EXECUTIVE INFORMATIONAL OVERVIEW

Transcription

Document Capture Technologies, Inc.
4255 Burton Drive
Santa Clara, CA 95054
Phone: (408) 436-9888
Fax: (408) 436-6151
www.docucap.com
Global Provider of Demand-Driven, Mobile Imaging Solutions
Snapshot
April 5, 2011
Over the past decade, information management has become increasingly important worldwide, particularly
with regard to how information is stored and shared. Accordingly, Document Capture Technologies, Inc.
(“DCT” or “the Company”) develops document and image capture products that transform business-critical
papers into a manageable digital format. DCT has worked for the past several years to provide cost-effective
†
and accurate mobile scanners as alternatives to manual data entry. The Company’s flexible and mobile
scanning solutions create usable electronic content suited for database, document, content, and other
systems. In doing so, these solutions are intended to reduce organizations’ operating costs, improve
information accuracy, and speed-up processing time. DCT seeks to provide a seamless operational link
between the scanner and data-collecting device by providing a customized interface based upon specific
client needs. The Company believes that it has created a competitive barrier that separates it from a
commodity-type business. To DCT’s knowledge, it ranks among the world’s largest developers of USBpowered, page-fed document capture platforms today. Since its first scanner was introduced in 2002, DCT
has shipped an estimated four million products for both business and personal use.
Recent Financial Data
Ticker (Exchange)
DCMT (OTC.BB)
Recent Price (04/05/2011)
$0.40
52-week Range
$0.15 – $0.95
Shares Outstanding*
~20.5 million
Market Capitalization
~$8.2 million
Average 200-day Volume
63,579
Insider Owners
~5%
Institutional Owners + >5%
~73%
EPS (Year ended 12/31/2010)
$0.01
Employees
29
* As of March 8, 2011.
Key Points

DCT emphasizes vertical markets and business-to-business sales, working with large branding
companies to bring imaging solutions to market. At present, the Company offers over 30 proprietary
scanners, which are distributed globally through Tier 1 original equipment manufacturers (OEMs),
value-added resellers (VARs), and other systems integrators.

Global spending for information management is valued in the trillions of dollars. In particular, the mobile
scanning market has expanded over the past several years in response to the following factors: (1) the
prevalence of broadband, which is nearly ubiquitous in the U.S. today; (2) legislation (the Check 21
Act, the USA Patriot Act) that has aided the establishment of a digital marketplace; and (3) increasing
demand for technology solutions that enhance information and identification security and efficiency.

DCT’s USB-powered scanners include smart functionalities, software support, and innovative security
features. Going forward, the Company is also working to introduce next-generation autonomous
products that incorporate capabilities such as Wi-Fi and Bluetooth connectivity with the ability to
upload scanned documents to mobile devices (e.g., smartphones) or cloud-based solutions.

DCT holds more than 20 patents, two pending patent applications, three patent applications in presubmission status, and five trademarks.

The Company believes that it is well situated to retain a solid position in the document and image
capture sectors due to its novel proprietary products, ability to customize products to meet customer
needs, commitment to research and development (R&D), global clientele, sales growth of approximately
29% in 2010, and a cash position of $2.3 million as at December 31, 2010.

In August 2010, DCT received $4 million from NCR Corp. via a private placement of Common Stock at
$1.036 per share. At present, DCT is profitable with no debt. In 2010, net revenue totaled $14.8 million.
†
BOLD WORDS ARE REFERENCED IN THE GLOSSARY ON PAGES 45-47.
Table of Contents
Snapshot ....................................................................................................................................................... 1 Recent Financial Data ................................................................................................................................... 1 Key Points ..................................................................................................................................................... 1 Summary ....................................................................................................................................................... 3 Company Background................................................................................................................................... 4 Growth Strategy ............................................................................................................................................ 6 Intellectual Property ...................................................................................................................................... 8 Company Leadership .................................................................................................................................... 9 Core Story ................................................................................................................................................... 13 Product Portfolio ................................................................................................................................... 13
Customer and Partner Relationships.................................................................................................... 22
Market Opportunities ............................................................................................................................ 24
Competition ................................................................................................................................................. 30 Milestones ................................................................................................................................................... 33 Historical Financial Results ......................................................................................................................... 34 Risks............................................................................................................................................................ 38 Recent Events ............................................................................................................................................. 44 Glossary ...................................................................................................................................................... 45 CRYSTAL RESEARCH ASSOCIATES, LLC
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Summary

Approximately 31% of all U.S. healthcare costs are related to paperwork, which is a leading
contributor to rising costs within this industry. Providers and insurance companies alike face pressure
to control costs and simplify complicated processes, and thus seek new, more efficient approaches.

Compact devices, such as DCT’s platforms, can function as stand-alone document and image
scanners or as part of larger systems facilitating digital healthcare records.

DCT’s products transform business-critical paper information into a manageable digital format for a
variety of enterprises, including government agencies, corporations, small offices and home offices
(SOHO), professional practices, and consumers. Through efficient document management solutions,
DCT enables reduced operating costs, more accurate information, and increased processing speeds.

The Company is focused on delivering lightweight, cost-effective products that have a small footprint
and are simple to integrate with other systems. Its patented scanners are designed to produce quality
images at low power consumption levels.

DCT offers customized document and image capture solutions equipped with proprietary software
development kits (SDKs) for integration with new and existing third-party systems. SDKs support
multiple applications, faster time to market, and ease of integration for partners/customers.

Over the past decade, the Company’s DocketPORT®, TravelScan®, SimpleScan®, and DocuPass®
brands have been distributed through a global network of original equipment manufacturers (OEMs)
and value-added resellers (VARs), including NCR Corp. (NCR-NYSE), Qualcomm, Inc. (QCOMNASDAQ), Burroughs Payment Systems, Inc., and Brother Industries, Ltd. (6448-TYO).

In August 2010, DCT closed a $4 million strategic direct investment with NCR Corp., a global
information and technology solutions provider. DCT anticipates using the NCR investment to enhance
future product offerings by developing core assets and intellectual property and expanding into new
market segments. In conjunction, NCR retained an option to further invest in DCT.

Information and communications technology (ICT) helps businesses create cost efficiencies,
boost labor productivity, and remain competitive. Vertical markets, such as financial services, tend to
have the greatest level of ICT. DCT targets diversified, growing vertical markets, such as banking,
healthcare, travel and hospitality (e.g., reading passports, ID cards), bulk freight transport, and an
array of other industries benefitting from the secure digitization of paper forms and images.

One of the fastest-growing trends in banking technology is remote deposit capture (RDC), fueled by
banks and others seeking to differentiate their mobile and online services. RDC has become a key
contributor to customer satisfaction and retention. DCT has previously entered into agreements with
Bridgeport Technologies, Digital Check, Burroughs, and NCR to develop RDC services using USBpowered mobile terminals—which reduce the processing costs of deposits and related transactions
and allow partners to customize RDC solutions for improved service and ongoing revenue growth.

The Company is led by a management team with expertise in research and development (R&D),
business development, corporate finance, sales, and marketing, among other fields. Corporate
leadership is focused on identifying and pursuing the most beneficial global opportunities for DCT,
and has recently strengthened its R&D team in order to enhance core competencies and create new
scanning solutions for greater penetration of high-growth markets.

DCT is profitable with no debt. Net revenue totaled $14.8 million in 2010 ($11.5 million in 2009), and
earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding non-recurring
expenses, was $1.6 million ($394,000 in 2009). At December 31, 2010, DCT had cash and cash
equivalents of $2.3 million. DCT believes that its financial position is a result of serving diversified
markets with products that are reliable, flexible, efficient, well supported, and delivered on time.

