**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




**x**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                OF 1934**


**For
      the Quarterly Period Ended March 31, 2008**





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


**For
      the transition period
      from           to**





**Commission
      File Number: 000-25839**





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC.**




(Exact
      name of registrant as specified in its charter)




**Delaware**
            
            **59-3134518**(State
                or other jurisdiction of
            
            (I.R.S.Employerincorporation
                or organization)
            
            Identification
                Number)


**1798
      Technology Drive**


**Suite
      178**


**San
      Jose, California 95110**


*(Address
      of principal executive offices, Zip code)*





**408-436-9888
      ext. 207**


*(Registrant’s
      telephone number, including area code)*





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or 15(d) of the Exchange Act during the preceding 12 months (or for such period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No  ̈








Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or smaller reporting company. See
      definitions of “large accelerated filer,” “accelerated filer,” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer  ̈ Accelerated
      filer  ̈ Non-accelerated
      filer  ̈ Smaller
      Reporting Company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act). Yes  ̈ No x





The
      number of shares of Common Stock outstanding as of May 12, 2008 was 18,443,770.











**SPECIAL
      NOTE ON FORWARD LOOKING STATEMENTS**





This
      Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis
      of Financial Condition and Results of Operations" in Item 2 of Part I of this
      report include forward-looking statements. These statements involve known and
      unknown risks, uncertainties and other factors that may cause our actual
      results, levels of activity, performance or achievements to be materially
      different from any future results, levels of activity, performance, or
      achievements expressed or implied by forward-looking statements.





In
      some
      cases, you can identify forward-looking statements by terminology such as "may,"
      "should," "expects," "plans," "anticipates," "believes," "estimates,"
      "predicts," "potential," "proposed," "intended," or "continue" or the negative
      of these terms or other comparable terminology. You should read statements
      that
      contain these words carefully, because they discuss our expectations about
      our
      future operating results or our future financial condition or state other
      "forward-looking" information. There may be events in the future that we are
      not
      able to accurately predict or control. Before you invest in our securities,
      you
      should be aware that the occurrence of any of the events described in this
      Quarterly Report could substantially harm our business, results of operations
      and financial condition, and that upon the occurrence of any of these events,
      the trading price of our securities could decline and you could lose all or
      part
      of your investment. Although we believe that the expectations reflected in
      the
      forward-looking statements are reasonable, we cannot guarantee future results,
      growth rates, levels of activity, performance or achievements. We are under
      no
      duty to update any of the forward-looking statements after the date of this
      Quarterly Report to conform these statements to actual results.





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            2 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**




**FORM 10-Q**




**FOR
      THE QUARTER ENDED MARCH 31, 2008**




**INDEX**





**Page****PART
                I – FINANCIAL INFORMATION**
            4Item
                1
            Financial
                Statements
            4Item
                2
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            18Item
                3
            Quantitative
                and Quantitative Disclosures about Market Risk
            25Item
                4T
            Controls
                and Procedures
            25**PART
                II – OTHER INFORMATION**
            26Item
                1
            Legal
                Proceedings
            26Item
                1A
            Risk
                Factors
            26Item
                2
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            26Item
                3
            Defaults
                Upon Senior Securities
            26Item
                4
            Submission
                of Matters to a Vote of Security Holders
            26Item
                5
            Other
                Information
            26Item
                6
            Exhibits
            26Signatures
            27




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            3 -





**PART
      I. FINANCIAL INFORMATION**





**Item
      1 - Financial Statements**


**DOCUMENT
      CAPTURE TECHNOLOGIES, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


*(in
      thousands)*





**March 31,**
            
            **December 31,****2008**
            
            **2007**(Unaudited)
            
            (Audited)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            **$**
            **1,299**
            
            $
            1,770Trade
                receivables
            
            
            **1,618**
            
            
            2,464Inventories,
                net
            
            
            **1,194**
            
            
            1,400Prepaid
                expenses and other current assets
            
            
            **29**
            
            
            32**Total
                current assets**
            
            
            **4,140**
            
            
            5,666Fixed
                assets, net
            
            
            **111**
            
            
            127**Total
                assets**
            
            **$**
            **4,251**
            
            $
            5,793**LIABILITIES
                AND STOCKHOLDERS’****EQUITY (DEFICIT)**Current
                liabilities:Notes
                payable and related warrant liability
            
            **$**
            **1,123**
            
            $
            1,239Trade
                payables to related parties
            
            
            **715**
            
            
            578Trade
                payables and other current liabilities
            
            
            **531**
            
            
            658Accrued
                dividends on Series A 5% cumulative convertible preferred
                stock
            
            
            **-**
            
            
            178**Total
                current liabilities**
            
            
            **2,369**
            
            
            2,653Long-term
                bank line of credit
            
            
            **700**
            
            
            2,021Liability
                under derivative contracts
            
            
            **569**
            
            
            255**Total
                liabilities**
            
            
            **3,638**
            
            
            4,929Commitments
                and contingencies (Note 10)Convertible
                preferred stock, $.001 par value, 2,000 authorized:Series
                A 5% cumulative convertible preferred stock, 0 and 11.5
                shares
              issued
                and outstanding at March 31, 2008 and December 31, 2007,
              respectively;
                liquidation value of $0 and $1,150 at March 31, 2008
              and
                December 31, 2007, respectively
            
            
            **-**
            
            
            1,074Series
                B convertible preferred stock, 1.5 shares issued and
              outstanding
                at March 31, 2008 and December 31, 2007; liquidation
              value
                of $150 at March 31, 2008 and December 31, 2007
            
            
            **82**
            
            
            70Stockholders’
                equity (deficit):Common
                stock $.001par value, 50,000 authorized, 18,444 shares issued
              and
                outstanding at March 31, 2008 and 15,904 shares issued
              and
                15,404 outstanding at December 31, 2007 (500 shares held in
                escrow)
            
            
            **18**
            
            
            15Additional
                paid-in capital
            
            
            **31,944**
            
            
            30,323Accumulated
                deficit
            
            
            **(31,431**
            **)**
            
            (30,618
            )**Total
                stockholders’ equity (deficit)**
            
            
            **531**
            
            
            (280
            )**Total
                liabilities and stockholders’ equity (deficit)**
            
            **$**
            **4,251**
            
            $
            5,793




The
        accompanying notes are an integral part of these unaudited condensed
        consolidated financial statements.





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            4 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**


*(in
      thousands, except per share amounts)*





**Three Months Ended March 31,****2008**
            
            **2007****Net
                sales**
            
            **$**
            **2,538**
            
            $
            4,127**Cost
                of sales**
            
            
            **1,805**
            
            
            2,484**Gross
                profit**
            
            
            **733**
            
            
            1,643**Operating
                expenses:**Selling
                and marketing
            
            
            **251**
            
            
            400General
                and administrative
            
            
            **710**
            
            
            915Research
                and development
            
            
            **203**
            
            
            777Total
                operating expenses
            
            
            **1,164**
            
            
            2,092**Operating
                loss**
            
            
            **(431**
            **)**
            
            (449
            )Other
                income (expense):Change
                in fair value of derivative instruments
            
            
            **(314**
            **)**
            
            (368
            )Gain
                on sale of assets
            
            
            **400**
            
            
            -Other
            
            
            **(133**
            **)**
            
            9**Total
                other income (expense)**
            
            
            **(47**
            **)**
            
            (359
            )Net
                loss before income taxes
            
            
            **(478**
            **)**
            
            (808
            )Provision
                for income taxes
            
            
            **2**
            
            
            -Net
                loss
            
            
            **(480**
            **)**
            
            (808
            )Dividend
                on Series A and accretion of Series A and Series B preferred stock
                redemption value
            
            
            **(102**
            **)**
            
            (241
            )Deemed
                dividend on Series A preferred stock maturity and
                conversion
            
            
            **(231**
            **)**
            
            -**Net
                loss available to common stockholders**
            
            **$**
            **(813**
            **)**
            $
            (1,049
            )**Net
                loss per common share – basic and diluted**
            
            **$**
            **(0.05**
            **)**
            $
            (0.04
            )**Weighted
                average common shares outstanding:**
              **Basic
                and diluted**
            
            
            **16,442**
            
            
            23,850


The
        accompanying notes are an integral part of these unaudited condensed
        consolidated financial statements.




