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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
    fiscal year ended December 31, 2010
  Commission file number
    000-28539
  DRI CORPORATION
 (Exact name of Registrant as
    specified in its Charter)
  North Carolina(State or other jurisdiction
    of
    incorporation or organization)

56-1362926(I.R.S. Employer
    Identification Number)   13760
    Noel Road, Suite 830
    Dallas, Texas 75240 (Address
    of principal executive offices, Zip Code)
  Registrants telephone number, including area code:
 (214) 378-8992
  Securities registered pursuant to Section 12(b) of the
    Act:
  Common Stock, $0.10 Par Value

The NASDAQ Capital
    Market®(Title of Each Class)

(Name of Each Exchange on Which Registered)   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o þ
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer o(Do not check if a smaller
    reporting company)

Smaller reporting
    company þ   Rule 12b-2 o þ
      Common Stock, par value $0.10 per share

11,858,270(Class of Common Stock)

Number of Shares   DOCUMENTS
    INCORPORATED BY REFERENCE:




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FORWARD-LOOKING
    STATEMENTS
      
    Statements regarding our ability to meet our capital
    requirements;
    Statements regarding our ability to meet and maintain our
    existing debt obligations, including obligations to make
    payments under such debt instruments;
    Statements regarding our future cash flow position;
    Statements regarding our ability to obtain lender financing
    sufficient to meet our working capital requirements;
    Statements about our efforts to manage and effect certain cost
    reductions;
    Statements regarding the timing or amount of future revenues;
    Statements regarding product sales in future periods;
    Statements regarding the effectiveness of any of
    managements strategic objectives or initiatives or the
    implications thereof on our shareholders, creditors, or other
    constituencies;
    Statements regarding expected results;
    Statements regarding current trends and indicators;
    Statements regarding our ability to comply with Section 404
    of the Sarbanes-Oxley Act of 2002;
    Statements regarding recent legislative action affecting the
    transportation
    and/or
    security industry, including, without limitation, the Safe,
    Accountable, Flexible, Efficient, Transportation Equity
    Act  A Legacy for Users, and any successor
    legislation, and the American Recovery and Reinvestment Act of
    2009 and their impact on the Companys results of
    operations;
    Statements regarding changes in federal or state funding for
    transportation
    and/or
    security-related funding;
    Statements regarding current conditions in the global capital
    markets and the global economy and their impact on the
    Companys results of operation;
    Statements regarding anticipated advancements in technology
    related to our products and services;
    Statements regarding future product and service offerings;
    Statements regarding the success of product and service
    introductions;
    Statements regarding the ability to include additional security
    features to existing products and services;
    Statements regarding the potential positive effect such
    additional security features may have on revenues;
    Statements regarding the expected contribution of sales of new
    and modified security related products to our profitability;
    Statements regarding future events or expectations including the
    expected timing of order deliveries;
    Statements regarding the expected customer acceptance of
    products; 2




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
    Statements regarding the success of special alliances with
    various product partners;
    Statements regarding the availability of alternate suppliers of
    the component parts required to manufacture our products;
    Statements regarding our intellectual property rights and our
    efforts to protect and defend such rights; and
    Statements that contain words like believe,
    anticipate, expect and similar
    expressions that are used to identify forward-looking statements.    
    Risks that we may not be able to meet our capital requirements;
    Risks that we may not be able to meet and maintain our debt
    obligations, including obligations to make payments under such
    debt instruments;
    Risks regarding our future cash flow position;
    Risks that we may be unable to obtain lender financing
    sufficient to meet our working capital requirements;
    Risks that we may not be able to effect desired and planned
    reductions in certain costs;
    Risks that managements strategic objectives or initiatives
    may not be effective;
    Risks that assumptions behind future revenue timing or amounts
    may not prove accurate over time;
    Risks that current trends and indicators may not be indicative
    of future results;
    Risks that we may lose customers or that customer demand for our
    products and services may decline;
    Risks that there will be reductions in federal
    and/or state
    funding for the transportation
    and/or
    security industry;
    Risks that current legislative action affecting the
    transportation
    and/or
    security industry may not have a favorable impact on the
    Companys results of operations;
    Risks that future technological advances may not occur when
    anticipated or that future technological advances will make our
    current product and service offerings obsolete;
    Risks that potential benefits our security products may have for
    our customers do not materialize;
    Risks that we will be unable to meet expected timing of order
    deliveries;
    Risks that product and service offerings may not be accepted by
    our customers;
    Risks that product and service introductions may not produce
    desired revenue results;
    Risks regarding the uncertainties surrounding our anticipated
    success of special alliances with various product partners;
    Risks that we may be unable to address and remediate any
    deficiencies in our internal controls over financial reporting
    and/or our
    disclosure controls;
    Risks that insufficient internal controls over financial
    reporting may cause us to fail to meet our reporting
    obligations, result in material misstatements in our financial
    statements, and negatively affect investor confidence;
    Risks that our efforts to comply with Section 404 of the
    Sarbanes-Oxley Act of 2002 could fail to be successful; 3




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
    Risks that we may be unable to obtain alternate suppliers of our
    component parts if our current suppliers are no longer available
    or cannot meet our future needs for such parts; and
    Risks that our efforts to protect and defend our intellectual
    property rights will not be sufficient.      WHERE YOU
    MAY FIND ADDITIONAL INFORMATION
  Form 10-K, Form 10-Q, Form 8-K,
  20549-0102. 1-800-SEC-0330. (http://www.sec.gov)
 4




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##### 



INDEX
   
 Page No.PART IItem 1.


Business


6Item 1A.


Risk Factors


16Item 1B.


Unresolved Staff Comment


22Item 2.


Properties


22Item 3.


Legal Proceedings


23Item 4.


(Removed and Reserved)


23PART IIItem 5.


Market for the Registrants Common Equity,
    Related Shareholder Matters, and Issuer Purchases of Equity
    Securities


23Item 6.


Selected Financial Data


24Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


24Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


39Item 8.


Financial Statements and Supplementary Data


40Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


75Item 9A.


Controls and Procedures


75Item 9B.


Other Information


76PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


76Item 11.


Executive Compensation


76Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Shareholder Matters


76Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


76Item 14.


Principal Accounting Fees and Services


76PART IVItem 15.


Exhibits and Financial Statement Schedules


76SIGNATURES


87EX-10.29.7EX-10.31.9EX-10.49EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   5




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PART I  Item 1.
    Business  General
  Form 10-K, ®
    ® ® tm ® ® tm ® ®
  quarter-to-quarter year-to-year,
  U.S.
    Operations
  U.S.-based
  
    Digital Recorders, Inc. (DR), based in the Research
    Triangle Park area of North Carolina, was established in
    September 1983. DR operated as a business unit of the Company
    under the name Digital Recorders until August 2007,
    at which time it was incorporated as a wholly-owned subsidiary
    of the Company. DRs primary products include: Global
    Positioning Satellite (GPS) tracking; automatic
    vehicle location (AVL) systems;
    VacTelltm

    video surveillance security systems; automatic vehicle
    monitoring (AVM) systems; and Talking
    Bus®

    automatic voice announcement systems, and OTvia off board
    passenger information systems. DRs customers include
    transit operating agencies, commercial transportation vehicle
    operators, and manufacturers of those vehicles primarily in the
    U.S. and Canada. 6




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
    TwinVision of North America, Inc. (TVna), a
    wholly-owned subsidiary of DRI based in the Research Triangle
    Park area of North Carolina, was established in May 1996. TVna
    designs, manufactures, sells, and services electronic
    destination sign systems used on transit and transportation
    rail, bus and van vehicles. TVnas customers include
    transit operating agencies, commercial transportation vehicle
    operators, and manufacturers of those vehicles primarily in the
    U.S. and Canada.
    Robinson Turney International, Inc. (RTI), a
    wholly-owned subsidiary of DRI based in Dallas, Texas, was
    established in August 1994 and acquired by DRI in July 1998.
    With the acquisition of RTI, DRI also acquired
    TwinVision®

    business development and marketing capabilities, as well as an
    exclusive license to Lite Vision Corporations display
    technology, which at the time was the primary display technology
    in use. RTI was a marketing consulting and business development
    firm devoted to the public transit industrys needs,
    primarily those of European-based businesses. RTI presently
    generates no revenue.  International
    Operations
    
    DRI-Europa AB, based in Göteborg, Sweden, is a wholly-owned
    subsidiary of DRI that serves as the umbrella organizational
    structure for DRIs international operations.
    Mobitec GmbH, based in Ettlingen, Germany, is a wholly-owned
    subsidiary of DRI-Europa AB. Mobitec GmbH primarily sells and
    services
    Mobitec®

    products. Mobitec GmbHs customers include transit
    operating agencies, commercial transportation vehicle operators,
    and the manufacturers of those vehicles in select markets in
    Europe, Asia-Pacific, and the Middle-East.
    Mobitec AB is a wholly-owned subsidiary of DRI-Europa AB based
    in Herrljunga, Sweden. Based upon our internal market share
    calculations, we believe Mobitec AB holds the largest market
    share of electronic destination sign systems in the Nordic
    markets. In addition to serving the Nordic markets, Mobitec AB
    also has sales and service offices in Germany, operated by
    Mobitec GmbH, and Australia, operated by its wholly-owned
    subsidiary Mobitec Pty Ltd. Mobitec ABs customers include
    transit operating agencies, commercial transportation vehicle
    operators, and the manufacturers of those vehicles in the Nordic
    and other select European markets.
    Mobitec Pty Ltd (Mobitec Pty) is a wholly-owned
    subsidiary of Mobitec AB based in Peakhurst NSW, Australia.
    Mobitec Pty Ltd imports and sells complete
    Mobitec®

    electronic destination sign systems primarily within the
    Australian market. Based upon our internal market share
    calculations, we believe Mobitec Pty Ltd holds a majority market
    share in the Australian market.
    Mobitec Empreendimientos e Participações Ltda.
    (Mobitec EP), based in São Paulo, Brazil, was
    established in May 2009 as a holding company to facilitate the
    July 2009 acquisition of the remaining 50% ownership interest of
    Mobitec Brazil Ltda then not owned by the Company. Mobitec EP
    was originally established as a wholly-owned subsidiary of
    Mobitec AB. To meet Brazilian legal requirements of at least two
    shareholders in a limited liability company, in June 2009, 1% of
    the ownership interest of Mobitec EP was transferred from
    Mobitec AB to Mobitec GmbH. Mobitec EP presently generates no
    revenue.
    Mobitec Brazil Ltda. (Mobitec Brazil), based in
    Caxias do Sul, Brazil, is engaged in manufacturing, selling and
    servicing electronic destination sign systems to OEMs and
    some end-user customers and operating authority customers,
    primarily in South America. Its products are also shipped
    throughout Mexico and the Caribbean. Through May 2009, Mobitec
    Brazil was a 50%-owned subsidiary of Mobitec AB. In June 2009,
    to facilitate the acquisition of the remaining 50% ownership
    interest of Mobitec Brazil then not owned by the Company,
    Mobitec AB transferred its 50% ownership interest in 7




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Mobitec Brazil to Mobitec EP. In July 2009, Mobitec EP acquired
    the remaining 50% interest of Mobitec Brazil that was then not
    owned by the Company. As a result of the acquisition, which is
    more fully described in Note 2 to the accompanying
    consolidated financial statements, Mobitec Brazil became a
    wholly-owned subsidiary of Mobitec EP. To meet Brazilian legal
    requirements of at least two shareholders in a limited liability
    company, on January 1, 2010, 1% of the ownership interest
    of Mobitec Brazil was transferred from Mobitec EP to Mobitec
    GmbH.  
    Castmaster Mobitec India Private Limited (Castmaster
    Mobitec), which began operations in the fourth quarter of
    2007, is a joint venture between Mobitec AB and Castmaster
    Enterprises Private Limited, a company incorporated in India.
    Mobitec AB owns 51% of Castmaster Mobitec, which is based in
    Delhi, India. Castmaster Mobitec has exclusive rights to
    produce, sell and service
    Mobitec®

    destination sign systems in India and selected markets in that
    region.
    Mobitec Far East Pte. Ltd. (Mobitec Far East), based
    in Singapore, was established in October 2009 as a wholly-owned
    subsidiary of DRI to more efficiently facilitate sales and
    service of
    Mobitec®

    products in select Asia-Pacific markets, primarily Singapore.
    Mobitec Far East currently has no operations and currently
    generates no revenue.  Divestiture
    of Digital Audio Corporation
    Mobitec
    Brazil Acquisition
    Industry
    and Market Overview
   8




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sub-segments
   9




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sub-segments
    region-to-region period-to-period
  ®
  ® tm ®
   10




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Key
    Competitors
      Products
    and Product Design
    
    DR600tm,

    a vehicle logic unit for buses that provides automatic vehicle
    monitoring, automatic vehicle location, and automatic vehicle
    schedule adherence communication systems and programs, generally
    including GPS triggering of product features;
    GPS tracking of vehicles;
    Talking
    Bus®

    next stop automatic voice announcement system and next stop
    internal signage;
    A Software Suite that provides modules for customized transit
    applications including computer-aided dispatch, automatic
    vehicle location, vehicle monitoring, wireless data exchange,
    and Central Recording Station;
    Transit Arrival Signs and software;
    Airport Shuttle Automatic Vehicle Location products and Arrival
    Signs;
    Integration of and with vehicle
    sub-systems
    including destination signs, fare collection, automatic
    passenger counters, engine controllers, transmission,
    multiplexer, etc.;
    TwinVision®

    all-LED (light-emitting diode) electronic destination sign
    systems;
    TwinVision®