The Company’s progress during 2010 was favorable, particularly with regard to its working capital of
$4.8 million and no debt. With revenue growth and additions to leadership, DCT believes that it is
poised to pursue business expansion and a greater global presence in 2011 and beyond.
CRYSTAL RESEARCH ASSOCIATES, LLC
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Company Background
Corporate History
Document Capture Technologies, Inc. (“DCT” or “the Company”), a Delaware corporation, formerly
operated under the name Syscan Imaging, Inc. (“SII”) and was a subsidiary of a Chinese company.
Initially, SII created proprietary image-sensing technologies in chip form but transitioned to supplying an
end-user product that encompasses the technology.
SII completed a reverse merger in 2004 to become a public company with shares traded on the Overthe-Counter Bulletin Board (OTC.BB) under the ticker “SYII.” In June 2006, SII changed its name to
Sysview Technology, Inc. and began trading under the ticker “SYVT.” During this time, the Company
pursued a crossover of its technology from mobile image-scanning devices to light-emitting diode (LED)
display technology, with the objective of supplying the intellectual property and technological capabilities
needed by large suppliers of monitors, flat-panel televisions, and other electronics. In 2008, management
initiated a refocus on its core product line of document capture platforms, which were the Company’s
primary revenue generator. As part of the refocus toward core competencies, the display business was
sold, Mr. David Clark (biography on page 9) became chief executive officer (CEO), and the Company was
renamed Document Capture Technologies. The ticker was changed to “DCMT” in January 2008. Since
2008, DCT has worked to streamline its business and deliver new mobile scanning products.
In September 2010, DCT combined its corporate office and warehousing facilities, at which time the
Company also expanded its domestic production capabilities. This move was anticipated to create
significant operational efficiencies and better position DCT to capitalize on certain market opportunities,
specifically those presented by U.S. government agencies that require products to be manufactured in the
U.S. under the Trade Agreements Act.
Headquarters and Employees
DCT is headquartered in Santa Clara, outside of San Jose, California, and employs 29 individuals in
R&D, sales, operations, and administration. Of these employees, three are located in China, two are in
Europe, and the remaining individuals are based in the U.S. To support growth (as described on pages 67), the Company is expanding offices in Europe and has plans to add sales personnel.
The Santa Clara location contains 32,000 square feet for corporate offices, product development,
inventory management, and distribution. The Company also has field service/sales offices and inventory
management and distribution facilities in the Netherlands (contact information below). As depicted in
Figure 1 (page 5), the majority of DCT’s manufacturing presently occurs in China and Taiwan. Logistics
services, such as transportation, storage, and distribution, are provided by third parties.
IJsselburcht 3, Suite 212
6825BS Arnhem
Netherlands
Phone: (+31) 26-36 53 440
Fax: (+31) 26-36 53 441
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Figure 1
GLOBAL PRESENCE
New York, New York
▪ Investor Relations
Arnhem, Netherlands
Apeldoorn, Netherlands
▪ European sales and
marketing
China
▪ Warehousing
▪ Manufacturing base
Silicon Valley, U.S.
▪ Engineering pool
▪ Sales and marketing
▪ China mass market
access
▪ R&D advanced
technology development
▪ Warehousing and U.S.
assembly
Taiwan
▪ Tooling fabrication
▪ Sourcing and
merchandizing
Source: Document Capture Technologies, Inc.
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Growth Strategy
DCT emphasizes vertical markets and business-to-business sales, working with large branding
companies to bring products to market. This model enables DCT to focus on its core strengths, which are
creating technologies, designing products, and establishing solutions that other companies/organizations
then supply to their customers. The Company expects to continue following this business model going
forward.
In addition to exploiting DCT’s chief expertise, this strategy has the added effect of limiting the Company’s
exposure to the retail environment. Monitoring demand through its global OEM and VAR partners, DCT
believes that sales are likely to continue to grow, especially throughout the EU and other large markets.
A paramount objective for DCT during 2011 is to ensure that it remains a customer-centered organization,
attuned and responsive to the needs of its clients. DCT intends to focus on deepening its relationships
with its Tier 1 OEM partners—NCR, Qualcomm, Burroughs, and Brother—while also working more
closely with top VAR customers.
With the expansion of its R&D team in 2009, DCT continues to develop products in-house. One growth
segment relates to information security, which has become a critical issue in many industries, including
travel, healthcare, and banking. In February 2011, a report from International Data Corporation (IDC)
forecasted growth of security products at nearly 8% in 2010, as markets rebound from the prior years’
recession (Source: Worldwide IT Security Products 2011–2014 Forecast and 2009 Vendor Shares:
Comprehensive Security Product Review). Organizations that had postponed investments in new
technologies are now expected to continue with upgrades, including for IT and security.
At the same time, DCT is evaluating synergistic partnership opportunities that combine skills from each
company and that have the potential to speed the development process and cycle time for bringing new
products to market.
Business Strategy: Focus on Hardware, Software, Sales, and New Global Vertical Markets
Going forward, DCT’s business strategy is to increase market penetration by expanding its document
scanning hardware portfolio, broadening the scope of its proprietary input devices, improving speed-tomarket, and initiating sales in new vertical markets.
Rather than developing an internal retail network to reach the end consumer, DCT emphasizes vertical
markets and business-to-business sales. The Company works with large branding companies to bring
products to the consumer. This model enables DCT to focus on its core strengths, which include creating
technologies, designing products, and establishing solutions that other companies/organizations then
supply to their customers. DCT has an ongoing commitment to bringing new R&D technologies to market
that specialize in adaptability and mobility. The Company expects to continue to follow this business
model.
Through accelerating investments in internal R&D as well as inlicensing, DCT is working to expand the
scope of its proprietary input devices. There are a wide range of uses for document capture platforms as
input devices. DCT recognizes the importance of addressing each of these and being able to offer various
software bundles based on what the Company’s partners and customers require in order to serve their
customers. Accordingly, DCT expects software to become an even larger component of its portfolio going
forward. The Company is continuing to enhance its multi-platform (Windows®, Mac, Linux, Windows®
Mobile, and Windows® CE) SDKs and leverage them in the creation of cloud-based software applications
to facilitate a range of input devices.
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In addition to providing customer support to existing Tier 1 OEM partners and VAR customers, the
Company is also investing in expanding its connections with customers, suppliers, and partners in
international markets, particularly across Europe and Asia. Moreover, DCT is working to enhance sales
and marketing in new vertical arenas where the Company believes there are growth opportunities, such
as point-of-service (POS), home POS, and remote POS (e.g., self-service) transactions, among many
other areas. Pages 25-29 present a detailed description of DCT’s current and targeted global markets.
To support these efforts, the Company has recently expanded its leadership, appointing Mr. Craig H.
Weber (biography on page 10) as president and chief operating officer (COO) in November 2010, Mr.
Jacques F. vonBechmann (biography on page 10) as senior vice president of sales in January 2011, and
Mr. Karl Etzel (biography on page 11) as product and business development manager in February 2011.
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Intellectual Property
DCT’s product development strategy is fueled by its intellectual property with the objective of creating
market-driven products. The Company has an aggressive intellectual property strategy to protect its
proprietary technology. DCT holds multiple patents related to scanning devices, including for efficient lowpower designs, and specializes in adaptability, integration into new and existing systems, and mobility,
with an ongoing commitment to R&D.
As of November 2010, DCT reported that its intellectual property portfolio comprised five trademarks,
more than 20 patents, two pending patents, and three patent applications in pre-submission status.
Current patents do not expire until 2017. In addition to its current patent and trademark portfolio, DCT is
collaborating with various third parties with the intent of licensing novel new features that can be
combined with the Company’s intellectual property to create stronger barriers to entry.
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Company Leadership
Over the past several months, DCT has added three new members to its executive management team,
with expectations of transforming the Company into an organization capable of fueling revenue and
profitability growth and accelerating new product development and deployment. The Company intends to
continue to selectively add new talent to its team.
Further, DCT expanded its R&D team during the third quarter 2009 to ramp-up R&D. New team
members, Mr. Peng-Cheng Chen and Mr. Suleman Saya, bring a combined 37 years of hardware and
software expertise to DCT from companies such as Cirrus Logic, Inc. (CRUS-NASDAQ) and Siemens AG
(SI-NYSE). The Company expects its strengthened R&D team to facilitate development of new scanning
solutions for greater penetration of high-growth markets, including remote deposit capture (RDC) and
healthcare.
The accompanying pages list DCT’s management, Board of Directors, and advisors. Table 1 provides a
summary of the Company’s key individuals, followed by detailed biographies.
Table 1
CORPORATE LEADERSHIP
David P. Clark
Chief Executive Officer and Director
Craig H. Weber, MBA, J.D.
President, Chief Operating Officer, and Secretary
M. Carolyn Ellis, MBA, CPA
Chief Financial Officer
Jacques F. vonBechmann, III, MBA
Senior Vice President of Sales
Pim (Willem) Blom
Vice President Business Development EMEA
(Europe, Middle East, Africa)
Karl Etzel, M.S.
Product and Business Development Manager
David P. Clark, Chief Executive Officer (CEO) and Director
Mr. Clark became DCT’s CEO in March 2008. Since July 2004, he had served as DCT’s senior vice
president of business development and as a director. He joined the Company from Nautical Vision, Inc.
where, as president, he created and implemented a business plan in the image display industry. From
2001 to 2003, Mr. Clark actively invested in and consulted to several companies with a focus on business
development, corporate finance, sales, and marketing. He was also president and CEO of
Homebytes.com from 1998 to 2001, where he raised over $25 million in funding from investors, including
America Online (AOL-NYSE), FBR Technology Venture Partners L.P., PNC Bank (PNC-NYSE), and
Bank of America Corp. (BAC-NYSE), as well as was instrumental in the acquisition of a key competitor.
Previously, Mr. Clark was director and the head of distribution of Take-Two Interactive Software, Inc.
(TTWO-NASDAQ), which resulted from Take-Two’s acquisition of Inventory Management Systems, Inc.
(IMSI), of which Mr. Clark was co-founder and president. Prior to founding IMSI, he held management
positions with Acclaim Entertainment, Inc. and the Imagesoft Division of Sony Music Holdings. Mr. Clark
received a B.S. in business from the State University of New York, Binghamton in 1990.
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Craig H. Weber, MBA, J.D., President, Chief Operating Officer (COO), and Secretary
Mr. Weber joined DCT as president and COO in November 2010. During a more than 25-year career, Mr.
Weber has served as president and CEO, chief financial officer (CFO), COO, and chief legal officer
(CLO), among other executive roles. Most recently, he was executive vice president, corporate
development and CFO of Home Care Delivered, Inc., a supplier of disposable medical supplies, where he
was also responsible for strategic planning and growth initiatives, acquisitions, and leadership
development. Previously, he was managing partner of Hollymeade Group, LLC, a private investment firm;
president and CEO of Whitlock eBusiness Solutions, a business and technology consulting company;
COO, strategic planning officer, and legal officer of Homebytes.com; and vice president, business
development and chief legal, administrative, and human resources officer for Walco International, Inc., a
$400 million pharmaceutical distribution company owned by Bain Capital. Before beginning his business
career, Mr. Weber practiced law as a partner at McGuireWoods in Richmond, Virginia, and as an
associate at Sullivan & Cromwell in New York City where he specialized in corporate finance, mergers
and acquisitions (M&A), and banking. Mr. Weber holds an MBA from the College of William and Mary; a
J.D. from the University of Virginia, where he was a member of the Virginia Law Review; and a B.S. from
Cornell University. Since 2002, Mr. Weber has been a member of the Board of Directors of Optical Cable
Corp. (OCCF-NASDAQ), where he is chairman of the Compensation Committee and serves on the Audit
Committee.
M. Carolyn Ellis, MBA, CPA, Chief Financial Officer (CFO)
Ms. Ellis was appointed DCT’s CFO in November 2007. She had been an independent contractor to the
Company since 2006 in the role of supervising financial reporting obligations. Prior to her work with the
Company, Ms. Ellis served as a director, secretary, and treasurer of Knovative, Inc., a
telecommunications R&D company that she co-founded in 2003 and where she remains a member of the
Board of Directors. From April 2000 to July 2003, Ms. Ellis served as the vice president of finance for
Correlant Communications. She has been a certified public accountant (CPA) since 1989. She earned a
Bachelor’s degree in economics and accounting from Hendrix College in 1986 and an MBA from the
University of New Mexico in 1994.
Jacques F. vonBechmann, III, MBA, Senior Vice President of Sales
Mr. vonBechmann joined DCT as senior vice president of sales in January 2011. Previously, he was
senior vice president of sales and marketing at Home Care Delivered. He has held executive positions in
sales and marketing for companies ranging from Internet start-ups to Fortune 100 companies, including
national accounts, Allergan, Inc. (AGN-NYSE); vice president, marketing of Cendant Corporation; and
vice president, sales at Allianz. He is also experienced with a variety of markets that include
pharmaceutical, consumer products, technology, and financial institutions and has worked with
companies such as Capital One Financial Corp. (COF-NYSE), Bank One Corp. (now part of JPMorgan
Chase & Co. [JPM-NYSE]), Qwest, Genworth Long Term Care, Columbia HCA, Double Click, Orbitz
Worldwide, Inc. (OWW-NYSE), The Walt Disney Co. (DIS-NYSE), Continental Airlines and United Airlines
(both part of United Continental Holdings, Inc. [UAL-NASDAQ]), American Airlines, Inc. (AMR-NYSE),
Expedia, Inc. (EXPE-NASDAQ), and Blue Cross and Blue Shield. Mr. vonBechmann also taught
marketing, economics, and leadership courses as an adjunct professor at the University of Richmond. He
is a graduate of the University of Virginia and received an MBA from the College of William and Mary.
Pim (Willem) Blom, Vice President Business Development EMEA (Europe, Middle East, Africa)
Mr. Blom, a native Dutchman, joined DCT in October 2005. He has extensive experience in the
distribution of well-known document imaging brands, such as Kodak, Kofax, Microtek, Agfa, Polaroid,
Fujitsu, and Omnipage. Before joining DCT, he was the European sales manager at Fibrenetix Group in
the UK, where he was responsible for sales, marketing, and distribution of mass storage devices for
document imaging and video applications. Mr. Blom has over 20 years of experience in marketing and
sales of a variety of IT products and equipment in the international marketplace and started his career in
the IT sector at Philips Telecommunications and Data Systems in 1988. Other experience includes
serving as director of sales and marketing at Phertron, a Netherlands-based company, where he
managed a sales group in the Benelux countries with international accounts including Philips and DuPont
Optical, Mitsubishi Chemical Holdings Corp. (4188-TYO), Agfa, and Teac Corporation (6803-TYO).
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Karl Etzel, M.S., Product and Business Development Manager
Mr. Etzel holds a Master’s in mechanical engineering from the University of California at Irvine. He joins
the Company after more than a decade as program manager for the U.S. Navy as well as product
manager for the Data Communications Division of Cypress Semiconductor Corp. (CY-NASDAQ) and Intel
Corp.’s (INTC-NASDAQ) Digital Health Group. His graduate education was fully funded by a National
Science Foundation Graduate Research Fellowship. DCT expects that Mr. Etzel can help facilitate the
continual strengthening of the Company’s product engineering department. Throughout his career, Mr.
Etzel has demonstrated an ability to accelerate the development of new products, and manage those
products from concept through launch to the forging of sales partnerships. His past assignments have
addressed several industry verticals of importance to DCT, including leading the development, marketing,
and OEM support for a hardware reference design for the healthcare sector.
Board of Directors
Table 2 provides a summary of DCT’s directors, followed by detailed biographies. The Board of Directors
oversees the conduct of and supervises the Company’s management.
Table 2
BOARD OF DIRECTORS
Edward M. Straw, MBA
David P. Clark
Roseann Larson, CPA
Darwin Hu, M.S.
Jody R. Samuels, J.D.
Chairman
Chief Executive Officer and Director
Director
Director
Director
Edward M. Straw, MBA, Chairman
Mr. Straw is currently executive vice president of PRTM Management Consultants, an operational
strategy consulting group. From 2000 to 2005, he served as president of global operations for Estée
Lauder Companies Inc. (EL-NYSE). From 1998 to 1999, he served as senior vice president of supply
chain management and manufacturing for Compaq Computer Corp. (now part of Hewlett-Packard Co.
[HPQ-NYSE]). Prior to Compaq, he served as president of Ryder Integrated Logistics Inc. from 1996 to
1998. Before joining the private sector, Mr. Straw had a distinguished 30-year career in the U.S. Navy,
retiring as a three-star admiral in 1996. He holds a B.S. from the U.S. Naval Academy and an MBA from
George Washington University, and is also a graduate of the National War College.
David P. Clark, CEO and Director
Biography on page 9.
Roseann Larson, CPA, Director
Ms. Larson has held several executive positions with Estée Lauder in her more than 20 years with the
company. Most recently, she held the position of vice president and program manager, EMEA for Estée
Lauder, responsible for centralizing, standardizing, and streamlining information systems across Estée
Lauder’s global enterprise. At the commencement of her career at Estée Lauder in 1989, Ms. Larson was
manager, internal audit where she conducted operational, IT, financial, and environmental audits and
contributed to fraud investigations for all divisions worldwide. Prior to her tenure at Estée Lauder, Ms.
Larson held several accounting and financial positions at Citicorp (part of Citigroup Inc. [C-NYSE]) from
1982 to 1989. She is a CPA and a member of the American Institute of Certified Public Accountants
(AICPA). She earned a B.B.A. in accounting from Bernard Baruch College (New York) in 1980.
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Darwin Hu, M.S., Director
Mr. Hu became chairman, president, and CEO of the Company on April 2, 2004, in connection with the
acquisition of Syscan, Inc. He resigned as president and CEO on March 1, 2008, and stepped down as
chairman of the Board of Directors on July 15, 2008. He continues to serve as a director of the Company.
Prior to April 2, 2004, Mr. Hu was the president and CEO of Syscan, Inc., DCT’s wholly owned subsidiary.
Mr. Hu has over 21 years of experience in the high-tech industry and has held various managementrelated positions within organizations related to color graphic imaging input scanning, display output and
imaging communication product development, manufacturing, and sales and marketing. Before joining
Syscan in April 1998, Mr. Hu held senior management positions at Microtek International, Inc. (2305TPE), Xerox Corp. (XRX-NYSE), OKI Electric Industry Co. Ltd., Advanced Vision Research, Inc., Olivetti
S.p.A., and Grundig Business Systems. He holds a Bachelor’s degree in engineering science from
National Cheng-Kung University, Taiwan, and a Master’s degree in computer science and engineering
from California State University.
Jody R. Samuels, J.D., Director
Mr. Samuels became a director of DCT in September 2009. He is currently of counsel to the law firm of
Richardson & Patel LLP and from 2006 through 2009 was a partner of Richardson & Patel LLP. Prior to
that, he was an associate and then a partner with the law firm of Ellenoff, Grossman & Schole from 2004
through 2006. From 1996 through 2004, Mr. Samuels was an associate at the law firm of Gersten Savage
LP. Mr. Samuels has been the Company’s corporate counsel since Syscan merged with Bankengine
Technologies, Inc. in 2004. Mr. Samuels represents many public and private companies in connection
with their corporate and securities transactions, including public offerings, private investment public entity
(PIPEs), and reverse mergers, as well as M&A transactions and regulatory compliance. Mr. Samuels also
represents broker-dealers in connection with public and private securities offerings. He received a B.S. in
accounting from Brooklyn College in 1991 and a J.D. from New York Law School in 1995.
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Core Story
Document Capture Technologies, Inc. (“DCT” or “the Company”) provides demand-driven solutions for
the paper-to-digital revolution that emphasize convenience, speed, and quality. DCT produces more than
30 document and image capture platforms, which are distributed globally. Over the course of its
operations, the Company has shipped nearly four million scanning products. Customers include Tier 1
original equipment manufacturers (OEMs), value-added resellers (VARs), and other systems integrators.
To the Company’s knowledge, it is one of the largest manufacturers of USB-powered, page-fed, mobile
scanners worldwide.
Based on its research, DCT believes that scanning is in its infancy and is an intimidating process for
many people. With compact designs and “plug and go” ease of operation, DCT’s products are intended to
be user-friendly. The Company’s USB-powered scanners also feature low power and space requirements
(i.e., a small footprint), with an aim to provide a simple form of document management at a low cost that
is easy to integrate with existing processes.
Another challenge that DCT faces is changing the way that people view scanning. The Company believes
that the average individual is unaware of the number of ways that information can be stored, shared, and
managed, and the efficiencies created by digitizing paper files and images.
DCT strives to demonstrate these benefits by promoting scanners as efficient devices easily employed for
many daily tasks. The Company defines its products as more than just a scanner that uploads a
document and attaches it to an email. Rather, DCT gives its document capture platforms “smart”
functionalities where the devices can integrate scanned data into a database or another application,
reducing human error and increasing efficiencies. With smart, fully functional scans, consumers use
document capture platforms to not only upload documents but also to digitize pictures, manage expense
reports, and deposit checks, among many other activities.
In addition, in response to globally heightened concerns for security, DCT is working to address an
increased demand for state-of-the-art information, identity, and financial transaction protection. Overall,
DCT believes that its products’ advanced information management features can continue to lead to
greater efficiencies in many industries.
DCT’s products are not only applicable to traditional areas where scanners have typically been used but
they have also extended the reach of document capture platforms into new markets. The Company’s
devices and technologies can be used for remote deposit capture (RDC), bank note and check
verification, document and information management, scanning barcodes, scanning IDs, passports, or
other security measures, reading business cards, and as optical mark readers, such as for lottery
terminals.
Pages 13-21 describe DCT’s product lines, highlighting the specifications, security features, and software
support for current products. Pages 22-23 overview DCT’s customer and partner relationships, and pages
24-29 detail the expanding vertical markets where the Company’s scanners are currently employed and
where DCT is seeking greater market penetration.
PRODUCT PORTFOLIO
DCT markets over 30 products across five classes (as listed in Table 3 [page 14]) designed to
accommodate the diverse needs of a variety of enterprises and markets, which include government
agencies, large and small corporations, small office/home office (SOHO) settings, professional practices,
and consumers. While all of DCT’s products are built from the same patented technologies, the product
groupings have varying features and configurations. Through its diverse product lines, the Company
manages the processing of millions of forms, documents, and transactions annually. Captured content is
efficiently converted into usable digital information that can be integrated into databases, documents, and
other types of information management systems.
®
PAGE 13
Table 3
PRODUCT CLASSES
A4: Letter Size
A5: Leaflet or Flyer
A6: ID Card; Check
A8: Business Card
CMOS-based Passport/ID
DCT markets its products domestically and internationally
through a network of more than 45 independent distributors
and channel partners across North America, Europe, and
Asia, as well as through several retail and Internet-based
channels.
DCT is committed to research and development (R&D) and
product innovation, a focus that it believes helps it stay at the
forefront of the paper-to-digital revolution. Using patented
technology, DCT optimizes product designs to be compact,
lightweight, and capable of providing quality images at low
power.
Currently, the DocketPORT® and TravelScan® lines comprise the Company’s most popular product
groups, which are further profiled on the accompanying pages. These secure document imaging
platforms possess the following attributes:

