<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the quarterly period ended March 31, 1999
                                   -------------------------------------------

                                            or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the transition period from              to
                               -----------------------------------------------

Commission File Number: 0-20244
                        ------------------------------------------------------

                              DATA RESEARCH ASSOCIATES, INC.
------------------------------------------------------------------------------
                 (Exact name of registrant as specified in its charter)


MISSOURI                                              43-1063230
------------------------------------------------------------------------------
(State or other jurisdiction             (I.R.S. Employer Identification No.)
of incorporation or organization)

1276 NORTH WARSON RD.  ST. LOUIS, MISSOURI                          63132
------------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

(314)    432-1100
------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
                                                                 Yes X   No
                                                                     --    --
                      APPLICABLE ONLY TO CORPORATE ISSUERS:

At April 15, 1999, there were 5,134,613 shares of the registrant's common stock
outstanding.





<PAGE>   2



                                      INDEX

                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES



PART I.  FINANCIAL INFORMATION
------------------------------

Item 1.  Financial Statements (Unaudited)

         Consolidated balance sheets       -March 31, 1999
                                            and September 30, 1998

         Consolidated statements of income -Three months ended March 31,
                                            1999 and 1998
                                           -Six months ended March 31,
                                            1999 and 1998

         Consolidated statements of cash flows -Six months ended March 31,
                                                1999 and 1998


         Notes to the unaudited consolidated financial statements

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations


PART II. OTHER INFORMATION
--------------------------



SIGNATURES























<PAGE>   3


Part I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                       March 31,  September 30,
                                                         1999          1998
                                                      (Unaudited)
                                                      -----------      --------
<S>                                                    <C>            <C>
                                      ASSETS

CURRENT ASSETS
  Cash and cash equivalents                               $11,954       $ 8,710
  Short-term investments                                    3,983         8,493
  Accounts receivable less allowance for doubtful
    accounts of $101 at March 31, 1999
    and September 30,1998:
      Billed                                                6,609         8,092
      Unbilled                                              1,096         2,445
                                                          -------       -------
                                                            7,705        10,537
  Income taxes receivable                                     535           278
  Inventories                                                  59           136
  Prepaid expenses                                            893           542
  Deferred income taxes                                       265           261
  Other current assets                                        211           202
                                                          -------       -------
        TOTAL CURRENT ASSETS                               25,605        29,159
PROPERTY AND EQUIPMENT
  Land and improvements                                       504           504
  Buildings and improvements                                2,713         2,719
  Data processing equipment                                 6,993         6,525
  Furniture, fixtures, and other                            4,282         3,724
                                                          -------       -------
                                                           14,492        13,472
  Less accumulated depreciation                             7,658         6,752
                                                          -------       -------
                                                            6,834         6,720
NOTE RECEIVABLE                                                24            43
DEFERRED SOFTWARE COSTS (net of accumulated
  amortization of $590 at March 31, 1999
  and $1,711 at September 30, 1998)                         4,727         4,365
INTANGIBLE ASSETS (net of accumulated
  amortization of $2,049 at March 31, 1999
  and $4,221 at September 30, 1998)                           705           443
                                                          -------       -------
                                                          $37,895       $40,730
                                                          =======       =======
</TABLE>













<PAGE>   4


(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                        March 31,  September 30,
                                                         1999           1998
                                                      (Unaudited)
                                                      -----------      --------
<S>                                                    <C>           <C>      

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                                        $ 1,535       $ 1,030
  Employee compensation                                       409           375
  Deferred revenue                                          3,169         4,511
  Customer deposits                                           639           695
  Other accrued liabilities                                   137           595
                                                          -------       -------
        TOTAL CURRENT LIABILITIES                           5,889         7,206
DEFERRED INCOME TAXES                                       2,006         2,019
SHAREHOLDERS' EQUITY
  Preferred stock, par value $.01 per share--
    1,000 shares authorized, no shares issued                   -             -
  Common stock, par value $.01 per share--10,000
    shares authorized, 5,557 shares issued at
    March 31, 1999, and September 30, 1998                     56            56
  Additional paid-in capital                                5,657         5,763
  Accumulated other comprehensive income                     (210)         (239)
  Retained earnings                                        28,580        28,887
                                                          -------       -------
                                                           34,083        34,467
  Less cost of treasury stock, 264 shares
  at March 31, 1999, 179 shares
  at September 30, 1998                                     4,083         2,962
                                                          -------       -------
        TOTAL SHAREHOLDERS' EQUITY                         30,000        31,505
                                                          -------       -------
                                                          $37,895       $40,730
                                                          =======       =======
</TABLE>






















See notes to unaudited consolidated financial statements.


