Statement of Position
Because of rampant speculation with regard to certain aspects of its business, the Board of Directors of Dragon Environmental Corporation (OTC-BB: DREV) wishes to make its shareholders and the financial community cognizant of the following facts:
Timing of Delivery of New Sand Dragon® Systems
In January, 1999, Dragon announced that contracts had been awarded for the construction of two additional Sand Dragon systems. However, as the contractor progressed in its performance under those agreements, it gradually became clear that certain design modifications would result in significant increases in manufacturing costs.
Because these designs were intended not only for the construction of these two units, but to provide the engineering platform for an entire new generation of Sand Dragon systems to be deployed worldwide, a substantial cost increase multiplied by a significant number of new systems would change the highly favorable operating economics of the company's business as a whole. Accordingly, the decision was reached to return to the design, with only minor variations, of the original Sand Dragon, which has been operating successfully for nearly ten years.
The engineering drawings of the original Sand Dragon are presently being updated, with completion of these modifications expected in another two to three weeks. At that time, as long as the pricing is in line with Dragon's expectations, the independent leasing company has advised Dragon that it will order one Sand Dragon for delivery in another six to eight weeks. Following that delivery and a 60-day field test, during which the new unit will perform actual on-site revenue-producing projects, any necessary further modifications will be determined. The independent leasing company has advised Dragon that at the conclusion of this testing period, it will place the order for this second unit as well.
Sawgrass Environmental Cleanup
Contrary speculation notwithstanding, the Company stands behind its recent press release headed "Dragon Plans Unique Environmental Project for Major Golf Facility", regarding its performance at Sawgrass, at Ponte Vedra Beach, Florida.
Sawgrass consists of a cluster of small communities, and the press release made clear that Dragon's project – for which it has been retained every year since 1996 – pertained specifically to "four separate areas of the property." These areas retain an independent contractor to perform a wide range of property maintenance activities, one of which is to keep certain canals and waterways in free-flowing condition, which in turn retains Dragon to do this work. In fact, the Sand Dragon is on-site in the Sawgrass community as of the date of this report.
Aquatek (U.K.) Limited
A press release explaining the nature of Dragon's relationship with Aquatek (UK) Limited (OTC-BB: AQUK) is presently in preparation, for release in the near future.
Shareholder Relations
Dragon wishes to acknowledge with thanks the positive comment that it has received, with regard to its Chief Executive Officer's ready availability to speak with shareholders on the telephone, and to personally address their many concerns. However, this has been somewhat disruptive to the company's business in two significant respects.
First, unlike much larger companies, for obvious reasons Dragon does not maintain a shareholder relations department, with the full-time responsibility of communicating with shareholders, brokers and the press. Accordingly, taking and returning the substantial number of calls that has been recently received – especially as trading volume in the company's stock frequently runs into the millions of shares per day – has been a substantial burden on management's time, often interrupting the flow of progress in achieving the company's goals.
Second, many shareholders and other interested investors call to request information and progress reports that have not been generally published. Most investors today are familiar with the subject of "insider trading", which reflects the inherent unfairness of certain shareholders obtaining and trading upon information that may not yet be generally available to all. In fact, the company's counsel has found it necessary to warn the company to be especially vigilant in this regard.
Accordingly, and somewhat regretfully, the company wishes to advise that it can no longer provide individual investors with any useful information by phone. Any information that the company believes should be promulgated will be published in the form of a press release or other public announcement, and simultaneously made available to all. Any shareholder who has a suggestion for the improvement of the company's business, or wishes any particular information to be released, is naturally most welcome to communicate with the company by mail, e-mail or fax, and if of widespread general interest the reply will be published in a form that is readily available to all.
Lastly, like most publicly-traded companies Dragon retains an outside firm to act as its Investor Relations Representative. Anyone wishing copies of any recent press releases, corporate profiles, or video profiles is welcome to contact Financial Technology Research Corporation, by mail at 518 Broadway, New York, NY 10012; by phone at 1-212-625-9100; by fax at 1-212-431-0300; or by e-mail at FINTEK@Financier.Com. However, it must be emphasized that this firm will never be in possession of any material non-public information, and therefore will not be in a position to answer any questions by providing information that has not already been generally released.
We sincerely hope that the foregoing has been helpful to our shareholders and other interested persons in clarifying our positions in each of these respects, and wish each of them every possible success in their investing activities in the months and years to come.
Board of Directors
Dragon Environmental Corporation
May 24, 1999
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