-
          5 -




**DOCUMENT
      CAPTURE TECHNOLOGIES, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**


*(in
      thousands)*





**Three Months Ended**
              **March 31,****2008**
            
            **2007****Operating
                activities:**Net
                loss available to common stockholders
            
            **$**
            **(813**
            **)**
            $
            (1,049
            )Adjustments
                to reconcile net loss to net cash provided (used) by operating
                activities:Depreciation
                expense
            
            
            **16**
            
            
            9Stock-based
                compensation cost – options
            
            
            **110**
            
            
            814Fair
                value of common stock warrants issued for services
                rendered
            
            
            **34**
            
            
            4Interest
                expense attributable to amortization of debt issuance
                costs
            
            
            **84**
            
            
            -Change
                in fair value of derivative instruments
            
            
            **314**
            
            
            368Accretion
                of Series A and Series B preferred stock redemption value
            
            
            **88**
            
            
            220Deemed
                dividend on Series A preferred stock
            
            
            **231**
            
            
            -Changes
                in operating assets and liabilities:Trade
                receivables
            
            
            **846**
            
            
            (689
            )Inventories
            
            
            **206**
            
            
            332Prepaid
                expenses and other current assets
            
            
            **3**
            
            
            (78
            )Accrued
                dividends on Series A 5% cumulative convertible stock
            
            
            **13**
            
            
            21Trade
                payables to related parties
            
            
            **137**
            
            
            (780
            )Trade
                payables and other current liabilities
            
            
            **(127**
            **)**
            
            (109
            )**Cash
                provided (used) by operating activities**
            
            
            **1,142**
            
            
            (937
            )**Investing
                activities:**Capital
                expenditures
            
            
            **-**
            
            
            (32
            )**Cash
                used by investing activities**
            
            
            **-**
            
            
            (32
            )**Financing
                activities:**Net**(**payments)
                advances on bank line of credit
            
            
            **(1,321**
            **)**
            
            500Payments
                on notes payable
            
            
            **(300**
            **)**
            
            -Proceeds
                from exercise of employee stock options
            
            
            **8**
            
            
            -**Cash
                (used) provided by financing activities**
            
            
            **(1,613**
            **)**
            
            500**Net
                decrease in cash and cash equivalents**
            
            
            **(471**
            **)**
            
            (469
            )**Cash
                and cash equivalents at beginning of period**
            
            
            **1,770**
            
            
            1,333**Cash
                and cash equivalents at end of period**
            
            **$**
            **1,299**
            
            $
            864**Non-cash
                investing and financing activities:**Restricted
                common stock acquired from related party
            
            **$**
            **-**
            
            $
            2Conversion
                of convertible preferred stock to common stock
            
            **$**
            **1,339**
            
            $
            -Increase
                in the warrant liability of common stock warrants in connection with
                debt
                financing
            
            **$**
            **100**
            
            $
            -


The
        accompanying notes are an integral part of these unaudited condensed
        consolidated financial statements.




-
            6 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





***Note
      1 – Background and Basis of Presentation***





*Organization*





Document
      Capture Technologies, Inc. ("DCT" or "Company") develops, designs and delivers
      various imaging technology solutions to all types and sizes of enterprises
      including governmental agencies, large corporations, small corporations, small
      office-home offices (“SOHO”), professional practices as well as consumers
      (referred to herein collectively as “Enterprises”). DCT is a market-leader in
      providing USB-powered scanning solutions to a wide variety of industries and
      market applications. DCT’s patented and proprietary page-imaging devices
      facilitate the way information is stored, shared and managed for both business
      and personal use.





Syscan,
      Inc., DCT’s wholly-owned subsidiary, was incorporated in California in 1995 to
      develop and manufacture a new generation of contact image sensors (“CIS”) that
      are complementary metal-oxide-silicon (“CMOS”) imaging sensor devices. During
      the late 1990s, DCT established many technical milestones and was granted
      numerous patents for its linear imaging technology. DCT’s patented CIS and
      mobile imaging scanner technology provides high quality images at extremely
      low
      power consumption levels allowing delivery of compact scanners in a form ideally
      suited for laptop or desktop computer users who need a small, lightweight device
      to scan or fax documents.





DCT’s
      business model was developed around intellectual property (“IP”) driven products
      sold primarily to original equipment manufacturers (“OEM”), private label brands
      and value added resellers (“VAR”) and can be found in a variety of applications,
      including but not limited, to the following:





·
            Document
                and information management;


·
            Identification
                card scanners;


·
            Passport
                security scanners;


·
            Bank
                note and check verification;


·
            Business
                card readers;


·
            Barcode
                scanning; and


·
            Optical
                mark readers used in lottery
                terminals.





In
      addition, during the past several years, DCT has engaged in the research and
      development of certain technologies related to the field of high definition
      (“HD”) display. During that time, DCT expanded its HD display initiative through
      acquisition, exclusive licensing and the addition of key personnel and expended
      significant resources to develop its HD display technology. However, in November
      2007, DCT terminated its HD display research and development efforts. All
      HD-related expenses, including employees and contractors were terminated by
      December 31, 2007. See Note 3.





*Basis
      of Presentation*





The
      accompanying unaudited condensed consolidated financial statements of DCT have
      been prepared in accordance with accounting principles generally accepted in
      the
      United States for interim financial information and the instructions to Form
      10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
      information and disclosures necessary for a presentation of the Company’s
      financial position, results of operations, and cash flows in conformity with
      accounting principles generally accepted in the United States (“GAAP”).





In
      the
      opinion of management, all adjustments ( which
      include only normal recurring adjustments) necessary to present fairly the
      financial position, results of operations and cash flows for all periods
      presented have been made. Preparing financial statements requires management
      to
      make estimates and assumptions that affect the reported amounts of assets,
      liabilities, revenue and expenses. Actual results may differ from these
      estimates. The results of operations for the period ended March 31, 2008 are
      not
      necessarily indicative of the operating results that may be expected for the
      entire year ending December 31, 2008. The interim financial statements should
      be
      read in conjunction with the financial statements in the Company’s Annual Report
      on Form 10-KSB for the year ended December 31, 2007, filed with the Securities
      and Exchange Commission (“SEC”) on March 5, 2008.





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            7 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





The
      consolidated financial statements include the accounts of DCT and its
      subsidiaries. All significant intercompany transactions and balances have been
      eliminated.





Certain
      accounts have been reclassified to conform to the current period presentation.
      Such reclassifications did not affect total net sales, operating loss or net
      loss available to common stockholders.





*Liquidity
      and Going Concern*





The
      accompanying financial statements have been prepared assuming that DCT will
      continue as a going concern. As of March 31, 2008, DCT has a substantial
      accumulated deficit totaling $31,431,000 resulting from recurring losses in
      recent years. These factors raise substantial doubt about DCT’s ability to
      continue as a going concern.





Management
      believes the Company has adequate resources to continue as a going concern
      such
      as current sources of liquidity including cash, current accounts receivables
      and
      a $285,000 line of credit available for use under its current line of credit
      facility. Management also believes that it has the ability to borrow additional
      funds from third parties such as financial institutions or will be successful
      in
      a debt or equity financing that will be sufficient to fund its operations for
      the next twelve months. Therefore, for at least the next twelve months, DCT
      can
      continue to operate as a going concern.





The
      consolidated financial statements do not include any adjustments relating to
      the
      recoverability and classification of recorded asset amounts or the amount and
      classification of liabilities or any other adjustment that might be necessary
      should DCT be unable to continue as a going concern.





***Note
      2 – Recent Accounting Pronouncements***





*Pronouncements
      Adopted During the Current Reporting Period*





In
      September 2006, the FASB issued SFAS 157, *Fair
      Value Measurements* (“SFAS
      157”), which provides guidance about how to measure assets and liabilities that
      use fair value. SFAS 157 will apply whenever another US Generally Accepted
      Accounting Principle (“GAAP”) standard requires (or permits) assets or
      liabilities to be measured at fair value but does not expand the use of fair
      value to any new circumstances. This standard also will require additional
      disclosures in both annual and quarterly reports. SFAS 157 was effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and was adopted by DCT on January 1, 2008. The adoption of SFAS 157 had no
      impact on DCT’s consolidated financial position, cash flows or results of
      operations.





In
      February 2007, the FASB issued SFAS 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities-Including
      an
      amendment of FASB Statement No. 115* (“SFAS
      159”). SFAS 159 permits entities to choose to measure many financial instruments
      and certain other items at fair value that are not currently required to be
      measured at fair value, with unrealized gains and losses related to these
      financial instruments reported in earnings at each subsequent reporting date.
      SFAS 159 was effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and was adopted by DCT on January 1, 2008.
      The adoption of SFAS 159 had no impact on DCT’s consolidated
      financial position, cash flows or results of operations .





In
      June
      2007, the FASB ratified the Emerging Issues Task Force (“EITF”) Issue No. 07-3,
“ *Accounting
      for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
      Research and Development Activities* ”
(“EITF
      07-3”). EITF 07-3 requires non-refundable advance payments for goods and
      services to be used in future research and development activities to be recorded
      as an asset and the payments to be expensed when the research and development
      activities are performed. EITF 07-3
      is effective, on a prospective basis, for fiscal years beginning after
      December 15, 2007 and was adopted by DCT on January
      1, 2008. The adoption of SFAS 159 had no impact on DCT’s consolidated financial
      position, cash flows or results of operations.





