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.

I was expecting news by xmas on the broadband trial .

another stinker where i am pleased to have bitten the bullet at a rather higher price

Fliper: there's always Monday... But clearly it's all been delayed I reckon. Perhaps we can pick some shares up again at 5p after all? 2008 should be a better year for them - though I'm sure Cynic will want an explanation for my optimism.

explanation? ..... why? ..... you're a girlie and work on intuition.
when it's wrong, it has to have been the moon's influence!

There's male logic for you!

better logic than expecting reason from the cosmos, even if somewhat apposite for a blue sky company

Steady guys! What happened to 'the season of good cheer'?

fear not harry ..... 'tis only a little harmless joshing

Hi Harry: have a Merry Christmas. And just to reassure you that it's just a bit of harmless banter, may I also wish Cynic a very Merry Christmas. - And thanx for all the fun guys!

A Happy and Prosperous 2008 to All :o)

Merry xmas and happy new year everyone.

Since the end of the period to which this Interim Report relates we have
considerably strengthened our management team. In particular, we have a new
Chief Executive Officer, Dr. Robert W. Dean, who is also President of our
wholly-owned US subsidiary, ViaLogy LLC. Robert comes to us from Science
Applications International Corporation (SAIC), where he was a Senior Vice
President. He brings a wealth of experience and business acumen to ViaLogy. In
addition, we welcome Robert Kern as Vice President, Sales and Marketing, and
Hugo Freuhof as Vice President, Operations.



We have also strengthened our Board of Directors, with Peter Reynolds joining us
as a non-executive director. An international businessman, Peter is on the
boards of a number of quoted companies and has considerable City experience.



In the Spring of 2008 we intend to launch ViaLogy's second product, MicroSPMTM.
This is a hardware platform for autonomous high definition digital video
processing. It is powered by ViaLogy's patented signal processing technology,
Quantum Resonance Interferometry ('QRI'). Other products, including MPEX
Electronic EyeTM which we are developing with the Boeing Corporation, will
follow.



We are dealing with international customers, who have long established
reputations for quality to protect, so the testing process is rigorous and
detailed. In each case the incorporation of SPM has so far proved entirely
successful and in two instances we are in detailed pricing negotiations, which
we are confident will lead to profitable contracts for ViaLogy.

agm presentation documents now available

http://www.vialogy.com/index.php?page=agm-30-october-2007

if anyone went to AGM, perhaps (s)he would like to repeat what the CEO had to say about a timetable as to when VIY would become either cash positive or even move to (true) profitability .... if this was not forthcoming, and i suspect it was not, then you are still (currently) investing in a pig in a poke, whatever other fine noises may be being made.

yawn......
oh dear, cynic completely loses the plot......never mind.....

so i take that there is indeed no such timetable .... in that case i suggest you read properly what i wrote and not what might you so imagine

ok, give us the benefit of your vast experience + tell us why this is a pig in a poke?
Does that apply to all unprofitable co's, or just ones you have lost money on?

I suspect you know the square root of bugger all about Vialogy.

at the moment, VIY is working with some very interesting ideas (even if i do not pretend to understand them) and liaising with some very high profile and potential clients ..... however, until such a time as VIY have proved they have something that has genuine commercial application which, as far as i can determine from what is written here, they do not yet have, then VIY is purely a promising but nevertheless blue sky company ...... one could say much the same about SEO, and we all know what happened there!

on the positive side, VIY announced ...... In each case the incorporation of SPM has so far proved entirely successful and in two instances we are in detailed pricing negotiations, which we are confident will lead to profitable contracts for ViaLogy ...... but there is still no indication of timing in that statement, let alone how profitable these individual contrcats might be, and assuredly not when the whole company may become profitable.

a company cannot run indefinitely as a loss maker .... sooner or later, and the former is the more likely in the current climate, the banks or whoever is financing will get fed up if there is no clear sign or timetable to profitability.

i have not said that VIY will never come good, but as it stands, it is still just a pig in a poke .....

patently there is no rush at all to chuck money into the ring ..... trying to get in at the sub-basement of every promising company is an absolute mug's game, as most will stay there or even be cremated.


now explain to the world why this is such a hot investment at this juncture?

Cynic, you are such an idiot.....

I will explain what I want, with no prompting from the likes of you.
But one thing I have never described VIY, or any other share for that matter, is a 'hot investment'. I tend to steer well clear of such opportunities, as the word 'hot' implies transitory. I am a long term investor and not interested in what may be 'hot' today and somewhat cooler tomorrow. It is a strategy that has paid me good dividends over the last ten years or so.

The use of such terms as 'hot investment' and 'pig in a poke' lends me to believe I am wasting my time trying to explain anything to you. On your basis, every company that does not make a profit is labelled with such a term. If your own criteria for investment is profitability, then clearly VIY is not or should not be in your universe of shares. If you bought it hoping for a 'quick profit' and sold at a loss, I suggest you re-evaluate your own investment style or demand a re-fund from who-ever told you VIY was profitable.

There has been ample evidence,posted on this thread and other internet sources as to why Vialogy presents a strong investment case, for those with enough brains to read and assimilate the information. If you really want to be spoon fed, I guess I can do that for you, at a pinch.

Notlob - I'm so pleased to see you've surfaced again: we'd been getting worried about you!

notlob ..... at least my post set out some logic as to why i do not think VIY is worthy of investment at this time ..... i do not insist that others concur, but at least it is a reasonaed view ....... you, on the other hand, resort to the gutter tactic of (moderate) abuse and fail to put forward any explanation why anyone, let alone myself, should indeed put money here ..... on that basis, one must only assume that you have no sound logic but merely trust that somewhere over the rainbow there is a pot of gold ..... perhaps there is, but it will still be there (if at all) in 12/18/24 months time, so if someone misses getting in at the sub-basement, there should, at least theoretically, be plenty of time to make plenty of money .... meanwhile, sound logic indicates that anyone's money is better placed elsewhere for at least the timebeing