I have tried to distil my notes on the AGM yesterday but fear there is still far too much here apologies! Thats why Ive set this up as a separate thread, so it doesnt get in the way of the discussions on the main one. You can just skim through it.

There was a lot of very useful information, and a very friendly atmosphere that encouraged informal discussions with the directors over coffee.

Notes on: Vialogy AGM 30 October 2007

The Chairman, Terry Bond, greeted us as we filed in to welcoming coffee and (good-quality) biscuits. It soon became evident that more seating was required unless we were to play musical chairs so more were brought in but, as the meeting progressed, there was standing-room only. I should have done a head count but guess there were twice as many attendees as had been anticipated perhaps 60 of us, or more? Some were clearly long-term holders as the directors seemed to recognise them from previous meetings.

Terry introduced the Board members (7 in all), including founder Dr Sandeep Gulati and Dr Robert (Bob) Dean who was recently appointed as the new CEO. There are currently 32 staff at HQ in Pasadena mostly CAL-Tech PhDs and similar.

After the formal part of the meeting, where we duly put our hands up to pass all resolutions, we went on to presentations by Bob and Sandeep. These proved to be very helpful and Ill try and summarise below. We did ask for the slides to be put on the Vialogy website (www.vialogy.com), and the directors thought that was a good idea and are in any case working on updating it.

Presentations

The company has now completed the development of 4 clearly identifiable and differentiable products and is on target to reach its financial objectives.

The Technology

The 4 products are all very techy and as described in various RNSs and on their website, so I wont go into details here, but will just give you my understanding of them in overview because it helps us to realise the potential of the business theyre in:

Basically, the technology is centred around various types of sensors, which can be deployed anywhere in the world and which can relay information back to a central control panel (ccp). Vialogy has written a million lines of code so that these sensors can be programmed and fully configured to the customers specifications guaranteed to be ready within 72 hours.

For instance, a campus spread around three different sites could have sensors in place that are programmed to see a specific event and to alert the monitor in the ccp. This could include for example temperature sensors, or intrusion detection, or breakage of a window. [When I later spoke with the FD, he explained that they set up demos for, say, a company that is operating globally, where info from all their sites is relayed back to London HQ; someone will break a window at the site in Indonesia and within seconds an alert comes up on the ccp, exactly identifying which window was broken.]

Another example Bob gave was to imagine that you want to be alerted when a red Rolls Royce is driving around Piccadilly. Currently youd have to employ someone to watch a screen constantly until the car shows up. But with Vialogy technology you can actually program the surveillance cameras to look for this specific event against a lot of background noise.

A significant advantage is that Vialogys technology can be used with existing legacy systems, which is a clear cost saving (it would cost a customer only one-fiftieth to one-tenth of what they would have to pay if using a competitor, where existing systems would need to be replaced).

He then went on to explain their target markets, which was helpful in understanding what the company is about:

Markets

Integrated security: e.g. military bases (the US has 700 around the world), border controls (being trialled on US-Mexican border), energy infrastructure (oil platforms, especially in the oceans their technology can clear see through the turbidity).
Public safety: e.g. to detect toxins in water supply, or poisonous gases.
Identity management: e.g. the growing problem of establishing that a person is who they say they are, i.e. biometrics.
Geoseismology: e.g. to produce data on secondary oilfields to view the amount of oil still in situ. [They are not currently extending this to mineral detection, though this could be something for the future.]
Targeted asset monitoring: e.g. to identify if someone is tampering with an asset; i.e. RFID.

Gartner Study on Vialogy

Soon after Bob Dean joined, he arranged for Gartner to spend a whole day sitting in with Vialogy to assess and validate their assumptions on their markets, their potential, and the competition. While they have not yet put a monetary value on this, Gartner have confirmed that:
Vialogy operates in a large market that is global and that is undergoing rapid growth.
There is stiff competition in all markets but Vialogy offers performance advantages and significantly greater cost-savings over their customers.
Time to market is important.

