedules, the Company has
amicably terminated contracts with four customers and subsequent to the end of
the year received written notice from one customer which has implemented Taos
that it considers the Company to be in significant breach of its agreement with
the customer and requesting a partial refund of funds paid to the Company. The
Company is reviewing this request and expects to reach an amicable settlement
with the customer. An amount has been accrued for the settlement costs.
Subsequent to the end of fiscal 1999, the Company received written notice from a
large academic customer which has implemented Taos saying that it believes the
Company to be in material breach of its agreement with the customer. The Company
and the customer developed a joint plan of action for meeting certain
functionality, performance, and stability requirements. The Company and the
customer are jointly working to implement this plan. While the Company believes
that it will be able to substantially comply with the Taos installation
schedules currently in place with its customers, a variety of factors could add
additional delays in these projects. Such factors include the difficulties
associated with incorporating rapid technological change into the Taos system,
the Company's dependence on third-party suppliers, and the relative scarcity of
qualified technical staff.
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COMPETITION. The library automation industry is highly competitive. A number of
companies offer products that target the library automation market. DRA competes
with software vendors whose products operate on Digital hardware platforms and
software vendors whose products operate on different platforms. Certain of the
Company's competitors have substantially greater financial, technical,
marketing, and sales resources than DRA.
DEPENDENCE ON KEY PERSONNEL. DRA's continued success depends in large part on
certain key personnel, including Michael J. Mellinger, its founder, President,
and Chief Executive Officer. The loss of the services of Mr. Mellinger and the
inability of the Company to attract and retain a suitable replacement could have
a material adverse effect on the Company.
PRINCIPAL SHAREHOLDERS. Michael J. Mellinger and F. Gilbert Bickel III combined
own in excess of 50 percent of the common stock outstanding. As a result,
Mr.Mellinger and Mr. Bickel may be able to effectively control the outcome of
certain matters requiring a shareholder vote.
POSSIBLE ACQUISITIONS. The Company may make acquisitions in the future.
Acquisitions involve numerous risks, including difficulties in the assimilation
of the operations and products of the acquired companies, the diversion of
management's attention from other business concerns, risks of entering markets
in which the Company has no or little direct experience, and potential loss of
key employees of the acquired companies.
YEAR 2000 PROBLEM. See discussion above under "Year 2000 Readiness Disclosure."