<PAGE>   5


                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                        Three months ended      Six months ended
                                              March 31,             March 31,
                                          1999      1998         1999      1998
                                         ------    ------       ------    ------
<S>                                    <C>        <C>          <C>      <C>      
REVENUES
  Hardware                              $   448   $ 1,793      $   922   $ 2,943
  Software                                1,943     1,916        3,157     3,550
  Service and other                       4,600     4,630        9,299     9,299
                                        -------   -------      -------   -------
                                          6,991     8,339       13,378    15,792
EXPENSES
  Cost of revenues
    Hardware                                306     1,226          644     2,054
    Software                                260       483          636       791
    Service and other                     1,304       912        2,599     2,281
                                        -------   -------      -------   -------
                                          1,870     2,621        3,879     5,126

  Salaries and employee benefits          2,897     2,636        5,339     5,121
  General and administrative expenses     1,604     1,978        3,152     3,464
  Depreciation and amortization             458       415          925       796
                                        -------   -------      -------   -------
                                          6,829     7,650       13,295    14,507

    INCOME FROM OPERATIONS                  162       689           83     1,285

OTHER INCOME                                151       257          415       493
                                        -------   -------      -------   -------
     Income before income taxes             313       946          498     1,778

PROVISION FOR INCOME TAXES                  102       363          162       703
                                        -------   -------      -------   -------
    NET INCOME                          $   211   $   583      $   336   $ 1,075
                                        =======   =======      =======   =======

Basic and Diluted earnings per share    $   .04   $   .11      $   .06   $   .19
                                        =======   =======      =======   =======
Dividends per share                     $   .12   $   .12      $   .12   $   .12
                                        =======   =======      =======   =======

</TABLE>













See notes to unaudited consolidated financial statements.




<PAGE>   6


                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                             Six months ended
                                                                 March 31,
                                                               1999     1998
                                                             -------  -------
<S>                                                        <C>       <C>  
OPERATING ACTIVITIES
  Net income                                                $   336   $ 1,075
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation and amortization                           1,645     1,865
      Provision for deferred income taxes                       (16)      (54)
      (Gain)loss on disposal of property and equipment            5         -
      Changes in operating assets
        and liabilities:
          Accounts receivable                                 2,854        88
          Inventories                                            78        37
          Prepaid expenses and
            other current assets                               (360)     (295)
          Accounts payable and
            other current liabilities                        (1,558)     (481)
          Note receivable                                        20        18
                                                            --------  --------
            NET CASH PROVIDED BY
                OPERATING ACTIVITIES                          3,004     2,253
                                                            --------  --------

INVESTING ACTIVITIES
  Purchase of property and equipment                         (1,039)   (1,105)
  Purchased software                                           (513)        -
  Deferred software cost                                       (833)     (650)
  Purchase of short-term investments                        (22,828)        -
  Proceeds from sale of short-term investments               27,338         -
                                                            --------  --------
            NET CASH PROVIDED BY
                (USED IN) INVESTING ACTIVITIES                2,125    (1,755)
                                                            --------  --------

FINANCING ACTIVITIES
  Proceeds from options exercised                               188       150
  Purchase of treasury shares                                (1,415)     (784)
  Dividends paid                                               (644)     (665)
                                                            --------  --------
            NET CASH USED IN
              FINANCING ACTIVITIES                           (1,871)   (1,299)
                                                            --------  --------

            EFFECT OF EXCHANGE RATE CHANGES ON
              CASH AND CASH EQUIVALENTS                         (14)      (23)
                                                            --------  --------

 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             3,244      (824)
                                                            --------  --------
            CASH AND CASH EQUIVALENTS
              AT BEGINNING OF PERIOD                          8,710    19,734
                                                            --------  --------
            CASH AND CASH EQUIVALENTS
              AT END OF PERIOD                              $11,954   $18,910
                                                            ========  ========
</TABLE>

See notes to unaudited consolidated financial statements.