USB powered;

Mobile; and

Page-fed.
Product Evolution
DCT’s initial scanners were centered on portability, which defined the Company’s early stages. Launched
in 2002, DCT’s first scanners were approximately the size of the cardboard tube within a roll of paper
towels and ran solely on USB power. These products were geared toward “road warriors” (people who
travel extensively for business) and capitalized on the expanding use of notebook computers.
To the Company’s knowledge, it was among the first to develop a portable scanner, a high-speed
portable scanner using USB 2.0, and a duplex (dual-sided) USB-powered scanner. Since these
developments, the Company has continued to release a consistent flow of new and next-generation
products, some of which are currently being field-tested. Table 4 summarizes DCT’s key historical product
development milestones.
Table 4
KEY PRODUCT DEVELOPMENT MILESTONES
2000
Introduced the first portable scanner with a PCMCIA interface
2004
Introduced USB 2.0 high-speed portable scanners
2005
Introduced A4 Duplex products
2006
Introduced a "Check 21" version of the A4 Duplex scanner
2007
Introduced an A6 Duplex scanner
2008
Brought new products to market, including the “7” series, DP 488, and DP 688
2009
Launched a next-generation controller (TS-PRO-XL, 4 Xena models)
2010
Introduced RDC solutions and the new CMOS DP 540
®
PAGE 14
Over the past decade, the Company’s DocketPORT®, TravelScan®, SimpleScan®, and DocuPass® brands
have been distributed through a global network of solution providers and VARs. As illustrated in Figure 2,
these product classes have included a number of models over the years.
Mobile Scanning Solutions
Figure 2
PRODUCT EVOLUTION
A4: Letter Size
A6: ID Card; Check
A8: Business Card
2002
2003
2004
2005
2006
2007
2008
2009
2010
These products have supported popular computing platforms such as Windows®, Mac OS, Linux,
Windows® Mobile, and Windows® CE. In addition, DCT offers proprietary Software Development Kits
([SDKs] described on page 17) for custom integration, application control, and VAR configurations.
Current Scanners
DCT’s most popular current scanners are largely concentrated within the DocketPORT® product line,
which represents fourth-generation compact document and image capture. The DocketPORT® products
share several common features, including the following: (1) USB powered; (2) optical resolution of 600
dots per inch (dpi); (3) lightweight; (4) small footprint; and (5) a minimal power requirement. Several of
the products offer duplex capabilities, where they can scan both sides of a two-sided document
simultaneously.
Additionally, DCT’s products meet stringent product compliance requirements from various countries,
including the EU’s Restriction of Hazardous Substances (RoHS) Directive and Waste Electrical and
Electronic Equipment (WEEE) Directive. The Company’s products have been RoHS compliant since
January 2006. Both DCT and its product manufacturer have established ongoing surveillance programs in
coordination with requirements set by multiple standards organizations, such as Underwriters
Laboratories, the Canadian Standards Association, CB Safety Standards, the Federal Communications
Commission (FCC class B), the EU (CE mark), and Japan (Voluntary Control Council for Interference
[VCCI] compliance).
®
PAGE 15
Figure 3 depicts several currently available DocketPORT® products. A detailed description of DCT’s
newest image capture platform, the DocketPORT® 540 (DP 540), follows the Figure.
Figure 3
A SELECTION OF CURRENT PRODUCTS
®
DocketPORT 487
®
DocketPORT 667
DocketPORT 488
DocketPORT 687
®
DocketPORT 468
®
DocketPORT 467
®
DocketPORT 540
®
®
DocketPORT 531
®
DocketPORT® 540 (DP 540)
In September 2010, DCT released its latest platform, the DP 540, which is targeted for scanning
passports and ID cards. The 500 series entails flatbed scanners, such as depicted in Figure 4. In keeping
with the Company’s signature design, the DP 540 has a small footprint and was built to be up to 10 times
faster than conventional scanning technologies—with image capture achieved in two seconds. It is the
Company’s smallest and fastest ID scanner.
Figure 4
500 SERIES
Quickly converts bulky passports and IDs to
electronic records
The DP 540 is targeted for the domestic and
international travel industries, which have strict security
and identification requirements. In February 2011, DCT
showcased the DP 540 to approximately 3,000
international travel IT professionals at a Travel
Technology Show in London. The DP 540 has a flat
surface; thus, it is equipped to rapidly and efficiently
scan bulky passports, personal ID papers, tickets, and
vouchers by airlines, airports, hotels, and travel agents.
It can also be integrated into kiosks and custom
housings, and includes multi-country adapter plugs.
DCT believes that the DP 540 is among the most
efficient low-cost technologies for the travel industry. In
addition, the DP 540 can be used in a variety of other
markets, including healthcare, retail, and commercial,
which require paper-to-digital processing of bulky
documents.
®
PAGE 16
The DP 540 is compatible with 32- and 64-bit versions of Windows® 7, Vista, and XP and uses the
TWAIN 1.9 imaging standard for both Windows® and Mac operating systems. The TWAIN standards are
specifications created by the TWAIN Working Group, a nonprofit organization representing the imaging
industry to link applications and image capture devices. These specifications help scanner and camera
vendors write the drivers for their devices. Drivers that follow TWAIN specifications are known as “TWAIN
drivers” or “TWAIN-compatible drivers.” As the DP 540 is TWAIN compliant, it may have hundreds of
commercial applications.
CMOS Image Sensor
In the 1990s, DCT’s wholly owned subsidiary, Syscan, Inc., began creating a new generation of patented
contact image sensors (CIS) that are complementary metal-oxide-semiconductor (CMOS) imaging
sensor devices. Many document scanners use CIS technology, which gathers light from red, green, and
blue LEDs (which when combined provide white light) and directs the light at the document being
scanned. The light reflected back is absorbed by a lens and directed at an image sensor array that
records the images based on light intensity. The DP 540 utilizes a camera-based (CMOS) image capture
system. This fast image capture technology uses multiple light sources for enhanced accuracy. It also
incorporates color, grayscale, and infrared scanning modes. The DP 540 has no moving parts.
As a result of its work in this area, DCT holds multiple patents for linear imaging technology. Its patented
CIS and mobile imaging scanner technology lead to high-quality images at low power consumption levels.
This characteristic allows DCT to deliver compact scanners that are simple to use and easily integrated
with computers, peripherals, and other systems.
Software
The Company custom designs document capture solutions that are lightweight, have a small footprint,
and, most importantly, are easily integrated with third-party systems. The ease of integration comes from
proprietary software development kits (SDKs) and application programming interfaces (APIs), which allow
the scanners to interface with both new and existing systems at a rapid rate. The Company can develop
an interface, if one does not already exist, with any computing device where there is a need for a small
footprint scanner. Competitors’ small retail scanners are generally not equipped for such integration.
In addition to ease of integration, the Company’s SDKs and APIs allow for a broad range of applications
and a faster time to market. DCT’s standard software packages include drivers to support Microsoft®
Windows® 7/Vista/XP, Windows® CE, Linux, and Mac OS. Since the software is bundled with the scanner
to meet specific customer needs, DCT’s products can be configured to run via servers or cloud-based
solutions.
DCT’s products can be easily configured to support different languages, and the Company provides
ongoing support for Romanized, Cyrillic, and Sinographic character software. Thus, its products are
believed to be well suited for sales opportunities in many international markets.
Going forward, DCT intends to focus on software applications as well as hardware applications. As the
Company develops wireless capabilities (Bluetooth and Wi-Fi), its software components are likely to
become more innovative to meet new demands. For example, next-generation autonomous scanners
could allow users to display and edit the digital image directly on the scanner via an LCD screen (as
addressed under Pipeline Initiatives on page 18).
Furthermore, the Company recognizes the need for expanded functionality. As such, DCT is developing
software solutions to support its partners’ and customers’ novel or best-of-breed cloud-based services.
For example, a USB or Bluetooth connection with a simple user interface could allow the end-user to
interact with various features in the cloud, such as contact management. Essentially, DCT aims to offer a
database unique to the user that would be maintained in the cloud, with plug-ins enabling such activities
as expense report management for small and micro businesses or the business traveler, photo services
(e.g., scanning photos to an online account), and access to a secure electronic vault, among many other
possible functions via the scanner. Ultimately, there are many uses for mobile scanners as an input
device.
®
PAGE 17
Security Features
DCT incorporates multiple security features into its hardware and software to meet varying market
requirements. Its scanners sold in the healthcare industry are Health Insurance Portability and
Accountability Act (HIPPA) compliant. To help ensure the security of private patient information,
scanned images are not stored on the devices but rather are transferred and then erased from the buffer
with no residual image to interfere with various healthcare privacy regulations. Greater details on the
application of DCT’s products to the healthcare field are provided on pages 26-27.
In addition, each scanner has digital serialization, which can be used in many different ways from
marketing to security. As a marketing tool, digital serialization enables recognition of where scanners are
deployed. As a security tool, it provides users with verification functions. One example of a verification
feature occurs during the remote check deposit process. When a check is scanned, it is digitally
serialized. Before being deposited, the digital serial number must match the specified customer and
scanner. This gives banks an additional verification measure before the deposit is completed.
Manufacturing
DCT’s goal is to remain cost-competitive by efficiently sourcing components and materials, driving
manufacturing costs lower and carefully controlling overhead. Much of the Company’s manufacturing
occurs in China and Taiwan. DCT purchases the majority of its finished products from Shenzhen Syscan
Technology (SST), a wholly owned subsidiary of Syscan Technology Holdings Ltd. A pricing agreement,
negotiated periodically, is in place between DCT and SST. Further, the Company believes that using this
supplier provides better control over both product quality and cost, as DCT’s engineers work closely with
the manufacturing team from the early stages of product design. DCT procures and delivers to SST
substantially all of the critical components and tooling required for scanner manufacture.
SST is in the process of relocating its primary manufacturing facilities from Shenzhen, China, to Wuhan,
Hubei Province, China, as a strategy to reduce direct and overhead costs. This relocation is on-track to
be complete with fully functional facilities by the end of April 2011.
Pipeline Initiatives
DCT is focused on introducing new hardware to remain competitive going forward. Among these
initiatives, the Company has targeted wireless scanning. As well, its Xena project seeks to produce an
autonomous scanning device capable of interaction with a wider variety of user modes and devices.
Autonomous products could include scanners that operate on a lithium ion battery and that incorporate a
small LCD screen and Bluetooth connectivity, allowing users to scan documents and upload the scans to
their mobile device—personal digital assistants (PDAs), iPhones, iPads, or BlackBerry or Droid
smartphones—via Bluetooth. DCT aims to begin shipping a selection of these new products during 2011.
DCT believes that mobile banking and mobile transactions will likely increase in the future with Webbased solutions becoming more prominent. To capitalize on this trend, the Company is developing
products with Wi-Fi connectivity and autonomous products that do not need a host device (e.g., a
computer) but rather connect to a cloud. As an example, Hewlett-Packard Company (HPQ-NYSE) has
introduced printers with an independent IP address so consumers can print from a cell phone to a printer
and bypass the need for a computer.
®
PAGE 18
Current Product Specifications
The DocketPORT® 488, listed in Table 5, can scan size ranges from business cards to legal documents
and represents the third generation of DCT’s duplex scanners. It is fully USB powered with no required
AC power adaptor. Another featured product of the DocketPORT® 400 series, the 487, scans full-size
documents on both sides simultaneously in as quickly as 10 seconds. Separately, the 468 simplex
scanner was designed for improved document handling and user interface.
Table 5
PRODUCT SPECIFICATIONS
®
DocketPORT 488
®
DocketPORT 487
®
®
DocketPORT 468
DocketPORT 467
Interface
Image Sensor
USB 2.0 (high speed) USB 2.0 (high speed) USB 2.0 (high speed) USB 2.0 (high speed)
Dual, 2 linear color
CMOS CIS
CMOS CIS
Linear color CMOS
CMOS
Resolution
Scanning Modes
600 dpi
Internal 48-bit analogto-digital conversion
for R,G,B three-color
channels
600 dpi (optical)
48-bit color (internal),
24-bit color (output),
8-bit grayscale,
1-bit B&W
600 dpi
Internal 48-bit analogto-digital conversion
for R,G,B three-color
channels
600 dpi (optical)
8-bit grayscale,
1-bit B&W
Scan Speed
10 ppm B/W;
4 ppm color
6 ppm B/W;
3 ppm color
5 ppm B/W;
2 ppm color
6 ppm B/W;
3 ppm color
Scan Area
8.5" x 14" max.
Business cards to
legal documents
8.5" x 14" max.
Business cards to
legal docs, A4 format
Weight
Dimensions
(L x W x H)
21 oz. w/o cable
12.25" x 2.0" x 2.65"
17.8 oz.
11.8" x 2.4" x 1.9"
12 oz. w/o cable
11.5" x 2.0" x 1.7"
12 oz.
11.7" x 2" x 1.7"
Cable Length
Power
Consumption
150 cm
0.01W suspend;
0.2W standby;
2.0W during scan
152 cm (detachable)
0.2W standby;
2.0W during scan
150 cm
0.01W suspend;
0.2W standby;
2.0W during scan
152 cm (detachable)
0.2W standby;
2.0W during scan
Paper Sensor
Paper Thickness
Regulatory
Requirement
Mechanical
0.1 mm~1.2 mm
CE, FCC Class B
Electro-mechanical
0.1 mm to 1.0 mm
FCC Class B, CE,
USB-IF.org
Mechanical
0.1 mm~0.6 mm
CE, FCC Class B
Electro-mechanical
0.1 mm to 0.8 mm
FCC Class B, CE,
USB-IF.org
Environmental
Requirement
RoHS, WEEE
RoHS, WEEE