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            8 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





*Pronouncements
      to be Adopted in Future Reporting Periods*





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), “ *Business
      Combinations* ”
(“SFAS
      141R”). SFAS 141R will significantly change the accounting for business
      combinations in a number of areas including the treatment of contingent
      consideration, contingencies, acquisition costs, in-process research and
      development and restructuring costs. In addition, under SFAS 141R, changes
      in
      deferred tax asset valuation allowances and acquired income tax uncertainties
      in
      a business combination after the measurement period will impact income taxes.
      SFAS 141R is effective for fiscal years beginning after December 15, 2008 and,
      as such, DCT will adopt this standard on January 1, 2009. DCT
      is
      currently evaluating the potential impact this standard may have on its
      consolidated financial position, cash flows and results of operations.





In
      March
      2008, the FASB issued SFAS No. 161, “ *Disclosures
      about Derivative Instruments and Hedging Activities-an amendment of FASB
      Statement No. 133* ”
(“SFAS
      161”). SFAS 161 requires enhanced disclosure related to derivatives and hedging
      activities and thereby seeks to improve the transparency of financial reporting.
      Under SFAS 161, entities are required to provide enhanced disclosures relating
      to: (a) how and why an entity uses derivative instruments; (b) how derivative
      instruments and related hedge items are accounted for under SFAS No. 133,
“ *Accounting
      for Derivative Instruments and Hedging Activities* ”
(“SFAS
      133”), and its related interpretations; and (c) how derivative instruments and
      related hedged items affect an entity’s financial position, financial
      performance, and cash flows. FAS No. 161 must be applied prospectively to all
      derivative instruments and non-derivative instruments that are designated and
      qualify as hedging instruments and related hedged items accounted for under
      SFAS
      133 for all financial statements issued for fiscal years and interim periods
      beginning after November 15, 2008, and,
      as
      such, DCT will adopt this standard on January 1, 2009. DCT
      is
      currently evaluating the potential impact this standard may have on its
      consolidated financial position, cash flows and results of operations.





Other
      recent accounting pronouncements issued by the FASB (including its EITF), the
      American Institute of Certified Public Accountants (“AICPA”), and the SEC did
      not or are not believed by management to have a material impact on the Company's
      present or future financial statements.





***Note
      3 – Sale of HD Display-Related Assets***





In
      December 2007, DCT entered an asset purchase agreement with Sky Glory Enterprise
      Investment Co., Ltd (“Sky Glory”), whereby Sky Glory agreed to purchase certain
      HD display-related assets, subject to certain terms and conditions, for a total
      of $600,000 cash. On March 31, 2008, DCT received an initial $400,000 cash
      payment. A second cash payment of $150,000 was received on May 2, 2008. To
      date,
      t he
      final
      $50,000 payment has not been received.





There
      were no costs associated with the sale of HD-related assets. As such, the entire
      cash proceeds of $400,000 were recorded as a gain on sale of assets during
      the
      three months ended March 31, 2008. The second cash payment of $150,000 will
      be
      reflected in DCT’s financial statements as a gain on sale of assets during the
      three months ended June 30, 2008. The final $50,000 payment will be reflected
      in
      DCT’s financial statements as a gain on sale of assets if and when the cash is
      received.





Darwin
      Hu, the current Chairman of DCT’s board of directors, was instrumental in
      negotiating and closing the sale of the HD-display related assets. Until March
      1, 2008, Mr. Hu was DCT’s President and Chief Executive Office, at which time he
      resigned from DCT to become an executive at a subsidiary of Sky Glory.





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            9 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





***Note
      4 – Related-Party Transactions***





*Related-Party
      Purchases*





The
      Company purchases the majority of its finished scanner imaging products from
      Syscan Lab Limited (“SLL”), a wholly-owned subsidiary of Syscan Technology
      Holdings Limited ("STH"), the parent company of DCT’s former majority
      stockholder. DCT’s Chairman, Darwin Hu, was formerly the CEO of STH. He resigned
      from STH effective December 2004.





Purchases
      from SLL totaled $1,380,000 and $2,178,000 for the three months ended March
      31,
      2008 and 2007, respectively. All purchases from SLL were carried out in the
      normal course of business. As a result of these purchases, the Company was
      liable to SLL for $715,000 and $578,000 at March 31, 2008 and December 31,
      2007,
      respectively.





***Note
      5 – Concentration of Credit Risk and Major Customers***





Financial
      instruments that subject DCT to credit risk are cash balances maintained in
      excess of federal depository insurance limits and trade receivables.





*Cash
      and Cash Equivalents*





DCT
      maintains cash balances at several banks. Accounts at each institution are
      insured by the Federal Deposit Insurance Corporation ("FDIC") up to $100,000.
      As
      of March 31, 2008, DCT had consolidated balances of approximately $1,097,000,
      which were not guaranteed by the FDIC. DCT has not experienced any losses in
      such accounts and believes the exposure is minimal.





*Major
      Customers and Trade Receivables*





A
      relatively small number of customers account for a significant percentage of
      DCT’s sales. Customers that exceeded 10% of total revenues and accounts
      receivable were as follows:





**Three
                months Ended**
              **March
                31,****2008**
            
            **2007**Customer
                A
            
            
            **28**
            **%**
            
            32
            %Customer
                B
            
            
            **25**
            
            
            15Customer
                C
            
            
            **21**
            
            
            21Customer
                D
            
            
            **10**
            
            
            *





*
      Customer accounted for less than 10% for the period indicated.




Trade
      receivables from these customers totaled $1,231,000 at March 31, 2008. As of
      March 31, 2008, all the Company's trade receivables were unsecured.





***Note
      6 – Concentration of Supplier Risk***





DCT
      purchases substantially all finished scanner imaging products from one vendor
      that is also a wholly-owned subsidiary of the parent company of its former
      majority stockholder. See Note 4. If this vendor became unable or unwilling
      to
      provide materials in a timely manner and DCT was unable to find alternative
      vendors, DCT's business, operating results and financial condition would be
      materially adversely affected.





-
            10 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





***Note
      7 – Employee Equity Incentive Plans***





*Stock-Based
      Compensation*





DCT
      has
      several stock-based employee compensation plans, which are more fully described
      in the 2007 Annual Report on Form 10-KSB.





Effective
      January 1, 2006 DCT adopted the fair value recognition provisions of SFAS 123R, *Share-Based
      Payments* (“SFAS
      123R”), using the modified prospective application method. Under this transition
      method, compensation cost recognized for the three months ended March 31, 2008
      and 2007, includes the applicable amounts of: (a) compensation expense of all
      stock-based payments granted prior to, but not yet vested as of January 1,
      2006
      (based on the grant-date fair value estimated in accordance with the original
      provisions of SFAS 123 and the Accounting Principles Board (“APB”) 25, *Accounting
      for Stock Issued to Employees* (“APB
      25”)), and (b) compensation expense for all stock-based payments granted
      subsequent to January 1, 2006 (based on the grant-date fair value estimated
      in
      accordance with the new provisions of SFAS 123R).





The
      following table sets forth the total stock-based compensation expense included
      in the Condensed Consolidated Statements of Operations ( *in
      thousands* ):





**Three months Ended**
              **March 31,****2008**
            
            **2007**Selling
                and marketing
            
            **$**
            **15**
            
            $
            73General
                and administrative
            
            
            **71**
            
            
            508Research
                and development
            
            
            **24**
            
            
            233





At
      March
      31, 2008, the Company had approximately $395,000 of total unrecognized
      compensation cost related to stock options. This cost is expected to be
      recognized over a weighted-average period of approximately 16
      months.





*Stock
      Options*





The
      following table summarizes stock option activity and related information for
      the
      three months ended March 31, 2008:





**Options**
            
            **Weighted-**
              **Average**
              **Exercise**
              **Price**Outstanding
                at December 31, 2007
            
            
            6,847,550
            
            $
            0.18Granted
            
            
            -
            
            
            -Exercised
            
            
            (1,446,000
            )
            
            (0.01
            )Cancelled
            
            
            (434,385
            )
            
            (0.87
            )Outstanding
                at March 31, 2008
            
            
            4,967,165
            
            $
            0.39





The
      following table summarizes all options outstanding and exercisable by price
      range as of March 31, 2008:





**Options Outstanding**
            
            **Options Exercisable****Range of**
              **Exercise**
              **Prices**
            
            **Number**
              **Outstanding**
            
            **Weighted-**
              **Average**
              **Remaining**
              **Contractual**
              **Life (Years)**
            
            **Weighted-**
              **Average**
              **Exercise**
              **Price**
            
            **Number**
              **Exercisable**
            
            **Weighted-**
              **Average**
              **Exercise**
              **Price**$0.01
            
            
            2,241,165
            
            
            4.07
            
            $
            0.01
            
            
            2,241,165
            
            $
            0.01$0.60
                - $0.70
            
            
            2,726,000
            
            
            8.86
            
            $
            0.70
            
            
            1,717,333
            
            $
            0.70








-
            11 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





***Note
      8 – Basic and Diluted Net Loss Per Common Share***





Basic
      net
      loss per common share is computed by dividing net loss by the weighted average
      number of shares of common stock outstanding during the period. Diluted net
      loss
      per common share is computed by dividing net loss by the weighted average number
      of shares of common stock and common stock equivalents outstanding during the
      period. Common stock equivalents were not considered in calculating DCT’s
      diluted net loss per common share for the three months ended March 31, 2008
      and
      2007 as their effect would be anti-dilutive. As a result, for all periods
      presented, DCT’s basic and diluted net loss per common share is the same.