<PAGE>   7




                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
            NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999

Note 1.  Basis of Presentation

The unaudited consolidated financial statements of Data Research Associates,
Inc. (the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and, therefore, should
be read in conjunction with the Company's consolidated financial statements and
the notes thereto for the year ended September 30, 1998, contained in the
Company's annual report for the year ended September 30, 1998. In the opinion of
management, all adjustments (consisting only of normal recurring items)
considered necessary for a fair presentation have been included. Certain amounts
in prior year financial statements have been reclassified to conform with the
current year presentation. The results of operations for the six months ended
March 31, 1999, are not necessarily indicative of the results that may be
expected for the year ending September 30, 1999.

Note 2.  Inventories

Inventories consist primarily of computer equipment and supplies, which are
stated at the lower of cost (first-in, first-out method) or market and the
unamortized cost of computer software purchased for resale. The Company had only
finished goods in inventory at March 31, 1999, and September 30, 1998.

Note 3. Income Taxes

The provision for income taxes is computed using the liability method. The
difference between the effective income tax rate and the U.S. federal income tax
rate is a result of state taxes and subsidiaries' losses for which there is no
current tax benefit.











<PAGE>   8



                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
      NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 MARCH 31, 1999

Note 4.  Earnings per share

The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share data):

<TABLE>
<CAPTION>
                                           Three Months            Six Months
                                              Ended                   Ended
                                            March 31,               March 31,
                                        -----------------      -----------------
                                         1999       1998        1999       1998
                                        -----------------      -----------------
<S>                                    <C>       <C>          <C>        <C>       
Numerator for basic earnings
per share and diluted earnings
per share:
  Net Income                            $ 211      $ 583       $ 336      $1,075
                                        =====      =====       =====      ======
Denominator:
  Basic earnings per share-
  Weighted-average shares               5,345      5,522       5,357       5,532

  Effect of dilutive securities:
    Stock options                          20         23          18          22
                                        -----      -----       -----      ------
  Denominator for diluted earnings
  per share--adjusted weighted-
  average shares and assumed
  conversions                           5,365      5,545       5,375       5,554
                                        =====      =====       =====      ======
Basic earnings per share                $ .04      $ .11       $ .06      $  .19
                                        =====      =====       =====      ======
Diluted earnings per share              $ .04      $ .11       $ .06      $  .19
                                        =====      =====       =====      ======
</TABLE>

Note 5.  Revenue Recognition

As of October 1, 1998, the Company adopted AICPA SOP 97-2, "Software Revenue
Recognition," which was effective for transactions of the Company on or after
that date. Prior years were not restated.

The Company derives revenue from software licenses, hardware sales, maintenance
and other services. Maintenance includes telephone support, software patches and
rights to upgrades on a when-and-if-available-basis. Other services include
installation, training, consulting, data conversion, networking and system
support. In software agreements that include rights to multiple software
products, maintenance, and/or other services, the Company allocates the total
agreement fee among each deliverable based on the relative fair value of each of
the deliverables determined by vendor-specific objective evidence.

Software and Hardware

The Company recognizes the revenue allocable to software licenses upon delivery
of the software product to the end user, unless the fee is not fixed or
determinable or collectibility is not probable. For agreements involving the
sale of hardware and the licensing of software, revenue for the processor
hardware and the software is recognized only upon delivery of both the software
and the processor hardware, which is required to render the software operable.

Revenue for additional hardware, other than the processor, is recognized when
the product is shipped. Software license revenue may include customization or
modification of the Company's software to meet specific customer needs. Revenue
for customization is recognized using contract accounting, which generally
results in using a completed contract basis.



<PAGE>   9

                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
      NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 MARCH 31, 1999



Maintenance

The Company recognizes revenue for maintenance on a straight-line basis over the
period the maintenance is provided.

Other Services

Agreements that include other services are evaluated to determine whether those
services are essential to the functionality of other elements of the agreement.
If a service is considered essential, revenue recognition on the elements whose
functionality depends on the service is deferred until the service is performed.
In multiple element agreements that include software installation, the Company
generally considers software installation to be an essential service. The
Company generally considers other services included in an agreement not to be
essential to the functionality of other elements of the agreement and revenue is
recognized upon completion of the service. Such other services include training,
consulting, data conversion, network installation and network and system
support.