RoHS, WEEE
RoHS, WEEE
Operating
Systems
Windows 7, Vista,
XP, 2003, 2000; Mac
OS X 10.4 and later
Bundled
Software
DocketSCAN II with
Scan-to-PDF utility
®
®
Windows 7, Vista,
XP, 2003, 2000; Mac
OS X 10.4 and later
®
®
Windows 7, Vista,
XP, 2003, 2000; Mac
OS X 10.4 and later
Windows 7, Vista,
XP, 2003, 2000; Mac
OS X 10.4 and later
DocketSCAN II with
Scan-to-PDF utility
Presto!
PageManager 7
®
PAGE 19
The DocketPORT® 687 offers quick and convenient scanning for ID cards and licenses with supported
document sizes ranging from business cards to 4” x 10” documents. Like many of DCT’s other products,
the DocketPORT® 687 is a fully USB-powered, portable duplex scanner. The DocketPORT® 531 has a
flatbed design and scans security documents with an infrared source. This platform is optimal for
passports, drivers’ licenses, bank checks, ID cards, photos, and digital watermarked documents.
Table 5 (continued)
PRODUCT SPECIFICATIONS
®
®
®
®
DocketPORT 687
DocketPORT 667
DocketPORT 540
DocketPORT 531
Interface
Image Sensor
USB 2.0 (high speed)
Dual, 2 linear color
CMOS
Linear color CMOS
CMOS Area
USB 2.0 (full speed)
Linear color - infrared
CMOS
Resolution
Scanning Modes
600 dpi (optical)
8-bit grayscale,
1-bit B&W
600 dpi (optical)
8-bit grayscale,
1-bit B&W
Scan Speed
Infrared, Grayscale,
Color
600 dpi (optical)
Monochrome, Color,
and Infrared filter
6 ppm B/W;
3 ppm color
Under 2 seconds
3 to 12 seconds
Scan Area
Weight
Dimensions
(L x W x H)
4.13" x 10" A6 format
10.6 oz.
8" x 2.75" x 1.8"
4.13" x 10" A6 format
8.4 oz.
7.5" x 2" x 1.7"
3.8" x 5.0"
2 lbs.
7.6" x 8.6" x 3.8"
5" x 3"
20 oz.
8.6" x 6.1" x 1.7"
Cable Length
Power
Consumption
152 cm (detachable)
0.2W standby;
2.0W during scan
152 cm (detachable)
0.2W standby;
2.0W during scan
183 cm
100-240 VAC,
50/60 Hz
152 cm (detachable)
0.2W standby;
2.0W during scan
Paper Sensor
Paper Thickness
Regulatory
Requirement
Electro-mechanical
0.1 mm to 1.0 mm
FCC Class B, CE,
USB-IF.org
Electro-mechanical
0.1 mm to 0.7 mm
FCC Class B, CE,
USB-IF.org
CE, FCC Class B
None, flatbed design
No limit, flatbed design
FCC Class B, CE
Environmental
Requirement
WEEE, RoHS
WEEE, RoHS
RoHS
WEEE, RoHS
Operating
Systems
Windows 7, Vista,
XP, 2003, 2000
DocketSCAN
Bundled
Software
®
®
Windows 7, Vista,
XP, 2003, 2000
Presto!
PageManager 7
®
®
Windows XP, 2000,
ME, 98SE
TWAIN driver only
Windows 7, Vista,
XP (64- and 32-bit)
DocketSCAN 2 with
Scan-to-PDF utility
®
PAGE 20
Legacy Products
Figure 5 illustrates some of DCT’s legacy products, for which the Company offers technical support and
software downloads through its website, www.docucap.com. These comprise a selection of
DocketPORT® devices as well as the TravelScan® line, which are entry-level document management
products.
Similar to the aforementioned DocketPORT® products, the TravelScan® scanners are lightweight, have a
small footprint, and are full-speed USB powered. As they require minimal workspace, they can be
conveniently carried with laptops, enabling users to efax, email, and organize business documents on the
go. The optical resolution of the scanners in the TravelScan® line is 300 dpi, and each of these is also
RoHS compliant. They entail minimal power consumption and are designed for simple operation at the
touch of a button.
Figure 5
LEGACY PRODUCTS
®
DocketPORT 465
®
®
TravelScan PRO600/600ND
DocketPORT 485
®
DocketPORT 685
®
DocketPORT 665
®
TravelScan PRO 2300 U/UP
®
TravelScan 662
®
TravelScan 464/464M
®
TravelScan FS531
®
TravelScan 660
®
PAGE 21
CUSTOMER AND PARTNER RELATIONSHIPS
DCT supplies document capture systems for use at a range of enterprises, including government
agencies, large corporations, SOHO setups, professional practices, and consumers. However, the
Company’s sales and marketing efforts are not targeted toward the end-users of its products but rather to
its direct customer base. As represented in Figure 6, DCT’s imaging products are distributed globally
through private-label solutions to Tier 1 original equipment manufacturers (OEMs), value-added resellers
(VARs), and other system integrators, including NCR Corp., Qualcomm, Inc., Burroughs Payment
Systems, Inc. (formerly part of Unisys Corp. [UIS-NYSE]), and Brother Industries, Ltd., among others.
Figure 6
A SELECTION OF THE COMPANY'S PARTNERS
DCT has provided products to many entities in the document capture market, including but not limited to…
NCR Corp.
DYMO-CardScan®, the technology
division of Newell Rubbermaid Inc.
Brother Industries, Ltd.
Xerox Corp., via a relationship with Visioneer, Inc.
Burroughs Payment Systems, Inc.
Qualcomm, Inc.
Digital Check Corp.
Ambir Technology Inc.
Sources: Crystal Research Associates, LLC and Document Capture Technologies, Inc.
NCR is a global technology company that supplies automated teller machines (ATMs), retail point-ofsale (POS) workstations, self-service kiosks, check and document imaging, and other solutions that aim
to help businesses connect, interact, and transact with their customers. Qualcomm specializes in wireless
communications worldwide, particularly for mobile communications and consumer electronics. Brother
International Corp. (the U.S. subsidiary of the Japanese parent, Brother Industries) provides products for
the home, home office, and office, including industrial products, home appliances, and business products
manufactured by Brother Industries. Other well-known Brother products include printers, fax machines,
and electronic labeling.
In addition, DCT has worked with multiple other third parties, such as CardScan®, a developer of contact
management technology for scanning business cards and managing the contact information in a
database. In 2008, CardScan® was merged into DYMO, the technology division of Newell Rubbermaid
Inc. (NWL-NYSE), which supplies a variety of organization and productivity solutions.
DCT also designs and manufactures product for Visioneer, Inc., a developer of intelligent imaging
solutions. Visioneer has an exclusive licensing agreement with Xerox Corp. to develop and market Xeroxbranded document scanners and digital projectors. Altogether, DCT markets its scanners through a
global network of more than 45 independent distributors and channel partners in North America, Europe,
and Asia.
®
PAGE 22
One of the primary benefits that DCT offers its customers is a vertically integrated business structure. The
Company designs, develops, and manufactures, allowing for quicker time to market. DCT also handles
product compliance and seeks to address any other concerns presented by its clients. Many customers,
such as NCR, visit the Company’s manufacturing facility on a biannual basis. As such, these relationships
serve to validate DCT’s capabilities. In addition, the Company maintains a product service and support
group for over 50 key channel partners that entails Web-based driver support, call center support, and
warranty and repair support.
Figure 7 provides a sample illustration to highlight how DCT’s product designs become branded thirdparty products.
Figure 7
FROM DESIGN TO REALITY
Revenues
DCT reported net revenues of over $14.8 million in 2010 (up from $11.5 million in 2009), generated solely
through sales of its document and image capture products. This increase of 29% was due to a 33%
increase in the number of scanners sold by the Company during 2010, as the average selling price
remained relatively constant. Sales included purchases by recurring customers for use in existing
products as well as for use in next-generation offerings.
NCR’s Recent Investment in DCT
On August 5, 2010, DCT received $4 million from NCR Corp. via a private placement of Common Stock
at $1.036 per share. In connection with the investment, NCR was given the right, at its election, to
designate one member to the Company’s Board and was granted a two-year option to purchase an
additional $4 million of Common Stock at $1.036 per share. To date, NCR has not exercised its right to
designate a Board member.
The investment by NCR signifies both a strategic and financial milestone. DCT expects to direct these
funds toward further partnership with NCR for the development of turnkey transaction solutions in both
the remote deposit capture (RDC) and healthcare markets. Because DCT’s technology is synergistic with
NCR’s products in multiple areas, this investment may also facilitate the Company’s entry into new
markets, such as hospitality and travel.
As part of the investment, NCR and DCT strengthened their existing strategic supplier master
procurement agreement. This agreement, initiated in July 2009, pertains to DCT’s manufacture and sale
of scanning products intended for resale by NCR. What was originally a three-year term on this
agreement is now extended until August 2014. Under the terms, DCT may not provide any products to
any other entity engaged in RDC or that seeks to facilitate electronic document management on a bank’s
secure server.
®
PAGE 23
MARKET OPPORTUNITIES
Information and Communications Technology (ICT)
ICT generally entails any device, service, or technology concerned with the storage, retrieval,
manipulation, transmission, or receipt of digital data. During 2009, the global ICT market contracted
approximately 3% in response to the worldwide economic crisis. In contrast, overall global trade declined
roughly 12.2% in 2009 (Source: the World Trade Organization, March 2010). As the world markets
recover (world trade was expected to expand 9.5% during 2010), the ICT market as well is set to
rebound—fueling spending for products and solutions that enhance information management.
Based on research conducted by IHS Global Insight,
Inc., a division of IHS Inc. (IHS-NYSE), the World
Information Technology and Services Alliance
([WITSA] www.witsa.org) anticipates worldwide ICT
growth of over 8% during 2011, stabilizing near 6% in
2013 (Source: WITSA’s Digital Planet 2010: the
Global Information Economy, June 2010). From 2009
to 2013, Digital Planet 2010 forecast regional growth
rates ranging from 5.9% per year for the Americas to
9.5% for Asia-Pacific, although the Americas will likely
still be the largest market for ICT products and
services in 2013.
Figure 8
GLOBAL ICT SPENDING BY MAJOR SEGMENT
($US Trillions, forecasted)
5.0
4.0
3.0
2.0
1.0
Figure 8 depicts findings that government and
business account for a sizeable share of ICT spending
due to ICT’s ability to create cost efficiencies, boost
productivity, and enhance competitiveness. Moreover,
vertical markets, such as financial services and
telecommunications, tend to have the greatest level of
ICT (Source: WITSA, November 23, 2010).
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Consumer Business/Gov't
Source: Figure 5, page 15 of Digital Planet 2010 from the
World Information Technology and Services Alliance and
IHS Global Insight, Inc.
Figure 9 highlights global ICT spending levels during 2009 for a number of major industries. Financial
services, noted in Figure 9 to be among the largest existing markets for ICT products, is expected to
remain a leading sector over the next several years as well (Source: Digital Planet 2010). As detailed on
the following pages, DCT targets many of these vertical industries, particularly finance and healthcare.
Figure 9
ICT SPENDING BY INDUSTRY SEGMENT IN 2009 ($US Billions)
Financial Services
Government
Services
Manufacturing
Telecom
Transportation
Healthcare
Retail Trade
Wholesale and Distribution
Hospitality, Hotels, and Leisure
Energy and Utilities
Hardware
Software
Services
Communications
Construction
Natural Resources
Educational Services
-
50
100
150
200 250 300
350 400
Source: Figure 7, page 16 of Digital Planet 2010 from the World Information Technology and Services Alliance and IHS Global
Insight, Inc.
®
PAGE 24
Mobile Document Capture
Over the past several years, a mobile scanning market has developed in response to the widespread
prevalence of broadband, which is nearly ubiquitous in the U.S. today. Broadband is essentially highspeed Internet access that is always available. With reliable broadband service, consumers and
enterprises alike benefit, as businesses have the ability to operate websites 24 hours a day, seven days a
week, and can deliver products and services in real time. Government, education, and healthcare
institutions also profit from offering online services, such as interactive home-based medical monitoring,
multi-media distance learning, or sending and receiving data to run a home business, among other
applications (Source: Communications Workers of America).
Accordingly, consumers have gravitated to electronic forms of communication, transmitting documents via
email or otherwise online rather than in paper form. DCT is capitalizing on the paper-to-digital revolution,
which is fueled by advancements within the broadband sector itself, particularly with regard to the speeds
that are now available for consumers that make transmitting large files online far less time consuming
than previously.
Check 21 Act
As a result of all of the changes brought about by the technological revolution over the past several
decades, people and businesses alike are in need of solutions to address newly arising security
concerns. In particular, recent new legislation has aided the establishment of a digital marketplace, which
requires advanced technologies and information-protection measures, such as DCT’s mobile scanners
with built-in security features (described on page 18). For example, after the Check Clearing for the 21st
Century Act (“Check 21”) became effective in October 2004, DCT began working to address several new
market opportunities created through this law. Check 21 allows banks to process electronic checks in the
same way that paper checks are processed.
The establishment of Check 21 enabled remote deposit capture (RDC) as a means for account holders to
remotely upload images of their paper checks to banking institutions instead of physically depositing the
paper check. As well, and perhaps a lesser known effect of Check 21, is that it was also designed to
enable banks to handle checks electronically between branches and institutions. Traditionally, banks had
to physically move paper checks from the bank where they were deposited to the bank that paid them.
A Selection of the Company’s Targeted Vertical Markets
Through its customer relationships, DCT has targeted global vertical markets that it believes have growth
potential and that could benefit from faster, easier-to-use products offering enhanced security. DCT’s
imaging products are supplied to partners in diversified industries encompassing banking, transportation,
healthcare, justice, law enforcement, and entertainment. Several trends today are helping to drive
demand for document capture solutions such as DCT’s, as noted below:

A proliferation of “green” initiatives intended to efficiently reduce waste;

Increasing demand for digital storage to reduce paper storage;

Greater requirements and legislation for secure information processing (e.g., the Health Insurance
Portability and Accountability Act [HIPPA]); and