Strategy Going Forward

Bob explained that in the US the large companies, such as Boeing and CISCO, keep their eyes on the horizon and work with smaller companies (such as Vialogy) to develop the innovative new products for them. It is not, as some people in the UK seem to see it, an outsourcing relationship. Hence, they work closely with such companies to incorporate Vialogy technology in their equipment. He likened it to the Intel chip, where the equipment manufacturers can boast an Intel chip within their aim is to be the embedded technology, i.e. Vialogy within.

There are clearly many opportunities that Vialogy could exploit, but Bobs approach is to:
Focus, Focus, FOCUS! to capitalise on their existing products as a top priority.
To work with organisations that can utilise their technology when selling a solutions package to the US government (border security is one example).
To target the high-growth global markets where their technology can be used.

Current Trials of their Technology include:

A study for a top global security company and surveillance camera supplier.
A pilot study with one of the USs largest broadband network operators.
Taiwan's Industrial Technology Research Institute (ITRI) working with major shipping/container companies.
Perimeter security systems.
Border security systems.
A novel optical sensor for a Fortune 100 company.

Q & A

1. A recurring theme was the high level of security surrounding the contracts that are at various stages of being trialled. The directors expressed their frustration at not being able to talk freely about these, and also at the lengthy gestation periods in some cases longer than anticipated. They have to work with companies that are waiting for the right time within their own sales cycles before moving ahead to incorporate the new technology into their products (e.g. a company might have a thousand existing cameras to shift before they can manufacture an upgraded version with the Vialogy technology within).

2. Newsflow is also a frustration to them: because of the above, there is also a delay until announcements can be officially made. While the directors appreciate that a lack of newsflow can have a negative impact on the share price, they clearly cannot jeapordise the contracts in negotiation by making any premature announcements. Any work that they undertake is done under an MOU and in every case we are precluded from saying anything.

The two above points were some of the things that had particularly concerned me, and were some of the reasons for my attending the AGM. The others were trying to understand the technology, the markets, and the potential and I have a much better idea of those now. I had also been concerned about the lack of information on the directors so I was pleased to have the chance of meeting them; they will now put summaries on the website.

My own opinion, having met the directors and having had the chance to speak with them, is that I do trust what they say. Thats very important to me if Im to hold on as a longer-term investor (and I dont always hold on!). I may not be as cynical as some, but I came away with a clear sense that the company does know where its heading, and that their technology will be of great value to global organisations.

Other Questions included:

Q: Are there any contracts where you can mention a name?
A: In one case, in the near-term future, we could perhaps say something. [I sensed that they were itching to do so, and think they indicated before year end!].

Q: How vulnerable is the company if Sandeep [the founder] were to fall ill?
A: The company is very robust This becomes less and less an issue as time goes on. The whole team can now cope with him having half a day off.

Q: Is there a timeline for when you can use the technology in the Oil and Gas industry?
A: Well have a good feel for that in about 4 months time. [I have the feeling that they are probably running a trial for a company but that is not anything that anyone actually said.]

Q: Are you planning a dual listing in the US?
A: Probably not for another 45 years for cost reasons. Were happy with AIM but we are aware of a growing enthusiasm for Vialogy in the US, so it would make sense at some time in the future.

Q: How significant are Bobs contacts within the US government?
A: I [Bob] still have plenty of contacts, and in any case its not an issue as one can always get to the right people. I understand the markets, and I understand the competition.

Q: Is it likely a big company might snap you up?
A: We are not aware of any bids on the table. There have been enquiries in the past but they didnt come to anything. Any company is vulnerable to a bid, and as people become more aware of Vialogy then it is of course possible but then the price goes up.

In Summary

I feel confident that Vialogy will achieve commercialisation of its products and that we will be hearing more from them next year, as some contracts progress from the testing to death that the technology has to undergo in any trials. It also seems likely that we will have an update before the end of this year, and that that could have an effect on the share price.

Is this a get-rich-quick scheme? Depends on your timescale!

nice update, looking good.