***Note
      9 – Equity***





***Common
      Stock Activity***





During
      January 2008, DCT cancelled 750,000 shares of its common stock (of which 500,000
      shares were never released from escrow) as a result of terminating its HD
      display related research and development efforts. The shares were originally
      issued in anticipation of reaching research and development milestones and
      conditions. However, the milestones and performance criteria were not met before
      the project was terminated.





During
      the first quarter of 2008, DCT issued 1,446,000 shares of common stock upon
      the
      exercise of stock options by DCT’s principal officers, employees and
      consultants. Of the options exercised, 646,000 shares were completed through
      a
      cashless exercise.





During
      the first quarter of 2008, DCT issued 1,844,016 shares of common stock resulting
      from the maturity of $1,150,000 (11,500 shares) of Series A 5% cumulative
      convertible preferred stock (“Series A Stock”) and the related accrued dividend
      shares.





***Preferred
      Stock Activity***





*Series
      A 5% Cumulative Convertible Preferred Stock Maturity*





On
      March
      15, 2008 (the "Series A Stock Redemption Date"), all of DCT’s outstanding Series
      A Stock was redeemed for a per share redemption price equal to the stated value
      on the Series A Stock Redemption Date (the "Series A Stock Redemption Price").
      The Series A Stock Redemption Price included principal and accrued dividends.
      The Series A Stock Redemption Price was payable either in cash or in shares
      of
      common stock at DCT’s sole discretion. DCT elected to pay all of the Series A
      Stock Redemption Price in shares of common stock. According to the terms of
      the
      Series A Stock agreement, the shares of common stock that were delivered to
      holders of the Series A Stock were valued at 85% of the fifteen-day volume
      weighted average price of the common stock on the Series A Redemption Date.





*Series
      A Stock Dividends*





Through
      maturity, DCT’s Series A Stock accrued cumulative dividends at a rate of 5% per
      year, payable semiannually on July 1 and January 1. Dividends were payable
      in
      cash, by accretion of the stated value or in shares of common stock. Subject
      to
      certain terms and conditions, the decision whether to accrete dividends to
      the
      stated value of the Series A Stock or to pay for dividends in cash or in shares
      of common stock was at DCT’s discretion and DCT opted to pay all dividends in
      shares of common stock. During the three months ended March 31, 2008 and 2007,
      Series A Stock dividends were approximately $14,000 and $21,000, respectively.





-
            12 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





*Series
      A Stock Deemed Dividends*





In
      accordance with EITF Issue 98-5, *Accounting
      for Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratios* (“EITF
      98-5”), and EITF Issue No. 00-27, *Application
      of Issue 98-5 to Certain Convertible Instruments* (“EITF
      00-27”), DCT’s Series A Stock had an embedded contingent beneficial conversion
      feature because the conversion price was less than the fair value of DCT’s
      common stock on the maturity and conversion of the Series A Stock into common
      stock. Additionally, the embedded beneficial conversion feature was considered
      contingent because it was based on two variables: (i) how much of the Series
      A
      Stock Redemption Price was paid in DCT’s common stock, and (ii) the fifteen-day
      volume weighted average price of the common stock on the Series A Redemption
      Date.





Under
      EITF 98-5, a contingent beneficial conversion feature should be recognized
      in
      earnings when all contingencies are resolved. DCT recorded a deemed dividend
      on
      its Series A Stock during the three months ended March 31, 2008 totaling
      $231,000. This non-cash dividend is to reflect the implied economic value to
      the
      preferred stockholder of converting Series A shares into common stock at a
      15%
      discount of the common stock price at the time of conversion. The fair value
      was
      calculated using the difference between the agreed-upon conversion price of
      the
      Series A Preferred Stock into shares of common stock and the fair market value
      of DCT's common stock on the conversion date. This amount was charged to
      accumulated deficit with the offsetting credit to additional paid-in-capital.





DCT
      treated the deemed dividend on Series A Stock as a reconciling item to adjust
      its reported net loss, together with Series A Stock dividends recorded during
      the applicable period, to the loss available to common stockholders line item
      on
      the consolidated statements of operations.





*Preferred
      Stock Accounting Treatment*





Preferred
      Stock Classification. Pursuant
      to the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task
      Force (“EITF”) EITF 00-19, *Accounting
      for Derivative Financial Instruments* (“EITF
      00-19”), and EITF Topic D-98, *Classification
      and Measurement of Redeemable Securities* (“Topic
      D-98”), DCT’s Series A Stock (until its maturity on March 15, 2008) and Series B
      convertible redeemable preferred stock (“Series B Stock”) was classified as
      temporary equity, as the stock is conditionally redeemable on the redemption
      date.





The
      difference between the initial recorded value of the Series A Stock redemption
      value was accreted, on a straight-line basis, from the issuance date through
      the
      maturity date of March 15, 2008. The difference between the initial recorded
      value of the Series B Stock and the minimum redemption value is being accreted,
      on a straight-line basis, from the issuance date through the earliest redemption
      of August 7, 2009. The increases in the carrying amount of the Series A Stock
      and Series B Stock for the three months ended March 31, 2008 and 2007 totaled
      approximately $88,000 and $220,000, respectively. The accretion of DCT’s Series
      A Stock and Series B Stock redemption value is disclosed as a reconciling item
      and adjusts DCT’s reported net loss, together with the Series A Stock dividends,
      to net loss available to common stockholders.





Likely
      Embedded Derivative. Under
      the provisions of SFAS 133, *Accounting
      for Derivative Instruments and Hedging Activities* (“SFAS
      133”) and EITF 00-19, the redemption feature and registrations rights feature of
      DCT’s (i) Series A Stock (until the March 15, 2008 maturity date), (ii) Series
      A
      Stock warrants, (iii) Series B Stock, and (iv) Series B Stock warrants (referred
      to collectively as “DCT’s Derivative Instruments”) are all likely derivative
      instruments that require bifurcation from the host contract. Accordingly, the
      fair value of DCT’s outstanding Derivative Instruments have been recorded in
      DCT’s Balance Sheet as a liability as of March 31, 2008. The total increase in
      the fair value of DCT’s Derivative Instruments totaled approximately $314,000
      and $368,000 for the three months ended March 31, 2008 and 2007, respectively,
      with the offsetting adjustment disclosed as non-operating expense on DCT’s
      Statements of Operations.





-
            13 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





DCT
      computes fair value of these derivatives using the Black-Scholes valuation
      model. The Black-Scholes model was developed for use in estimating the fair
      value of traded options that have no vesting restrictions and are fully
      transferable. In addition, option valuation models require the input of highly
      subjective assumptions, including the expected stock price volatility. DCT's
      derivative instruments have characteristics significantly different from traded
      options, and the input assumptions used in the model can materially affect
      the
      fair value estimate.





The
      assumptions used in the Black-Scholes valuation model to estimate fair value
      of
      each derivative instrument and the resulting weighted average estimated value
      of
      the Series A Stock derivative liability and the Series B Stock derivative
      liability as of March 31, 2008 and 2007 are as follows:





**March 31,****2008**
            
            **2007**Weighted
                average estimated values per share
            
            $
            0.29
            
            $
            0.27Expected
                remaining life in years
            
            
            2
            
            
            3Expected
                volatility
            
            
            108
            %
            
            51
            %Expected
                dividend yield
            
            
            0
            %
            
            0
            %Risk
                free interest rate
            
            
            4
            %
            
            5.3
            %




***Note
      10 – Commitments and Contingencies***




*Operating
      Leases*




The
      Company is committed under various non-cancelable operating leases which extend
      through February 2011. Future minimum rental commitments as of March 31, 2008
      are as follows ( *in
      thousands* ):




**Year Ending**
              **March 31,**
            
            **Future**
              **Minimum**
              **Lease**
              **Payments**2009
            
            $
            1892010
            
            
            1512011
            
            
            39Total
            
            $
            379




*Bank
      Line of Credit*




DCT
      has a
      $3,000,000 line of credit (“LOC”) at a commercial bank. Borrowings under the LOC
      are limited to 80% of eligible accounts receivable and 40% of eligible
      inventory, as defined in the LOC agreement. The LOC bears an annual interest
      rate of prime (6.0% at March 31, 2008) plus 1.25% for advances drawn against
      accounts receivables and prime plus 2.25% for advances drawn against inventory.
      Interest payments are due monthly and all unpaid interest and principal is
      due
      in full on September 13, 2009. Upon certain events of default, the default
      variable interest rate increases to prime plus 5%. DCT had an available
      borrowing capacity of $285,000 on its LOC at March 31, 2008.