    Chromatic Series color electronic destination sign systems;
    TwinVision®

    Smart Series electronic destination sign systems;
    TwinVision®

    Silver Smart Series electronic destination sign systems;
    ELYSÉ®

    and Central Recording Station software;
    Mobitec®

    electronic destination sign systems and electronic information
    display systems; and
    VacTelltm video
    surveillance, recording and actionable intelligence products.   11




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® ®
  ® ® ® ® ® state-of-the-art
  ®
  ®
  Marketing
    and Sales Organization
   12




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request-for-quote
  Customers
    Seasonality
    and Fluctuation in Results
  quarter-to-quarter year-to-year
    quarter-to-quarter, period-over-period year-to-year.
 13




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quarter-to-quarter year-to-year.
  Backlog
    Research
    and Development
    ® tm ® ® state-of-the-art
  985-20, Costs of Computer Software to be Sold, Leased or
    Marketed
   14




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period-to-period
  Manufacturing
    Operations
    Buy-America
        Customer
    Service
    Proprietary
    Rights
    
    Digital
    Recorders®,
    DR500C+®,
    DR600®,
    ELYSE®,
    LiveLook-In®,
    MobiLite®,
    Mobitec®,
    OTvia®,
    OTvia2®,
    Talking
    Bus®,
    TwinVision®, and
    VacTell®. 15




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and/or and/or and/or and/or
    Employees
    Item 1A.
    Risk
    Factors    Risks
    Related to Indebtedness, Financial Condition and Results of
    Operations
  Our substantial debt could adversely affect our financial
    position, operations and ability to grow.
  
    we could be required to dedicate a substantial portion of our
    cash flow from operations to payments on our debt, which would
    reduce amounts available for working capital, capital
    expenditures, research and development and other general
    corporate purposes;
    our flexibility in planning for, or reacting to, changes in our
    business and the industries in which we operate could be limited; 16




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
    we may be more vulnerable to general adverse economic and
    industry conditions;
    we may be at a disadvantage compared to our competitors that may
    have less debt than we do;
    it may be more difficult for us to obtain additional financing
    that may be necessary in connection with our business;
    it may be more difficult for us to implement our business and
    growth strategies;
    we may have to pay higher interest rates on future
    borrowings; and
    we may not comply with financial loan covenants, which could
    require us to incur additional expenses to obtain waivers from
    lenders or could restrict the availability of financing we can
    obtain to support our working capital requirements.  We may be unable to repay the indebtedness under our BHC and
    PNC Agreements on or before their maturity date of
    April 30, 2012. and/or
  Some of our debt bears interest at variable
    rates.
  Future cash requirements or restrictions on cash could
    adversely affect our financial position, and an event of default
    under our outstanding debt instruments could impair our ability
    to conduct business operations.
  
    triggering of certain payment obligations, or acceleration of
    payment obligations, under our revolving credit facilities and
    loan agreements;
    costs associated with unanticipated litigation relating to our
    intellectual property or other matters;
    taxes due upon the transfer of cash held in foreign
    locations; and
    taxes assessed by local authorities where we conduct business.     17




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Our operating results may continue to
    fluctuate.
  Risks
    Related to Our Operations and Product Development
  A significant portion of our sales is derived from sales to a
    small number of customers. If we are not able to obtain new
    customers or obtain significant repeat business from existing
    customers, our business could be seriously
    harmed.
  We depend on third parties to supply components we need to
    produce our products.
    Many of our customers rely, to some extent, on government
    funding, which subjects us to risks associated with governmental
    budgeting and authorization processes.
 18




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and/or
    We must continually improve our technology to remain
    competitive.
  We cannot assure you that any new products we develop will be
    accepted by customers.
  Risks
    Related to Our International Operations
  There are numerous risks associated with international
    operations, which represent a significant part of our
    business.
  Complying with foreign tax laws can be complicated, and we
    may incur unexpected tax obligations in some
    jurisdictions.
  We operate in several international locations and, in India,
    with less than full ownership control.
 19




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The future of Castmaster Mobitec, our relatively new
    51%-owned joint venture in India, is
    uncertain.
  Risks
    Related to Internal Controls
  Efforts to maintain effective internal controls may not be
    successful.
  Risks
    Related to Intellectual Property
  We may not be able to defend successfully against claims of
    infringement against the intellectual property rights of others,
    and such defense could be costly.
  Risks
    Related to Our Equity Securities
  The public market for our Common Stock may be volatile,
    especially since market prices for technology stocks often have
    been unrelated to operating performance.
  
    Actual or anticipated variations in our quarterly operating
    results;
    Historical and anticipated operating results;
    Announcements of new product or service offerings;
    Technological innovations;
    Competitive developments in the public transit industry;
    Changes in financial estimates by securities analysts; 20




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
    Conditions and trends in the public transit industry;
    Funding initiatives and other legislative developments affecting
    the transit industry;
    Adoption of new accounting standards affecting the technology
    industry or the public transit industry; and
    General market and economic conditions and other factors.    Our preferred stock has preferential rights over our Common
    Stock.
  Risks
    Related to Anti-Takeover Provisions
  Our articles of incorporation, bylaws and North Carolina law
    contain provisions that may make takeovers more difficult or
    limit the price third parties are willing to pay for our
    stock.
   21




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Provisions of our bylaws limit the ability of shareholders to
    call special meetings of shareholders and therefore could
    discourage, delay or prevent a merger, acquisition or other
    change in control of our company.
  Risks
    Associated with Potential Growth
  We may not be able to obtain the financing we will need to
    implement our operating strategy.
  Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    MonthlyCity and State

Country

Area

Use

Rent

ExpirationDurham, NC

USA


49,864 sf


Office, service and repair, warehouse and assembly

$
26,054


December 2018Dallas, TX

USA


3,994 sf


Office(a)

$
6,490


November 2015Sydney

Australia


1,055 sm


Office, service and repair, warehouse

$
6,077


September 2012Caxias do Sul

Brazil


880 sm


Office, service and repair, warehouse and assembly

$
4,520


June 2014Herrljunga

Sweden


3,251 sm


Office, service and repair, warehouse and assembly (b)

$
18,906


March 2020Herrljunga

Sweden


200 sm


Warehouse

$
590


December 2011Ettlingen

Germany


470 sm


Office, service and repair, warehouse

$
4,870


December 2017Ettlingen

Germany


250 sm


Warehouse

$
679


Open endedFilderstadt-Bonlanden

Germany


136 sm


Office (b)

$
1,817


October 2013New Delhi

India


920 sy


Office, service and repair, warehouse and assembly

$
8,111


June 2014     (a)
    
    Used by administration  U.S. Corporate(b)
    
    Used by administration  international 22




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Item 3.
    Legal
    Proceedings    Item 4.
    (Removed
    and Reserved) PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Shareholder
    Matters, and Issuer Purchases of Equity Securities  ®
  High


LowYear Ended December 31, 2009First Quarter

$
1.19


$
0.72Second Quarter


1.81



0.89Third Quarter


2.55



1.24Fourth Quarter


2.62



1.30Year Ended December 31, 2010First Quarter

$
1.97


$
1.39Second Quarter


2.20



1.68Third Quarter


1.82



1.41Fourth Quarter


1.74



1.04      23




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Equity
    Compensation Plan Information
    Number of SecuritiesRemaining Available forNumber of Securities to


Weighted-Average


Future Issuance Underbe Issued Upon Exercise


Exercise Price of


Equity Compensation Plansof Outstanding Options,


Outstanding Options,


(Excluding SecuritiesWarrants and Rights


Warrants and Rights


Reflected in Column a)Plan Category

(a)


(b)


(c)1993 Incentive Stock Option Plan


79,000


$
2.47



None2003 Stock Option Plan


1,436,220


$
2.24



600,333Total


1,515,220


$
2.25



600,333     *
    
    All options issued under the 1993 Incentive Stock Option Plan
    and the 2003 Stock Option Plan have been approved by the
    Companys shareholders.    Item 6.
    Selected
    Financial Data    Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Business 
    General
    quarter-to-quarter year-to-year
 24




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period-to-period, period-over-period,
  Results
    of Operations
      Year Ended December 31,2010


2009


2008Net sales


100.0
%


100.0
%


100.0
%Cost of sales


70.7



69.9



66.1Gross profit


29.3



30.1



33.9Operating expenses:Selling, general and administrative


28.3



24.8



26.9Research and development


0.6



0.6



1.4Total operating expenses


28.9



25.4



28.3Operating income


0.4



4.7



5.6Total other income and expense


(2.0
)


(1.3
)


(1.0
)Income (loss) before income tax expense


(1.6
)


3.4



4.6Income tax expense


(0.3
)


(1.0
)


(1.6
)Net income (loss)


(1.9
)


2.4



3.0Less: Net income attributable to noncontrolling interests, net
    of tax


(0.1
)


(0.2
)


(0.9
)Net income (loss) attributable to DRI Corporation


(2.0
) %


2.2
%


2.1
%   Comparison
    of Results for the Years Ended December 31, 2010 and
    2009
  Net
    Sales and Gross Profit
   25




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Asia-Pacific
          period-to-period,
 26




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Selling,
    General and Administrative
    Research
    and Development
  985-20, Costs of Computer Software to be Sold, Leased or
    Marketed
  Operating
    Income (Loss)
    Other
    Income and Expense
   27




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Income
    Tax Expense
    Net
    Income (Loss) Applicable to Common Shareholders of DRI
    Corporation
    Comparison
    of Results for the Years Ended December 31, 2009 and
    2008
  Net
    Sales and Gross Profit
           28




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##### Table of Contents



Selling,
    General and Administrative
  718-20
  Research
    and Development
   29




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985-20, Costs of Computer Software to be Sold, Leased or
    Marketed
  Operating
    Income (Loss)
    Other
    Income, Foreign Currency Gain (Loss) and Interest
    Expense
    Income
    Tax Expense
    Net
    Income (Loss) Applicable to Common Shareholders of DRI
    Corporation
    Liquidity
    and Capital Resources
  Cash
    Flows
   30




---



##### Table of Contents



470-10-45-5, Classification of Revolving Credit Agreements Subject to
    Lock-Box Arrangement and Subjective Acceleration Clauses
  sub-assemblies
      Significant
    Financing Arrangements
    
    DR and TVna (collectively, the Borrowers) have in
    place an asset-based lending agreement (the PNC
    Agreement) with PNC Bank, National Association
    (PNC) which has a maturity date that, effective
    March 31, 2011, has been extended to the earlier of
    (a) April 30, 2012 or (b) five days prior 31




---



##### Table of Contents



to the maturity date of our domestic term loan with BHC Interim
    Funding III. DRI has agreed to guarantee the obligations of the
    Borrowers under the PNC Agreement. The PNC Agreement provides up
    to $8.0 million in borrowings under a revolving credit
    facility. Borrowing availability under the PNC Agreement is
    based upon an advance rate equal to 85% of eligible domestic
    accounts receivable of the Borrowers plus 75% of eligible
    foreign receivables of the Borrowers, limited to the lesser of
    $2.5 million or the amount of coverage under acceptable
    credit insurance policies of the Borrowers, as determined by PNC
    in its reasonable discretion, plus 85% of the appraised net
    orderly liquidation value of inventory of the Borrowers, limited
    to $750,000. At December 31, 2010, the outstanding
    principal balance on the revolving credit facility was
    approximately $2.8 million and remaining borrowing
    availability under the revolving credit facility was
    approximately $1.6 million.  
    Mobitec AB has credit facilities in place under agreements with
    Svenska Handelsbanken AB (Handelsbanken) pursuant to
    which it may currently borrow up to a maximum of
    38.0 million krona, or approximately US$5.6 million
    (based on exchange rates at December 31, 2010) through
    May 31, 2011, on which date, under terms of the credit
    agreements, the maximum borrowing capacity will be reduced by
    7.0 million krona, or approximately US$1.0 million
    (based on exchange rates at December 31, 2010). At
    December 31, 2010, borrowings due and outstanding under
    these credit facilities totaled 33.0 million krona
    (approximately US$4.9 million, based on exchange rates at
    December 31, 2010). Additional borrowing availability under
    these agreements at December 31, 2010 amounted to
    approximately US$733,000. These credit agreements renew annually
    on a calendar-year basis.
    Mobitec GmbH has a credit facility in place under an agreement
    with Handelsbanken pursuant to which it may borrow up to a
    maximum of approximately 912,000 Euro (approximately
    US$1.2 million, based on exchange rates at
    December 31, 2010). At December 31, 2010, borrowings
    due and outstanding under this credit facility totaled 556,000
    Euro (approximately US$737,000, based on exchange rates at
    December 31, 2010). Additional borrowing availability under
    this credit facility at December 31, 2010 amounted to
    approximately US$472,000. The agreement under which this credit
    facility is extended has an open-ended term.    
    At December 31, 2010, pursuant to terms of a loan agreement
    (the BHC Agreement) with BHC Interim Funding III,
    L.P. (BHC), the Borrowers had an outstanding
    principal balance of approximately $4.8 million due on a
    term loan (the Term Loan) which had an original
    principal balance of a $5.0 million. The Term Loan has a
    maturity date that, effective April 6, 2011, has been
    extended to April 30, 2012.
    At December 31, 2010, Mobitec AB had an outstanding
    principal balance of approximately 1.9 million krona
    (approximately US$277,000, based on exchange rates at
    December 31, 2010) due on an additional term loan
    under a credit agreement with Handelsbanken (the Mobitec
    Loan). The Mobitec Loan is payable in quarterly principal
    installments of 375,000 krona (approximately US$55,000, based on
    exchange rates at December 31, 2010) and matures
    March 31, 2012.
    At December 31, 2010, Mobitec Brazil has outstanding
    borrowings from a bank in Brazil of approximately 583,000
    Brazilian Real (BRL) (approximately US$350,000,
    based on exchange rates at December 31, 2010). The
    borrowings are secured by accounts receivable on certain export
    sales by Mobitec Brazil Ltda and have a term of 180 days.
    At December 31, 2010, Mobitec Brazil had two loans payable
    to two banks in Brazil with an aggregate outstanding principal
    balance of approximately 228,000 BRL (approximately US$136,000,
    based on exchange rates as of December 31, 2010). One loan
    has a principal balance of approximately 154,000 BRL
    (approximately US$92,000, based on exchange rates as of
    December 31, 2010) and matures May 3, 2011. The
    other loan has an outstanding principal balance of approximately
    74,000 BRL 32




