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Microcap & Penny Stocks : Docucon ( DOCU )

DOCU 68.87

+1.3%

Nov 26 3:59 PM EST

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To: MARK SIMON who wrote (24)	7/11/1996 12:35:00 AM
From: Randall E. Gann	of 510

This all depends on how fast they can scan the job, the faster the better. Then they can go out and get a new contract fast. Their are more contracts than most of these scanning companies can handle. We've been using paper or microfilm for how many years? About 30 for microfilm. Paper? If they do have previous existing machines they can use, the profit margin is very high the machines are paid for from the first contract. They may still be working on previous contracts so you can't assume they have these machines available. Some of these machines cost $80,000 at the present. I'm unsure of what kind of machines they use? Mekel and Sunrise are the ones I'm familiar with. These two machines are mainly designed to scan Micro fiche and rollfilm not paper. Kodak makes one of the best paper scanners and I know they aren't cheap. Remember most big companies use Micro film not paper to store important info. Insurance companies are the biggest source of revenues not lawyers offices. This can be a very high margin business as it is new. Very little competition at this point. Watch out for the big microfilm companies who already have many of these customers as clients to come into the business as competition. Indexing is the hardest part of the job, the scanning or the imaging is easy. So you just scanned an image what do you do with it with out indexing. Indexing is where the money comes in because you have to pay someone to type in the index or you have to count on tech that is so so to do it. This can be a slow proccess. If the quality is good or the documents are all the same you can use OCR (Optical Character Recgonition) to read an index for you thus making it automated and quicker. If the job is done right half could be profit. I'm unfamiliar with the contract so I can't say for sure. 14.7 M, how many documents are we talking? What are the indexing parameters? What is the quality of the original material? Mark I hope this helps. If you have more questions let me know and I will try to answer as best I can. I truely do not completely understand DOCU's market but I think I understand the problems they will run into. If you have some smart people to running things this business can be very profitable but how big can your operation get before it becomes hard to manage?

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