As
      of
      March 31, 2008, DCT was in compliance with all LOC debt covenants.




*Long-Term
      Loan*




On
      September 27, 2007 the Company entered into a $1,500,000 term loan agreement
      ("Loan Agreement") with Montage Capital, LLC ("Lender") in an arm’s length
      transaction. DCT granted the Lender a continuing security interest, and pledged
      to the Lender, all of its assets to secure payment and performance of its
      obligations under the Loan Agreement. The Loan Agreement and the security
      interest are subordinate to DCT’s LOC.





-
            14 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**




DCT
      is
      currently making monthly principal payments of $100,000 and interest payments
      at
      an annual interest rate of 15%. All outstanding principal and accrued interest
      is due at the time the loan matures on November 30, 2008. However, if DCT sells
      any assets outside the ordinary course of business and receives cash proceeds
      from such sale, the Lender must be paid 20% of such proceeds as pre-payment
      of
      the outstanding principal. Additionally, under certain circumstances defined
      in
      the Loan Agreement, the Lender has the right to declare all of the amounts
      due
      under the Loan Agreement immediately due and payable. No such circumstances
      have
      occurred to date.




In
      connection with the Loan Agreement, DCT issued warrants (“Loan Warrants”) to
      purchase up to 650,000 shares of DCT’s common stock at an initial exercise price
      of $0.60 per share. The
      Loan
      Warrants vested immediately and expire September 2012. From the initial funding
      of the Loan Agreement through March 31, 2008, the warrant holders had the right
      to require DCT to purchase the warrant for a maximum of $250,000. On March
      31,
      2008, the warrant repurchase price increased to a maximum of $350,000. The
      warrant repurchase feature expires September 2012.





Under
      the
      Black-Scholes pricing model, the fair value of the Loan Warrants on the issuance
      date was $399,000 using the following assumptions: contractual term of five
      years, 5.3% risk-free interest rate, expected volatility of 90% and expected
      dividend yield of 0%. Because the warrants were immediately redeemable for
      $250,000 cash at the warrant holder’s request, DCT accounted for the original
      $250,000 warrant redemption value as a current liability and the $149,000 excess
      fair value over the warrant redemption value as additional paid-in capital.
      On
      March 31, 2008, DCT accounted for the warrant repurchase price increased maximum
      by increasing the related current liability from $250,000 to $350,000 with
      the
      offset recorded to additional paid in capital.





DCT
      is
      accreting the entire $399,000 debt discount to interest expense over the life
      of
      the Loan Agreement. In connection with the Loan Warrants, DCT recorded non-cash
      interest expense for the three months ended March 31, 2008 of $84,000.





Future
      annual repayment obligations as of March 31, 2008 were as follows ( *in
      thousands* ):





Principal
                payments due less than 12 months
            
            $
            1,000Loan
                Warrants redemption value
            
            
            350Total
                obligations
            
            
            1,350Less
                unamortized debt discount
            
            
            (227
            )Total
                notes payable and related warrant liability
            
            $
            1,123




The
      Loan
      Warrants provide for weighted average anti-dilution price adjustments if the
      Company issues common stock (or securities convertible into common stock) for
      consideration less than the then-effective exercise price; provided that if
      the
      Company sells or issues its equity securities within one year after the issue
      date in an offering in which the Company receives gross proceeds of at least
      $1,000,000 (“Equity Event”), then, at the option of the Lender, the shares into
      which the Loan Warrants are convertible will be of the type and series of stock
      issued in the Equity Event. The exercise price shall be equal to the price
      per
      share paid in the Equity Event, and the Lender shall have the rights given
      to
      the purchasers in the Equity Event.




*Employment
      Agreements*




The
      Company maintains employment agreements with its executive officers, which
      extend through 2008. The agreements provide for a base salary, annual bonus
      to
      be determined by the Board of Directors, termination payments, stock options,
      non-competition provisions, and other terms and conditions of employment. In
      addition, the Company maintains employment agreements with other key employees
      with similar terms and conditions. As of March 31, 2008, termination payments
      totaling $389,000 are in effect.





-
            15 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**




*Consulting
      Agreement*




DCT
      entered into an Investor Relations Consulting Agreement dated January 25, 2008,
      for a term of one year beginning January 1, 2008, payable at a monthly rate
      of
      $5,000. Additionally, DCT agreed to pay the consultant 110,000 warrants with
      an
      exercise price of $0.65 per share, with the following vesting schedule: (i)
      50%
      upon signing the agreement, (ii) 25% on June 30, 2008, and (iii) 25% on
      September 30, 2008. The warrants expire three years after their respective
      vesting dates (January 1, 2011, June 30, 2011, and September 30, 2011). Each
      warrant includes a cashless exercise provision. The warrants will not be
      registered under federal or state securities laws. The fair value of these
      warrants, as determined by the Black-Scholes valuation model, totaled
      approximately $68,000 and is amortized ratably over the vesting period. As
      such,
      $34,000 was charged to general and administrative expense and credited to
      additional paid-in capital during the three months ended March 31,
      2008.




*Registration
      Rights Agreements*




In
      connection with the issuance of multiple equity instruments, DCT executed
      registration rights agreements with the purchasers thereof under which DCT
      agreed to register the common shares underlying the equity instrument. All
      registration rights agreements provide for liquidated damages in the event
      the
      registration statement is not maintained continuously effective. During the
      three months ended March 31, 2008, DCT maintained continuously effective
      registration statements for all equity instruments that require effective
      registration statements.




*Litigation,
      Claims and Assessments*




The
      Company experiences routine litigation in the normal course of its business
      and
      does not believe that any pending litigation will have a material adverse effect
      on DCT’s financial condition, results of operations or cash
      flows.




***Note
      10 – Segment and Geographic Information***




*Segment
      Information*





DCT
      currently operates in one segment, the design, development and delivery of
      various imaging technology solutions, most notably scanners, as defined by
      SFAS
      131, *Disclosures
      about Segments of an Enterprise and Related Information* (“SFAS
      131”).





*Geographic
      Information*





During
      the three months ended March 31, 2008 and 2007, DCT recorded net sales
      throughout the U.S. and Europe as determined by the final destination of the
      product. The following table summarizes total net sales attributable to
      significant countries ( *in
      thousands* ):





**Three Months Ended**
              **March 31,****2008**
            
            **2007**U.S.
            
            **$**
            **2,351**
            
            $
            4,001Europe
                and other
            
            
            **187**
            
            
            126**$**
            **2,538**
            
            $
            4,127








-
            16 -





**DOCUMENT
      CAPTURE TECHNOLOGIES, INC**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS –
(Unaudited)**





Presented
      below is information regarding identifiable assets, classified by operations
      located in the U.S., Europe and Asia ( *in
      thousands* ):


**March 31, 2008**
            
            **December 31, 2007**U.S.
            
            **$**
            **4,110**
            
            $
            5,574Asia
            
            
            **100**
            
            
            110Europe
            
            
            **41**
            
            
            109**$**
            **4,251**
            
            $
            5,793





Assets
      located in Asia relate to tooling equipment required to manufacture DCT’s
      product. Assets located in Europe relate to DCT’s field service, sales,
      distribution and inventory management in the Netherlands.





-
            17 -





**Item
      2 - Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**




The
      following discussion should be read in conjunction with Document Capture
      Technologies, Inc.’s (“DCT” or “Company”) unaudited condensed consolidated
      financial statements and notes included herein. The results described below
      are
      not necessarily indicative of the results to be expected in any future period.
      Certain statements in this discussion and analysis, including statements
      regarding our strategy, financial performance and revenue sources, are
      forward-looking statements based on current expectations and entail various
      risks and uncertainties that could cause actual results to differ materially
      from those expressed in the forward-looking statements. Readers are referred
      to
      DCT’s Annual Report on Form 10-KSB for the year ended December 31, 2007 as filed
      with the Securities and Exchange Commission on March 5, 2008. We undertake
      no
      duty to update any forward-looking statement to conform the statement to actual
      results or changes in our expectations.




Management's
      discussion and analysis of financial condition and results of operations
      ("MD&A") is provided as a supplement to the accompanying unaudited condensed
      consolidated financial statements and notes to help provide an understanding
      of
      our financial condition, changes in financial condition and results of
      operations. The MD&A section is organized as follows:




·
            ***Overview***.
                This section provides a general description of the Company's business,
                as
                well as recent developments that we believe are important in understanding
                the results of operations and to anticipate future trends in those
                operations.




·
            ***Critical
                accounting policies***.
                This section provides an analysis of the significant estimates and
                judgments that affect the reported amounts of assets, liabilities,
                revenues and expenses, and related disclosure of contingent assets
                and
                liabilities.