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##### Table of Contents



(approximately US$44,000, based on exchange rates as of
    December 31, 2010) and has a maturity date of
    May 31, 2013.  
    At December 31, 2010, Castmaster Mobitec had two loans
    payable to a bank in India with an aggregate outstanding
    principal balance of approximately 5.0 million Indian
    Rupees (INR) (approximately US$109,000, based on
    exchange rates as of December 31, 2010). One loan has a
    principal balance of approximately 4.1 million INR
    (approximately US$90,000, based on exchange rates as of
    December 31, 2010) and matures September 7, 2012.
    The second loan has a principal balance of approximately 880,000
    INR (approximately US$19,000, based on exchange rates as of
    December 31, 2010) and matures November 7, 2014.      Fixed ChargeFiscal Quarter Ending:

Coverage Ratio:

Leverage Ratio:

EBITDA:September 30, 2010


0.70 to 1.00



8.85 to 1.00


$
4,750,000December 31, 2010


0.85 to 1.00



8.25 to 1.00


$
4,250,000March 31, 2011


1.00 to 1.00



7.25 to 1.00


$
5,000,000June 30, 2011


1.05 to 1.00



7.00 to 1.00


$
5,000,000    33




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##### Table of Contents




    Establish the fixed charge coverage ratio required to be
    maintained as of the end of each of the fiscal quarters ending
    March 31, 2011, June 30, 2011, September 30,
    2011, December 31, 2011 and each fiscal quarter ending
    thereafter as set forth below:  Fixed ChargeFiscal Quarter Ending:

Coverage Ratio:March 31, 2011

No TestJune 30, 2011

No TestSeptember 30, 2011

No TestDecember 31, 2011 and each fiscal quarter ending thereafter

1.25 to 1.00   
    Establish the leverage ratio required to be maintained as of the
    end of each of the fiscal quarters ending March 31, 2011,
    June 30, 2011, September 30, 2011, December 31,
    2011 and each fiscal quarter ending thereafter as set forth
    below;:  Fiscal Quarter Ending:

Leverage Ratio:March 31, 2011


17.50 to 1.00June 30, 2011


16.50 to 1.00September 30, 2011


10.25 to 1.00December 31, 2011 and each fiscal quarter ending thereafter


4.00 to 1.00   
    Establish the minimum, trailing-twelve-month EBITDA that must be
    maintained by DRI Corporation on a consolidated basis as of the
    end of each of the fiscal quarters ending March 31, 2011,
    June 30, 2011, September 30, 2011, December 31,
    2011 and each fiscal quarter ending thereafter as set forth
    below:  Fiscal Quarter Ending:

EBITDA:March 31, 2011

$
2,750,000June 30, 2011

$
3,000,000September 30, 2011

$
5,000,000December 31, 2011 and each fiscal quarter ending thereafter

$
7,000,000     Fiscal Quarter Ending:

EBITDA:March 31, 2011

$
525,000June 30, 2011

$
625,000September 30, 2011

$
900,000December 31, 2011 and each fiscal quarter ending thereafter


No Test  34




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##### Table of Contents



Then the Amount of theIf the Payment Date is:

Termination Fee Shall Equal:On or before June 30, 2011

$
800,000After June 30, 2011, but on or before September 30,
    2011

$
1,000,000After September 30, 2011, but on or before
    December 30, 2011

$
1,300,000January 1, 2012 and thereafter

$
1,700,000       Series K
    Preferred Stock
    Management
    Conclusion
     35




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    
    Allowance for doubtful accounts;
    Inventory valuation
    Warranty reserve;
    Intangible assets and goodwill;
    Income taxes, including deferred tax assets;
    Revenue recognition; and
    Stock-based compensation  Allowance
    for Doubtful Accounts
    Inventory
    Valuation and Warranty Reserve
  end-of-life
  Intangible
    Assets and Goodwill
   36




---



##### Table of Contents



Income
    Taxes
      740-10-25.
 37




---



##### Table of Contents



Revenue
    Recognition
  set-up and/or No. 2009-13, Multiple-Deliverable Revenue Arrangements, Revenue Recognition. 2009-13 2009-13
  2009-13
  985-605, Software Revenue Recognition 985-605)
  2009-13, No. 00-21, Revenue Arrangements with Multiple Deliverables.
    Stock-based
    Compensation
  718-20, Stock Compensation Awards Classified as Equity 718-20,
 38




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Recent
    Accounting Pronouncements
  2010-01, Equity (Topic 505)  Accounting for Distributions
    to Shareholders with Components of Stock and Cash 2010-01 2010-01 2010-01
  2010-28, Intangibles  Goodwill and Other (Topic 350): When
    to Perform Step 2 of the Goodwill Impairment Test for Reporting
    Units with Zero or Negative Carrying Amounts 2010-28 2010-28 2010-28
  Impact of
    Inflation
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   39




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##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  DRI
    CORPORATION AND SUBSIDIARIES
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  Section

PageReport of Independent Registered Public
    Accounting Firm


41Consolidated Balance Sheets 
    December 31, 2010 and 2009


42Consolidated Statements of Operations 
    Years Ended December 31, 2010, 2009 and 2008


43Consolidated Statements of Shareholders
    Equity  Years Ended December 31, 2010, 2009 and
    2008


44Consolidated Statements of Cash Flows 
    Years Ended December 31, 2010, 2009 and 2008


45Notes to Consolidated Financial Statements


46  40




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                41




---



##### Table of Contents



DRI
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE
  December 31,2010


2009(In thousands, except shares and per share amounts)ASSETSCurrent AssetsCash and cash equivalents

$
1,391


$
1,800Trade accounts receivable, net


15,678



18,192Current portion of note receivable


86



86Stock subscription receivable






670Other receivables


300



559Inventories, net


15,134



13,042Prepaids and other current assets


1,389



2,930Deferred tax assets, net


613



250Total current assets


34,591



37,529Property and equipment, net


7,145



5,266Long-term portion of note receivable






86Goodwill


10,398



9,793Intangible assets, net


651



728Other assets


1,045



890Total assets

$
53,830


$
54,292LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesLines of credit

$
8,454


$
7,200Loans payable


442



463Current portion of long-term debt


944



960Current portion of foreign tax settlement


550



561Accounts payable


8,703



10,099Accrued expenses and other current liabilities


6,354



6,459Preferred stock dividends payable


19



20Total current liabilities


25,466



25,762Long-term debt and capital leases, net


6,239



6,572Foreign tax settlement, long-term






294Deferred tax liabilities, net


84



338Liability for uncertain tax positions


723



380Commitments and contingencies (Notes 7, 8, 9, 18, and 19)Shareholders EquitySeries K redeemable, convertible preferred stock,
    $.10 par value, liquidation preference of $5,000 per share;
    475 shares authorized; 439 and 299 shares issued and
    outstanding at December 31, 2010, and December 31,
    2009, respectively; redeemable at the discretion of the Company
    at any time


1,957



1,341Series E redeemable, nonvoting, convertible preferred
    stock, $.10 par value, liquidation preference of $5,000 per
    share; 80 shares authorized; 80 shares issued and
    outstanding at December 31, 2010, and December 31,
    2009; redeemable at the discretion of the Company at any time


337



337Series G redeemable, convertible preferred stock,
    $.10 par value, liquidation preference of $5,000 per share;
    725 shares authorized; 536 and 480 shares issued and
    outstanding at December 31, 2010, and December 31,
    2009, respectively; redeemable at the discretion of the Company
    at any time


2,398



2,118Series H redeemable, convertible preferred stock,
    $.10 par value, liquidation preference of $5,000 per share;
    125 shares authorized; 69 shares issued and
    outstanding at December 31, 2010, and December 31,
    2009, respectively; redeemable at the discretion of the Company
    at any time


332



297Series AAA redeemable, nonvoting, convertible preferred
    stock, $.10 par value, liquidation preference of $5,000 per
    share; 166 shares authorized; 166 shares issued and
    outstanding at December 31, 2010, and December 31,
    2009; redeemable at the discretion of the Company at any time


830



830Common stock, $.10 par value, 25,000,000 shares
    authorized; 11,838,873 and 11,746,327 shares issued and
    outstanding at December 31, 2010 and December 31,
    2009, respectively.


1,184



1,175Additional paid-in capital


30,374



30,393Accumulated other comprehensive income  foreign
    currency translation


3,180



1,976Accumulated deficit


(20,121
)


(18,276
)Total DRI shareholders equity


20,471



20,191Noncontrolling interests  Castmaster Mobitec India
    Private Limited


847



755Total shareholders equity


21,318



20,946Total liabilities and shareholders equity

$
53,830


$
54,292    42




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##### Table of Contents



DRI
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2010


2009


2008(In thousands, except share and per share amounts)Net sales

$
87,301


$
82,285


$
70,559Cost of sales


61,761



57,489



46,671Gross profit


25,540



24,796



23,888Operating expensesSelling, general and administrative


24,702



20,402



19,000Research and development


612



552



974Total operating expenses


25,314



20,954



19,974Operating income


226



3,842



3,914Other income (loss)


30



(101
)


188Foreign currency gain (loss)


(276
)


531



558Interest expense


(1,488
)


(1,460
)


(1,433
)Total other income and expense


(1,734
)


(1,030
)


(687
)Income (loss) before income tax expense


(1,508
)


2,812



3,227Income tax expense


(245
)


(836
)


(1,096
)Net income (loss)


(1,753
)


1,976



2,131Less: Net income attributable to noncontrolling interests, net
    of tax


(92
)


(146
)


(635
)Net income (loss) attributable to DRI Corporation


(1,845
)


1,830



1,496Provision for preferred stock dividends


(553
)


(319
)


(303
)Net income (loss) applicable to common shareholders of DRI
    Corporation

$
(2,398
)

$
1,511


$
1,193Net income (loss) per share applicable to common shareholders of
    DRI CorporationBasic

$
(0.20
)

$
0.13


$
0.11Diluted

$
(0.20
)

$
0.13


$
0.10Weighted average number of common shares and common share
    equivalents outstandingBasic


11,804,189



11,548,403



11,333,984Diluted


11,804,189



11,715,807



11,492,473    43




---



##### Table of Contents



DRI
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  DRI Shareholders EquityPreferred stock


Common Stock








AccumulatedNumber





Number





Additional


Accum-


Other


Total DRI





Totalof Shares


Book


of Shares


Par


Paid-in


ulated


Comprehensive


Shareholders


Noncontrolling


ShareholdersIssued


Value


Issued


Value


Capital


Deficit


Income (Loss)


Equity


Interests


Equity(In thousands, except shares and per share amounts)Balance as of December 31, 2007


816


$
3,618



11,187,993


$
1,119


$
32,079


$
(21,894
)

$
4,570


$
19,492


$
422


$
19,914Issuance of common stock










37,553



3



83











86







86Issuance of Series G preferred stock dividend


34



170























170







170Issuance of Series H preferred stock dividend


5



25























25







25Conversion of Series AAA preferred stock


(6
)


(30
)


5,454



1



29



















Conversion of Series E preferred stock, net of issuance
    costs


(5
)


(18
)


8,333



1



17



















Conversion of convertible subordinated debenture










227,273



23



227











250







250Amortization of convertible subordinated debenture beneficial
    conversion feature


















54











54







54Issuance of warrants


















333











333







333Preferred stock dividends


















(303
)










(303
)






(303
)Dividends paid to noncontrolling interests


































(205
)


(205
)Stock-based compensation expense


















187











187







187Comprehensive income (loss):Net income






















1,496







1,496



635



2,131Translation adjustment


























(4,058
)


(4,058
)






(4,058
)Balance as of December 31, 2008


844


$
3,765



11,466,606


$
1,147


$
32,706


$
(20,398
)

$
512


$
17,732


$
852


$
18,584Cumulative effect of reclassification of warrants as a result of
    a new accounting requirement


















(333
)


292







(41
)






(41
)Balance as of January 1, 2009, as adjusted


844


$
3,765



11,466,606


$
1,147


$
32,373


$
(20,106
)