Increasing demand for secure, efficient, and remotely performed financial transactions.
To that extent, efficiency is a key advantage driving the adoption of DCT’s products. USB-powered
scanners can make a number of processes more efficient. Between the widespread adoption and
increased speeds of broadband, Check 21 and other legislation, and various other general security
concerns, DCT has identified a range of vertical markets that could benefit from integrating its pagecapture platforms into both new and existing systems. Such target markets include healthcare,
passport/ID cards, RDC and banking, security, and transport, among many others (as listed in Table 6
[page 26]).
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PAGE 25
Table 6
EXAMPLES OF DCT'S VERTICAL MARKETS FOR MOBILE SCANNERS
Healthcare and Medical Applications
Financial Sector and Banking
Passport and ID Card Security Readers
Gaming and Lottery
Remote Deposit Capture (RDC)
Bulk Freight In-Cab Solutions (Trucking and Transport Form Input)
Document Management
Corporate IT Solutions
Business Cards and Receipts
Legal and Sales Contracts
Faxing and Mobile Imaging Communication
DCT evaluates direct and focused opportunities where its products can be simple to use and be
integrated at a lower cost with ease to its customer base as well the end-user. Below are overviews of
several market sectors where the Company’s platforms are currently employed and where it believes
there are further near-term expansion opportunities.
In addition, DCT works within the SOHO arena, and expects the point-of-sale to become more of an
opportunity in the future as well. Further, the Company’s pipeline includes products that capitalize on
trends toward mobile and Web-based transactions.
Healthcare
Historically, healthcare has represented over 50% of the Company’s revenues on an annual basis. Going
forward, DCT continues to see considerable healthcare opportunities, particularly in light of the U.S.
government’s focus on digitizing healthcare documents.
Fraud detection has been a critical driver of DCT’s healthcare business. Patient fraud occurs when
someone goes into a healthcare provider and supplies their personal insurance card and identification but
fills out the appropriate forms on behalf of a friend or relative who actually has the health issue and is in
need of the care but lacks insurance. Often, once the receptionist photocopies the ID and insurance
information and places it in the patient’s file, it is not verified again. To address this issue, the healthcare
system has started implementing multiple points of identity verification. Thus, when an individual checks
in at the receptionist, their information is uploaded to an electronic file, which is available for verification
by physicians and other medical personnel as they see the patient. For example, when a physician orders
an X-ray or an MRI for a patient, the technician can pull up the patient’s information and view a
photograph of the patient to ensure that the correct person is receiving treatment. These procedures may
help reduce insurance fraud.
Figure 10
600 SERIES
Scanners for IDs and Insurance Cards
Additional scanner applications within the healthcare
industry include, but are not limited to, the following: (1)
updating medical records at nursing stations, examining
rooms, or other remote locations; (2) patient or customer
registration and verification through a kiosk; (3)
facilitating insurance claim documentation; and (4) copayment processing. Often, claims are rejected by
insurance companies due to manual errors; however,
electronically capturing patient information and sharing it
with other providers and insurance partners may
minimize the potential for error. As illustrated in Figure
10, compact products (e.g., the DocketPORT® 600
series) are optimal for scanning information at the front
desk of a healthcare facility, such as IDs and insurance
cards. DCT’s scanners can lead to shortened registration
times, reduced errors, and reduced costs.
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PAGE 26
In a move to further establish contacts in the healthcare industry, DCT entered into a consulting
agreement with National Health Media in August 2010. The Company expects this relationship to provide
ongoing representation in the healthcare industry, generating awareness for DCT’s products’ significance
and application in the industry beyond solely ID card scanning. Specifically, this relationship is expected
to help the Company capitalize on the current U.S. government’s push toward the digitization of
healthcare documents and the storage of that information in a cloud-based environment. Healthcare
represents more than 17% of gross domestic product (GDP) in the U.S. today (Source: The Week
October 29, 2010), and is a crucial area for DCT going forward.
Rising Healthcare Costs Create Opportunities for More Efficient Technologies
The U.S. spent $2.3 trillion on healthcare in 2008, which was more than double the per capita spending of
European countries, Japan, and other industrialized nations (Source: The Week). With ongoing pressure
to control costs and simplify complicated processes, healthcare providers and organizations are seeking
new, more productive approaches. Such methods may include implementing new technologies geared
toward creating low-cost efficiencies, such as DCT’s platforms, which can work as stand-alone document
and image scanners or as part of larger systems for automated healthcare records. Approximately 31% of
all U.S. healthcare costs are related to paperwork, which is a leading contributor to the rising cost of
healthcare (Source: New England Journal of Medicine 349:768-775; 2003).
There is also a significant need for IT systems that reduce administrative expenses and improve
healthcare resources and processes, particularly as it relates to insurance plan management (Source:
Health Affairs Vol. 28 [4]: 544:554; 2009). Recent federal healthcare reform in the U.S. included two new
laws signed in March 2010: (1) the Patient Protection and Affordable Care Act; and (2) the Health Care
and Education Reconciliation Act of 2010. Among other changes, these acts include provisions that
require most individuals to obtain health insurance, establish new regulations on health plans, establish
health insurance exchanges, and modify certain payment systems to encourage more cost-effective care
and to reduce inefficiencies and waste, including through new tools to address fraud and abuse.
Passports and ID Cards
Identification verification, insurance card scanning, and scanning patient documents are believed to be
among the most common uses for document capture platforms. DCT’s passport and ID scanners, such as
the DP 540 (described on pages 16-17), also enable transaction verification by capturing images of photo
IDs or drivers’ licenses, among other forms.
The USA Patriot Act, passed in response to the September 11, 2001, terrorist attacks, encompasses
numerous provisions aimed at improving security and identification measures in the U.S., particularly with
regard to border controls, law enforcement, and financial activities. As a result, institutions have a greater
responsibility to collect and maintain identifying information about their customers. As drivers’ licenses
and passports are among the most common forms of identification presented, there is increased demand
for efficient ID scanners and devices that can capture this paper-based information for secure digitization,
transmittal, or storage.
Remote Deposit Capture (RDC)
RDC is one of the fastest growing trends in banking technology because it allows customers the
convenience of depositing checks from any location equipped with a scanner, computer, and Internet
connection. Recently, RDC has expanded to smartphones, which now have the ability to photograph a
check and send it to the bank. RDC is a service used by both businesses and individuals. It is expected to
expand considerably during 2011, as financial institutions and companies such as PayPal.com seek to
further differentiate their mobile and online services.
RDC is a new, disruptive technology that only came into fruition after the U.S. Congress implemented
Check 21 in October 2004. This act permitted banks to deposit checks based on images of the original
checks without requiring the physical document. RDC offers banks and consumers alike multiple benefits,
including convenience, speed (as funds are often available earlier using RDC than in-person deposits),
reduced processing and paper costs, and enhanced operational efficiencies.
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PAGE 27
RDC is associated with security concerns, such as consumers’ account information being hacked if
checks are transmitted over an unsecured connection. Thus, it is important for banks and other RDC
vendors to be selective in choosing RDC platforms that address potential security issues.
DCT has previously entered into agreements with Bridgeport Technologies, Digital Check, Burroughs,
and NCR to develop RDC services using DCT’s USB-powered mobile scanners. The Company and its
partners supply RDC products and applications to reduce the processing cost of deposits and related
transaction costs. Moreover, DCT’s proprietary technologies allow its partners and clients to customize
their RDC solutions, with the goal of creating improved customer service and ongoing revenue growth by
increasing customer satisfaction and retention.
In particular, DCT entered into a strategic OEM agreement with NCR in August 2009 to supply an RDC
solution targeting small businesses. DCT’s technologies have served to augment NCR’s existing portfolio,
thereby helping NCR’s financial customers implement effective RDC programs.
DCT also recognizes an opportunity to integrate RDC solutions within its healthcare offerings. Such
functionality allows a healthcare provider to deposit co-payment checks instantly, making funds more
readily available while reducing the overhead costs associated with processing such payments.
Financial Sector and Banking
The Company’s relationships with NCR and Burroughs have contributed to its identification of financial
institutions as new targets for the use of document capture. The small and micro business banking sector
represents an example of how large banks could employ DCT’s products. Based on research from NCR,
DCT estimates that there are over 25 million small and micro businesses in the U.S. that have a business
checking account. Moreover, the Company believes that this market has been underserved by financial
institutions due to the costs of providing greater business services to smaller companies.
However, with the introduction of lower cost, lightweight, easy to integrate, mobile scanners, such as
those provided by DCT, banks may be able to renew programs where small and micro businesses are
incentivized to open an account and remain a customer. For instance, the bank could offer a
complimentary portable scanner with new accounts, which the customer could then use to remotely
deposit checks into the new online business checking account.
On a larger scale, small and micro businesses (or any other customer for whom this approach is
employed) could scan and upload important documents via their secure banking relationship to a virtual
safety deposit box. DCT’s research has determined that this “electronic vault” concept will likely need to
be offered by a financial or insurance institution due to concerns over security and privacy; however,
those institutions could supply a plug-in allowing the consumer to open an online secure storage area
sponsored by the institution. Consumers could scan and upload birth certificates, vehicle titles, social
security cards, and many other documents to what is essentially a virtual safety deposit box that could be
accessed from any terminal worldwide.
The Company’s products may help facilitate the management of business cards, expense reports, and a
number of other new services that banks could be able to initiate for customers. By incorporating DCT’s
platforms, banks benefit by being able to offer cost-efficient perks that aid customer retention. By having a
dedicated device to interact with their online banking, customers may be less likely to move to a different
bank. This is a sample scenario of how DCT may be able to expand its sales going forward by targeting
the banking sector. In addition, DCT also works with various kiosk manufacturers for financial
transactions, such as NCR.
In recognition of the growth opportunities in the financial and banking sector for both DCT and its RDC
partners, the Company exhibited at the Banking Administration Institute’s (BAI) Retail Delivery
Conference during October 2010 in Las Vegas, which is one of the largest global retail financial services
events. There, DCT profiled its new DP 540 ID scanner, among other products, highlighting the platform’s
abilities to deliver cost efficiencies and increased revenues.
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Gaming and Lottery
In gaming and lottery, DCT is working with a foreign government entity in order to incorporate its scanning
technology into cable set-top boxes. One of the objectives in this scenario is to allow cable customers to
enter the state-run lottery from their home, just as they currently do at retail locations. Next-generation
technology could expand the gaming industry to homes by allowing customers to scan gaming
documents (e.g., Keno cards) through their home Internet connection.
Government
A wide range of other government agencies represent target customers for DCT including but not limited
to the following: (1) the Veterans Administration (VA); (2) U.S. Customs and Border Protection; (3) the
Transportation Security Administration (TSA); (4) the Department of Homeland Security; and (5) the
Department of Defense’s (DOD) procurement system. Essentially, any government agency that reviews
and verifies documentation at multiple processing points, or process documents remotely, is a potential
customer for DCT.
Bulk Freight In-Cab Solutions
During 2011, DCT anticipates that its products could be used within the bulk freight field as well. There
were over 5.6 million commercial trailers, including semis, registered in the U.S. during 2009 (Source: the
U.S. Department of Transportation’s Federal Highway Administration, January 2011). Several entities
have begun creating full in-cab solutions, which entail an in-cab satellite-based computer system for fleet
management. Typically, drivers collect a receipt/bill of lading for each delivery and turn these in when
they arrive back to dispatch. Once the paperwork is received by accounting, invoicing can occur. In
contrast, with an in-cab computer system and DCT’s mobile scanners, drivers could scan and send the
bills of lading immediately after delivery, enabling a much faster start to the invoicing process.
In April 2009, DCT entered into an agreement with Belgium-based, transportation management company,
Punch Telematix n.v., which has since been acquired by Trimble Transport & Logistics. Trimble provides
integrated onboard computers, wireless communication services, and Web-based back-office applications
for the transport and logistics sector. Per the agreement, DCT’s mobile scanning technologies were
adopted for Punch’s CarCube™ onboard computer system. The inclusion of DCT’s products was
expected to allow drivers to communicate instantly with their back offices and clients, improving costeffective information delivery of invoices, purchase orders, and trip routes.
Other transportation applications include long-haul carrier delivery verification; enabling real-time rail and
multi-mode manifest updates; emergency and public safety vehicles; and border patrol processing of
commercial vehicles.
Corporate
Beyond the vertical markets described on the preceding pages, DCT’s product lines are also applicable
for general corporate IT functions, such as facilitating paper-to-digital submissions of contracts,
agreements, critical records, and other documents. Due to the scanners’ lightweight, compact nature,
sales and field forces could capitalize on DCT’s mobile units to scan meeting notes, upload business
cards, or save and organize receipts, as could telecommuters and individuals who fax for convenience.
Likewise, large consultancy, insurance, and financial firms can equip mobile employees with DCT
scanners designed to securely integrate with corporate document management systems. Some products
are designed especially for capturing business card data, while others aid record-keeping and archiving,
such as for receipts and tax documents.
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PAGE 29
Competition
DCT’s products may compete with the document capture platforms offered by large corporations, such as
Canon Inc. (CAJ-NYSE) and Fujitsu Ltd (6702-TYO). However, it is important to note that many retail
scanners are multiple page-fed devices, which increases their price and entry level. DCT has positioned
itself as supplying entry-level niche products with the potential to expand the scanning market.
While DCT may encounter competition from companies providing scanners to the retail market, the
Company most closely competes with entities that target vertical markets as they mature. To maintain a
competitive advantage, DCT focuses on R&D and factory efficiency, which is intended to enable
improved time-to-market product cycles and quality products. Table 7 summarizes what DCT believes to
be its competitive advantages.
Table 7
POTENTIAL COMPETITIVE ADVANTAGES
▪ Product quality and performance
▪ Patented and proprietary-based products
▪ Established reputation, experience, and presence in the USB-powered document and image capture market
▪ Relationships that allow DCT to identify and work closely with customers to meet market demands
▪ A vertical integration design and manufacturing business model that reduces the time to introduce a new or
improved product to the market
▪ Broad distribution channels
The companies listed below are not intended to be an exhaustive collection of DCT’s competitors but
rather an indication of the type of competitors the Company may encounter as it seeks further market
penetration. DCT’s customers are not included in this competition overview.
Canon Inc. (CAJ-NYSE)
Canon is a Japanese multinational corporation that focuses on manufacturing imaging and optical
products. The company was founded in 1937 and is headquartered in Tokyo. Canon has manufactured
various types of scanners, and its present portfolio comprises nine document scanners, four photo
scanners, and four film or negative scanners, as well as a variety of higher-end business scanners
capable of over 40 pages per minute (ppm). One of the company’s most recent products relevant to
DCT’s business is the imageFORMULA P-150 personal document scanner. The P-150 or as it is also
called, the Scan-tini, is a compact, USB-powered scanner, that is designed for user friendliness and
estimated to process 15 ppm. This product represents Canon’s first personal scanner and its first USBpowered, professional-grade document scanner. The P-150 incorporates the company’s
CaptureOnTouch Lite software, allowing users to “plug-and-scan.” Canon-branded products are available
through numerous resellers as well as its Canon Business Solutions, Inc. unit.
Fujitsu Limited (6702-TYO)
Headquartered in Tokyo, Fujitsu offers a variety of products in the document imaging and computing
industries. Recently, Fujitsu showcased the ScanSnap S1100, which is reported to be one of the world’s
smallest portable document scanners. ScanSnap S1100 is USB powered and weighs roughly 12 ounces.
Additionally, the ScanSnap S1100 enables the user to scan documents into Evernote® and Google
Docs™ cloud services. Similarly, Fujitsu’s ScanSnap S300M, designed for Macintosh operating systems,
is USB powered and is reported to have a scanning speed of 16 ppm.
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Plustek Inc. (Closely held)
Headquartered in Taiwan, Plustek originated in 1986 as an OEM and has since become a global
manufacturer of imaging solutions. Plustek leverages its factories and engineering skills for just-in-time
manufacturing on a contract basis. Currently, Plustek’s imaging products comprise a number of product
lines, including the MobileOffice scanner series. MobileOffice models entail portable, lightweight
scanners, many of which are powered by USB. Plustek has created units geared for home and road use,
as well as for healthcare, pharmacy, financial, and transportation (e.g., in-truck use) applications
worldwide. The company positions its MobileOffice D428 as an easy to use, high-speed, compact
scanner for vertical markets that require scanning of plastic cards or documents up to 8.5” x 14” in size.
The D428 is applicable to front desk, teller, patient intake, and pharmacy applications. Its USB-powered
MobileOffice S420 simplex scanner captures paper documents and business cards at a rate of
approximately 12 ppm. Additional models enable duplex scanning, scans of rigid cards and small items
such as insurance cards, ID cards, checks, deposit slips, receipts, and medical prescriptions, and offer
functions such as scanning to a searchable PDF.
Rather than focusing solely on the retail customer, Plustek targets its products as industry solutions for
vertical markets, such as accounting, education, financial, healthcare, and transportation. In addition,
Plustek’s SDK is a collection of development libraries that includes a barcode reader library, a check
reader library, and an ID card scanning library, thus allowing software developers and system integrators
to integrate the use of Plustek scanners into their software applications. The company’s technologies are
available through software vendors, VARs, and solution and distribution partners.
The Neat Company (Closely held)
Headquartered in Philadelphia, Pennsylvania, the Neat Company develops and markets scanner and
software solutions. It was founded in 2002 and formerly operated as NeatReceipts. The Neat Company
offers products ranging from lightweight, USB-powered mobile scanners to complete digital filing systems.
The company markets NeatDesk®, a system that is capable of scanning receipts, business cards, and
other documents, and NeatScan®, a toolbar for installation in Microsoft Word®, PowerPoint®, Excel®, and
Outlook® that enables document scanning and editing within the applications. The Neat Company also
created NeatReceipts®, a mobile scanner and digital filing system that scans business cards, receipts,
and other documents to produce expense reports, capture contact information, and create searchable
PDFs. Neat Company products are also designed as a way to add scanning into existing solutions
through integrated scanner and software solutions. The Neat Company is a Microsoft Certified Partner,
and has partnered with synergistic solution providers, ExpenseWire and MyBusinessExecutive. Neat
Company products are available for purchase through the Neat Company’s store, retail stores, and
authorized resellers. The company has also created an infomercial campaign for “As Seen on TV” sales.
VuPoint Solutions (Closely held)
Headquartered in California, VuPoint produces scanners and other electronics, such as printers and
waterproof binoculars. VuPoint’s current focus has been producing lightweight and portable scanners.
One recent innovation of VuPoint is the Magic Wand™. The Magic Wand™ weighs less than a pound.
The Magic Wand Jr.™ is similar to the Magic Wand™ but weighs less than four ounces. Both products
are USB powered, with varying capacities.
I.R.I.S. s.a. (IRIS-NYSE Euronext Brussels)
With global headquarters in Belgium, I.R.I.S. develops and provides intelligent document recognition and
electronic document management products and technologies. Currently, the company has operations in
eight countries and sells products to 90 countries worldwide. The I.R.I.S. home and office product lines
include optical character recognition (OCR) software to convert and edit paper documents and PDF files
instantly, pen scanners that insert text onto a computer and digital pens, mobile scanners, photo
scanners, and card scanners that scan and export business cards to a contact manager. The company’s
corporate products also entail document server software, high-speed scanning software, invoice
solutions, form solutions, toolkits and OEM services that enable integration of I.R.I.S. technologies into
third-party applications, and products for sorting, indexing, and archiving.
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PAGE 31
I.R.I.S. markets IRIScan™ 2, a portable, lightweight scanner that is USB connected and equipped with an
extended software suite. IRIScan™ 2 can scan photos as well as convert documents into editable text
files and business cards into Outlook® contacts. The company also offers IRIScan™ Anywhere 2, a
battery-powered scanner that allows users to scan without a computer. IRIScan™ Anywhere 2 saves files
to the scanner itself or to a memory card and can be recharged using a USB cable. In July 2009, Canon
acquired approximately 17% of I.R.I.S. for approximately €22 million.
PlanOn System Solutions Inc. (Closely held)
Headquartered in Ontario, Canada, PlanOn provides mobile scanning and printing solutions. The
company offers full-page scanners and printers, and believes that it may possess imaging products
among the smallest in the world. For example, PlanOn’s DocuPenXtreme X05 portable scanner is the
size of a standard pen but includes a rechargeable battery, 200 MHz computer processor, and Bluetooth.
PlanOn products are available for purchase online, through retail stores, and through a network of
resellers.
Bluepoint Solutions Inc. (Closely held)
In February 2011, Bluepoint Solutions announced that several additional credit unions opted to use
Bluepoint’s QwikDeposit ToGo as their mobile RDC platform. In contrast to physical check deposits or
PC-based uploads, this mobile platform allows users to deposit checks securely with a camera-equipped
smartphone. The application was designed to support the majority of smartphones currently on the
market. Bluepoint develops software used by companies in the financial services industry, specifically
credit unions, in order to process checks and digitally manage forms in compliance with Check 21.
Bluepoint provides RDC solutions for financial institutions at the home, business, store, ATM, teller
window, or branch level. All points of capture are fully integrated with Bluepoint’s Transport Service,
which makes items available for immediate clearing and which the company believes may result in
savings on dollar amount or per item transmission fees. Bluepoint also maintains a central repository for
captured images, thus images are available for retrieval institution-wide. In addition to RDC, the company
offers image-based item processing, electronic document management, and receipt management.
Cachet Financial Solutions Inc. (Closely held)
In March 2011, Cachet launched a new product called CheckReview™, which is intended to enable
financial institutions to easily recognize potential check fraud. Cachet expected to begin coupling
CheckReview™ with its existing RDC solutions in April 2011. Cachet provides consumer and commercial
deposit capture solutions for financial institutions and their customers. Its RDC Select™ software program
reduces the need for financial institutions to create and maintain internal RDC businesses. Cachet’s
software is developed for both Windows® and Mac operating systems and is designed to clarify the
process of implementing and servicing RDC.
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Milestones
Recent Milestones