<PAGE>   10



                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
      NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 MARCH 31, 1999


Note 6. Comprehensive Income

As of October 1, 1998, the Company adopted Statement 130, "Reporting
Comprehensive Income." Statement 130 requires that all components of
comprehensive income, including net income, be reported in the financial
statements in the period in which they are recognized. Comprehensive income is
defined as the change in equity during a period from transactions and other
events and circumstances from non-owner sources. The adoption of this Statement
had no impact on the Company's net income or shareholders' equity. Statement 130
requires foreign currency translation adjustments, which prior to adoption were
reported separately in shareholders' equity, to be included in other
comprehensive income. The presentation of prior year financial statements
reflects reclassification of data to conform to the requirements of Statement
130.

The components of comprehensive income, net of related tax, for the three and
six month periods ended March 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                             Three Months         Six Months
                                                Ended                Ended
                                               March 31,           March 31,
                                           ------------------------------------
                                            1999     1998        1999     1998
                                           ------------------------------------
<S>                                       <C>       <C>         <C>     <C>          
Net income                                  $211     $583        $336    $1,075
Foreign currency translation adjustment       21       (8)         29       (33)
                                           ------------------------------------
Comprehensive income                        $232     $575        $365    $1,042
                                           ------------------------------------
                                           ------------------------------------
</TABLE>

The components of accumulated other comprehensive income, net of related tax, at
March 31, 1999 and September 30, 1998, are as follows:

<TABLE>
<CAPTION>

                                                   Mar 31, 1999    Sept 30, 1998
                                                   -----------------------------
<S>                                                  <C>              <C>  
Foreign currency translation adjustment                 $(210)           $(239)
                                                   -----------------------------
Accumulated other comprehensive income                  $(210)           $(239)
                                                   -----------------------------
                                                   -----------------------------
</TABLE>

Note 7. Segment Information

Effective for fiscal year end September 30, 1999 reporting, the Company will
adopt SFAS No. 131, "Segment Information". SFAS No. 131 amends the requirements
for public enterprises to report financial and descriptive information about its
reportable operating segments. Operating segments, as defined in SFAS No. 131,
are components of an enterprise for which separate financial information is
available and is evaluated regularly by the Company in deciding how to allocate
resources and in assessing performance. The financial information is required to
be reported on the basis that it is used internally for evaluating the segment
performance. Management believes the Company operates in one business and
operating segment and that the adoption of this standard will not have a
material impact on the Company's financial statements.


<PAGE>   11



                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES
      NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 MARCH 31, 1999


Note 8. New Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which is
required to be adopted for years beginning after June 15, 1999. Because of the
Company's minimal use of derivatives, management does not anticipate that the
adoption of the new Statement will have a significant effect on earnings or the
financial position of the Company.


<PAGE>   12



DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES


Item 2. Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Overview

  The Company's revenue recognition policy is discussed in Note 5 to the
unaudited consolidated financial statements. The components of the cost for
development of software primarily include salaries and employee benefits and are
expensed as incurred until such costs qualify as deferred software costs which
are amortized over the estimated useful life of the product. The amortization of
capitalized software is allocated as a direct cost of licensing DRA software.
The Company typically experiences greater gross margin on software licenses and
services than on sales of hardware. The Company's profitability depends in part
on the mix of its revenue components and not necessarily on total revenues.

  The Company's revenues and earnings can fluctuate from quarter to quarter
depending upon, among other things, such factors as the complexity of customers'
procurement processes, new product and service introductions by the Company and
other vendors, delays in customer purchases due to timing of library
professional conferences and trade shows, installation scheduling and customer
delays in facilities preparation. In addition, a substantial portion of the
Company's revenues for each quarter is attributable to a limited number of
orders and tends to be realized towards the end of each quarter. Thus, even
short delays or deferrals of sales near the end of a quarter can cause quarterly
results to fluctuate substantially. In the future, the Company's revenues will
be increasingly dependent on sales of its next-generation system which is 
currently being developed. The initial version of certain modules of the new 
system was released in the fourth quarter of fiscal year 1998. The timing of the
completion of this system, Taos, which is based on object-oriented client/server
design, may be affected by multiple factors, including rapid technological 
change, dependence on third-party suppliers and the relative scarcity of 
qualified technical staff. The Company recognized the first revenue from Taos in
the fourth quarter of fiscal 1998 and currently has a backlog of revenue related
to nine contracts for the Taos system. Recognition of revenue from this backlog 
is subject to completion of all required modules mandated by each contract, 
along with the logistical considerations that accompany the initial release of a
new product. See Exhibit 99.1 "Cautionary Statements - Additional Important 
Factors To Be Considered", in the Company's Form 10-K for the year ended 
September 30, 1998.