$
512


$
17,691


$
852


$
18,543Issuance of common stock










80,641



8



93











101







101Issuance of Series G preferred stock dividend


36



180























180







180Issuance of Series H preferred stock dividend


5



25























25







25Issuance of Series K preferred stock, net of issuance costs


299



1,341























1,341







1,341Conversion of Series J preferred stock, net of issuance
    costs


(90
)


(388
)


199,080



20



368



















Reclassification of warrants


















207











207







207Modification of warrants


















31











31







31Preferred stock dividends


















(319
)










(319
)






(319
)Stock-based compensation expense


















347











347







347Purchase of noncontrolling interest


















(2,707
)










(2,707
)


(243
)


(2,950
)Comprehensive income:Net income






















1,830







1,830



146



1,976Translation adjustment


























1,464



1,464







1,464Balance as of December 31, 2009


1,094


$
4,923



11,746,327


$
1,175


$
30,393


$
(18,276
)

$
1,976


$
20,191


$
755


$
20,946Issuance of common stock










49,689



5



85











90







90Issuance of Series G preferred stock dividend


56



280























280







280Issuance of Series H preferred stock dividend


7



35























35







35Issuance of Series K preferred stock, net of issuance costs


155



683























683







683Conversion of Series K preferred stock, net of issuance
    costs


(15
)


(67
)


42,857



4



63



















Preferred stock dividends


















(553
)










(553
)






(553
)Stock-based compensation expense


















386











386







386Comprehensive income (loss):Net income (loss)






















(1,845
)






(1,845
)


92



(1,753
)Translation adjustment, net of tax


























1,204



1,204







1,204Balance as of December 31, 2010


1,297


$
5,854



11,838,873


$
1,184


$
30,374


$
(20,121
)

$
3,180


$
20,471


$
847


$
21,318    44




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##### Table of Contents



DRI
    CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2010


2009


2008(In thousands)Cash flows from operating activitiesNet income (loss)

$
(1,753
)

$
1,976


$
2,131Adjustments to reconcile net income (loss) to net cash provided
    by operating activitiesDeferred income taxes


(599
)


46



106Change in liability for uncertain tax positions


270



37



63Depreciation and amortization of property and equipment


1,442



1,054



933Amortization of intangible assets


111



115



151Amortization of deferred financing costs


586



478



344Amortization of debt discount


111



111



170Amortization of beneficial conversion feature










54Change in fair value of warrant liability






110



Loan termination fee accrual


235



243



123Bad debt expense


302



180



176Stock issued in lieu of cash compensation


90



101



86Stock-based compensation expense


386



347



187Write-down of inventory for obsolescence


275



197



156Impairment of other current assets


1,038







Loss on disposal of fixed assets


83



20



15Other, primarily effect of foreign currency (gain) loss and bank
    fees


99



(324
)


(412
)Changes in operating assets and liabilities(Increase) decrease in trade accounts receivable


2,618



(4,592
)


(2,454
)(Increase) decrease in other receivables


189



(394
)


3Increase in inventories


(2,914
)


(1,697
)


(2,330
)(Increase) decrease in prepaids and other current assets


1,000



(1,350
)


39(Increase) decrease in other assets


13



(6
)


(11
)Increase (decrease) in accounts payable


(1,492
)


4,063



(416
)Increase in accrued expenses and other current liabilities


89



1,184



1,231Decrease in foreign tax settlement


(324
)


(334
)


(327
)Net cash provided by operating activities


1,855



1,565



18Cash flows from investing activitiesProceeds from sale of fixed assets






4



4Purchases of property and equipment


(718
)


(218
)


(489
)Investments in software development


(2,452
)


(2,123
)


(1,551
)Acquisition of noncontrolling interest






(1,000
)


Net cash used in investing activities


(3,170
)


(3,337
)


(2,036
)Cash flows from financing activitiesProceeds from bank borrowings and lines of credit


96,724



96,610



88,658Principal payments on bank borrowings and lines of credit


(96,791
)


(94,435
)


(85,032
)Issuance of common stock










3Proceeds from issuance of preferred stock, net of costs


1,235



825



Payment of debt issuance costs










(1,304
)Payment of loan amendment fees


(99
)


(79
)


Payment of dividends to noncontrolling interest










(205
)Payment of dividends on preferred stock


(239
)


(111
)


(110
)Net cash provided by financing activities


830



2,810



2,010Effect of exchange rate changes on cash and cash equivalents


76



164



(123
)Net increase (decrease) in cash and cash equivalents


(409
)


1,202



(131
)Cash and cash equivalents at beginning of period


1,800



598



729Cash and cash equivalents at end of period

$
1,391


$
1,800


$
598Supplemental Disclosure of Cash Flow InformationCash paid during the period for interest

$
1,236


$
1,108


$
896Cash paid during the period for income taxes

$
1,516


$
415


$
799Supplemental disclosures of non-cash investing and financing
    activities:Conversion of preferred stock to common stock

$
75


$
450


$
55Preferred stock issued for services

$
120


$



$
Fair value of warrants issued in connection with new term loan

$



$



$
333Increase in fair value of warrants due to modification

$



$
88


$
Acquisition of noncontrolling interest under short and long-term
    debt obligations

$



$
1,950


$
Conversion of convertible subordinated debenture

$



$



$
250Amortization of convertible subordinated debenture beneficial
    conversion feature

$



$



$
54Purchase of equipment under capital lease obligation

$



$
27


$
21Purchase of automobile under long-term debt obligation

$
49


$



$
Preferred stock dividends

$
315


$
205


$
195    45




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (1)
    Organization
    and Summary of Significant Accounting Policies  Organization
    and Liquidity
  ®
  ® ® ® ®
    Principles
    of Consolidation
    Use of
    Estimates
      Cash
    Equivalents
   46




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##### Table of Contents



Revenue
    Recognition
  set-up and/or No. 2009-13, Multiple-Deliverable Revenue Arrangements, Revenue Recognition. 2009-13 2009-13
  2009-13
  985-605, Software Revenue Recognition 985-605)
  2009-13, No. 00-21, Revenue Arrangements with Multiple Deliverables
     47




---



##### Table of Contents



Sales
    Taxes
    Trade
    Accounts Receivable
    Inventories
  first-in, end-of-life
  Property
    and Equipment
    Goodwill
    and Indefinite Life Intangible Assets
     48




---



##### Table of Contents



Intangible
    Assets
    Research
    and Development Costs
    Advertising
    Costs
    Shipping
    and Handling Fees and Costs
    Stock-Based
    Compensation
    Foreign
    Currency
     49




---



##### Table of Contents



Income
    Taxes
      Fair
    Value of Assets and Liabilities
  820-10, Fair Value Measurements and Disclosures 820-10,
  815-40, Derivatives and Hedging  Contracts in
    Entitys own Equity
   50




---



##### Table of Contents



820-10
  Fair
    Value of Financial Instruments
    Product
    Warranties
    Year Ended December 31,2010


2009


2008Balance at beginning of period

$
805


$
495


$
491Additions charged to costs and expenses


256



399



236Deductions


(292
)


(156
)


(164
)Foreign exchange translation (gain) loss


40



67



(68
)Balance at end of period

$
809


$
805


$
495   Recent
    Accounting Pronouncements
  2010-01, Equity (Topic 505)  Accounting for Distributions
    to Shareholders with Components of Stock and Cash 2010-01 2010-01 2010-01
  2010-28, Intangibles  Goodwill and Other (Topic 350): When
    to Perform Step 2 of the Goodwill Impairment Test for Reporting
    Units with Zero or Negative Carrying Amounts 2010-28 2010-28
 51




---



##### Table of Contents



2010-28
  Reclassifications
    (2)
    Mobitec
    Brazil Ltda      810-10-65, Non-Controlling Interests in Consolidated Financial
    Statements
  (3)
    Goodwill
    and Other Intangible Assets   52




---



##### Table of Contents



(In thousands)Balance as of January 1, 2008

$
11,033Effect of exchange rates


(1,999
)Balance as of December 31, 2008


9,034Effect of exchange rates


759Balance as of December 31, 2009


9,793Effect of exchange rates


605Balance as of December 31, 2010

$
10,398     Weighted


December 31, 2010


December 31, 2009Average


Gross





Net


Gross





NetRemaining Life


Carrying


Accumulated


Carrying


Carrying


Accumulated


Carrying(Years)


Amount


Amortization


Amount


Amount


Amortization


Amount(In thousands)Intangible assets subject to amortization:Customer lists


5.55


$
1,759


$
1,108


$
651


$
1,666


$
938


$
728       (4)
    Accounts
    Receivable  December 31,2010


2009(In thousands)Trade accounts receivable

$
15,985


$
18,465Less: allowance for doubtful accounts


(307
)


(273
)$
15,678


$
18,192  53




---



##### Table of Contents



(5)
    Property
    and Equipment  EstimatedDepreciable

December 31,Lives (Years)

2010


2009(In thousands)Leasehold improvements

3 - 10

$
370


$
306Automobiles

4 - 6


382



387Computer and telecommunications equipment

2 - 5


1,223



1,137Software

5


9,335



7,163Test equipment

3 - 7


180



144Furniture and fixtures

2 - 10


2,939



2,331Software projects in progress




1,732



1,24516,161



12,713Less accumulated depreciation and amortization




(9,016
)


(7,447
)Total property and equipment, net



$
7,145


$
5,266       (6)
    Inventories  December 31,2010


2009(In thousands)Raw materials and system components

$
11,962


$
8,924Work in process


17



35Finished goods


3,155



4,083Total inventories, net

$
15,134


$
13,042   (7)
    Leases     54




---



##### Table of Contents



Capital


OperatingLeases


Leases(In thousands)Year Ending December 31,2011

$
19


$
1,1402012


14



1,1602013


2



1,0172014






7742015






615Thereafter






1,612Total future minimum lease payments


35


$
6,318Less amount representing interest (9% interest)


(4
)Present value of future minimum capital lease payments


31Less current portion


(17
)Long-term portion

$
14   (8)
    Lines of
    Credit and Loans Payable  a)
    Domestic
    lines of credit and loan payable     55




---



##### Table of Contents



Fixed ChargeFiscal Quarter Ending:

Coverage Ratio:

Leverage Ratio:

EBITDA:September 30, 2010


0.70 to 1.0



8.85 to 1.0


$
4,750,000December 31, 2010


0.85 to 1.0



8.25 to 1.0


$
4,250,000March 31, 2011


1.00 to 1.0



7.25 to 1.0


$
5,000,000June 30, 2011


1.05 to 1.0



7.00 to 1.0


$
5,000,000     b)
    International
    lines of credit and loans payable   56




---



##### Table of Contents



57




---



##### Table of Contents



December 31,2010


2009(In thousands)Line of credit with PNC Bank, National Association dated
    June 30, 2008; secured by all tangible and intangible U.S.
    assets of the Company; bears average interest rate of 5.00% and
    5.00% in 2010 and 2009, respectively (see Note 24 for
    additional disclosure)

$
2,841


$
3,786Line of credit with Svenska Handelsbanken AB; renews annually on
    a calendar- year basis; secured by certain assets of the Swedish
    subsidiary, Mobitec AB; bears average interest rate of 4.48% and
    3.53% in 2010 and 2009, respectively


2,301



Line of credit with Svenska Handelsbanken AB; renews annually on
    a calendar- year basis; secured by accounts receivable of the
    Swedish subsidiary, Mobitec AB; bears average interest rate of
    4.59% and 4.83% in 2010 and 2009, respectively


2,575



2,047Line of credit with Svenska Handelsbanken AB dated June 23,
    2004; open-ended term; secured by accounts receivable and
    inventory of the German subsidiary, Mobitec GmbH; bears average
    interest rate of 4.39% and 3.48% in 2010 and 2009, respectively


737



1,367Total lines of credit

$
8,454


$
7,200   (9)
    Long-Term
    Debt    December 31,2010


2009(In thousands)Term loan with BHC Interim Funding III, L.P., dated
    June 30, 2008; secured by substantially all tangible and
    intangible assets of the Company; bears interest rate of 12.75%.
    (see Note 24 for additional disclosure)

$
4,750


$
4,750Term loan with Svenska Handelsbanken AB, dated June 30,
    2008; payable in quarterly installments of $55,350; secured by
    accounts receivable and inventory of the Swedish subsidiary,
    Mobitec AB; bears average interest rate of 6.24% and 7.32% in
    2010 and 2009, respectively


277



470Term loan with Roberto Demore, dated August 31, 2009;
    payable in quarterly installments of $162,500; unsecured; bears
    interest rate of 5.0%


1,463



1,950Term loan with HDFC Bank, dated October 5, 2009; payable in
    monthly installments of $4,603, inclusive of interest at 8.0%


90



132Term loan with HDFC Bank, dated November 14, 2009; payable
    in monthly installments of $497, inclusive of interest at 9.51%


19



22Term loan with Banco Finesa, dated May 28, 2010; payable in
    monthly installments of $1,912, inclusive of interest at 20.10%


44



Total long-term debt


6,643



7,324Term loan termination fee accrual


581



346Less current portion


(944
)


(960
)Less debt discount


(55
)


