from w-w-bb:

19.01.2007 - Total Rocketscience

The third and final company making up our Risk / Reward trilogy on shares for 2007 has so many investment negatives that most observers might not even give it more than a cursory glance. Although quoted on the London AIM market, it is based on the other side of the World, has reported revenues and cash flow of diddly squat and, more importantly, operates in an area of expertise so deep in boffinland that you need to be at least a 5 star techie to venture anywhere near it.

What originally persuaded us to give it a second look was the fact that legendary Stockmarket investor, Jim Slater, was pouring money into it via several successive rounds of financing. As we all know, Mr. Slater is a qualified accountant and hugely experienced corporate financier but clearly he is more at home in leafy Surrey than in the technologically rarified atmosphere of Southern California. However, he must have gleaned enough about what the company actually did to get extremely excited about it. In fact, by last Autumn, he had grown to like it so much that, to paraphrase the immortal Victor Kiam, he bought the remaining 51 % of the company that his vehicle, Original Investments, didn't already own.

The company in question was VIALOGY and, ever since it was fully reversed into Original just before Christmas, Slater's loyal band of followers have seen their highly speculative penny punt move on to the calculated risk category and been duly rewarded with a 50% shareprice improvement. We first latched on to this situation last April when we wrote a piece entitled The Cisco Kid ( see news archive ). To recap briefly, the company was set up by some brainboxes who had earlier worked together on supercomputing projects for NASA. Led by Dr. Sandip Gulati, the team appeared to have perfected software to detect and enhance extremely weak signals previously obscured by background noise. This may not seem particularly earthshattering to the layman but, apparently, the applications for this technology are not only revolutionary but almost limitless which suggests that an exponential rise in licensing income could well lie ahead.

Big news clearly travels fast on the Eastern seaboard because global behemoths Cisco and Boeing have already enlisted Vialogy to work on 2 major government inspired projects and these are just the ones that the company have been allowed to talk about publicly. As we reported in April, Cisco has contracted Vialogy to help with its IPICS programme which seeks to make sure that all emergency services and government agencies can communicate with each other quickly via computers and phones. The need to address this obvious requirement was highlighted by 9 / 11 when communications between different departments with different systems proved chaotic.

For its part, Boeing has recently confirmed that Vialogy has delivered a tenfold improvement in the accuracy and efficiency of the types of gyroscopes it uses in spacecraft and missile navigational systems. It is also known that both Cisco and Boeing see a major role for the technology in such areas as border controls and missile defence systems. Elsewhere a much smaller Texan company, Evolution Petroleum, is applying the technology to improving seismic evaluation of oil and gas deposits.

This initial clutch of applications is almost certainly just the tip of a very large iceberg that is going to float into view over the next few years and all that is required is a little patience. At todays price of 5.5p, Vialogy is valued at a mere 22m. To justify this valuation, the company would have to be earning say 2 million pretax. With cash reserves of 3 million and its heavyweight partners funding the projects it is involved in, Vialogy should be able to get through to breakeven without further recourse to shareholders. We would expect this stage to be reached sometime over the next 12 months. Thereafter, profits could / should escalate very dramatically as new applications and licensing income start to snowball.

On a two year view, shareholders could be rewarded extremely handsomely indeed. Vialogy is in so many ways akin to last weeks selection, CORAC. Both are now moving from the development stage to commercialization with the scales tipping away from blue sky risk towards the reality of cash flow. Both have mindblowing upside potential yet both have current shareprice action that makes drying paint look positively orgasmic. Although this presents an opportunity for latecomers, it is a frustrating byproduct of both companies involvement with highly sensitive technology and powerful, publicity shy partners. Moreover, the present lack of any meaningful numbers together with the sheer scale of future potential makes any serious stockbroker research well nigh impossible. All this will resolve itself in due course but, as they say in the Grolsch advert, all good things come to those who wait.

Business Financial Newswire
"Software and computer services group ViaLogy has signed a contract to provide QuantumRD hydrocarbon reservoir discovery services to one of the US's largest independent oil exploration and production companies.

The Oklahoma-based client's name is not being released.

Initially the collaboration will be focused on the Mescalero Springs prospect in New Mexico. ViaLogy will analyze 3D seismic data to discover oil and gas targets and deliver its recommendations in four weeks.

ViaLogy has also announced a contract for QuantumRD with Nordan Oil & Gas Corporation of Abilene, Texas.

These and other new contracts bring its current client base to eight and its contingent order book of wells to more than 50. The company also reports a strong sales pipeline of prospective clients. "

Performing well today on good news, looks like a busy year for VIY, I don't hold having sold out months ago but good luck all.
2517

whilst it's great to see that they have another client, we need to get some positive results from the drilling quickly or this is going to drift yet again ! Is this going to be another teasing year, a lot of promise but little to show for it !

I do have a large holding but patience is running out, cut losses and move on maybe give it until end of Q1.

either their technology works or it doesn't, nobody is going to sign up to a dud product. Surely the word must be out amongst oilies as to whether their claims are based on success or just pie in the sky.

or they may just have some fantastic sales/PR men! There have been many larger companies who have promised the best products and look a them now RBS, Lloyds etc They need to share the results with the investor community so that thye can attract the wider audience !
don't get me wrong I want them to suceed buit when you have been holding for 2 years + on hope it would be nice to see a bit more than just signing up of clients.

I second that, pumben. Seems a bit like CRA. Amazing technology, but if it's that good, how come it's not selling like hot cakes? I have an average price here of 10p, so if & when the sp gets beyond that point, I'm afraid I shall be moving on.

I'd be happy with 10p

interesting mines 11p

harry as far as we know CRA hasn't sold anything yet whereas VIY appears to have.

CRA sold a pup

cynic you forgot the P!

great start to the New Year for VIY
sounds like we are in for a period of strong news-flow, fingers crossed + all that.

CORRRR never seen 6p on here before

in july you would have done

stand erect and corrected boss....

is it the correction that made you erect? ..... didn't think you'd been to pubic school

it's the thought of you......... ;-))

haven't buggered anyone for a while ..... perhaps my big chance now!

Get a room you two, you're starting to deter new investors!!! ;o)

but the voyeurs are already queuing!