Year 2000 Readiness Disclosure

   The arrival of the year 2000 poses certain technological challenges resulting
from a reliance of some computer technologies on two digits rather than four
digits to represent the calendar year (e.g., "98" for "1998"). It is generally
believed that computer technologies programmed in this manner, if not corrected,
may produce inaccurate or unpredictable results or system failures in connection
with the transition from 1999 to 2000, when dates will begin to have a lower
two-digit number than dates in the prior century. This problem, the so-called
"Year 2000 Problem" or "Y2K Problem," could have an adverse effect on the
Company's financial condition, results of operations, business or business
prospects because, in order to function properly, the Company's products must
interface with a multitude of software and hardware products manufactured by
unrelated third parties. The Company has been working diligently to prevent or
mitigate disruptions relating to the year 2000.

   As of March 31, 1999, the Company has reviewed all of its proprietary
software products and believes that all of such software products are currently
capable of accurately processing date data related to the change from 1999 to
2000, if used with third party products that are also capable of accurately
processing such data.


<PAGE>   13



   The Company has formed an oversight committee and has developed a plan to
coordinate identification, evaluation and implementation of any necessary
changes to the computer systems, applications and business processes used by the
Company in the operation of its business. As of March 31, 1999, the oversight
committee had identified the Company's systems that could potentially be
impacted by the Y2K Problem, had prioritized the identified systems and had
undertaken three primary steps to validate systems readiness. The three steps
are (1) obtaining a vendor readiness statement (2) internal testing, and (3)
third-party validation through an authorized organization that has already
tested the systems. The Company plans to obtain a vendor readiness statement for
all identified systems and to perform internal testing on those identified as
critical to its operations that have not already been validated through a
third-party authorized organization. By June 30, 1999, the Company will have
completed necessary testing of critical systems and will have compiled a list of
identified problems and recommended solutions. Beginning in July 1999, the
Company will begin applying solutions, verifying that such solutions make the
system(s) avoid the Y2K Problem, and developing a contingency plan for any
critical system that remains susceptible to the Y2K Problem. The Company plans
to be substantially complete with all Y2K readiness and contingency planning by
September 30, 1999.

  The Company anticipates that its Y2K action plan discussed above will be
carried out solely by existing employees without significantly impacting their
other duties. Accordingly, the Company has not incurred any material incremental
costs and has not identified any incremental future costs associated with the
Y2K Problem.

  No assurances can be given that the Company will be able to completely
identify or address all issues related to the Year 2000 Problem that affect the
Company, or that third parties with whom the Company does business will not
experience system failures as a result of the Year 2000 Problem, nor can the
Company fully predict the consequences of any such failure.

  There is no single customer or product vendor which, in the Company's
assessment, is or may be likely to present any significant exposure due to the
Year 2000 Problem. However, management anticipates that there may be some
negative impact on the timely receipt of accounts receivable due to the failure
of certain customers to prepare adequately for the Year 2000 Problem. In a
worst-case scenario, these accounts receivable related difficulties might
require the Company to draw down its own credit line or to reduce the amount of
available cash on hand.

  The Company also could face some risk from the possible failure of one or more
of its third party vendors to continue to provide uninterrupted service through
the changeover to the year 2000. Because the Company outsources the delivery of
hardware to its customers, such a failure could affect the installation of the
Company's products at customer locations. While an evaluation of the Year 2000
preparedness of its third party vendors has been part of the Company's Y2K
action plan, the Company's ability to evaluate is limited to some extent by the
willingness of vendors to supply information and the ability of vendors to
verify the Y2K preparedness of their own systems or their sub-providers.
However, the Company has received assurances from its significant vendors that
there will not be any such disruption; accordingly the Company does not
currently anticipate that any of its significant vendors will fail to provide
continuing service due to the Year 2000 Problem.

