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.

odds are that we are all doing our moolah on all 3 stocks!

Lovely RNS today, this should see a rise in the sp. Up 0.625p before markets open during mm auctions. Lets remain possitive as over the next 3 weeks during trials VIY may become a joint venture oiler.

Now only up 0.25p.

"Complete results will be delivered by ViaLogy to Atascosa within three weeks, and exploratory drilling to prove the technology will commence soon afterwards."

Any chance this will prove a nibble of carrot for this three-legged donkey?

Dangerous to chase price up, but I think as its been depressed lately it may be the right thing to do. DYOR.

Up 0.75p already.

eeyore! eeyore!

Here come the sellers on news brigade. Maybe a price drop on the way, followed by more purchases and another tick up. AIMHO. DYOR.

UK smallcap opening - ViaLogy hardens on Atascosa Exploration agreement
AFX


LONDON (Thomson Financial) - ViaLogy hardened 0.75 of a penny to 5.625 pence as the provider of real-time network-centric signal processing platforms entered into an agreement with a Texas-based oil and gas explorer and producer, Atascosa Exploration, to use ViaLogy's technology to analyse seismic data for more accurate definition of the extent and density of underground oil reservoirs before drilling begins.

MM's slightly distorting the true picture to scare out weaker holders. Analyising trades there are two distinct groups, one around 5.25p and the other around 5.5p. I think that all trades are being dealt below the mid in an attempt to convince some parties to sell. You can probably purchase cheaper than you realise at the moment.

I would make that about 1.2 million purchases and 800,000 sells, so far.

Not 700,000 purchases and 1.3 million sells as quoted.

this is very strong news today, I expect further news releases in the month ahead and good share price appreciation.

This one application of VIY's technology in one market could be worth a small fortune, let alone all the other market areas VIY are active in.

Very strong buy at these levels, imo.

The problem with VIY is it is difficult for the layman to understand their technological breakthrough and its applications. PI's will only be able to judge their significance when the sales figures are announced. However it does appear that the company has a future and it remains to be seen how big that future will be. Worth a punt at this level imho.

strong volume today has hopefully cleared out all/most of the sellers, we will see from here.
These are looking such a good buy right now, imo.
Top up time beckons!

Agree mm's antics today suggest they are trying to control the sp, perhaps more interesting news on the way.

Thinks are starting to take shape . If their products are that good , everyone will be after their technology .

Nice sea of blue this morning .

strong news to come, perhaps?

it's been teasing for a while but everytime it moves up a bit it moves srtraight back down, any ideas as to when it's interims are ?

Year end is 31/3/08 final results due latest 30/9/08.