FEATURED PRO: Danny Deadlock is an independent equity analyst based in Hanna. He publishes the Microcap newsletter (www.microcap.com) and also writes a column that features his favourite stocks at the Stockhouse investment site (www.stockhouse.ca).

Deadlock’s Perspective: “As we head toward the U.S. election, (President George W.) Bush can’t afford to have millions of investors crying over stock market losses, so it’s unlikely that we’ll see any dramatic declines, pending, of course, terrorism.

“From a microcap perspective, it’s been a terrible year for the mining sector and penny stock in general, so expect tax-loss selling to be heavy in November and early December. Our newsletter typically takes advantage of late December to bottom-fish quality stocks ahead of January.”

FIRST STAR

Danny Deadlock

* Cotelligent Inc. (CGZT-U.S. OTCB)
* Recent Price: $0.155 US.
* 52-Week Range: $0.10-0.30.
* Snapshot: Cotelligent offers customized business services that enhance existing applications, integrate disparate systems and extend mobile and web technologies. The company also develops digital communication through private video networks and has become one of the premier narrowcasting firms in the U.S. gaming and hospitality markets.
* CEO: James Lavelle.
* Head Office: San Francisco.
* Vital Stats (U.S. dollars): 2004 Revenue, approx. $4.5 million; Cash Position, approx. $3 million; Market Cap, $3.85 million; Shares Outstanding, 24.86 million.
* Deadlock’s View: “In the U.S., narrowcasting revenues are expected to climb from $300 million in 2004 to $3 billion by 2007. A critical component of narrowcasting is the plasma screen, where high-resolution computer graphics can be used to replace the traditional static sign. Plasma screens have dropped dramatically in cost and will be a primary driver in this industry.
“Cotelligent works with half the major casinos and resorts in Las Vegas and will expand their narrowcasting model into other markets and industries over the next year.”
* Risk Rating: High. “Risk of excess dilution from any financing in 2005 if the share price does not move significantly higher by then.”
* Web Watch: www.cotelligent.com

SECOND STAR
* Inflazyme (IZP-TSX)
* Recent Price: $0.235.
* 52-Week Range: $0.195-$1.72.
* Snapshot: Inflazyme is a biotech company focused on the discovery and development of therapies for the treatment of autoimmune diseases and other related diseases such as thrombosis, as well as learning and memory disorders.
* CEO: Ian McBeath.
* Head Office: Richmond, B.C.
* Vital Stats: Revenue (last 12 mos), $100,000; Earnings/Loss (last 12 mos), $19.5 million Loss; Market Cap, $24.96 million; Shares Outstanding, 106.22 million; Cash Position, approx. $28 million.
* Deadlock’s View: “In June, IZP was trading near $1.30 before it collapsed on news that its flagship asthma drug had failed a key clinical study. In April, the company bought British-based Adprotech for $20 million in stock worth approximately $1.57 per share. Adprotech specializes in immune system research. Currently, that acquisition carries a value of zero (in terms of the share price) because the stock trades for cash value. Any new alliances with major drug companies or a proper merger/acquisition could have a significant impact on share price from this level.”
* Risk: High. “Government approval of experimental drugs can take a very long time and alliances with larger companies are critical to preserving cash.”
* Web Watch: www.inflazyme.com

THIRD STAR
* ViaNetworks (VNWI-Nasdaq)
* Recent Price: $0.65 US.
* 52-Week Range: $0.50-$2.37.
* Snapshot: Via provides business communications solutions to small and medium-sized businesses through a comprehensive portfolio of managed services. The company raised more than $300 million US at $20 per share in 2000.
* CEO: Rhett Williams.
* Head Office: Amsterdam, Netherlands.
* Vital Stats (U.S. dollars): Revenue (last 12 mos), $70.8 million; 5-Yr Revenue Growth, 32.9 per cent; Earnings/Loss (last 12 mos), $34.7 million; Market Cap, $39.72 million; Shares Outstanding, 61.10 million.
* Deadlock’s View: “In August, VNWI closed the acquisition of assets from PSINet Europe and soon after that Telstra bought PSINet’s U.K. operations. Telstra paid $90 million for a company generating $58 million (revenue) so they could tap into the U.K. market. By comparison (to PSINet U.K.), VNWI is doing about $100 million in revenue throughout Europe, including the U.K., and currently has a market cap above cash value of only $18 million. The difference here is that PSINet U.K. was profitable as opposed to VNWI, which is not yet profitable.
“Obviously, Telstra sees significant growth opportunities in this industry and if VNWI can hit profitability, their market cap may turn significantly.”
* Risk: High. “If the company is not profitable by mid-2005, they will need to raise more cash at these low prices.”
* Web Watch: www.vianetworks.com

Deadlock’s Edge Record (past 12 mos): -16 per cent. Best Pick: Vulcan Minerals (VUL-TSXV) +62.2 per cent. Worst Pick: Connacher Oil & Gas (CLL-TSX) -75.4 per cent.

Disclosure: Deadlock says he holds small positions in the featured stocks.