   The Company, like similarly situated enterprises, is subject to certain risks
as a result of possible industry-wide or area-wide failures triggered by the
Year 2000 Problem. For example, the failure of certain utility providers (e.g.,
electricity, gas, telecommunications) to avoid disruption of service in
connection with the transition from 1999 to 2000 could adversely affect the
Company's results of operations, liquidity and financial condition. In
management's estimate, such a system-wide or area-wide failure presents a
significant risk to the Company in connection with the Year 2000 Problem because
the resulting disruption may be entirely beyond the ability of the Company to


<PAGE>   14


cure, and the Company relies on such utilities for the delivery of its own
products, particularly telecommunications. The significance of any such
disruption would depend on its duration and systemic and geographic magnitude.
Of course, any such disruption would likely impact businesses other than the
Company.

Forward Looking Statements

Except for the historical information and statements contained in
Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A"), the matters and items contained in this document,
including MD&A, contain a substantial number of forward-looking statements,
indicated by such words as "expects," "believes," "estimates," "anticipates,"
"plans," "assessment," "should," "will," and similar words. These
forward-looking statements are based on the Company's and management's beliefs,
assumptions, expectations, estimates and projections any or all of which are
subject to future change, depending on unknown developments and facts. These
forward-looking statements should be read in conjunction with the disclosures in
Exhibit 99.1 "Cautionary Statements - Additional Important Factors to Be
Considered," in the Company's Form 10-K for the year ended September 30, 1998.






<PAGE>   15


Results of Operations

Three Months Ended March 31, 1999 compared to Three Months Ended March 31, 1998

  Hardware revenues decreased $1.4 million, or 75%, to $.4 million for the three
months ended March 31, 1999, from $1.8 million for the three months ended March
31, 1998. The decrease is primarily due to the lack of new contract shipments in
the quarter ended March 31, 1999, coupled with the continued decline of prices
in the computer hardware market. The Company had no new contract shipments of
hardware in the quarter ended March 31, 1999, as some customers are deferring
purchase decisions or system deliveries in anticipation of Taos. The gross
margin percentage on hardware was 32% in the three months ended March 31, 1999
and in the three months ended March 31, 1998.

  Software license revenues remained consistent at $1.9 million in the three
months ended March 31, 1999, and the three months ended March 31, 1998. The
Company had no new contract shipments of software in the quarter ended March 31,
1999, as some customers are deferring purchase decisions or system deliveries in
anticipation of Taos. However, revenue of $.5 million was recognized on custom
software developed for an existing customer in the three months ended March 31,
1999. The gross margin percentage on software was 87% in the three months ended
March 31,1999, and 75% in the three months ended March 31, 1998. Sales of lower
margin software developed by third parties were down in the three months ended
March 31, 1999, from the three months ended March 31, 1998.

  Service and other revenues were $4.6 million in the three months ended March
31, 1999, remaining consistent with the three months ended March 31, 1998. The
continued increase in software maintenance revenue was offset by a decrease in
revenues from the Company's other services, many of which are associated with
new system sales. Management expects that software maintenance revenues, a major
component of service and other revenues, will continue to increase as the base
of licensed software products increases. The gross margin percentage on service
and other revenues was 72% in the three months ended March 31, 1999, and 80% in
the three months ended March 31, 1998. The decline is primarily attributable to
the mix of services provided. The second quarter of fiscal year 1999 had higher
revenue from the Internet services business than the second quarter of fiscal
year 1998. Internet services have higher direct costs than the Company's other
services.

  Salaries and employee benefits increased $.3 million, or 10%, to $2.9 million
in the three months ended March 31, 1999, from $2.6 million in the three months
ended March 31, 1998. This increase is primarily attributable to $.1 million in
additional salaries due to the hiring of additional staff in the development and
testing departments, coupled with $.1 million in annual salary increases.

  General and administrative expenses decreased $.4 million, or 19%, to $1.6
million in the three months ended March 31, 1999, from $2.0 million in the three
months ended March 31, 1998. This decrease is primarily attributable to the
write-off of purchased software, no longer sold by the company, resulting in a
non-recurring expense of $.4 million in the three months ended March 31, 1998.

  Income from operations decreased $.5 million, or 76%, to $.2 million in the
three months ended March 31, 1999, from $.7 million in the three months ended
March 31, 1998. The decrease is primarily attributable to the decrease in
hardware sales in the three months ended March 31, 1999, from the three months
ended March 31, 1998.