·
            ***Results
                of operations.***This section provides an analysis of our results of operations for
                the
                three months ended March 31, 2008 compared to the three months ended
                March
                31, 2007. A brief description of certain aspects, transactions and
                events
                is provided, including related-party transactions that impact the
                comparability of the results being
                analyzed.




·
            ***Liquidity
                and capital resources.***This section provides an analysis of our financial condition and
                cash
                flows as of and for the three months ended March 31, 2008 as compared
                to
                the three months ended March 31,
                2007.




***Overview***




We
      are in
      the business of designing, developing and delivering imaging technology
      solutions. Our technology is protected under multiple patents. We focus our
      research and development toward new deliverable and marketable technologies.
      We
      sell our products to customers throughout the world, including the United
      States, Canada, Europe, South America, Australia and Asia.




We
      are
      actively shipping six groups of image-capture products. We have expanded our
      document/image-capture product offerings, and will continue to expand our
      product offerings in the future in response to the increased market demand
      for
      faster and easier-to-use products as well as increased security to meet the
      growing need for information protection, including identity and financial
      transaction protection.




While
      substantially all our revenues and operating expenses have historically been
      denominated in the U.S. dollar and unaffected by the decreased value of the
      U.S.
      dollar, all our product is purchased in the Chinese Yuan. This has significantly
      increased the cost of our product, which has not been passed through to our
      customers. We expect this trend to continue throughout the remainder of
      2008.




We
      have
      been, and will continue to explore and evaluate a range of strategic
      opportunities to enhance shareholder value, including, but not limited to,
      combinations, partnerships, sales or mergers of our operations or assets with
      another entity and/or a recapitalization. As of the date of this filing, we
      continue to evaluate different strategic opportunities.





-
            18 -




During
      November 2007, we terminated our high definition (“HD”) display research and
      development efforts. All HD display-related expenses, including employees and
      contractors were terminated by December 31, 2007. As such our operating expenses
      for the three months ended March 31, 2008 are not directly comparable to our
      operating expenses for the three months ended March 31, 2007. We never generated
      any sales from our HD-display research and development efforts.




***Critical
      Accounting Policies***




Our
      MD&A is based upon our condensed consolidated financial statements, which
      have been prepared in accordance with accounting principles generally accepted
      in the United States. The preparation of these financial statements requires
      us
      to make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses, and related disclosure of contingent assets
      and liabilities. On an on-going basis, we evaluate our estimates, including
      those related to revenue recognition, trade receivables and allowance for
      doubtful accounts, inventories, and income taxes. We base our estimates on
      historical experience and on various other assumptions that we believe are
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.




An
      accounting policy is deemed to be critical if it requires an accounting estimate
      to be made based on assumptions about matters that are highly uncertain at
      the
      time the estimate is made, and if different estimates that reasonably could
      have
      been used or changes in the accounting estimate that are reasonably likely
      to
      occur could materially change the financial statements.




Our
      disclosures of critical accounting policies in our Annual Report on Form 10-KSB
      for the year ended December 31, 2007 have not materially changed since that
      report was filed.





-
            19 -





**Results
      of Operations**





The
      following table summarizes certain aspects of our results of operations for
      the
      three months ended March 31, 2008 compared to the three months ended March
      31,
      2007 ( *in
      thousands* ):





**Three Months**
              **Ended March 31.****2008**
            
            **2007**
            
            **$
                Change**
            
            **%
                Change**Net
                sales
            
            $
            2,538
            
            $
            4,127
            
            $
            (1,589
            )
            
            (39
            )%Cost
                of sales
            
            
            1,805
            
            
            2,484
            
            
            (679
            )
            
            (27
            )As
                a percentage of sales
            
            
            71
            %
            
            60
            %Selling
                and marketing expense
            
            
            251
            
            
            400
            
            
            (149
            )
            
            (37
            )General
                and administrative expense
            
            
            710
            
            
            915
            
            
            (205
            )
            
            (22
            )Research
                and development expense
            
            
            203
            
            
            777
            
            
            (574
            )
            
            (74
            )Total
                other income (expense)
            
            
            (47
            )
            
            (359
            )
            
            NM
            
            
            NMDividend
                and deemed dividend on 5% convertible preferred stock and accretion
                of
                preferred stock redemption value
            
            
            (333
            )
            
            (241
            )
            
            NM
            
            
            NMNM
                = Not Meaningful





*Net
      Sales*





The
      decrease in net sales during the three months ended March 31, 2008 as compared
      to the three months ended March 31, 2007 was attributable to the
      following:





·
            The
                timing and rescheduling of significant customer orders, which resulted
                in
                unusually high number of scanners shipped during the three months
                ended
                March 31, 2007 and an unusually low number of scanners shipped during
                the
                three months ended March 31, 2008.





·
            The
                overall slowdown of the general economic and market conditions in
                the U.S.
                economy and the related slowdown of information technology (“IT”)
                spending.





From
      time
      to time, our key customers place large orders causing our quarterly net revenue
      to fluctuate significantly. We expect this trend and resulting fluctuations
      to
      continue. And although the number of scanners shipped during any quarter has
      fluctuated significantly, our average selling price has remained fairly stable
      and we expect this stability to continue for the foreseeable
      future.





We
      continue to concentrate on expanding our significant customer base and
      decreasing our risk of dependency on a small number of significant customers.
      However, revenue generated from our top four customers during the three months
      ended March 31, 2008 was 84% as compared to 75% during the same period in fiscal
      2007. The identities of our largest customer and their respective contributions
      to our net sales have varied in the past and will likely continue to vary from
      period to period.





-
            20 -





*Cost
      of Sales, Including Gross Profit*




Cost
      of
      sales includes all direct costs related to the purchase of scanners, imaging
      modules and services related to the delivery of those items manufactured in
      China, and to a lesser extent engineering services and software royalties.
      Cost
      of sales as a percentage of net sales increased during the three months ended
      March 31, 2008 as compared to the same period in 2007 as a direct result of
      the
      devaluation of the U.S. dollar against the Chinese Yuan. Although we will
      continue to be exposed to the fluctuation of U.S. dollar against the Chinese
      Yuan, we are working with our contract manufacturer to reduce our exposure
      and
      risk. At the same time, we have been and will continue to evaluate other cost
      reducing strategies to offset our gross margin percentage decline experienced
      during the three months ended March 31, 2008.





We
      expect
      our cost of sales as a percentage of net sales to fluctuate somewhat during
      the
      remainder of 2008 as we experience changes in our product mix, the value of
      the
      U.S. dollar remains volatile and we implement product cost reduction strategies.





*Selling
      and Marketing Expense*




Selling
      and marketing expenses consist primarily of salaries and related costs of
      employees, including stock-based compensation costs, engaged in our
      sales, marketing and customer account management functions and to a lesser
      extent, market development and promotional funds for our retail distribution
      channels, tradeshows, website support, warehousing, logistics and certain sales
      representative fees. Selling and marketing expense fluctuates depending on
      the
      timing of advertising and promotions of our various new products, including
      our
      attendance at tradeshows, which are key to promoting our products.




The
      decrease in selling and marketing expense during the three months ended March
      31, 2008 as compared to the three months ended March 31, 2007 was primarily
      attributable to the termination of our HD display-related activities, which
      added approximately $107,000 of selling and marketing expense during the three
      months ended March 31, 2007. We incurred no HD display-related selling and
      marketing expenses during the three months ended March 31, 2008. To a lesser
      extent, the decrease was attributable to lower stock-based
      compensation costs (a non-cash charge) as a result of granting stock options
      to
      key employees as accounted for under SFAS 123R. See “Note 7: Employee Equity
      Incentive Plans” in Part I, Item 1 of this Form 10-Q. Stock-based compensation
      cost was $15,000 and $73,000 for the three months ended March 31, 2008 and
      2007,
      respectively.




*General
      and Administrative Expense*




General
      and administrative expense consists primarily of costs associated with our
      executive, financial, human resources and information services functions,
      including stock-based compensation costs, facilities-related expenses and
      outside professional services such as legal and accounting. General and
      administrative expenses decreased during the three months ended March 31, 2008 as
      compared to the three months ended March 31, 2007 as a result of the
      decrease in our stock-based compensation cost (a non-cash charge). We granted
      stock options to key employees and directors during the first quarter of fiscal
      2007 and accounted for such option grants under SFAS 123R. See “Note 7: Employee
      Equity Incentive Plans” in Part I, Item 1 of this Form 10-Q. Stock-based
      compensation cost was $71,000 and $508,000 during the three months ended March
      31, 2008 and 2007, respectively. The decrease caused by the reduction of
      stock-based compensation cost was somewhat offset by the following:





·
            The
                $90,000 non-recurring severance expense associated with changes to
                our
                executive management;


·
            Increased
                personnel costs to support our expanding business and related
                infrastructure; and


·
            Increased
                expenses associated with maintaining our public company status, including
                the costs of complying with the Sarbanes-Oxley Act.