(166
)6,225



6,544Long-term portion of capital leases


14



28Total long-term debt and capital leases, less current portion

$
6,239


$
6,572    58




---



##### Table of Contents



Year Ending December 31,

Amount(In thousands)2011

$
9442012


5,6822013


112014


62015


Thereafter


Total

$
6,643     (10)
    Accrued
    Expenses and Other Current Liabilities  December 31,2010


2009(In thousands)Salaries, commissions, and benefits

$
2,516


$
2,024Taxes  payroll, sales, income, and other


1,375



1,967Warranties


809



805Current portion of capital leases


17



15Interest payable


135



166Deferred revenue


639



557Customer rebates and credits


320



404Other


543



521Total accrued expenses and other current liabilities

$
6,354


$
6,459   (11)
    Preferred
    Stock    Series K
    Preferred
   59




---



##### Table of Contents



20-day
   60




---



##### Table of Contents



Series E
    Preferred
    Series G
    Preferred
    Series H
    Preferred
    Series J
    Preferred
    Series AAA
    Preferred
    Liquidation
    Priority
   61




---



##### Table of Contents



(12)
    Comprehensive
    Income (Loss)  December 31,2010


2009


2008(In thousands)Net Income (loss)

$
(1,753
)

$
1,976


$
2,131Other comprehensive income (loss), net of tax:Foreign currency translation adjustment, net of tax


1,204



1,464



(4,058
)Total other comprehensive income (loss), net of tax


1,204



1,464



(4,058
)Comprehensive income (loss)


(549
)


3,440



(1,927
)Comprehensive income attributable to the noncontrolling interest


(143
)


(175
)


(816
)Comprehensive income (loss) attributable to DRI Corporation

$
(692
)

$
3,265


$
(2,743
)   (13)
    Common
    Stock Warrants         62




---



##### Table of Contents



Outstanding

Exercise

ExpirationWarrants

Price

Date93,750

$
1.60


March 201115,929

$
2.26


June 201280,000

$
2.00


April 2013150,000

$
1.75


June 2013200,000

$
1.00


June 2013     (14)
    Stock-Based
    Compensation    Stock
    Options
        Weighted-Weighted-


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term


ValueOutstanding at December 31, 2009


1,021,456


$
2.42Granted


110,004



1.57Exercised


Expired


(39,000
)


2.00Forfeited


(25,150
)


2.64Outstanding at December 31, 2010


1,067,310


$
2.34



7.1


$
Vested and expected to vest at December 31, 2010


957,282


$
2.35



7.2



Exercisable at December 31, 2010


602,959


$
2.45



6.2



    63




---



##### Table of Contents



Weighted-Weighted-


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term


ValueOutstanding at December 31, 2009


458,414


$
2.23Granted


67,496



1.61Exercised


Expired


(78,000
)


2.80Outstanding at December 31, 2010


447,910


$
2.04



3.3


$
Vested and expected to vest at December 31, 2010


399,699


$
1.99



3.6



Exercisable at December 31, 2010


239,660


$
2.22



2.4



   in-the-money
        2010


2009


2008Weighted average fair value of grants

$
1.08


$
0.74


$
1.59Risk-free interest rate


2.2
%


2.4
%


3.4
%Expected life


6.3 years



6.3 years



6.8 yearsExpected volatility


76
%


71
%


70
%Expected dividends


None



None



None     Risk-free interest rate.
  Expected life.
  Expected volatility.
 64




---



##### Table of Contents



Expected dividends.
    Restricted
    Stock
      Weighted-AverageGrant DateShares


Fair ValueNon-vested restricted stock at December 31, 2009





$Granted


97,500



1.41Vested


Forfeited


Non-vested restricted stock at December 31, 2010


97,500


$
1.41           
    Regular monthly retainer fee compensation is paid up to $1,000
    in Common Stock and the remainder paid in cash, with shares
    payable determined as described below.
    Shares of Common Stock payable under this plan are issued on a
    quarterly basis.
    Individual directors may annually (as of each Annual Meeting of
    Shareholders) elect to opt in or out of the
    payment-in-stock
    provision of the plan, effective the following January 1.    
    Each key executive manager of the Company may make the election
    to receive up to $1,000 per month of
    his/her
    compensation in the form of Common Stock, with shares payable
    determined as described below.
    Shares of Common Stock payable under the plan are issued on a
    quarterly basis. 65




---



##### Table of Contents




    The election to participate will be on a yearly basis, effective
    January 1 of each year. If the election is made to participate,
    the commitment is for the full year, unless compelling and
    extenuating circumstances arise supporting doing otherwise.    (15)
    Income
    Taxes  740-10-25,
    2010


2009Balance as of January 1

$
228


$
264Additions for tax positions related to prior years






Additions for tax positions related to the current year


207



(62
)Foreign exchange translation gain


28



26Balance as of December 31

$
463


$
228       Year Ended December 31,2010


2009


2008(In thousands)Domestic

$
(2,179
)

$
(360
)

$
444Foreign


671



3,172



2,783$
(1,508
)

$
2,812


$
3,227  66




---



##### Table of Contents



Year Ended December 31,2010


2009


2008(In thousands)CurrentU.S. federal

$



$



$
State










2Foreign


685



861



932685



861



934DeferredU.S. federal










State










Foreign


(440
)


(25
)


162(440
)


(25
)


162$
245


$
836


$
1,096     Year Ended December 31,2010


2009


2008Percentage





Percentage





Percentageof Pretax





of Pretax





of PretaxAmount


Earnings (Loss)


Amount


Earnings (Loss)


Amount


Earnings (Loss)(In thousands)Computed expected tax expense (benefit)

$
(513
)


34.0
%

$
956



34.0
%

$
1,028



34.0
%Increase (decrease) in income taxes resulting from:Nondeductible expenses


133



(8.8
)


99



3.5



72



2.4(Increase)/decrease in prior year NOL


280



(18.5
)


(85
)


(3.0
)


(1,127
)


(37.3
)Higher (lower) rates on earnings of foreign operations


37



(2.5
)


(9
)


(0.3
)


211



7.0State taxes, net of federal benefit


















6



0.2Uncertain tax positions


177



(11.7
)


(70
)


(2.5
)


63



2.1Changes in valuation allowance


131



(8.8
)


(55
)


(2.0
)


843



27.9$
245



(16.3
)%

$
836



29.7
%

$
1,096



36.3
%  67




---



##### Table of Contents



December 31,2010


2009(In thousands)Deferred tax assetsFederal and state loss carryforwards

$
7,142


$
6,301Federal tax credits


300



305Foreign loss carryforwards


2,398



2,259Inventory reserve and capitalization


154



122Other accruals and reserves


221



233Total gross deferred tax assets


10,215



9,220Less valuation allowance


(8,250
)


(8,119
)1,965



1,101Deferred tax liabilitiesProperty and equipment


(1,352
)


(851
)Untaxed foreign reserves


(84
)


(338
)Total deferred tax liabilities


(1,436
)


(1,189
)Net deferred tax assets (liabilities)

$
529


$
(88
)       December 31,2010


2009(In thousands)Current assets

$
613


$
250Noncurrent assets

$
1,352


$
851Noncurrent liabilities


(1,436
)


(1,189
)Net noncurrent liabilities

$
(84
)

$
(338
)Net deferred assets (liabilities)

$
529


$
(88
)      68




---



##### Table of Contents



(16)
    Related
    Party Transactions    (17)
    Segment
    and Geographic Information    2010


2009


2008(In thousands)Net salesNorth America

$
34,748


$
32,104


$
30,576Europe


22,760



26,602



20,008Asia-Pacific


17,313



15,644



8,018Middle East


489



381



948South America


11,991



7,554



11,009$
87,301


$
82,285


$
70,559Long-lived assetsNorth America

$
4,105


$
3,670


$
2,982Europe


2,619



1,948



1,527Asia-Pacific


957



313



46South America


509



225



209$
8,190


$
6,156


$
4,764   (18)
    Legal
    Proceedings    (19)
    Foreign
    Tax Settlement   69




---



##### Table of Contents



(20)
    Per Share
    Amounts    2010


2009


2008(In thousands, except share amounts)Net income (loss) applicable to common shareholders of DRI
    Corporation

$
(2,398
)

$
1,511


$
1,193Effect of dilutive securities on net income (loss) of DRI
    Corporation:Convertible debt










10Convertible preferred stock






11



Net income (loss) applicable to common shareholders of DRICorporation, assuming conversions

$
(2,398
)

$
1,522


$
1,203Weighted average shares oustanding  Basic


11,804,189



11,548,403



11,333,984Effect of dilutive securities on shares outstanding:Options






10,898



26,170Warrants






71,504



19,925Convertible debt










112,394Convertible preferred stock






85,002



Weighted average shares outstanding  Diluted


11,804,189



11,715,807



11,492,473    70




---



##### Table of Contents



(21)
    Unaudited
    Quarterly Financial Data    Year Ended December 31, 2010Q1

Q2

Q3

Q4(In thousands, except share and per share amounts)(Unaudited)Net sales

$
22,129


$
25,559


$
19,860


$
19,753Gross profit


5,324



7,770



6,508



5,938Operating income (loss)


(765
)


1,778



669



(1,456
)Net income (loss) applicable to common shareholders of DRI
    Corporation


(995
)


763



(545
)


(1,621
)Net income (loss) applicable to common shareholders per common
    share:Basic

$
(0.08
)

$
0.06


$
(0.05
)

$
(0.14
)Diluted

$
(0.08
)

$
0.06


$
(0.05
)

$
(0.14
)Weighted average number of common shares and common share
    equivalents outstandingBasic


11,753,359



11,797,095



11,826,249



11,838,873Diluted


11,753,359



14,322,759



11,826,249



11,838,873   Year Ended December 31, 2009Q1

Q2

Q3

Q4(In thousands, except share and per share amounts)(Unaudited)Net sales

$
13,202


$
21,514


$
21,555


$
26,014Gross profit


3,686



6,670



7,167



7,273Operating income (loss)


(866
)


1,326



2,007



1,375Net income (loss) applicable to common shareholders of DRI
    Corporation


(1,149
)


1,075



842



743Net income (loss) applicable to common shareholders per common
    shareBasic

$
(0.10
)

$
0.09


$
0.07


$
0.06Diluted

$
(0.10
)

$
0.09


$
0.07


$
0.06Weighted average number of common sharesand common share equivalents outstandingBasic


11,473,219



11,498,254



11,522,979



11,696,980Diluted


11,473,219



13,228,690



13,395,830



13,629,129   (22)
    Employee
    Benefit Plan   71




---



##### Table of Contents



(23)
    Non-monetary
    Transaction  Advertising Rights          (24)
    Subsequent
    Events   72




---



##### Table of Contents




    Establish the fixed charge coverage ratio required to be
    maintained as of the end of each of the fiscal quarters ending
    March 31, 2011, June 30, 2011, September 30,
    2011, December 31, 2011 and each fiscal quarter ending
    thereafter as set forth below:  Fixed ChargeFiscal Quarter Ending:

Coverage Ratio:March 31, 2011


No TestJune 30, 2011


No TestSeptember 30, 2011


No TestDecember 31, 2011 and each fiscal quarter ending thereafter


1.25 to 1.00   
    Establish the leverage ratio required to be maintained as of the
    end of each of the fiscal quarters ending March 31, 2011,
    June 30, 2011, September 30, 2011, December 31,
    2011 and each fiscal quarter ending thereafter as set forth
    below:  Fiscal Quarter Ending:

Leverage Ratio:March 31, 2011


17.50 to 1.00June 30, 2011


16.50 to 1.00September 30, 2011


10.25 to 1.00December 31, 2011 and each fiscal quarter ending thereafter


4.00 to 1.00   
    Establish the minimum, trailing-twelve-month EBITDA that must be
    maintained by DRI Corporation on a consolidated basis as of the
    end of each of the fiscal quarters ending March 31, 2011,
    June 30, 2011, September 30, 2011, December 31,
    2011 and each fiscal quarter ending thereafter as set forth
    below:  Fiscal Quarter Ending:

EBITDA:March 31, 2011

$
2,750,000June 30, 2011

$
3,000,000September 30, 2011

$
5,000,000December 31, 2011 and each fiscal quarter ending thereafter

$
7,000,000    73




---



##### Table of Contents



Fiscal Quarter Ending:

EBITDA:March 31, 2011

$
525,000June 30, 2011

$
625,000September 30, 2011

$
900,000December 31, 2011 and each fiscal quarter ending thereafter


No Test     Then the Amount of theIf the Payment Date is:

Termination Fee Shall Equal:On or before June 30, 2011

$
800,000After June 30, 2011, but on or before September 30,
    2011

$
1,000,000After September 30, 2011, but on or before
    December 30, 2011

$
1,300,000January 1, 2012 and thereafter

$
1,700,000      74




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  l3a-15(e)
  Managements
    Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f). Internal Control  Integrated Framework
      Remediation
    of Material Weakness  Revenue
    Recognition
     75




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
    Item 9B.
    Other
    Information    PART III
    Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (1)(2)
    Financial Statements
   76




---



##### Table of Contents



(3)
    Exhibits    ExhibitNo.