  The Company's consolidated effective tax rate was 33% for the three month
period ended March 31, 1999, and 38% for the three month period ended March 31,
1998. The decrease is a result of additional research and development credits
being generated and utilized in 1999.



<PAGE>   16


Results of Operations

Six Months Ended March 31, 1999 compared to Six Months Ended March 31, 1998

  Hardware revenues decreased $2.0 million, or 69%, to $.9 million for the six
months ended March 31, 1999, from $2.9 million for the six months ended March
31, 1998. The decrease is primarily due to the lack of new contract shipments in
the six months ended March 31, 1999, coupled with the continued decline of
prices in the computer hardware market. The Company had no new contract
shipments of hardware in the six months ended March 31, 1999, as some customers
are deferring purchase decisions or system deliveries in anticipation of Taos.
The gross margin percentage on hardware was 30% in the six months ended March
31, 1999 and in the six months ended March 31, 1998.

Software license revenues decreased $.4 million, or 11%, to $3.2 million in the
six months ended March 31, 1999, from $3.6 million in the six months ended March
31, 1998. The decrease is primarily attributable to one new software contract
that generated $.6 million of revenue in the six months ended March 31, 1998.
The Company had no new contract shipments of software in the six months ended
March 31, 1999, as some customers are deferring purchase decisions or system
deliveries in anticipation of Taos. The gross margin percentage on software was
80% in the six months ended March 31,1999, and 78% in the six months ended March
31, 1998. Sales of lower margin software developed by third parties were down in
the six months ended March 31, 1999, from the six months ended March 31, 1998.

  Service and other revenues were $9.3 million in the six months ended March 31,
1999, remaining consistent with the six months ended March 31, 1998. The
continued increase in software maintenance revenue was offset by a decrease in
revenues from the Company's other services, many of which are associated with
new system sales, in the six months ended March 31, 1999. Management expects
that software maintenance revenues, a major component of service and other
revenues, will continue to increase as the base of licensed software products
increases. The gross margin percentage on service and other revenues was 72% in
the six months ended March 31, 1999, and 75% in the six months ended March 31,
1998. The decline is primarily attributable to the mix of services provided. The
six months ended March 31, 1999 showed higher revenue from the Internet services
business than the six months ended March 31, 1998. Internet services have higher
direct costs than the Company's other services.

  Salaries and employee benefits increased $.2 million, or 4%, to $5.3 million
in the six months ended March 31, 1999, from $5.1 million in the six months
ended March 31, 1998. This increase is primarily attributable to $.1 million in
additional salaries due to the hiring of additional staff in the development and
testing departments, coupled with $.1 million in annual salary increases.

  General and administrative expenses decreased $.3 million, or 9%, to $3.2
million in the six months ended March 31, 1999, from $3.5 million in the six
months ended March 31, 1998. This decrease is primarily attributable to the
write-off of purchased software, no longer sold by the company, resulting in a
non-recurring expense of $.4 million in the six months ended March 31, 1998.

  Income from operations decreased $1.2 million, or 94%, to $.1 million in the
six months ended March 31, 1999, from $1.3 million in the six months ended March
31, 1998. The decrease is primarily attributable to the decrease in hardware
sales in the six months ended March 31, 1999, from March 31, 1998,and to the
less profitable mix of services sold in the six months ended March 31, 1999.

  The Company's consolidated effective tax rate was 33% for the six month period
ended March 31, 1999, and 40% for the six month period ended March 31, 1998. The
decrease is a result of additional research and development credits being
generated and utilized in 1999.



<PAGE>   17


Liquidity and Capital Resources

  The Company's cash needs are primarily for working capital and capital
expenditures and historically have been met by cash flows from operations, bank
borrowings, and equipment leases. At March 31, 1999, the Company's working
capital was $19.7 million and its ratio of current assets to current liabilities
was 4.3 to 1, as compared to working capital of $21.6 million and a ratio of
current assets to current liabilities of 4.0 to 1 at March 31, 1998.

  Net cash provided by operating activities was $3.0 million for the six months
ended March 31, 1999, compared to $2.3 million for the six months ended March
31, 1998. The increase in net cash provided by operations was due primarily to
the receipt, in the six months ended March 31, 1999, of over $1.2 million from
one customer.