Reported a record fourth quarter 2010 with revenues totaling $4.6 million.

In 2010, DCT’s revenue totaled $14.8 million ($11.5 million in 2009), and earnings before interest,
taxes, depreciation, and amortization (EBITDA), excluding non-recurring expenses, totaled $1.6
million ($394,000 in 2009).

Hired Mr. Karl Etzel as product and business development manager.

Hired Mr. Jacques F. vonBechmann as senior vice president of sales to bring sales and marketing
expertise to the Company’s key global markets.

Appointed Mr. Craig H. Weber, who brings extensive management, corporate finance, and legal
experience to DCT, as president and chief operating officer (COO).

Participated in several exposition and trade shows where the Company could further profile its
scanner portfolio, meet with decision makers, and introduce innovative new technologies and
products. Forums included the Documation 2011 Trade Show at the Paris La Defense, March 23-24,
2011; the Travel Technology Show in London, February 8-9, 2011; and the Banking Administration
Institute’s (BAI) Retail Delivery Expo in Las Vegas, October 19-21, 2010.

Introduced the DocketPORT® 540 (DP 540) passport and ID scanner.

Received a $4 million equity investment from NCR Corp. in August 2010.
Potential Milestones

Expand product offerings to meet end-user needs as identified by DCT’s OEM and VAR customers.

Expand global presence to penetrate international markets.

Develop new uses for existing technology (e.g., as a virtual safety deposit box).
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Historical Financial Results
From 2008 through 2010, DCT strengthened its financial position and eliminated debt. The Company’s
Statements of Operations, Balance Sheets, and Statements of Cash Flows are included in Tables 8, 9,
and 10 (pages 35-37).
Significant Capital Transactions
On September 27, 2007, the Company repurchased and retired 8,000,000 (35% of the then outstanding
shares) of its restricted Common Stock from its majority stockholder.
On August 5, 2010, DCT received $4 million from NCR Corp. via a private placement of Common Stock
at $1.036 per share. In connection with the investment, NCR was given the right, at its election, to
designate one member to the Company’s Board and was granted a two-year option to purchase an
additional $4 million of Common Stock at $1.036 per share. To date, NCR has not exercised its right to
designate a Board member.
On September 10, 2010, DCT’s Board of Directors authorized a $2.5 million Share Repurchase Program
of the Company’s Common Stock. To date, under this authorization, DCT has repurchased and retired
2,969,000 shares of Common Stock (or 13% of the shares outstanding on September 10, 2010). As of
the end of March 2011, $303,000 remained available for repurchase under the existing repurchase
authorization limit.
As a result of these capital transactions, DCT believes that it has a solid foundation on which to move
forward.
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Table 8
Document Capture Technologies, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Years Ended December 31,
2010
2009
Net sales
$
14,849
$
11,529
Cost of sales
9,030
6,936
Gross profit
5,819
4,593
Operating expenses:
Selling, general, and administrative
Research and development
5,098
1,088
3,880
1,013
Total operating expenses
6,186
4,893
Operating loss
(367)
(300)
Non-operating income (expense):
Change in fair value of Stock Option liability and derivative instruments
Interest income
Interest expense
Other
733
1
(57)
71
9
1
(54)
9
Total non-operating income (expense)
748
(35)
Net income (loss) before income taxes
Provision (benefit) for income taxes
381
102
(335)
(74)
Net income (loss)
279
(261)
—
(30)
Accretion of Preferred Stock redemption value
Net income (loss) available to Common Stockholders
$
279
$
(291)
Basic earnings (loss) per share
Diluted earnings (loss) per share
$
$
0.01
0.01
$
$
(0.02)
(0.02)
Weighted average Common Shares outstanding – basic
Weighted average Common Shares outstanding – diluted
20,581
27,092
18,775
18,775
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PAGE 35
Table 9
CONSOLIDATED BALANCE SHEETS (in thousands)
ASSETS
Current assets:
Cash and cash equivalents
Trade receivables
Inventories, net
Income tax receivable
Prepaid expenses and other current assets
December 31,
2010
December 31,
2009
$
$
2,322
2,539
1,730
—
259
328
1,497
1,674
65
67
Total current assets
6,850
3,631
Restricted cash
Other non-current assets
Fixed assets, net
—
44
145
5
—
176
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit
Trade payables to related parties
Trade payables and other accrued expenses
Accrued compensation and benefits
Deferred revenue and customer deposits
Income tax payable
$
7,039
$
3,812
$
—
654
546
712
29
100
$
202
341
440
124
111
—
Total current liabilities
2,041
1,218
811
70
—
—
Stock Option liability
Long-term deferred rent
Commitments and contingencies
(See Note 11 of DCT's Form 10-K filed 03/16/2011)
Stockholders’ equity:
Preferred Stock $.001 par value, 2,000 authorized, 0 issued and
outstanding at December 31, 2010 and December 31, 2009
Common Stock $.001 par value, 50,000 authorized, 20,479 and
19,406 shares issued and outstanding at December 31, 2010
and 2009, respectively
Additional paid-in capital
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
20
36,940
(32,843)
19
35,697
(33,122)
4,117
7,039
2,594
3,812
$
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PAGE 36
Table 10
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31,
2010
2009
Operating activities
Net income (loss)
$
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation expense included in operating expenses
Depreciation expense included in cost of sales
Fair value of Common Stock and Common Stock Warrants issued for services rendered
Stock-based compensation cost-options
Change in fair value of Stock Option liability and derivative instruments
Non-cash interest expense
Changes in operating assets and liabilities:
Trade receivables
Inventories
Prepaid expenses and other current assets
Other non-current assets
Trade payables to related parties
Trade payables and other accrued expenses
Accrued compensation and benefits
Income taxes payable
Deferred revenue and customer deposits
Long-term deferred rent
Cash provided (used) by operating activities
Investing activities
Capital expenditures
Cash (used) provided by investing activities
Financing activities
Proceeds from issuance of Common Stock, net of issuance costs
Net advances (payments) on bank line of credit
Loan origination fees
Cash paid upon the maturity of Preferred Stock
Payments for repurchase of Common Stock
Cash provided by financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
279
$
(261)
49
54
74
940
(733)
45
58
—
111
525
(9)
18
(1,042)
(56)
(131)
(44)
313
106
588
100
(82)
70
530
(131)
(321)
(69)
—
(52)
164
2
(75)
(76)
—
(116)
(72)
(91)
(72)
(91)
3,971
(225)
(13)
—
(2,197)
—
225
(20)
(75)
—
1,536
130
1,994
(77)
328
405
Cash and cash equivalents at end of year
$
2,322
$
328
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest
Income taxes
$
$
16
2
$
$
31
67
Non-cash investing and financing activities:
Conversion of Warrants to Common Stock
Conversion of Convertible Preferred Stock to Common Stock
Issuance of Common Stock Warrants in connection with debt
Transfer of tooling equipment deposits to fixed assets
$
$
$
$
—
—
—
—
$
$
$
$
350
75
35
45
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PAGE 37
Risks
Some of the information in this Executive Informational Overview® (EIO®) relates to future events or future
business and financial performance. Such statements can only be predictions and the actual events or
results may differ from those discussed due to the risks described in DCT’s statements on Forms 10-K,
10-Q, 8-K, as well as other forms filed from time to time. The content of this report with respect to DCT
has been compiled primarily from information available to the public released by the Company through
news releases, Annual Reports, and U.S. Securities and Exchange Commission (SEC) filings. DCT is
solely responsible for the accuracy of this information. Information as to other companies has been
prepared from publicly available information and has not been independently verified by DCT. Certain
summaries of activities have been condensed to aid the reader in gaining a general understanding. For
more complete information about DCT, please refer to the Company’s website at www.docucap.com.
Investors should carefully consider the risks and information about DCT’s business described below.
Investors should not interpret the order in which these considerations are presented as an indication of
their relative importance. The risks and uncertainties described below are not the only risks that the
Company faces. Additional risks and uncertainties not presently known to DCT or that the Company
currently believes to be immaterial may also adversely affect its business. If any of the following risks and
uncertainties develops into actual events, the business, financial condition, and results of operations
could be materially and adversely affected, and the trading price of the Company’s shares could decline.
RISKS RELATING TO DCT’S BUSINESS
A significant percentage of DCT’s revenue is derived from sales to a few large customers, and if
the Company is not able to retain these customers, or if they reschedule, reduce, or cancel orders
or delay or default on payments, DCT’s revenues would be reduced and its financial condition and
cash flows would suffer.
Total sales to significant customers (customers that represent more than 10% of DCT’s net sales) were
62% and 64% during the years ended December 31, 2010 and 2009, respectively. For further details,
refer to Note 1 included in Part II, “Item 8: Financial Statements,” of the Company’s Form 10-K filed with
the SEC on March 16, 2011. DCT expects that its largest customers will likely continue to account for a
substantial portion of the Company’s net sales for the foreseeable future. None of its customers are
obligated to purchase a minimum number of products in the aggregate or during any particular period.
DCT cannot provide assurance that any of its customers will continue to purchase products at historic or
current levels.
The Company has experienced a history of recurring operating losses and may continue to incur
losses for the foreseeable future.
DCT’s operating loss was $367,000 and $300,000 for the years December 31, 2010 and 2009,
respectively. Its accumulated deficit as of December 31, 2010, was $32,843,000. The Company cannot
provide assurance that it can achieve operating profitability in the future.
DCT currently subcontracts the manufacturing of its image-capture products to one company and
this reliance on one company exposes DCT to risk that could damage its reputation and adversely
affect business.
If the Company’s manufacturer (refer to Part III, “Item 13: Certain Relationships and Related
Transactions, and Director Independence” of the March 16, 2011, Form 10-K for further details) becomes
unable or unwilling to provide products to DCT in a timely manner, the Company may not be able to
deliver products to customers on time, which could increase costs, damage its reputation, or result in the
loss of customers. Although DCT has the right to utilize other manufacturers at any time, identifying and
qualifying a new manufacturer to replace the current manufacturer could take 6 to 12 months.
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PAGE 38
At the end of January 2010, Shenzhen Syscan Technology (SST) announced a relocation of its primary
manufacturing facility, currently in Shenzhen, China, to Wuhan, Hubei, China. The purpose of the
relocation relates to an opportunity for SST to reduce its direct and overhead costs. Based on information
provided to it by SST as of March 31, 2010, DCT anticipated the new manufacturing facility to be fully
functional by April 2011 with minimal impact to the manufacturing process; however, DCT cannot provide
assurance that production will not be negatively impacted. In the event that there is a delay in the
relocation of the manufacturing facility, DCT’s business operations could be materially adversely affected.
DCT depends on a limited number of suppliers to provide the components and raw materials
necessary to manufacture its products; any interruption in the availability of these components
and raw materials used in the products could reduce revenues.
Although many alternative suppliers exist, DCT relies on a single or limited number of suppliers for many
of the significant components and raw materials required to manufacture its document and image capture
products. This reliance leads to a number of significant risks, including the following:

