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.

all rumour and gossip at the moment but I'm certainly not taking profits for a long time yet!



all rumour and gossip,

You never said a truer word.

Warning, this share could seriously damage your health and wealth!

.

there are a lot of de-rampers and shorters in this share right now.
It seems some of them have been badly burnt and they are getting very desperate over the other side.

Good article posted over there

http://www.michaelwalters.com/index.phtml


Trust - Vialogy (VIY)
24/4/2009 (119264)

Trust

Oh dear. They never stop, the cheats and conmen, knockers and nasties, banging away on bulletin boards seeking to undermine trust in companies and to erode their share price.
They are always there, either seeking to profit from selling short, or simply satisfying an empty urge to make mischief.

Happily, few try it on this site. There are company critics on our bulletin board, and they are to be encouraged. Sensible debate adds to our understanding, and there are always valid questions and negatives in any story. But when it descends to lies and cynical stupidity, their efforts are deleted.

Sadly, most sites are not monitored, and the cheats can prosper. They spoil the otherwise excellent ADVFN bulletin board, and have been busy bashing Vialogy (VIY) of late, prompting a few uneasy questions on our bulletin board.

It is hard to come up with answers to every question. Much of the time, it is best simply to ignore them. Every reply simply opens the way to a new set of questions.
And if the questions dont work, a few lies are tossed into the mix.

There is no easy way of dealing with this. Though the FSA halted the main campaign against 3DM (now ENRT) years back, the regulator shows little interest in acting against the most blatant abuse.

In the end, you simply have to decide for yourself whether you trust the company whose shares you have bought. Are the directors and their advisers honest people? What is their record like? Do they make sense?

Use your common sense, and accept that you will never get everything absolutely right. Many believed Robert Maxwell until the very end, despite abundant evidence of his trickery. Others here and in the US threw money at Bernie Madoff, ignoring critics and trusting his reputation and the readiness of regulators to let him carry on. And thousands put money in Icelandic banks, ignoring the obvious heap of debt building up in that tiny country.

More difficult to spot, perhaps, was the state of the Dunfermline building society. Or perhaps what Fred Goodwin was doing at the Royal Bank of Scotland. And so on.

You cant win them all, and in the current climate, especially, it is easy for cynics to plant the seed of doubt in any enterprise. Time and again, we have said here If in doubt, get out. It remains sound advice. There are no guarantees.

Dont, though, get panicked out of a good thing too easily. Appreciate that buying any share is a form of gambling. The moment you step into the stock market, you are taking a risk. Some of that arises because perfectly honest, well-meaning, properly behaved businesses will make errors of judgement and will come unstuck. Business is not easy. Not all will get it right and make money.

Research is great, and learning about a company is good. It can help you improve the chances of successful investment. But you always have to take a certain amount on trust.

That is what I am doing in holding shares in Vialogy and in suggesting that it could have a bright future if all continues to go well. The technology it is seeking to sell is still relatively unproven. There could yet be a flaw we have not spotted, and the business model the way it makes money from what it does is not yet established. It is an early stage business. Buying into such a company means taking a greater risk of failure in exchange for the prospect of greater rewards if it succeeds.

Sadly, thanks to utter stupidity by the FSA, it is no longer mandatory for directors to disclose their share holdings and options in a companys annual accounts. So investors can no longer conduct a simple survey of the financial commitment the board has to the company. At a time when regulators are imposing ever more ridiculous, obscure and downright misleading accounting standards, this is merely a routine measure of the contempt in which these boys hold the private investor. It is all too typical of life now in the UK common sense no longer applies.

The Vialogy accounts do show, however, that the board and employees have substantial share options and have accepted them as share based payment.

At Vialogy, we know Jim Slater was a big shareholder. He has told us why he sold down below 3% (in fairness, he could easily have chosen to stay silent). We know he supported the recent warrants refinancing. So we know he is still involved, but we dont know how deeply.

Slaters interest is important. Still absolutely on the ball at 80, he is a meticulous researcher of companies. He played a big part in creating Vialogy. He knows how to play the investment game, and is well able to exploit it to his advantage, but he is a man of integrity and plays by the rules. He values his reputation, and would not be associated with any questionable operation.

Chairman Terry Bond has long been an associate of Slater. He has a fine background in advancing the interests of private investors. He might lack the depth of management experience of some, but is no fool, and is a man of integrity.

The background of the key American directors Bob Dean and Sandeep Gulati, appears impressive. They are highly experienced and intelligent men, and Dean especially knows his way around managing companies. Anyone who has met them and watched and listened as they addressed the Vialogy annual meeting will have little doubt of their integrity.

Anyone who disagrees with this assessment should not be holding Vialogy shares. It is as simple as that. If you are to invest, you have to take a certain amount on trust.

The notion that there is some serious question mark over the very existence of Atascosa, the Texan oil company which is leasing land and drilling the wells is laughable. John Mullins, who heads it, has no need to create a website or answer the telephone. He runs a private company which puts together partnerships to exploit oil opportunities.

He has agreed to be quoted in several Vialogy press releases, indicating his belief. He has nothing to gain by making misleading statements. He has put money together to drill the wells which have used Vialogys technology. Had the technology then failed, he could have sat quietly in the background, dealing with his partners, staying below the surface.

