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.

cynic
there is a seller(s) out there, perhaps not surprising in the current climate, but with more good news to come, I believe the sp is due a bing hoist northwards,imo.

would be nice ...... something cheery to go alongside my short of SOLA

Nice 1 mil buy at the end of the day ?

Isn't the 3 week trial testing period up for one of it's technologies ?

its not a testing period
VIY said they would deliver the results to Atascosa within three weeks
Then, assuming VIY have found something of interest in the seismic, Atascosa have to drill hole in the ground and check it out!

this article from the Mike Walters site gives a good overview of the oil initiative

The Old Boys Oil Company - Vialogy (VIY)
18/6/2008 (119264)

The Old Boys Oil Company


Theres a fortune in them there algorithms. And those smart fellas out in California at a company called Vialogy (VIY) have got a pretty good handle on em.

Thats what they believe deep in the heart of Texas at the Old Boys Oil Company, more formally known as Atascosa Exploration of San Antonio. John D. Mullins, chief executive of Atascosa, is pretty excited by the idea that Vialogys Quantum Resonance Interferometry can analyse coarse 2D and 3D seismic signals and spot where the oil is underground, maybe to within a distance of 20 feet or so. If it works, that will make a great deal of money for the good ole boys and the tecchies on the West Coast.

We should know fairly quickly. Mullins says he can get a rig programme rolling in 30 days and drilling should take maybe seven or eight more. If it hits, it hits.

Vialogy can analyse his seismic within three weeks (more likely seven days), and tell him where it thinks he should drill. He has the rigs, and three prospective well sites lined up in Texas (operators tend to take a lease on vast tracts of land carrying the right to drill within two or three years). He plans to offer Vialogy the chance to analyse different structures and different information, 2D on one site, 3D on another, maybe a combination of both on a third.

Whatever happens, he is also likely to drill one well where Vialogy says, and one where his team tells him. He chuckles that Atascosa has a 90 year-old geologist, and hes trying to cut back his working week. But that is one old boy who has become a legend in his own lifetime and knows his way around Texas oil like no-one else, winning massive respect. So Vialogy is not playing with greenhorns here..

The oil is there, Mullins is convinced. He says; Weve looked at the production numbers in a lot of well-known fields an South Texas and a lot of lesser known fields. I have concluded that the major oil companies are liars. You can quote me. The contention that there is nothing left onshore USA is a load of bull. There is still more oil to be recovered than has been produced so far in the US. I think that Vialogys interpretation is going to help us do that.

Atascosa is privately held, so details are hard to come by. Mullins says that with partners they control several millions of barrels of reserves.

More significantly, Atascosa has connections in the industry. If the Vialogy process works, Mullins and his boys have the ability to introduce it to a whole raft of players in the oil game. In a business where they have shrugged off a host of outsiders bringing new ideas, innovations need a credible sponsor to take off. Mullins offers that.

Independents do 90% or more of the drilling in the US, and it can cost $1.5m to $4m to drill a well. Anything which can improve the chances of success has vast potential.

The two companies have formed a joint venture, and that will take a percentage of production in excess of that predicted by earlier models. All being well, they will go on with a business commercialising the project within the United States. Vialogy could take it around the world.

Mullins says; The value to my company and Vialogy will be tremendous if it works. We will charge a small interpretation fee, and if the operator drills hell pay a small royalty. There is potential for several thousands wells a year.

Actual costs to Vialogy are modest. The system has been pretty well developed already, emerging from the days resident boffin Dr Sandeep Gulati spent at the joint propulsion laboratory working on deep space projects for NASA. It ought to work. Mullins says These guys are smart enough. If they say they can do it, they can.

This is the first of what could be a flurry of announcements from Vialogy over the next five or six months, as reported in my Axia piece on May 30. There is much more good news in the wings, some of it involving a large project.

It is not clear whether Vialogys technology will be in the contract Boeing is likely to be awarded any day on the southwest border electronic fence. It might not be right to put too much hope into that, though there is good, big news to come before long.

Figures? Well, the company knows the market wants them, and needs them to drive the share price higher. There will be something a soon as possible, but it is a sensitive subject. It depends mainly on how much bigger partners can sell, and how quickly they start those sales. Vialogy simply takes a small proportion out of the sales by big boys, who hate to see their sales projections revealed.

The shares rallied on the news, but were coming off at the close, finishing at 4.75p to 5.5p in the face of what looks like a sizeable seller.

In the current climate, the shares remain vulnerable because of the lack of defined revenues. Anyone, though, ready to take a blue sky gamble ought to hold tight, and even to buy at around current levels. There are never guarantees in the investment game, but Vialogy increasingly looks like developing into a major revenue earner with massively important intellectual property. Along the way, the share price might continue to struggle for a while. But fans will not want to risk being out as the news rolls out this summer.

I have a holding in Vialogy.

Ends

13.5 million at mid price. Must be buys bearing in mind current news position. 758,700 plus dealing charges, could be an institution coming on board. How come they never pay full price. What happened to market conditions for them. They just mention their price and they get it. Prehaps I shall have to become the institution of oilyrag. LOL.

should think it is just stock being moved about at mid price by funds/institutions.

Looks as though Jim Sleter still believes in buying their shares, see RNS re Artemis increased shareholding.

Nice to see all blue today .

Thats because its viyday. Usually goes up on a viyday.

going up bigstyle, now the potential is realised big Oil firms will want a piece

News is good but it needs to hold a nice gain by COB otherwise it will go just go back to where it started. I wish the day traders would leave it alone and let it rise !! What we need to hear are the results of the drilling and if the 2nd unexpectged oil find is substantial as stated in rns then others will defintly want to be interested in the technology. It looks like last weeks big drop was a tree shake in anticipation of this news. Jime Slter obvously had a good idea !

gobsmakingly good news
should be trading 15p+ in decent markets after the run of strong news VIY has had recently, but destined to go a lot higher, with more news still to come,imo.

VIY is rapidly falling off the field in the Shitshare Stakes 2008 (worst performer between VIY, GOO and AMER wins!)

whats the Shitshare Stakes 2008, Cynic? Not heard of that one, is there a thread, sounds interesting!

Given that the small cap index is down about 25% on the year and VIY is modestly up on the year, then I can see they must be doing very badly in the Shitshare stakes.
In fact, would have thought VIY would be in the top 20% of performers for this year, just guessing. Even before todays rise, there was an outperformance from VIY.

it was just a silly little entry i made on the FTSE thread in an idle moment

ok, no problems.
On a quick glance, I see both GOO and AMER have done ok as well, compared to the market at large.
Now TAN or OXB, or plenty of others, they would have been great for the Shitshares stakes, with the benefit of hindsight, ofcourse!

Does anyone know whether a decision has been made by Boeing on the electronic border fence that rumours suggested VOY may have a part to play ??

Presumably traders taking advantage of a bounce as buys & sells split almost 50/50. Drifting off a little now already.