Unavailability of materials and interruptions in delivery of components and raw materials from
suppliers;

Manufacturing delays caused by such unavailability or interruptions in delivery; and

Fluctuations in the quality and the price of components and raw materials.
DCT does not have any long-term or exclusive purchase commitments with any of its suppliers. Failure to
maintain existing relationships with current suppliers, or failure to establish new supplier relationships in
the future, could negatively affect the Company’s ability to obtain necessary components and raw
materials in a timely manner. If DCT is unable to obtain ample supply of materials from existing suppliers
or alternative supply sources, it may be unable to satisfy customers’ orders, which could reduce revenues
and adversely affect relationships with customers. Because DCT relies on a limited number of suppliers,
any cost increases or other changes that impact suppliers could be imposed on the Company and may
require it to incur additional costs in order to obtain an adequate supply of components and raw materials.
DCT faces growing competition and expects competition to increase in the future.
The Company faces an increasingly competitive market with larger competitors and rapidly evolving
technologies. DCT anticipates pricing pressure from domestic and international markets requiring ongoing
management attention. Any material decrease in its revenues as a result of any such pricing pressures,
without a corresponding reduction in cost of goods sold, would have a material adverse effect on gross
profit.
DCT’s executive officers and key personnel are critical to its business and the loss of their
services could adversely affect business.
DCT’s success depends to a significant degree upon the continuing contributions of its key executive
officers and managers. Although the Company has employment agreements with most of these
individuals, it cannot guarantee that it can retain these individuals. In addition, it has not obtained “key
man” life insurance on the lives of any of the members of its management team.
The authorization and issuance of “Blank Check” Preferred Stock could have an anti-takeover
effect detrimental to the interests of stockholders.
DCT’s certificate of incorporation allows the Board of Directors to issue Preferred Stock with rights and
preferences set by the Board without further stockholder approval. In particular circumstances, issuance
of these “Blank Check Preferred” shares could have an anti-takeover effect. For example, in the event of
a hostile takeover attempt, it may be possible for management and the Board to impede the attempt by
issuing Blank Check Preferred Shares, thereby diluting or impairing the voting power of other outstanding
shares of Common Stock and increasing the potential costs to acquire control of the Company. The
Board of Directors has the right to issue Blank Check Preferred Shares without first offering them to
holders of Common Stock, as the holders of the Common Stock have no preemptive rights.
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PAGE 39
DCT’s results of operations could vary as a result of the methods, estimates, and judgments that
it uses in applying accounting policies.
The methods, estimates, and judgments that DCT uses in applying its accounting policies have a
significant impact on results of operations (refer to “Critical Accounting Estimates” in Part II, Item 7 of the
March 16, 2011, Form 10-K). Such methods, estimates, and judgments are, by their nature, subject to
substantial risks, uncertainties, and assumptions. Factors may arise over time that lead DCT to change its
methods, estimates, and judgments. Changes in those methods, estimates, and judgments could
significantly affect results of operations.
DCT’s results of operations could be impacted by macroeconomic and other factors, including
currency exchange rates, harming its results of operations.
Such factors include fluctuations in foreign currency exchange rates, specifically the fluctuation between
the Chinese Yuan and the U.S. dollar, and fluctuations in interest rates.
RISKS RELATED TO INTELLECTUAL PROPERTY AND TECHNOLOGY
Unauthorized use of DCT’s intellectual property and proprietary technology could adversely affect
the Company’s business and results of operations.
DCT’s success and competitive position depend in large part on its ability to obtain and maintain
intellectual property rights to protect its products. DCT currently, and may in the future, rely on a
combination of patents, copyrights, trademarks, service marks, trade secrets, confidentiality provisions,
and licensing arrangements to establish and protect its intellectual property and proprietary rights.
Unauthorized parties may attempt to copy aspects of its products or obtain, license, sell, or otherwise use
information that DCT regards as proprietary. Policing unauthorized use of its products is difficult, and the
Company may not be able to protect its technology from unauthorized use.
Additionally, DCT’s competitors may independently develop technologies that are substantially the same
or superior to the Company’s without infringing its rights. In these cases, DCT would be unable to prevent
competitors from selling or licensing these similar or superior technologies. Further, the laws of some
foreign countries do not protect proprietary rights to the same extent as the laws of the U.S. Third parties
have claimed and may claim in the future that DCT or its customers are infringing, or contributing to the
infringement of, their intellectual property. DCT could be exposed to significant litigation or licensing
expenses or be prevented from selling its products if such claims are successful.
DCT may be unaware of intellectual property rights of others that may cover some of its technologies and
products. If it appears necessary or desirable, the Company may seek licenses for these intellectual
property rights. However, it may not be able to obtain licenses from some or all claimants or the terms of
any offered licenses may not be acceptable to the Company, and DCT may not be able to resolve
disputes without litigation. Any litigation regarding intellectual property could be costly and timeconsuming and could divert the attention of management and key personnel from business operations.
In the event of a claim of intellectual property infringement, DCT may be required to enter into costly
royalty or license agreements. Third parties claiming intellectual property infringement may be able to
obtain injunctive or other equitable relief that could effectively block the Company’s ability to develop and
sell products.
RISKS RELATING TO COMMON STOCK
The stock market has experienced volatility that often has been unrelated to the operating
performance of listed companies. These broad fluctuations may be the result of unscrupulous
practices that may adversely affect the price of stock, regardless of operating performance.
Shareholders should be aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the
market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns
include the following: (1) control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (3) boiler room practices involving highpressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and
®
PAGE 40
undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of
the same securities by promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The
occurrence of these patterns or practices could increase the volatility of DCT’s share price.
The limited prior public market and trading market may cause possible volatility in stock price.
To date, there has only been a limited public market for DCT’s securities and there can be no assurance
that the Company can attain an active trading market for its securities. Its Common Stock trades on the
Over-the-Counter Bulletin Board (OTC.BB), which is an unorganized, inter-dealer, OTC market that
provides significantly less liquidity than the national securities exchanges. Quotes for securities on the
OTC.BB are not listed in the financial sections of newspapers as are those for the national securities
exchanges. Moreover, in recent years, the overall market for securities has experienced extreme price
and volume fluctuations that have particularly affected the market prices of many smaller companies. The
trading price of DCT’s Common Stock is expected to be subject to significant fluctuations that are affected
by, but not limited to, the following:

Quarterly variations in operating results and achievement of key business metrics;

Changes in earnings estimates by securities analysts, if any;

Any differences between reported results and securities analysts’ published or unpublished
expectations;

Announcements of new products by DCT or its competitors;

Market reaction to any acquisitions, joint ventures, or strategic investments announced by DCT or its
competitors;

Demand for DCT’s products;

Shares sold pursuant to Rule 144 or upon exercise of Warrants and Options or conversion of Series
B Convertible Preferred Stock; and