He had no need to go public, other than to help promote a technology which he believed in, and which would help him make money by promoting it more generally. There have been ample searches by bulletin board posters to show that Atascosa is real, and holds leases and has gained drilling permits.

Speaking to him in June (The Old Boys Oil Company June 18, 2008) he came across as one might imagine a colourful, plain speaking Texan oil man. He saw no great reason to give much detail of his business, beyond saying he and his partners control several millions of barrels of reserves. Privately, the word is that he is delighted with how Vialogys QuantumRD is working. Mostly, though, he chooses not to answer his phone.

Why would a major oil name, someone British investors might know, back Vialogy in the early stages? The technology was unproven, and still has some way to go. Such ventures rarely attract big names. They prefer to pay more but buy proven technology. Why not start proving it in Texas, where there are oil men galore, each one looking to steal a march on the rest?

Bob Dean and Terry Bond may be in Texas right now, probably talking to Mullins about the next step, and about the other companies probably names we Brits do not know who are interested in coming aboard. That makes sense. The technology will gather pace and credibility with each successive well then the majors will come sniffing around.

Outside oil, there are names we know working with Vialogy. Check the press releases of the past couple of years. Vialogy have been working with Boeing and Cisco, giants using Vialogy technology for a small part of their systems. And there have been deals with Los Angeles County, Axia Net Media, and approval from the American National Incident Management System Support Center (part of Homeland Security).

Can anyone seriously question that such deals exist? That such announcements were not approved by all involved? Could Dean and Gulati possibility have the credibility to do those deals, then skip off to start playing the fool deep in the heart of Texas?
Though prospects are exciting, none of this means that buying Vialogy shares is not a risky business. It could all end in tears, even now. But the chances of something good are growing, and lend the shares real appeal to those who go in with their eyes wide open. But dont waste too much time worrying about the knockers and the nasties, the cheats and the conmen.

Whatever happens, they will be around. By all means be aware that they are there, but pause, apply a little common sense, and treat them with the contempt they deserve.

I have a holding in Vialogy.

Ends

sounds like VIY are going global with this one.

From t1ps - E.K.'s perspective:
"Vialogy (VIY) seems to have announced major breakthroughs (and its share price has advanced) with an oil company whose commercial integrity is not obvious. The oil company is called Atascosa Exploration LLC and allegedly based in Texas. Try getting hold of the CEO, one John D Mullins ( 001 210 402 3656) to assess the company. Others have tried and failed. They kept getting an answering machine. Perhaps John is mullin' it over (Geddit?). Sell Vialogy in haste down to 3p. (The Slaters are out.) I have a modest short."

LOL! What a pack of lies that is!

Someone should tell EK that Slater has just under-written the recent fund-raising!

Also, as MW says:

' The notion that there is some serious question mark over the very existence of Atascosa, the Texan oil company which is leasing land and drilling the wells is laughable. John Mullins, who heads it, has no need to create a website or answer the telephone. He runs a private company which puts together partnerships to exploit oil opportunities. '


With strong near term news flow coming, not to mention a large spread and getting his facts completely wrong, seems like a bad day at the office on this one for EK.

Next update is due soon .

EK is fried on this one
can't win 'em all, tough titty for him!

The Mary Ridgeway#1 actual figures should be next info, I think.
2517

The new producing well, called Mary Ridgeway #1, is located on the Galba lease owned by ViaLogy's partner Atascosa Exploration LLC of San Antonio. The Mary Ridgeway#1 well is estimated to hold larger recoverable reserves compared to ViaLogy's previously announced Cindy Bartlett#2 well discovery announced in March 2009. As before, Vialogy predicted the subsurface hydrocarbon reservoir boundaries, the porosity of the oil-bearing Bartosh sands, formation depth, and positioned the well. Prospect estimates were confirmed by the well-logging and independent subsequent core laboratory analysis. The companies will be releasing actual figures over the next few days, including dollar estimates of recoverable reserves. As announced earlier, under its current contract with Atascosa, Vialogy will receive 5% Back-In-After-Payout working interest in the well.

BTW I'm a holder of these but I suppose some maybe concerned by the statement "next few days" this normally suggests within a week but it looks like it is going to be longer, they will need to get a RNS statement out soon otherwise people may follow EK (I seriously hope that he is wrong).

I'm in this one and also hope that for once he is wrong, I'm glad that the CEO or the boss is not at his desk waiting for a telephone call...I want him to be out and about doing things not messing around with office work !.

The stock is rising fast, he will be losing money as he puts big punts on things !.

2.35m gone through @ 2.5p.
2517

wrongly reported trade,imo.

"Tech invest" the tip sheet have bought into this....they would not be happy if this went pear shaped.....you must always take notice of EK though !, but this time I'm not so sure : to me this looks very promising and I'm staying in !.

Who would you think that it is a wrongly reported trade ? I wass surprised at the price of the sale but for a trade of that size is probably right. Is someone in the know ?

Oh well been in it for such a long time why worry !!

Again I hope you're right notlob !

pumben, I am right.
Share price up strongly towards the close is yet another indicator.
Next week will be another excellent week for all VIY holders.
Strong sp appreciation and scorched shorts is on the cards!

Of all the shorts to take out : this would not be one !, I would have thought, anyway we shall see !.

seems like we could be in for some fireworks next week.
rf, I concur, it seems to be a very foolish short indeed.