We
      anticipate that general and administrative expenses will continue to increase
      as
      our business continues to grow and the costs associated with being a public
      company continue to increase as a result of our required reporting requirements
      including, but not limited to, expenses incurred to comply with the
      Sarbanes-Oxley Act of 2002.





-
            21 -





*Research
      and Development Expense*





Research
      and development expense consists primarily of salaries and related costs,
      including stock-based compensation costs, of employees engaged in product
      research, design and development activities, compliance testing, documentation,
      prototypes and expenses associated with transitioning the product to production. The
      decrease during the three months ended March 31, 2008 as compared to the three
      months ended March 31, 2007 was a result of terminating our HD display-related
      product development during November 2007. During the three months ended March
      31, 2007, salaries, expensed equipment and contractors related to our HD display
      product was approximately $438,000. We incurred no HD display-related expenses
      during the three months ended March 31, 2008. To a lesser extent, research
      and
      development expenses decreased as a result of reduced stock-based
      compensation cost (a non-cash charge) attributable to granting stock options
      to
      key employees during the first quarter of fiscal 2007 and accounting for such
      option grants under SFAS 123R. See “Note 7: Employee Equity Incentive Plans” in
      Part I, Item 1 of this Form 10-Q. Stock-based compensation cost was $24,000
      and
      $233,000 for the three months ended March 31, 2008 and 2007, respectively.





*Total
      Other Income (Expense)*





The
      most
      significant component of our other income (expense) during the three months
      ended March 31, 2008 was a $400,000 gain on sale of assets. In
      December 2007, DCT entered an asset purchase agreement with Sky Glory Enterprise
      Investment Co., Ltd (“Sky Glory”), whereby Sky Glory agreed to purchase certain
      HD display-related assets, subject to certain terms and conditions, for a total
      of $600,000 cash. On March 31, 2008, DCT received an initial $400,000 cash
      payment. A second cash payment of $150,000 was received on May 2, 2008. To
      date,
      the final $50,000 payment has not been received.





There
      were no costs associated with the sale of HD-related assets. As such, the entire
      cash proceeds of $400,000 were recorded as a gain on sale of assets during
      the
      three months ended March 31, 2008. The second cash payment of $150,000 will
      be
      reflected in DCT’s financial statements as a gain on sale of assets during the
      three months ended June 30, 2008. The final $50,000 payment will be reflected
      in
      DCT’s financial statements as a gain on sale of assets if and when the cash is
      received.





Darwin
      Hu, the current Chairman of DCT’s board of directors, was instrumental in
      negotiating and closing the sale of the HD-display related assets. Until March
      1, 2008, Mr. Hu was DCT’s President and Chief Executive Office, at which time he
      resigned from DCT to become an executive at a subsidiary of Sky Glory.





Other
      income (expense) for the three months ended March 31, 2008 and 2007 also
      included the $314,000 and $368,000 increase, respectively, in the fair value
      of
      the liability for derivative contracts (associated with our Series A Stock
      and
      related warrants and Series B Stock and related warrants). Pursuant to SFAS
      133
      and EITF 00-19, the increase in the fair value of the liability for derivative
      contracts is included as other expense in our consolidated statements of
      operations.





Other
      income (expense) was also impacted by our increased debt, which resulted in
      interest expense increasing to $147,000 during the three months ended March
      31,
      2008 from $16,000 during the three months ended March 31, 2007. Of the $147,000
      interest expense recorded during the three months ended March 31, 2008, $84,000
      was non-cash interest expense attributable to amortization of debt issuance
      costs. We had no non-cash interest expense during the three months ended March
      31, 2007.





*Dividend
      and Deemed Dividend on Series A Stock and Accretion of Preferred Stock
      Redemption Value*





During
      the three months ended March 31, 2008 and 2007, the total accretion on our
      preferred stock was $88,000 and $220,000, respectively. The decrease was
      attributable to the conversion of both our Series A Stock and Series B Stock
      and
      the maturity of our Series A Stock on March 15, 2008.





During
      the three months ended March 31, 2008 and 2007, Series A Stock dividends were
      approximately $14,000 and $21,000, respectively. We
      do not
      pay dividends on our Series B Stock.





DCT
      recorded a deemed dividend on its Series A Stock during the three months ended
      March 31, 2008 totaling $231,000. This non-cash dividend is to reflect the
      implied economic value to the preferred stockholder of converting Series A
      shares into common stock at a 15% discount of the common stock price at the
      time
      of conversion. The fair value was calculated using the difference between the
      agreed-upon conversion price of the Series A Preferred Stock into shares of
      common stock and the fair market value of DCT's common stock on the conversion
      date. See
“Note
      9: Equity” in Part I, Item 1 of this Form 10-Q.





-
            22 -





***Liquidity
      and Capital Resources***





At
      March
      31, 2008, our principal sources of liquidity included cash and cash equivalents
      of $1,299,000 and an available borrowing capacity of $285,000 on our bank line
      of credit. We had no significant cash outlays, except as part of our normal
      operations, during the three months ended March 31, 2008.





Operating
      activities: During the three months ended March 31, 2008, our operating
      activities provided $1,142,000 of cash. This was primarily a result of our
      $813,000 net loss available to common shareholders, $877,000 of net non-cash
      expenses and accretion of Series A and Series B preferred stock redemption
      value, and $1,078,000 net cash provided by changes in operating assets and
      liabilities. Our net loss available to common shareholders for the three months
      ended March 31, 2008 included a $400,000 gain on the sale of our HD
      display-related assets, which positively impacted our cash position. During
      the
      three months ended March 31, 2007, our operating activities used $937, 000
      of
      cash. This was primarily a result of our $1,049,000 net loss, $1,415,000 of
      net
      non-cash expenses and $1,303,000 net cash used by changes in operating assets
      and liabilities. Non-cash items included in net loss available to common
      shareholders for both the three months ended March 31, 2008 and 2007 include
      depreciation expense, stock-based compensation cost of options, fair value
      of
      warrants issued for services rendered, change in fair value of derivative
      instruments and the accretion of our Series A and Series B preferred stock
      redemption value. Changes in our operating assets and liabilities are indicative
      of the decrease in the sales of our product during the three months ended March
      31, 2008 compared to the three months ended March 31, 2007.





We
      expect
      future cash provided (used) by operating activities to fluctuate, primarily
      as a
      result of fluctuations in our operating results, timing of product shipments,
      trade receivables collections, inventory management and timing of vendor
      payments.





Investing
      activities: We had no investing activities during the three months ended March
      31, 2008. Our investing activities for the three months ended March 31, 2007
      were minimal and consisted of purchasing computer and general equipment during
      the normal course of business.




Financing
      activities: During the three months ended March 31, 2008, our financing
      activities consisted of paying down our bank line of credit and our notes
      payable according to the terms of the agreement. During the three months ended
      March 31, 2007, our financing activities consisted of a $500,000 draw against
      our bank line of credit to meet short-term obligations, including payment on
      the
      purchase of our product.





*Cash
      and Working Capital Requirements*





As
      previously discussed, we terminated our HD display research and development
      efforts during November 2007. With the termination of the HD display portion
      of
      our business, our operating expenses during the three months ended March 31,
      2008 were more aligned with our net sales. Additionally, our anticipated future
      operating expenses will be more aligned with our projected net sales. If we
      successfully manage our projected net sales and re-aligned operating expenses,
      of which there can be no assurance, management believes that current cash and
      other sources of liquidity are sufficient to fund normal operations through
      the
      next 12 months.





*Contractual
      Obligations*




The
      following table summarizes our contractual obligations at March 31, 2008, and
      the effect such obligations are expected to have on our liquidity and cash
      flows
      in future periods ( *in
      thousands* ):





**Less Than**
            
            **One – Three**
            
            **Three – Five****Total**
            
            **One
                Year**
            
            **Years**
            
            **Years**Long-term
                bank line of credit**(1)**
            
            $
            700
            
            $
            -
            
            $
            700
            
            $
            -Term
                loan principal payments**(2)**
            
            
            1,000
            
            
            1,000
            
            
            -
            
            
            -Term
                loan warrant liabilities**(3)**
            
            
            350
            
            
            350
            
            
            -
            
            
            -Series
                B Stock principal**(4)**
            
            
            150
            
            
            -
            
            
            150
            
            
            -Operating
                lease obligations
            
            
            379
            
            
            189
            
            
            190
            
            
            -Consulting
                agreement
            
            
            45
            
            
            45
            
            
            -
            
            
            -Total
                contractual cash obligations
            
            $
            2,624
            
            $
            1,584
            
            $
            1,040
            
            $
            -





-
            23 -





**(1)** During
      September 2007, we replaced our existing $2,500,000 line of credit at a
      commercial bank with a similar line of credit (“LOC”) at a different commercial
      bank. The new LOC maximum available credit is $3,000,000. Borrowings under
      the
      LOC are limited to 80% of eligible accounts receivable and 40% of eligible
      inventory, as defined in the LOC agreement.




