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Microcap & Penny Stocks : SEDONA Corporation (SDNA)

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To: Mike Heimbuch who wrote (89)	3/17/1997 4:33:00 PM
From: Mike Heimbuch	of 731

Follow up on Private Placement Issue Spoke at length with Pete Delle Donne of Sedona this afternoon. He described in detail where the money would likely go - 10-20% each to the scanner division and TRC division - the remaining 70% to Sedona to expand in-house map data, develop the software department and commercialize its products. Still developing is the key here. Size of the placement may be substantial - more like 5-8 million - with a possible credit line for again as much. I was told that getting the money was no problem - at least 10 outfits lined up to hand out the funds. May be done deal in under 4 weeks. Sedona is right there in the highest demand segment of GIS - providing map and data info - but needs to keep working on related manipulation software. Sales efforts are going well - but we have yet to see committments to purchases that will generate press releases - which he assured me would be out immediately when they happen. There is still substantial risk of execution here. Sounds like we can expect the first 8-10 months of 97 to continue with negative EPS, although by even pessimistic standards Mr. DD expects profitability this year - and all indicators for the future expectations to fall in place within the next 6 months. He said it is very difficult for the layman to understand what SCNG is doing- in terms of products,demand, technology, and direction. If the Open GIS consortium can keep from fracturing due to provincial business interests - and stay focused on standards development - SCNG will have a wonderful chance for a home run in the next two years. The consortium timetable seems to be set back aways at this point. The TRC division continues to hold promise if they can figure out how to market this huge government bidding database they have worked on forever. Says the working atmosphere is incredibly good and positively focused. There are some personnel needs to provide distinct marketing and sales efforts, as well as some engineers to work on product development. Commercialization of what has been primarily government and bureaucratic oriented product - remains a primary task for Sedona - as does the comprehensive packaging of both data and manipulation tools into a product which can meet a wide array of needs and withstand the rapid obsolescence which comes with technological change. There is competition - alot of which may become customers of SCNG - because of slightly different niches in the GIS world - GIS is expanding exponentially - new territory for everybody. High risk - yes - unequivocably says Mr. DD - but this is not just a horse race between equals - SCNG does have some advantages to bring to the table. Now - the public just needs to sit down and eat. My question is - what does a large private placement do for the stock price?? Mike H.

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