General economic or stock market conditions unrelated to DCT’s operating performance.
These fluctuations, as well as general economic and market conditions, may have a material or adverse
effect on the market price of DCT’s Common Stock.
The OTC.BB is a quotation system, not an issuer listing service, market, or exchange. Therefore,
buying and selling stock on the OTC.BB is not as efficient as buying and selling stock through an
exchange. As a result, it may be difficult to sell Common Stock or investors may not be able to
sell Common Stock for an optimum trading price.
The OTC.BB executes trades and quotations using a manual process and cannot guarantee the market
information for securities. In some instances, quote information, or even firm quotes, may not be
available. The OTC.BB’s manual execution process may delay order processing and as a result, a limit
order may fail to execute or a market order may execute at a significantly different price due to
intervening price fluctuations. Trade execution, execution reporting, and legal trade confirmation delivery
may be delayed significantly. Consequently, one may not be able to sell shares of Common Stock at the
optimum trading prices.
OTC.BB securities are frequent targets of fraud or market manipulation not only because of their
generally low price, but also because the OTC.BB reporting requirements for these securities are less
stringent than for listed or NASDAQ-traded securities, and no exchange requirements are imposed.
Dealers may dominate the market and set prices that are not based on competitive forces. Individuals or
groups may create fraudulent markets and control the sudden, sharp increase of price and trading volume
and the equally sudden collapse of the market price for shares of Common Stock.
®
PAGE 41
When fewer shares of a security are traded on the OTC.BB, the security’s market price may become
increasingly volatile and price movement may outpace the ability to deliver accurate quote information.
Due to lower trading volumes of DCT’s Common Stock, there may be a lower likelihood that one’s orders
for its Common Stock will be executed, and current prices may differ significantly from the price one was
quoted by the OTC.BB at the time of one’s order entry.
Orders for OTC.BB securities may be canceled or edited like orders for other securities. All requests to
change or cancel an order must be submitted to, received, and processed by the OTC.BB. The OTC.BB
executes trades using a manual process, which could cause delays in order processing and reporting,
and could hamper one’s ability to cancel or edit one’s order. Consequently, selling shares of DCT’s
Common Stock at the optimum trading prices may be impossible.
The dealer’s spread (the difference between the bid and ask prices) may be large and may result in
substantial losses to the seller of DCT’s Common Stock on the OTC.BB if the stock must be sold
immediately. Further, purchasers of DCT’s Common Stock may incur an immediate “paper” loss due to
the price spread. Moreover, dealers may not have a bid price for DCT’s Common Stock on the OTC.BB.
Due to the foregoing factors, demand for the Company’s Common Stock on the OTC.BB may be
decreased or eliminated.
DCT’s Common Stock is considered a “penny stock.” The application of the “penny stock” rules
to its Common Stock could limit the trading and liquidity of the Common Stock, adversely affect
the market price of its Common Stock and increase transaction costs to sell those shares.
The Commission has adopted regulations that generally define a “penny stock” to be any equity security
that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. As a result, DCT’s shares of Common Stock are subject to rules
that impose additional sales practice requirements on broker-dealers who sell such securities to persons
other than established clients and “accredited investors.”
For transactions governed by these rules, the broker-dealer must make a special suitability determination
for the purchase of such securities, must obtain the purchaser’s written consent to the transaction, and
must deliver to the purchaser a SEC-mandated, penny stock risk disclosure document, all prior to the
purchase. The broker-dealer must also disclose the commission payable to both the broker-dealer and
the registered representative, current quotations for the securities and, if the broker-dealer is the sole
market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the
market. Finally, monthly statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks. Consequently, the “penny
stock” rules may restrict the ability of broker-dealers to sell DCT’s shares of Common Stock and may
affect the ability of investors to sell such shares of Common Stock in the secondary market and may
affect the price at which investors can sell such shares.
Additional authorized shares of DCT’s Common Stock and Preferred Stock available for issuance
may result in substantial dilution to its shareholders.
DCT is authorized to issue 50,000,000 shares of its Common Stock. As of March 8, 2011, there were
20,479,276 shares of Common Stock issued and outstanding. The total shares of Common Stock issued
and outstanding does not include shares reserved in anticipation of the exercise of Options or Warrants.
As of March 8, 2011, DCT had the Common Shares listed in Table 11 reserved for future issuance.
Table 11
COMMON SHARES RESERVED FOR FUTURE ISSUANCE
Stock Options – employees, directors, and contractors
NCR Option
Warrants outstanding
15,244,498
3,861,004
798,027
Total
19,903,529
®
PAGE 42
The numbers above do not include 71,667 shares that are available for future grant under employee
Stock Option plans. To the extent that Options or Warrants are exercised, the holders of the Company’s
Common Stock will experience further dilution. In addition, in the event that any future financing should be
in the form of, be convertible into or exchangeable for, equity securities, and upon the exercise of Options
and Warrants, investors may experience additional dilution.
While the Company has no present plans to issue additional shares of Preferred Stock in the future, its
Board of Directors has the authority, without stockholder approval, to create and issue one or more series
of such Preferred Stock and to determine the voting, dividend, and other rights of holders of such
Preferred Stock. The above bulleted numbers do not include any future issuance of Preferred Stock. The
issuance of any of such series of Preferred Stock will cause further dilution to holders of Common Stock.
Future sales of DCT’s Common Stock could put downward selling pressure on its Common Stock,
and adversely affect the per share price. There is a risk that this downward pressure may make it
impossible for an investor to sell shares of Common Stock at any reasonable price, if at all.
From time to time, certain of the Company’s stockholders may be eligible to sell all or some of their
shares of Common Stock by means of ordinary brokerage transactions in the open market pursuant to
Rule 144, promulgated under the Securities Act of 1933 (Securities Act), subject to certain limitations. In
general, Rule 144 permits the unlimited sale of securities by stockholders that are non-affiliates that have
satisfied a six-month holding period, and affiliates of the Company may sell within any three-month period
a number of securities that does not exceed 1% of DCT’s then outstanding shares of Common Stock. Any
substantial sale of Common Stock pursuant to Rule 144 or pursuant to any resale prospectus may have a
material adverse effect on the market price of its securities.
Limitations on director and officer liability and indemnification of officers and directors may
discourage shareholders from bringing suit against a director.
DCT’s certificate of incorporation and bylaws provide, with certain exceptions as permitted by governing
Delaware law, that a director or officer shall not be personally liable to the Company or its shareholders
for breach of fiduciary duty as a director, except for acts or omissions that involve intentional misconduct,
fraud or knowing violation of law, or unlawful payments of dividends. These provisions may discourage
shareholders from bringing suit against a director for breach of fiduciary duty and may reduce the
likelihood of derivative litigation brought by shareholders on DCT’s behalf against a director. In addition,
the Company’s certificate of incorporation and bylaws provide for mandatory indemnification of directors
and officers to the fullest extent permitted by Delaware law.
®
PAGE 43
Recent Events
03/31/2011—Document Capture Technologies, Inc. provided an update on the $2.5 million Share
Repurchase Program approved by the Board of Directors on September 10, 2010.
03/21/2011—Announced that it was presenting its latest products and technologies to over 6,000 global
professionals and decision makers at the Documation 2011 Trade Show at the Paris La Defense, March
23-24, 2011. Representatives included key management and information technology (IT) executives from
the global finance, healthcare, security, and insurance sectors as well as large end-users and channel
partners.
03/16/2011—Announced 2010 revenues of $14.8 million, a 29% increase over 2009. Net income rose to
$279,000 in 2010 versus a loss of $291,000 in 2009. Earnings per share (EPS) were $0.01 for 2010, and
working capital plus line of credit availability increased to $6.5 million at December 31, 2010, from $3.3
million at December 31, 2009. Further year-end financial data is presented on pages 34-37.
02/16/2011—Announced the hiring of Mr. Karl Etzel (biography on page 11) as product and business
development manager.
01/31/2011—Announced that it was presenting the latest of its scanning technologies, particularly the
recently announced DocketPORT® 540 (DP 540), to IT travel professionals at the Travel Technology
Show (Booth A20) in London, February 8-9, 2011.
01/07/2011—Announced the hiring of Mr. Jacques F. vonBechmann (biography on page 10) to the
position of senior vice president of sales. Mr. vonBechmann’s marketing expertise in the pharmaceutical,
consumer products, technology, and finance sectors is expected to help grow and enhance sales in the
Company’s key global markets.
11/15/2010—Reported third quarter 2010 sales of $3.5 million, an increase of 19% over the same period
in 2009, and year-to-date sales of $10.3 million, an increase of 28% over 2009. Year-to-date EBITDA
increased to $690,000 versus a loss of $6,000 for the same period in 2009. Year-to-date net loss
improved 40% to a loss of $305,000 from a loss of $505,000 for the same period in 2009.
11/11/2010—Announced the appointment of Mr. Craig H. Weber (biography on page 10) as president
and chief operating officer (COO).
10/14/2010—Announced that the Company was exhibiting in Booth 213 at the Banking Administration
Institute’s (BAI) Retail Delivery Conference at the Mandalay Bay Hotel in Las Vegas from October 19-21,
2010. DCT believes that this conference is one of the largest retail financial services events in the world.
09/23/2010—Announced the release of the DP 540 passport and ID card scanner.
09/14/2010—Announced that the Board of Directors authorized a $2.5 million share repurchase program
of the Company’s Common Stock.
08/11/2010—Reported second quarter 2010 revenues of $3.3 million, an increase of 10% from the
second quarter 2009. For the first six months of 2010, revenues were $6.7 million. Net income for the
year-to-date 2010 period rose to $123,000 from a loss of $576,000 in the first half of 2009.
08/09/2010—Announced that it received $4 million through a private placement of its Common Stock to
NCR Corp. at $1.036 per share.
06/10/2010—Announced the appointment of Ms. Roseann Larson (biography on page 11) to its Board of
Directors and as chair of DCT’s Audit Committee.
05/25/2010—Reported first quarter 2010 revenues of $3.4 million, a 70% increase over first quarter 2009.
®
PAGE 44
Glossary
Best-of-Breed—A term of art used to describe a product believed to be the best of its type.
Organizations often purchase software from different vendors in order to obtain the best-of-breed for each
application area, such as a human resources package from one and an accounting package from
another.
Bill of Lading—A document signed by a carrier (a transporter of goods) or the carrier’s representative
and issued to a consignor (the shipper of goods) that evidences the receipt of goods for shipment to a
specified designation and person.
Bluetooth—A short-range wireless technology designed to allow connection of portable devices in a
wire-free manner.
Broadband—Of or relating to or being a communications network in which the bandwidth can be divided
and shared by multiple simultaneous signals (as for voice, data, or video).
Buffer—(computer science) A part of RAM used for the temporary storage of data that is waiting to be
sent to a device. It is used to compensate for differences in the rate of flow of data between components
of a computer system.
CE Mark—Conformité Européenne. A mandatory European marking for certain product groups to
indicate conformity with the essential health and safety requirements set out in European Directives. To
permit the use of a CE Mark on a product, proof that the item meets the relevant requirements must be
documented.
Check 21 Act (“Check Clearing for the 21st Century Act”)—Signed into law on October 28, 2003, and
effective on October 28, 2004, Check 21 is designed to foster innovation in the payments system and to
enhance efficiency by reducing some of the legal impediments to check truncation. The law facilitates
check truncation by creating a new negotiable instrument called a substitute check, which permits banks
to truncate original checks, to process check information electronically, and to deliver substitute checks to
banks that want to continue receiving paper checks.
Chip—Short for microchip, the complex yet tiny modules that store computer memory or provide logic
circuitry for microprocessors. Many special-purpose chips, known as application-specific integrated
circuits, are being made today for automobiles, home appliances, telephones, and other devices.
Cloud—(as it relates to computing) Internet-based computing, whereby shared resources, software, and
information are provided to computers and other devices on-demand.
Complementary Metal-Oxide Semiconductor (CMOS)—A semiconductor technology process that is
also applied on the image sensor device of all of DCT’s mobile scanners to convert the light intensity of
the exposed document into a digitized electronic signal for computing process. DCT’s CMOS image
sensor also uses linear-type CMOS sensors to line up a number of segments to form a size A4 or A6
length to capture images applied in the mobile sheet-fed scanner. It consumes less power, making them
suitable for use in battery-powered devices, such as portable scanners, computers, and memory devices.
Contact Image Sensors (CIS)—A relatively recent technological innovation in the field of optical flatbed
scanners in low power and portable applications. A CIS places the image sensor in near direct contact
with the object to be scanned, in contrast to using mirrors to bounce light to a stationary sensor, as is the
case in conventional scanners. A CIS typically consists of linear array of detectors, covered by a focusing
lens and flanked by red, green, and blue LEDs for illumination. LED use allows the CIS to be power
efficient, with many scanners being powered through the minimal line voltage supplied via a USB
connection.
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Dots per Inch (dpi)—A measure of output resolution produced by printers or monitors. The greater the
dpi, the better the clarity and resolution of an image.
End-user—The final consumer of a product. The end-user may differ from the person or entity that
initially purchases the product.
Footprint—The area taken up by some object.
Health Insurance Portability and Accountability Act (HIPPA)—Legislation passed in 1996 that
includes a privacy rule creating national standards to protect personal health information.
Home POS—The point-of-service (POS) at home could include services such as interactive gaming (e.g.,
lottery, Keno), couponing, and special purchase opportunities online and via cable.
Information and Communications Technology (ICT)—Any device, application, service, or technology
concerned with speeding and facilitating the exchange and distribution of information. ICT includes
products that store, retrieve, manipulate, transmit, or receive information electronically in a digital form.
Keno—A game of chance, adapted from lotto for gambling purposes.
Light-emitting Diode (LED)—A semiconductor or “solid state” light source that can produce a very bright
light for a small amount of power.
Linux—A Unix-like operating system that was designed to provide personal computer users a free or lowcost operating system comparable to traditional and usually more costly Unix systems. Linux has a
reputation as an efficient and fast-performing system.
Micro Businesses—A very small business that is privately owned and operated with a small number of
employees and a relatively low volume of sales.
Optical Mark Readers—A scanning device that can read carefully placed pencil marks on specially
designed documents. These are frequently used in forms, questionnaires, and answer-sheets.
Original Equipment Manufacturers (OEMs)—Entities that supply equipment to other companies to
resell or incorporate into another product using the reseller’s brand name. OEMs may also be considered
to be the companies that acquire a product or component and reuse or incorporate it into a new product
under the new brand name.
Point-of-Sale—Combination of hardware and software that records customers’ purchases, accepts
payments, and adjusts inventory levels.
Remote Deposit Capture (RDC)—A system that allows a customer or bank to scan checks remotely and
transmit the check images to a bank for deposit, usually via an encrypted Internet connection. RDC is
made possible by the Check 21 Act, passed in October 2003 and implemented in October 2004, which
allows banks to clear checks based on images of the original checks, rather than necessarily having the
physical checks in hand in order to post the deposit.
Restriction of Hazardous Substances (RoHS) Directive—Bans the use of certain hazardous
substances (such as lead, mercury, cadmium, hexavalent chromium, and some polybrominated flameretardants) in electrical and electronic equipment. RoHS allows possible exemptions. In July 2006, the EU
began requiring all electronics products sold within the EU to be RoHS compliant pursuant to the
European Directive 2002/95/EC as amended by European Directive 2003/108/EC(e).
Reverse Merger—In a reverse takeover, shareholders of the private company purchase control of the
public shell company and merge it with a private company. The publicly traded corporation is called a
“shell” as all that exists of the original company is its organizational structure. The private company
shareholders receive a substantial majority of the shares of the public company and obtain control of its
Board of Directors.
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Scanners—Electronic devices that generate a digital representation of an image for data input to a
computer.
Set-top Boxes—Devices that enable a television set to become a user interface to the Internet as well as
to receive and decode digital television broadcasts.
TWAIN 1.9—An image capture standard for Microsoft® Windows® and Apple Macintosh operating
systems. The TWAIN standard was first released in 1992, and is currently ratified at version 2.1 as of July
2009. TWAIN is typically used as an interface between image processing software and a scanner or
digital camera.
USA Patriot Act—The Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA Patriot) Act is a U.S. law passed in the wake of the September 11,
2001, terrorist attacks. Its goals were to strengthen domestic security and broaden the powers of lawenforcement agencies with regards to identifying and stopping terrorists.
USB (Universal Serial Bus)—The most widely used hardware interface for attaching peripherals to a
computer. USB 1.0 (1996) and USB 1.1 (1998) provide a low-speed 1.5 Mbps subchannel for keyboards
and mice and a full-speed channel at 12 Mbps. High-speed USB 2.0 (2001) offers a top rate of 480 Mbps
(up to 40 times faster than USB 1.0) while SuperSpeed USB 3.0 (2008) provides a 10 times increase to
4.8 Gbps.
Value-added Resellers (VARs)—A company that integrates the hardware and software of several
vendors with its own software, then resells the entire package.
Vertical Markets—In business, all of the potential purchasers within a business sector; a market that
meets the needs of a particular industry by producing similar goods or services (e.g., banking, insurance,
transportation).
Voluntary Control Council for Interference (VCCI)—The Voluntary Control Council for Interference by
Information Technology Equipment is the Japanese body governing radiofrequency emissions (i.e.,
electromagnetic interference) standards. It was formed in December 1985 and the VCCI mark also
appears on some electrical equipment sold outside Japan.
Waste Electrical and Electronic Equipment (WEEE) Directive—Sets out the financial and other
responsibilities of EEE producers with regard to the collection and recycling of waste from a broad range
of EEE at their end of life.
Wi-Fi—A logo from the Wi-Fi Alliance that certifies that network devices comply with the IEEE 802.11
wireless Ethernet standards. In the early 2000s, Wi-Fi/802.11 became widely used, and within a short
time, all laptops and other handheld devices were equipped with built-in Wi-Fi. Earlier laptops can be WiFi enabled by plugging in a Wi-Fi adapter via the USB port or PC card.
Windows® CE—Microsoft® Windows® CE is an open, scalable, 32-bit operating system that integrates
real-time capabilities with advanced Windows® technologies for a range of small footprint devices. A
typical Windows® CE–based device is designed for a specific use, often runs disconnected from other
computers, and requires a small operating system that has a deterministic response to interrupts.
Examples include enterprise tools, such as industrial controllers, communications hubs, and point-of-sale
terminals, and consumer products, such as cameras, Internet appliances, and interactive televisions.
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PAGE 47
Jeffrey J. Kraws and Karen B. Goldfarb
Phone: (609) 306-2274
Fax: (609) 395-9339
Email: [email protected]
Web: www.crystalra.com
Legal Notes and Disclosures: This report has been prepared by Document Capture Technologies, Inc. (“DCT”
or “the Company”) with the assistance of Crystal Research Associates, LLC (“CRA”) based upon information
provided by the Company. CRA has not independently verified such information. In addition, CRA has been
compensated by the Company in cash of forty-three thousand, five hundred dollars and four hundred thousand
warrants for its services in creating this report, for updates, and for printing costs.
Some of the information in this report relates to future events or future business and financial performance. Such
statements constitute forward-looking information within the meaning of the Private Securities Litigation Act of
1995. Such statements can be only predictions and the actual events or results may differ from those discussed
due to, among other things, the risks described in DCT’s 10-K, 10-Q, press releases, and other forms filed from
time to time. The content of this report with respect to DCT has been compiled primarily from information
available to the public released by the Company. DCT is solely responsible for the accuracy of that information.
Information as to other companies has been prepared from publicly available information and has not been
independently verified by DCT or CRA. Certain summaries of activities and outcomes have been condensed to
aid the reader in gaining a general understanding. For more complete information about DCT, the reader is
directed to the Company’s website at www.docucap.com. This report is published solely for information purposes
and is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any state. Past
performance does not guarantee future performance. Additional information about DCT and its public filings, as
well as copies of this report, can be obtained in either a paper or electronic format by calling (408) 436-9888.
®
PAGE 48

EXECUTIVE INFORMATIONAL OVERVIEW

Transcription

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