<PAGE>
Exhibit 99.1
Risk Factors
The following factors may affect the Company's future performance.
We Have a History of Losses. We have incurred net operating losses since 1991
and as of September 30, 2000, we had an accumulated deficit of $33,992,500. We
will need significant increases in revenue to meet our projected development,
selling, marketing and other operating costs and to achieve a profitable level
of operations. There can be no assurance, however, as to when or if such
increases in revenues will be achieved.
Our Results of Operations May Fluctuate. Our quarterly operating results have in
the past and may in the future vary significantly depending on factors such as:
. revenue from software licenses;
. the timing of new product and service announcements;
. market acceptance of new and enhanced versions of our products;
. the size and timing of significant orders;
. changes in operating expenses;
. general economic factors.
We have limited or no control over many of these factors. We operate with
virtually no order backlog because our software licenses typically are installed
shortly after orders are received. As a result, revenues in any quarter are
substantially dependent on the quantity of orders received in that quarter.
Quarterly revenues also are difficult to forecast because the market for our
products is evolving and our revenues in any period are significantly affected
by the announcements and product offerings of our competitors as well as
alternative technologies. As a result, we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance.
Our Success Depends Upon the New Products We Develop and Our Ability to Improve
Technology. In August 1999, we introduced our MediaBin platform, which was
designed to provide efficient, accurate and timely utilization of image assets
for brand-centered corporations, cross-media publishers, photo stock houses and
any other organizations that depend on the efficient, accurate and timely
utilization of image assets. We expect that the majority of our future revenues
will be derived from MediaBin license and service fees and from maintenance fees
for our software. As a result, our future operating results are substantially
dependent upon market acceptance of MediaBin and any enhancements thereto. There
can be no assurance that MediaBin will continue to achieve market acceptance, or
that we will introduce enhanced versions of our products on a timely basis to
meet the evolving needs of our customers. Any material reduction in demand for
our products, increased competition, technological change or other factors would
have a material adverse effect on our business, operating results and financial
condition.
Our Markets are Highly Competitive. The development and marketing of digital
image products and technologies are extremely competitive. Many of the companies
developing and marketing competitive technologies have competitive advantages
over us, because they have established positions in the market, brand name
recognition or established ties with OEMs. Further, there can be no assurance
that our competitors will not succeed in developing products or technologies
that are more effective than those being developed by us or that would render
our products and technologies obsolete. In addition, many of our competitors
have substantially greater financial, technical, marketing and human resources
capabilities than us.
Our Ability to Generate a Sufficient Amount of Capital is Uncertain. We
anticipate that, in order to maintain a competitive position in our market, we
must expend substantial resources to continue research and
<PAGE>
development relating to potential applications and new technologies. We must
also expand our sales, marketing and distribution activities. There can be no
assurance that we will be able to generate internally the funds necessary to
continue such research and development efforts or to expand sales and marketing
activities, or that additional funds from outside sources will be available for
such purposes.