The
      LOC
      bears an annual interest rate of prime (6.0% at March 31, 2008) plus 1.25%
      for
      advances drawn against accounts receivables and prime plus 2.25% for advances
      drawn against inventory. Interest payments are due monthly and all unpaid
      interest and principal is due in full on September 13, 2009. Upon certain events
      of default, the default variable interest rate increases to prime plus 5%.
      As of
      March 31, 2008, DCT was in compliance with all LOC debt covenants and had an
      unused LOC borrowing capacity of $285,000.




**(2)**  On
      September 27, 2007, we entered into a $1,500,000 term loan agreement ("Loan
      Agreement") with Montage Capital, LLC ("Lender") and used the funds to
      repurchase 8,000,000 shares of our restricted common stock. We granted the
      Lender a continuing security interest, and pledged to the Lender, all of our
      assets to secure payment and performance of its obligations under the Loan
      Agreement. The Loan Agreement and the security interest are subordinate to
      our
      LOC.




The
      Loan
      Agreement bears an annual interest rate of 15% with interest-only payments
      due
      monthly starting from initial funding through October 31, 2007. Thereafter,
      principal of $100,000 per month plus accrued interest is due at the end of
      each
      month through the loan’s maturity date of November 30, 2008. The remaining
      principal balance and accrued interest is due on the maturity date.




**(3)** In
      connection with the Loan Agreement, we issued warrants (“Loan Warrants”) to
      purchase up to 650,000 shares of our common stock at an initial exercise price
      of $0.60 per share. The
      Loan
      Warrants vested immediately and expire September 2012. From the initial funding
      of the Loan Agreement through March 31, 2008, the warrant holders had the right
      to require DCT to purchase the warrant for a maximum of $250,000. On March
      31,
      2008, the warrant repurchase price increased to a maximum of $350,000. The
      warrant repurchase feature expires September 2012.





**(4)**  On
      August
      7, 2009 (the "Series B Stock Redemption Date"), all of our outstanding Series
      B
      Stock shall be redeemed for a per share redemption price equal to the stated
      value on the Series B Stock Redemption Date (the "Series B Stock Redemption
      Price"). The Series B Stock Redemption Price is payable by us in cash or in
      shares of common stock at our discretion and shall be paid within five trading
      days after the Series B Stock Redemption Date. In the event we elect to pay
      all
      or some of the Series B Stock Redemption Price in shares of common stock, the
      shares of common stock to be delivered to the purchasers shall be valued at
      85%
      of the fifteen-day volume weighted average price of the common stock on the
      Series B Stock Redemption Date.





*Off-Balance
      Sheet Arrangements*





At
      March
      31, 2008, we did not have any relationship with unconsolidated entities or
      financial partnerships, which other companies have established for the purpose
      of facilitating off-balance sheet arrangements or other contractually narrow
      or
      limited purposes. Therefore, we are not materially exposed to any financing,
      liquidity, market or credit risk that could arise if we had engaged in such
      relationships.





***Trends***





We
      expect
      the devaluation of the U.S. dollar against the Chinese Yuan to continue to
      negatively impact our business for the foreseeable future. To the best of our
      knowledge, except for the devaluation of the U.S. dollar against the Chinese
      Yuan and commitments described in “Note 10: Commitments and Contingencies” in
      Part I, Item 1 of this Form 10-Q, there are no other known trends or demands,
      commitments, events or uncertainties **** that
      existed at March 31, 2008, which are likely to have a material effect on our
      future liquidity.





-
            24 -





**Item
      3 – Quantitative and Qualitative Disclosure about Market
      Risk**





We
      are
      exposed to market risk related to fluctuations in interest rates and in foreign
      currency exchange rates as follows:




***Interest
      Rate Exposure***




DCT’s
      exposure to market risk for changes in interest rates is limited to our LOC,
      which varies with the prime lending rate. We only draw on our LOC when needed
      for short-term working capital needs and we maintain a low or zero balance
      when
      possible. As such, the interest expense on our variable rate debt is a minimal
      part of our operations. Although we cannot predict market fluctuations in
      interest rates and their impact on our variable rate debt, management believes
      the exposure is minimal. For example, a 10% increase in the prime lending rate
      during the three months ended March 31, 2008 would have increased our interest
      expense less than $20,000, an immaterial impact on our consolidated financial
      position, cash flows or results of operations.





***Foreign
      Currency Exchange Rate Exposure***





We
      operate in the United States, manufacture in China,
      and greater than 95% of our sales to date have been made in U.S. dollars.
      However, we purchase our finished scanner imaging products from a manufacturer
      located in China and the purchase price is denominated in the Chinese Yuan.
      As a
      result, currency fluctuations between the U.S. dollar and the Chinese Yuan
      have
      historically caused, and could continue to cause in the future, the purchase
      price of our finished scanner product to increase significantly. Such
      fluctuation has negatively impacted our historical results of operations, cash
      flows and financial position and could continue to negatively impact us in
      the
      future. For example, a 10% appreciation in the Chinese Yuan against the U.S.
      dollar would have increased our cost of sales over $200,000 during the three
      months ended March 31, 2008.




We
      expect
      to purchase our finished scanner imaging products from China for the near future
      and expect such purchases to be denominated in the Chinese Yuan. As a result,
      we
      anticipate that we may experience increased exposure to the risks of fluctuating
      currencies and may choose to engage in currency hedging activities to reduce
      these risks. However, we cannot be certain that any such hedging activities
      will
      be effective, or available to us at commercially reasonable rates.





**Item
      4 – Controls and Procedures**





*Evaluation
      of Disclosure Controls and Procedures*





Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of the effectiveness of the design and operation of our disclosure
      controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
      the Securities Exchange Act of 1934 as of the end of the period covered by
      this
      report (the “Evaluation Date”). Based upon the evaluation, our principal
      executive officer and principal financial officer concluded as of the Evaluation
      Date that our disclosure controls and procedures were effective. Disclosure
      controls are controls and procedures designed to reasonably ensure that
      information required to be disclosed in our reports filed under the Exchange
      Act, such as this report, is recorded, processed, summarized and reported within
      the time periods specified in the SEC’s rules and forms. Disclosure controls
      include controls and procedures designed to reasonably ensure that such
      information is accumulated and communicated to our management, including our
      chief executive officer and chief financial officer, as appropriate to allow
      timely decisions regarding required disclosure.





*Changes
      in Internal Controls Over Financial Reporting*





There
      were no changes in our internal controls over financial reporting that occurred
      during the quarterly period covered by this report that have materially
      affected, or are reasonably likely to materially affect, our internal control
      over financial reporting.





-
            25 -





**PART
      II. OTHER INFORMATION**





**Item
      1 - Legal Proceedings**





We
      are
      subject to various legal proceedings from time to time in the ordinary course
      of
      business, none of which is required to be disclosed under this Item 1.





**Item
      1A – Risk Factors**





There
      have been no changes the risk factors included in our Annual Report on Form
      10-KSB for the year ended December 31, 2007 as filed with the Securities and
      Exchange Commission on March 5, 2008.





**Item
      2 - Unregistered Sales of Equity Securities and Use of Proceeds**





None.





**Item
      3 - Defaults Upon Senior Securities**





None.





**Item
      4 - Submission of Matters to a Vote of Security Holders**





None.





**Item
      5 - Other Information**





None.





**Item
      6 - Exhibits**





**Exhibit**
              **Number**
            
            **Description
                of Exhibit**
            
            **Method
                of Filing**10.1
            
            Lease
                Agreement by and between DCT and Airport II Property Management,
                LLC dated
                March 7, 2008
            
            Filed
                herewith10.2
            
            Asset
                purchase agreement by and between DCT and Sky Glory Enterprise Investment
                Co., LTD. Dated December 20, 2007
            
            Filed
                herewith31.1
            
            Certification
                Pursuant to Section 302 of the Sarbanes-Oxley Act – David P.
                Clark
            
            Filed
                herewith31.2
            
            Certification
                Pursuant to Section 302 of the Sarbanes-Oxley Act – M. Carolyn Ellis
            
            Filed
                herewith32.1
            
            Certifications
                Pursuant to Section 906 of the Sarbanes-Oxley Act – David P.
                Clark
            
            Filed
                herewith32.2
            
            Certifications
                Pursuant to Section 906 of the Sarbanes-Oxley Act – M. Carolyn
                Ellis
            
            Filed
                herewith





-
            26 -





**SIGNATURES**





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





**Document
                Capture Technologies, Inc.**Date:
                May 15, 2008*/s/**David
                P. Clark*David
                P. Clark, Chief Executive OfficerDate:
                May 15, 2008*/s/
                M. Carolyn Ellis*M.
                Carolyn EllisChief
                Financial Officer





-
            27 -