Document3
.1

Amended and Restated Articles of Incorporation of the Company
    (incorporated herein by reference from the Companys
    Registration Statement on Form S-3, filed with the SEC on
    December 23, 2003)3
.1.1

Articles of Amendment to the Articles of Incorporation of the
    Company containing an amendment to eliminate a staggered
    election of Board members (incorporated herein by reference to
    the Companys Report on Form 10-Q for the quarter ended
    June 30, 2005)3
.1.2

Articles of Amendment to Articles of Incorporation of the
    Company, dated February 2, 2010, amending and restating the
    Companys Preferred Stock capitalization (incorporated
    herein by reference to the Companys Annual Report on Form
    10-K for the fiscal year ended December 31, 2009 filed with the
    SEC on April 15, 2010)3
.2

Articles of Amendment to Articles of Incorporation of the
    Company containing Certificate of Designation of Series E
    Redeemable Nonvoting Convertible Stock (incorporated herein by
    reference from the Companys Report on Form 8-K, filed with
    the SEC on November 12, 2003)3
.3

Articles of Amendment to Articles of Incorporation of the
    Company containing Amended and Restated Certificate of
    Designation of Series F Redeemable Convertible Preferred Stock
    (incorporated herein by reference from the Companys Report
    on Form 8-K, filed with the SEC on April 14, 2004)3
.4

Articles of Amendment to the Articles of Incorporation of the
    Company containing Series AAA Preferred Stock Change in
    Quarterly Dividend Accrual and Conversion Price (incorporated
    herein by reference to the Companys Report on Form 10-K
    for the year ended December 31, 2004)3
.5

Articles of Amendment to Articles of Incorporation of the
    Company containing Amended and Restated Certificate of
    Designation of Series G Convertible Preferred Stock
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed on June 28, 2005)3
.5.1

Articles of Correction of Articles of Amendment to the Articles
    of Incorporation of the Company containing a correction to an
    error in the Amended Certificate of Designation of Series G
    Convertible Preferred Stock (incorporated herein by reference to
    the Companys Report on Form 10-Q for the quarter
    ended June 30, 2005)3
.6

Articles of Amendment to Articles of Incorporation of the
    Company containing Amended and Restated Certificate of
    Designation of Series H Convertible Preferred Stock
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed on November 4, 2005)3
.7

Articles of Amendment to Articles of Incorporation of the
    Company containing Amended and Restated Certificate of
    Designation of Series I Convertible Preferred Stock
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed on March 23, 2006)3
.8

Articles of Amendment to Articles of Incorporation of the
    Company containing Certificate of Designation of Series D Junior
    Participating Preferred Stock (incorporated herein by reference
    to the Companys Registration Statement on Form 8-A filed
    with the SEC on December 17, 1999)3
.8.1

Amendment No. 1 to Certificate of Designation of Series D Junior
    Participating Preferred Stock (incorporated herein by reference
    to the Companys Report on Form 8-K filed with the SEC on
    September 28, 2006)3
.8.2

Amendment No. 2 to Certificate of Designation of Series D Junior
    Participating Preferred Stock (incorporated herein by reference
    to the Companys Registration Statement on Form 8-A filed
    with the SEC on October 2, 2006)3
.9

Articles of Amendment to Articles of Incorporation of the
    Company containing Amended and Restated Certificate of
    Designation of Series J Convertible Preferred Stock
    (incorporated herein by reference to the Companys Report
    on Form 10-Q for the quarter ended June 30, 2007)3
.10

Articles of Amendment to Articles of Incorporation of the
    Company containing Certificate of Designation of Series K Senior
    Convertible Preferred Stock (incorporated herein by reference to
    the Companys Report on Form 8-K filed with the SEC on
    October 15, 2009) 77




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##### Table of Contents



ExhibitNo.

Document3
.10.1

Articles of Amendment to Articles of Incorporation of the
    Company containing Certificate of Designation of Series K Senior
    Convertible Preferred Stock (incorporated herein by reference to
    the Companys Report on Form 8-K filed with the SEC on
    November 12, 2009)3
.10.2

Articles of Amendment to Articles of Incorporation of the
    Company containing Certificate of Designation of Series K Senior
    Convertible Preferred Stock, dated December 29, 2009
    (incorporated herein by reference to the Companys Annual
    Report on Form 10-K for the fiscal year ended December 31, 2009
    filed with the SEC on April 15, 2010)3
.10.3

Amendment to Certificate of Designation of Series K Senior
    Convertible Preferred Stock, dated January 5, 2010 (incorporated
    herein by reference to the Companys Annual Report on Form
    10-K for the fiscal year ended December 31, 2009 filed with the
    SEC on April 15, 2010)3
.10.4

Amendment to Certificate of Designation of Series K Senior
    Convertible Preferred Stock, dated August 16, 2010 (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed with the SEC on August 20, 2010)3
.11

Amended and Restated Bylaws of the Company (incorporated herein
    by reference to the Companys Report on Form 8-K filed on
    September 18, 2006)3
.11.1

Amendment to Bylaws of DRI Corporation, dated as of September
    12, 2007 (incorporated herein by reference to the Companys
    Report on Form 8-K filed with the SEC on September 14, 2007)4
.1

Form of specimen certificate for Common Stock of the Company
    (incorporated herein by reference from the Companys
    Registration Statement on Form SB-2, filed with the SEC (SEC
    File
    No. 33-82870-A))4
.2

Rights Agreement, dated as of September 22, 2006, between the
    Company and American Stock Transfer & Trust Company, as
    Rights Agent, together with the following exhibits thereto:
    Exhibit A  Certificate of Designation of Series
    D Junior Participating Preferred Stock of Digital Recorders,
    Inc. and the Amendment to Certificate of Designation of Series D
    Junior Participating Preferred Stock of Digital Recorders, Inc.;
    Exhibit B  Form of Right Certificate; and
    Exhibit C  Summary of Rights to Purchase Shares
    (incorporated herein by reference to the Companys
    Registration Statement on Form 8-A filed with the Securities and
    Exchange Commission on October 2, 2006)4
.2.1

Amendment No. 2 to Rights Agreement, dated July 8, 2004, between
    Digital Recorders, Inc. and Continental Stock Transfer &
    Trust Company (incorporated herein by reference to the
    Companys Report on Form 8-K, filed with the SEC on July 8,
    2004)4
.3

Form of Certificate of Designation of Series H Convertible
    Preferred Stock (incorporated herein by reference to the
    Companys Report on Form 8-K filed on November 4, 2005)4
.4

Omnibus Amendment dated as of January 10, 2007, effective
    December 31, 2006, by and among the Company, TwinVision of North
    America, Inc., Digital Audio Corporation, Robinson-Turney
    International, Inc., and Laurus Master Fund, Ltd. (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed with the SEC on January 16, 2007)4
.5

Amended and Restated Secured Term Note dated as of January 10,
    2007, effective December 31, 2006, by and between the Company,
    TwinVision of North America, Inc., Digital Audio Corporation,
    Robinson-Turney International, Inc., and Laurus Master Fund,
    Ltd. (incorporated herein by reference to the Companys
    Report on Form 8-K filed with the SEC on January 16, 2007)4
.6

Second Amended and Restated Registration Rights Agreement dated
    as of January 10, 2007, effective December 31, 2006, by and
    between the Company and Laurus Master Fund, Ltd. (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed with the SEC on January 16, 2007)4
.7

Warrant, dated as of June 30, 2008, issued by the Company to BHC
    Interim Funding III, L.P. (incorporated herein by reference to
    the Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008) 78




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ExhibitNo.

Document4
.7.1

First Amendment to Warrant, dated March 26, 2009, by and between
    the Company and BHC Interim Funding III, L.P. (incorporated by
    reference to the Companys Report on Form 10-K filed with
    the SEC on March 31, 2009)4
.7.2

Second Amendment to Warrant, dated September 30, 2009, by and
    between the Company and BHC Interim Funding II, L.P.
    (incorporated by reference to the Companys Report on Form
    10-Q for the quarter ended September 30, 2009)4
.7.3

Third Amendment to Warrant, dated December 28, 2009, by and
    between the Company and BHC Interim Funding II, L.P.
    (incorporated herein by reference to the Companys Annual
    Report on Form 10-K for the fiscal year ended December 31, 2009
    filed with the SEC on April 15, 2010)4
.8

Stock Purchase Warrant, dated as of October 13, 2003, issued by
    the Company to Dolphin Offshore Partners, L.P. (terminated)
    (incorporated herein by reference to the Companys Report
    on Form 8-K, filed with the SEC on November 12, 2003)4
.9

Stock Purchase Warrant, dated June 23, 2005, issued by the
    Company to Dolphin Offshore Partners, L.P. (incorporated herein
    by reference to the Companys Report on Form 8-K filed on
    June 28, 2005)4
.10

Stock Purchase Warrant issued by the Company to Transit Vehicle
    Technology Investments, Inc., dated March 21, 2006 (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on March 23, 2006)4
.11

Common Stock Purchase Warrant issued by the Company to Laurus
    Master Fund, Ltd., dated as of April 28, 2006 (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on May 4, 2006)10
.1

Form of Office Lease Agreement, between the Company and Sterling
    Plaza Limited Partnership (incorporated herein by reference from
    the Companys Form 10-KSB/A, filed with the SEC on May 21,
    2001)10
.1.1

First Amendment to Lease Agreement, between the Company and
    Sterling Plaza Limited Partnership, d/b/a Dallas Sterling Plaza
    Limited Partnership, dated August 25, 2003 (incorporated herein
    by reference to the Companys Registration Statement of
    Form S-1, filed with the SEC on January 4, 2005)10
.1.2

Second Amendment to Lease Agreement, between the Company and
    Sterling Plaza Limited Partnership, d/b/a Dallas Sterling Plaza
    Limited Partnership, dated September 17, 2004 (incorporated
    herein by reference to the Companys Registration Statement
    of Form S-1, filed with the SEC on January 4, 2005)10
.2

Lease Agreement, between the Company and The Prudential Savings
    Bank, F.S.B., dated December 18, 1998 (incorporated herein by
    reference from the Companys Form 10-KSB/A, filed with the
    SEC on June 6, 2001)10
.2.1

First Lease Amendment, between the Company and Property Reserve,
    Inc., f/k/a The Prudential Savings Bank, F.S.B., dated December
    11, 2002 (incorporated herein by reference to the Companys
    Registration Statement of Form S-1, filed with the SEC on
    January 4, 2005)10
.2.2

Second Lease Amendment, between the Company and Property
    Reserve, Inc., f/k/a The Prudential Savings Bank, F.S.B., dated
    June 18, 2003 (incorporated herein by reference to the
    Companys Registration Statement of Form S-1, filed with
    the SEC on January 4, 2005)10
.2.3

Third Lease Amendment, between the Company and Property Reserve,
    Inc., f/k/a The Prudential Savings Bank, F.S.B., dated August
    21, 2003 (incorporated herein by reference to the Companys
    Registration Statement of Form S-1, filed with the SEC on
    January 4, 2005)10
.2.4

Fourth Lease Amendment, between the Company and Property
    Reserve, Inc., f/k/a The Prudential Savings Bank, F.S.B., dated
    September 8, 2003 (incorporated herein by reference to the
    Companys Registration Statement of Form S-1, filed with
    the SEC on January 4, 2005)10
.3

Share Purchase Agreement, dated as of October 13, 2003, by and
    between Dolphin Offshore Partners, L.P. and the Company
    (incorporated herein by reference to the Companys Report
    on Form 8-K, filed with the SEC on November 12, 2003) 79




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ExhibitNo.

Document10
.4

Securities Purchase Agreement, dated as of November 5, 2003, by
    and between the Company, as seller, and BFSUS Special
    Opportunities Trust PLC and Renaissance US Growth &
    Investment Trust PLC, collectively as purchasers (incorporated
    herein by reference to the Companys Report on Form 8-K,
    filed with the SEC on November 12, 2003)10
.5

Loan and Security Agreement, dated as of November 6, 2003, by
    and between LaSalle Business Credit, LLC, as lender, and the
    Company, as borrower (incorporated herein by reference to the
    Companys Report on Form 8-K, filed with the SEC on
    November 12, 2003)10
.5.1

Waiver, Consent and Fourth Amendment Agreement between the
    Company and LaSalle Business Credit, LLC, dated March 6, 2006
    (incorporated herein by reference to the Companys Report
    on Form 10-K filed with the SEC on April 17, 2006)10
.6

Amended and Restated Registration Rights Agreement, dated as of
    April 1, 2004, by and between the Company and Dolphin Offshore
    Partners, L.P. (incorporated herein by reference from the
    Companys Report on Form 8-K, filed with the SEC on April
    14, 2004)10
.7

Securities Purchase Agreement dated as of April 21, 2004, among
    Digital Recorders, Inc. and the investors named therein
    (incorporated herein by reference to the Companys Report
    on Form 8-K, filed with the SEC on April 22, 2004)10
.8

Registration Rights Agreement dated as of April 21, 2004, among
    Digital Recorders, Inc. and the investors named therein
    (incorporated herein by reference to the Companys Report
    on Form 8-K, filed with the SEC on April 22, 2004)10
.9

Securities Purchase Agreement, dated October 5, 2004, between
    the Company and Riverview Group LLC (incorporated herein by
    reference to the Companys Report on Form 8-K, filed with
    the SEC on October 7, 2004)10
.10

Registration Rights Agreement, dated October 5, 2004, between
    the Company and Riverview Group LLC (incorporated herein by
    reference to the Companys Report on Form 8-K, filed with
    the SEC on October 7, 2004)10
.11

Share Purchase Agreement, dated June 23, 2005, by and between
    the Company and Dolphin Offshore Partners, L.P.(incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on June 28, 2005)10
.12

Registration Rights Agreement, dated June 23, 2005, by and
    between the Company and Dolphin Offshore Partners, L.P.
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed on June 28, 2005)10
.13

Share Purchase Agreement, dated October 31, 2005, between John
    D. Higgins and the Company (incorporated herein by reference to
    the Companys Report on Form 8-K filed on November 4, 2005)10
.14

Form of Registration Rights Agreement between John D. Higgins
    and the Company (incorporated herein by reference to the
    Companys Report on Form 8-K filed on November 4, 2005)10
.15

Secured Non-Convertible Revolving Note between the Company and
    Laurus Master Fund, Ltd., dated March 15, 2006 (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on March 21, 2006)10
.16

Security Agreement (with Schedules) between the Company and
    Laurus Master Fund, Ltd. dated March 15, 2006 (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on March 21, 2006)10
.17

Grant of Security Interest in Patents and Trademarks (with
    Schedules) between the Company and Laurus Master Fund, Ltd.,
    dated March 15, 2006 (incorporated herein by reference to the
    Companys Report on Form 8-K filed on March 21, 2006)10
.18

Stock Pledge Agreement (with Schedules) between the Company and
    Laurus Master Fund, Ltd., dated March 15, 2006 (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on March 21, 2006)10
.19

Registration Rights Agreement between the Company and Laurus
    Master Fund, Ltd., dated March 15, 2006 (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on March 21, 2006) 80




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##### Table of Contents



ExhibitNo.