  Net cash provided by investing activities was $2.1 million for the six months
ended March 31, 1999, compared to net cash used of $1.8 million for the six
months ended March 31, 1998. The increase in net cash provided by investing
activities is primarily due to the Company's need to maintain cash with enough
liquidity to fund it's repurchase of treasury stock. To accomplish this, as
investments matured during the quarter ended March 31, 1999, the proceeds were
put into instruments whose holding periods classified them as cash or cash
equivalents, rather than short-term investments.

  Net cash used by financing activities was $1.9 million for the six months
ended March 31, 1999, compared to $1.3 million for the six months ended March
31, 1998. Purchases of treasury stock in the amount of $1.4 million for the six
months ended March 31, 1999, compared to $.8 million for the six months ended
March 31, 1998 accounted for most of the increase in cash used. Management
extended the Company's $6.0 million line of credit to January 2000. The line of
credit bears interest at federal funds rate plus 200 basis points payable
monthly on outstanding balances. There have been no borrowings against the
Company's line of credit since May 1991.

  Management believes that, with the current cash position of $12.0 million,
short-term investments of $4.0 million, accounts receivable of $7.7 million,
continued cash flow from operations, and the availability of the $6.0 million
line of credit, and total current liabilities of $5.9 million, the Company will
be able to meet both its short-term liquidity needs and short-term capital
expenditure needs. In April 1999, subsequent to the end of the quarter, the
Company's Board of Directors authorized the additional repurchase of the
Company's common stock in an amount of up to $2 million, such purchases to be
made from time to time during the following twelve months. No material
commitments with respect to capital expenditures have been made for fiscal 1999.
Management believes that with total long-term liabilities of approximately $2.0
million and no other known long-term commitments or demands, the Company will be
able to satisfy its known long-term liabilities and liquidity needs through the
funding sources identified above.












<PAGE>   18



                        DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES



PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not a party to any litigation except the following:

In October 1998, Sector 7 U.S.A., Inc. ("Sector 7"), filed suit against the
Company in the United States District Court for the Western District of Texas,
Austin Division (Civil Action No. A98CA 58-575JN) seeking a declaratory judgment
that Sector 7 did not breach a computer software development contract (the
"Contract") between the Company and Sector 7.

Shortly thereafter, the Company filed a lawsuit against Sector 7 in the United
States District Court for the Eastern District of Missouri, Eastern Division
(Cause No. 4:98 CV 01335ERW), claiming breach of the Contract and seeking
$750,000 for breach of warranty and other damages for fraud in the inducement
with respect to such Contract.

Subsequent to the end of the quarter ended March 31, 1999, the two lawsuits were
tentatively settled through mediation with no expected adverse consequences to
the Company.

Item 2.  Changes in Securities.

Not applicable.

Item 3.  Defaults Upon Senior Securities.

Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.

     (a) The Annual Meeting of Shareholders of the Company (the "Annual
         Meeting") was held on February 10, 1999. of the 5,370,370 shares
         entitled to vote at the Annual meeting, 5,245,248 shares were present
         at such meeting in person or by proxy.

     (b) Not applicable.

     (c) At the Annual Meeting, the shareholders of the Company, elected Howard
         L. Wood as Class C Director of the Company, to Hold office until his
         successor has been duly elected and Qualified, by a vote of 5,241,596
         for and 3,652 withheld.


Item 5.  Other Information.

Not applicable.

Item 6.  Exhibits and Reports on Form 8-K.

     (a) Exhibits

         27 Financial Data Schedule

     (b) Reports on Form 8-K

         No reports on Form 8-K were required to be filed during the three
         Months ended March 31, 1999.



<PAGE>   19




PART II.  OTHER INFORMATION

                 DATA RESEARCH ASSOCIATES, INC. AND SUBSIDIARIES


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                            DATA RESEARCH ASSOCIATES, INC.



May 14, 1999                                /s/Michael J. Mellinger
------------                                ------------------------------
Date                                        Michael J. Mellinger
                                            Chairman, President, and
                                            Chief Executive Officer
                                            (Principal Executive Officer)


May 14, 1999                                /s/Katharine W. Biggs
------------                                ------------------------------
Date                                        Katharine W. Biggs
                                            Vice President, and
                                            Chief Financial Officer
                                            (Principal Accounting Officer)