MindArrow: Pointing in the Right Direction?

In this column, I will cover stocks that have either been pulverized or are
‘under the radar.’ These stocks are definitely in the high-risk category.
But if they pan-out, they can definitely help fatten your pocketbook.

This week, I will focus on a company that is less than one year old and, by
the way, is listed on the OTC Bulletin Board. No doubt, the OTC market is
not for the faint-of-heart, but there can be some gems.

A possible gem is MindArrow Systems . I had a chance to visit the
company several weeks ago. They are based in Aliso Viejo, Calif., in a
building that is next-door to Buy.com (hopefully that won’t jinx MindArrow).

A perennial problem with OTC stocks is cash in the bank. Well, for now, the
company is liquid, with about $18 million and a burn rate that should last
them more than a year. In fact, in its latest round of financing (a private
placement), the company was able to attract such strategic investors as
Gabelli Global Growth Fund, Metamor Worldwide (a subsidiary of PSINet),
Kevin Parker (former CIO of Morgan Stanley Dean Witter), Thomas Quick
(founder of Quick & Reilly), and East River Ventures.

What does MindArrow do? They develop multimedia technologies that help
companies engage in online advertising. After all, traditional online
advertising is dull and not very effective. With MindArrow, companies can
create video presentations fairly easily. These are then sent to opt-in
email users. There is no special software required to see the
advertisements. All in all, it’s razzle-dazzle stuff and definitely gets
your attention.

Last week, the company released its product — which is called Virtual
Prospector. According to the CEO, Tom Blakeley, ‘We want to get rid of
traditional brochures. Our eBrochures are more engaging, interactive and
also cheaper.’ And, of course, the messages can be highly targeted.

Virtual Prospector is a comprehensive tool. For example, it allows sales
people to track the success or failure of their advertising campaigns in
real-time. The system is based on the ASP model, so there is no need to
download or configure software. The system is run from MindArrow’s network
of servers.

How good is the product? This week, the product received the Best Product
Award in the communications category at the VARVision Spring 2000
convention. The award was selected from 180 leading VARs.

The stock has had a wild ride, reaching a high of $55 and a low of $6. Now,
the stock is at $9.625. Because the company is young, revenues have been
minimal. So, buying such a company is definitely a big bet. But like
anything: Where there is big risk, there is an opportunity for big returns.

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