Document10
.19.1

Amended and Restated Registration Rights Agreement dated as of
    April 28, 2006, by and between Digital Recorders, Inc. and
    Laurus Master Fund, Ltd. (incorporated herein by reference to
    the Companys Report on Form 8-K filed on May 4, 2006)10
.20

Share Purchase Agreement between the Company and Transit Vehicle
    Technology Investments, Inc., dated March 21, 2006 (incorporated
    herein by reference to the Companys Report on
    Form 8-K
    filed on March 23, 2006)10
.21

Registration Rights Agreement between the Company and Transit
    Vehicle Technology Investments, Inc., dated March 21, 2006
    (incorporated herein by reference to the Companys Report
    on
    Form 8-K
    filed on March 23, 2006)10
.22

Securities Purchase Agreement dated as of April 28, 2006, by and
    between Digital Recorders, Inc., TwinVision of North America,
    Inc., Digital Audio Corporation, and Robinson-Turney
    International, Inc., and Laurus Master Fund, Ltd. (incorporated
    herein by reference to the Companys Report on Form 8-K
    filed on May 4, 2006)10
.22.1

Waiver and Consent, dated as of April 30, 2007, entered into by
    and between Digital Recorders, Inc., TwinVision of North
    America, Inc., Digital Audio Corporation, Robinson-Turney
    International, Inc. and Laurus Master Fund, Ltd. (incorporated
    herein by reference to the Companys Report on Form 10-Q
    for the quarter ended March 31, 2007)10
.23

Secured Term Note by Digital Recorders, Inc., TwinVision of
    North America, Inc., Digital Audio Corporation, and
    Robinson-Turney International, Inc., issued to Laurus Master
    Fund, Ltd., in the original principal amount of $1,600,000
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed on May 4, 2006)10
.24

Share Purchase Agreement, dated as of April 30, 2007, entered
    into by and among Dolphin Direct Equity Partners, LP, Digital
    Audio Corporation and Digital Recorders, Inc. (incorporated
    herein by reference to the Companys Report on Form 10-Q
    for the quarter ended March 31, 2007)10
.25

Promissory Note, dated April 30, 2007, by Dolphin Direct Equity
    Partners, LP issued to Digital Recorders, Inc. in the principal
    sum of $285,000 (incorporated herein by reference to the
    Companys Report on Form 10-Q for the quarter ended June
    30, 2007)10
.26

Form of Share Purchase Agreement, dated June 11, 2007, between
    Digital Recorders, Inc. and buyer of Series J Convertible
    Preferred Stock of Digital Recorders, Inc. with Schedule of
    Differences (incorporated herein by reference to the
    Companys Report on Form 10-Q for the quarter ended June
    30, 2007)10
.27

Form of Registration Rights Agreement, dated June 11, 2007,
    between Digital Recorders, Inc. and holder of Series J
    Convertible Preferred Stock of Digital Recorders, Inc.
    (incorporated herein by reference to the Companys Report
    on Form 10-Q for the quarter ended June 30, 2007)10
.28

Agreement, dated as of June 30, 2008, by and between the Company
    and John D. Higgins (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.29

Revolving Credit and Security Agreement, dated as of June 30,
    2008, by and among PNC Bank, National Association and Digital
    Recorders, Inc., TwinVision of North America, Inc. and DRI
    Corporation (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.29.1

Amendment No. 2 to Revolving Credit and Security Agreement,
    dated September 29, 2008, by and between Digital Recorders,
    Inc., TwinVision of North America, Inc. and DRI Corporation, and
    PNC Bank, National Association (incorporated by reference to the
    Companys Report on
    Form 10-Q
    for the quarter ended September 30, 2008)10
.29.2

Amendment No. 3 to Revolving Credit and Security Agreement,
    dated as of March 26, 2009, by and between Digital Recorders,
    Inc., TwinVision of North America, Inc. and DRI Corporation, and
    PNC Bank, National Association (incorporated herein by reference
    to the Companys Report on Form 10-K filed with the SEC on
    March 31, 2009) 81




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##### Table of Contents



ExhibitNo.

Document10
.29.3

Amendment No. 4 to Revolving Credit and Security Agreement,
    dated as of July 30, 2009, by and between Digital Recorders,
    Inc., TwinVision of North America, Inc., and DRI Corporation,
    and PNC Bank, National Association (incorporated herein by
    reference to the Companys Report on Form 8-K filed with
    the SEC on August 5, 2009)10
.29.4

Amendment No. 5 to Revolving Credit and Security Agreement,
    dated as of October 5, 2009, by and among Digital Recorders,
    Inc., TwinVision of North America, Inc., and DRI Corporation,
    and PNC Bank, National Association (incorporated herein by
    reference to the Companys Report on Form 10-Q for the
    quarter ended September 30, 2009)10
.29.5

Amendment No. 6 to Revolving Credit and Security Agreement,
    dated as of December 28, 2009, by and among Digital Recorders,
    Inc., TwinVision of North America, Inc., and DRI Corporation,
    and PNC Bank, National Association (incorporated herein by
    reference to the Companys Annual Report on Form 10-K for
    the fiscal year ended December 31, 2009 filed with the SEC on
    April 15, 2010)10
.29.6

Amendment No. 7 to Revolving Credit and Security Agreement,
    dated as of November 12, 2010, by and among Digital Recorders,
    Inc., TwinVision of North America, Inc., and DRI Corporation,
    and PNC Bank, National Association (incorporated herein by
    reference to the Companys Quarterly Report on Form 10-Q
    for the quarter ended September 30, 2010 filed with the SEC on
    November 15, 2010)10
.29.7

Waiver and Amendment No. 8 to Revolving Credit and Security
    Agreement, dated as of March 31, 2011, by and among Digital
    Recorders, Inc., TwinVision of North America, Inc., and DRI
    Corporation, and PNC Bank, National Association (filed herewith)10
.30

Revolving Credit Note, dated as of June 30, 2008, issued by
    Digital Recorders, Inc., TwinVision of North America, Inc. and
    DRI Corporation to PNC Bank, National Association (incorporated
    herein by reference to the Companys Report on Form 8-K/A,
    filed with the SEC on August 14, 2008)10
.31

Loan and Security Agreement, dated as of June 30, 2008, by and
    among Digital Recorders, Inc., TwinVision of North America, Inc.
    and DRI Corporation, and BHC Interim Funding III, L.P.
    (incorporated herein by reference to the Companys Report
    on Form 8-K/A, filed with the SEC on August 14, 2008)10
.31.1

First Amendment to the Loan and Security Agreement, dated as of
    July 30, 2008, by and among Digital Recorders, Inc., TwinVision
    of North America, Inc. and DRI Corporation, and BHC Interim
    Funding III, L.P. (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.31.2

Second Amendment to the Loan and Security Agreement, dated as of
    March 26, 2009, by and among Digital Recorders, Inc., TwinVision
    of North America, Inc. and DRI Corporation, and BHC Interim
    Funding III, L.P. (incorporated herein by reference to the
    Companys Report on Form 10-K filed with the SEC on March
    31, 2009)10
.31.3

Letter Agreement, dated as of July 21, 2009, by and among
    Digital Recorders, Inc. and TwinVision of North America, Inc.,
    as Borrowers, DRI Corporation, as Guarantor, and BHC Interim
    Funding III, L.P. (incorporated herein by reference to the
    Companys Report on Form 10-Q for the quarter ended June
    30, 2009)10
.31.3.1

Letter of Amendment to Letter Agreement, dated as of July 31,
    2009, by and among Digital Recorders, Inc. and TwinVision of
    North America, Inc., as Borrowers, DRI Corporation, as
    Guarantor, and BHC Interim Funding III, L.P., as Lender
    (incorporated herein by reference to the Companys Report
    on Form 10-Q for the quarter ended June 30, 2009)10
.31.4

Third Amendment to Loan and Security Agreement, dated as of
    August 18, 2009, by and among Digital Recorders, Inc. and
    TwinVision of North America, Inc., as Borrowers, DRI
    Corporation, as Guarantor, and BHC Interim Funding III, L.P., as
    Lender (incorporated herein by reference to the Companys
    Report on Form 10-Q for the quarter ended June 30, 2009)10
.31.5

Letter of Amendment to Loan and Security Agreement, dated as of
    August 18, 2009, by and between DRI Corporation and BHC Interim
    Funding III, L.P. (incorporated herein by reference to the
    Companys Report on From 8-K filed with the SEC on August
    24, 2009) 82




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ExhibitNo.

Document10
.31.6

Fourth Amendment to Loan and Security Agreement, dated as of
    October 1, 2009, by and among Digital Recorders, Inc. and
    TwinVision of North America, Inc., as Borrowers, DRI
    Corporation, as Guarantor, and BHC Interim Funding III, L.P., as
    Lender (incorporated herein by reference to the Companys
    Report on Form 10-Q for the quarter ended September 30, 2009)10
.31.7

Fifth Amendment to Loan and Security Agreement, dated as of
    December 28, 2009, by and among Digital Recorders, Inc. and
    TwinVision of North America, Inc., as Borrowers, DRI
    Corporation, as Guarantor, and BHC Interim Funding III, L.P., as
    Lender (incorporated herein by reference to the Companys
    Annual Report on Form 10-K for the fiscal year ended December
    31, 2009 filed with the SEC on April 15, 2010)10
.31.8

Seventh Amendment to Loan and Security Agreement, dated as of
    November 12, 2010, by and among Digital Recorders, Inc. and
    TwinVision of North America, Inc., as Borrowers, DRI
    Corporation, as Guarantor, and BHC Interim Funding III, L.P., as
    Lender (incorporated herein by reference to the Companys
    Quarterly Report on Form 10-Q for the quarter ended September
    30, 2010 filed with the SEC on November 15, 2010)10
.31.9

Waiver and Eighth Amendment to Loan and Security Agreement,
    dated as of April 6, 2011, by and among Digital Recorders, Inc.
    and TwinVision of North America, Inc., as Borrowers, DRI
    Corporation, as Guarantor, and BHC Interim Funding III, L.P., as
    Lender (filed herewith)10
.32

Senior Secured Term Note, dated as of June 30, 2008, issued by
    Digital Recorders, Inc. and TwinVision of North America, Inc. to
    BHC Interim Funding III, L.P. (incorporated herein by reference
    to the Companys Report on Form 8-K/A, filed with the SEC
    on August 14, 2008)10
.33

Continuing Unconditional Guaranty, dated as of June 30, 2008,
    granted by the Company in favor of BHC Interim Funding III, L.P.
    (incorporated herein by reference to the Companys Report
    on Form 8-K/A, filed with the SEC on August 14, 2008)10
.34

Stock Pledge Agreement, dated as of June 30, 2008, by and
    between the Company and BHC Interim Funding III, L.P.
    (incorporated herein by reference to the Companys Report
    on
    Form 8-K/A,
    filed with the SEC on August 14, 2008)10
.35

Trademark Security Agreement, dated as of June 30, 2008, by and
    between the Company and BHC Interim Funding III, L.P.
    (incorporated herein by reference to the Companys Report
    on
    Form 8-K/A,
    filed with the SEC on August 14, 2008)10
.36

Trademark Security Agreement, dated as of June 30, 2008, by and
    between Digital Recorders, Inc. and BHC Interim Funding III,
    L.P. (incorporated herein by reference to the Companys
    Report on Form 8-K/A, filed with the SEC on August 14, 2008)10
.37

Trademark and Security Agreement, dated as of June 30, 2008, by
    and between TwinVision of North America, Inc. and BHC Interim
    Funding III, L.P. (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.38

Copyright Security Agreement, dated as of June 30, 2008, by and
    between Digital Recorders, Inc. and BHC Interim Funding III,
    L.P. (incorporated herein by reference to the Companys
    Report on Form 8-K/A, filed with the SEC on August 14, 2008)10
.39

Copyright Security Agreement, dated as of June 30, 2008, by and
    between TwinVision of North America, Inc. and BHC Interim
    Funding III, L.P. (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.40

Patent Security Agreement, dated as of June 30, 2008, by and
    between Digital Recorders, Inc. and BHC Interim Funding III,
    L.P. (incorporated herein by reference to the Companys
    Report on Form 8-K/A, filed with the SEC on August 14, 2008)10
.41

Undertaking Concerning Loan Payment for purposes other than
    personal consumption, by and between Handelsbanken and Mobitec
    AB (English translation) (incorporated herein by reference to
    the Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.41.1

Undertaking Concerning Loan Payment for purposes other than
    personal consumption, dated June 16, 2009, by and between
    Handelsbanken and Mobitec AB (English translation) (incorporated
    herein by reference to the Companys Report on Form 10-Q
    for the quarter ended June 30, 2009) 83




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##### Table of Contents



ExhibitNo.

Document10
.41.2

Undertaking Concerning Loan Payment for purposes other than
    personal consumption, dated June 16, 2009, by and between
    Handelsbanken and Mobitec AB (English translation) (incorporated
    herein by reference to the Companys Report on Form 10-Q
    for the quarter ended June 30, 2009)10
.41.3

Undertaking Concerning Loan Payment for purposes other than
    personal consumption, dated March 25, 2010, by and between
    Handelsbanken and Mobitec AB (English translation) (incorporated
    herein by reference to the Companys Annual Report on Form
    10-K for the fiscal year ended December 31, 2009 filed with the
    SEC on April 15, 2010).10
.42

Instrument for Debt A Loan for purposes other than personal
    consumption, by and between Handelsbanken and Mobitec AB
    (English translation) (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.43

Factoring Agreement by and between Handelsbanken and Mobitec AB
    (English translation) (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.43.1

Amendment, dated October 22, 2010, to Factoring Agreement by and
    between Handelsbanken and Mobitec AB (English translation)
    (incorporated herein by reference to the Companys Report
    on Form 8-K, filed with the SEC on October 25, 2010)10
.44

EURO Short Term Loan Facility by and between Handelsbanken and
    Mobitec GmbH (incorporated herein by reference to the
    Companys Report on Form 8-K/A, filed with the SEC on
    August 14, 2008)10
.44.1

EURO Short Term Loan Facility by and between Handelsbanken and
    Mobitec GmbH, dated as of June 25, 2009 (incorporated herein by
    reference to the Companys Report on Form 8-K filed with
    the SEC on July 1, 2009)10
.45

Executive Employment Agreement, dated January 1, 1999, between
    the Company and Larry Hagemann (incorporated herein by reference
    from the Companys Proxy Statement for the Annual Meeting
    of Shareholders for fiscal year 2000, filed with the SEC on June
    6, 2001)10
.46

Executive Employment Agreement, between the Company and David N.
    Pilotte, dated October 25, 2004 (incorporated herein by
    reference to the Companys Report on Form 8-K, filed with
    the SEC on October 22, 2004)10
.47

Executive Employment Agreement, dated November 15, 2007, between
    Mobitec GmbH and Mobitec AB and Oliver Wels (incorporated herein
    by reference from the Companys Report on Form 10-Q for the
    quarter ended March 31, 2008)10
.48

Executive Employment Agreement, dated December 31, 2007, between
    the Company and Lawrence A. Hagemann (incorporated herein by
    reference from the Companys Report on
    Form 8-K,
    filed with the SEC on January 10, 2008)10
.49

Executive Employment Agreement, effective September 16,
    2010, between the Company and Stephen P. Slay (filed herewith)10
.50

Executive Employment Agreement, dated December 31, 2007, between
    the Company and Rob R. Taylor (incorporated herein by reference
    from the Companys Report on Form 8-K, filed with the SEC
    on January 10, 2008)10
.51

Executive Employment Agreement, effective December 31, 2007,
    between the Company and Tanya Lind Johnson (incorporated herein
    by reference from the Companys Report on Form 8-K, filed
    with the SEC on January 18, 2008)10
.52

Executive Employment Agreement, effective December 31, 2007,
    between the Company and William F. Fay, Jr. (incorporated herein
    by reference from the Companys Report on Form 8-K, filed
    with the SEC on January 18, 2008)10
.53

Executive Employment Agreement, effective January 1, 2008,
    between the Company and David L. Turney (incorporated herein by
    reference from the Companys Report on Form 8-K, filed with
    the SEC on January 18, 2008)10
.54

Executive Employment Agreement, effective June 17, 2010, between
    the Company and Kathleen B. Oher (incorporated herein by
    reference from the Companys Report on Form 8-K, filed with
    the SEC on June 17, 2010) 84




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ExhibitNo.

Document10
.55

Extension Agreement, dated as of April 30, 2008 by and between
    DRI Corporation and Digital Audio Corporation (incorporated
    herein by reference from the Companys Report on Form 8-K,
    filed with the SEC on May 6, 2008)10
.55.1

Second Extension Agreement, dated as of April 30, 2009, by and
    between DRI Corporation and Digital Audio Corporation
    (incorporated herein by reference to the Companys Report
    on
    Form 8-K
    filed with the SEC on May 6, 2009)10
.55.2

Third Extension Agreement, dated as of April 30, 2010, by and
    between DRI Corporation and Digital Audio Corporation
    (incorporated herein by reference to the Companys Report
    on
    Form 8-K
    filed with the SEC on April 23, 2010)10
.56

General Pledging, dated June 16, 2009, by and between
    Handelsbanken and Mobitec AB (English translation) (incorporated
    herein by reference to the Companys Report on Form 10-Q
    for the quarter ended June 30, 2009)10
.57

Contract A Supplementary Overdraft Facility for purposes other
    than personal consumption, dated June 16, 2009, by and between
    Handelsbanken and Mobitec AB (English translation) (incorporated
    herein by reference to the Companys Report on Form 10-Q
    for the quarter ended June 30, 2009)10
.57.1

Contract A Supplementary Overdraft Facility for purposes other
    than for personal consumption, dated March 25, 2010, by and
    between Handelsbanken and Mobitec AB (English translation)
    (incorporated herein by reference to the Companys Annual
    Report on Form 10-K for the fiscal year ended December 31, 2009
    filed with the SEC on April 15, 2010)10
.57.2

Contract A Supplementary Overdraft Facility for purposes other
    than personal consumption, dated May 11, 2010, by and between
    Handelsbanken and Mobitec AB (English translation) (incorporated
    herein by reference to the Companys Report on Form 10-Q
    for the quarter ended March 31, 2010)10
.57.3

Contract A Supplementary Overdraft Facility for purposes other
    than personal consumption, dated October 22, 2010, by and
    between Handelsbanken and Mobitec AB (English translation)
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed with the SEC on October 25, 2010)10
.57.4

Contract A Supplementary Overdraft Facility for purposes other
    than personal consumption, dated December 6, 2010, by and
    between Handelsbanken and Mobitec AB (English translation)
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed with the SEC on December 10, 2010)10
.57.5

Contract A Supplementary Overdraft Facility for purposes other
    than personal consumption, dated February 25, 2011, by and
    between Handelsbanken and Mobitec AB (English translation)
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed with the SEC on March 3, 2011)10
.58

Contract A Base Overdraft Facility for purposes other than
    personal consumption, dated February 25, 2011, by and
    between Handelsbanken and Mobitec AB (English translation)
    (incorporated herein by reference to the Companys Report
    on Form 8-K filed with the SEC on March 3, 2011)10
.59

Quota Purchase Agreement, dated as of July 22, 2009, by and
    among Mobitec AB, Mobitec Empreendimientos e
    Participações Ltda., Mobitec Brasil Ltda, Roberto
    Juventino Demore, Lorena Giusti Demore, and JADI
    Itinerários Eletrônicos Ltda (incorporated herein by
    reference to the Companys Report on Form 10-Q for the
    quarter ended June 30, 2009) (confidential treatment requested
    for specific portions of this agreement)10
.59.1

First Amendment to Quota Purchase Agreement, dated as of August
    31, 2009, by and among Mobitec Empreendimientos e
    Participações Ltda., Roberto Juventino Demore, Lorena
    Giusti Demore, JADI Itinerários Eletrônicos Ltda,
    Mobitec AB and Mobitec Brasil Ltda. (incorporated herein by
    reference to the Companys Report on Form 10-Q for the
    quarter ended September 30, 2009) (confidential treatment
    requested for specific portions of this agreement) 85




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##### Table of Contents



ExhibitNo.

Document10
.60

Promissory Note, dated July 22, 2009, by Mobitec
    Empreendimientos e Participações Ltda., as Maker, and
    Mobitec AB, as Guarantor, issued to Roberto Juventino Demore and
    Lorena Giusti Demore, in the principal amount of $1,000,000
    (English translation) (incorporated herein by reference to the
    Companys Report on Form 10-Q for the quarter ended June
    30, 2009) (confidential treatment requested for specific
    portions of this agreement)10
.60.1

Promissory Note, dated August 31, 2009, by Mobitec
    Empreendimientos e Participações Ltda., as Maker,
    issued to Roberto Juventino Demore in the principal amount of
    $1,000,000 (incorporated herein by reference to the
    Companys Report on Form 10-Q for the quarter ended
    September 30, 2009) (confidential treatment requested for
    specific portions of this agreement)10
.61

Promissory Note, dated July 22, 2009, by Mobitec AB issued to
    Roberto Juventino Demore and Lorena Giusti Demore, in the
    principal amount of $1,950,000 (incorporated herein by reference
    to the Companys Report on Form 10-Q for the quarter ended
    June 30, 2009) (confidential treatment requested for specific
    portions of this agreement)10
.61.1

Promissory Note, dated August 31, 2009, by Mobitec AB, issued to
    Roberto Juventino Demore in the principal amount of $1,950,000
    (incorporated herein by reference to the Companys Report
    on Form 10-Q for the quarter ended September 30, 2009)
    (confidential treatment requested for specific portions of this
    agreement)10
.62

Form of Subscription Agreement by and between DRI Corporation
    and holder of Series K Senior Convertible Preferred Stock of DRI
    Corporation (incorporated herein by reference to the
    Companys Report on Form 8-K filed with the SEC on October
    30, 2009)10
.62.1

Form of Subscription Agreement by and between DRI Corporation
    and holder of Series K Senior Convertible Preferred Stock of DRI
    Corporation (incorporated herein by reference to the
    Companys Annual Report on Form 10-K for the fiscal year
    ended December 31, 2009 filed with the SEC on April 15, 2010)10
.62.2

Form of Subscription Agreement by and between DRI Corporation
    and holder of Series K Senior Convertible Preferred Stock of DRI
    Corporation (incorporated herein by reference to the
    Companys Report on Form 8-K filed with the SEC on August
    20, 2010)10
.63

Form of Registration Rights Agreement by and between DRI
    Corporation and holder of Series K Senior Convertible Preferred
    Stock of DRI Corporation (incorporated herein by reference to
    the Companys Report on Form 8-K filed with the SEC on
    October 30, 2009)10
.63.1

Form of Registration Rights Agreement by and between DRI
    Corporation and holder of Series K Senior Convertible Preferred
    Stock of DRI Corporation (incorporated herein by reference to
    the Companys Annual Report on Form 10-K for the fiscal
    year ended December 31, 2009 filed with the SEC on April 15,
    2010)10
.63.2

Form of Registration Rights Agreement by and between DRI
    Corporation and holder of Series K Senior Convertible Preferred
    Stock of DRI Corporation (incorporated herein by reference to
    the Companys Report on Form 8-K filed with the SEC on
    August 20, 2010)21
.1

Listing of Subsidiaries of the Company (filed herewith)23
.1

Consent of Grant Thornton LLP (filed herewith)31
.1

Section 302 Certification of David L. Turney (filed herewith)31
.2

Section 302 Certification of Kathleen B. Oher (filed herewith)32
.1

Section 906 Certification of David L. Turney (filed herewith)32
.2

Section 906 Certification of Kathleen B. Oher (filed herewith)  86




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SIGNATURES      By:
    /s/  DAVID
    L. TURNEY   Chairman of the Board and Chief Executive
 Officer (Principal Executive Officer)
    Pursuant to the requirements of the Securities Exchange Act
    of 1934, this report has been signed below by the following
    persons on behalf of the registrant and in the capacities and on
    the dates indicated.
  Signature

Title

Date/s/  DAVID
    L. TURNEYDavid
    L. Turney

Chairman of the Board and Chief Executive Officer
    (Principal Executive Officer)

April 15, 2011/s/  KATHLEEN
    B. OHERKathleen
    B. Oher

Vice President, Chief Financial Officer, Treasurer and
    Secretary
    (Principal Financial and Accounting Officer)

April 15, 2011/s/  HUELON
    ANDREW HARRISONHuelon
    Andrew Harrison

Director

April 15, 2011/s/  JOHN
    D. HIGGINSJohn
    D. Higgins

Director

April 15, 2011/s/  HELGA
    HOUSTONHelga
    Houston

Director

April 15, 2011/s/  STEPHANIE
    L. PINSONStephanie
    L. Pinson

Director

April 15, 2011/s/  JOHN
    K. PIROTTEJohn
    K. Pirotte

Director

April 15, 2011/s/  JULIANN
    TENNEYJuliann
    Tenney

Director

April 15, 2011  87