The Mission Report

The MissionIR Report - Late February 2014

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Company Updates


FHFA: Home Prices Climb for 10 Straight Quarters

U.S. house prices rose 1.2 percent in the fourth quarter of 2013, according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI), marking the tenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index.

“Home price appreciation in the fourth quarter was considerable, but more modest than in recent periods,” FHFA Principal Economist Andrew Leventis stated in the news release. “It is too early to know whether the lower quarterly growth rate represents the beginning of more normalized price appreciation patterns or a more significant slowdown.”

The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Compared with last year, house prices rose 7.7 percent from the fourth quarter of 2012 to the fourth quarter of 2013. FHFA’s seasonally adjusted monthly index for December was up 0.8 percent from November.

FHFA’s expanded-data house price index, a metric that adds transaction information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 1.2 percent over the prior quarter. Over the last year, that index is up 7.8 percent. For individual states, price changes reflected in the expanded-data measure and the traditional purchase-only HPI are compared on pages 17-19 of this report.

The seasonally adjusted, purchase-only HPI rose 7.7 percent from the fourth quarter of 2012 to the fourth quarter of 2013 while prices of other goods and services rose only 0.7 percent. The inflation-adjusted price of homes rose approximately 7.0 percent over the latest year.

Significant Findings:

  • The seasonally adjusted, purchase-only HPI rose in 38 states during the fourth quarter of 2013 (down from 48 states as reported during the third quarter). The top five states in annual appreciation: 1) Nevada 2) California 3) Arizona 4) Oregon 5) Florida.
  • Of the nine census divisions, the Mountain division experienced the strongest increase in the fourth quarter, posting a 2.4 percent increase and an 11.7 percent increase since last year. House prices were weakest in the New England division, where prices increased 0.1 percent from the prior quarter.
  • As measured with purchase-only indexes for the 100 most populated metropolitan areas in the U.S., fourth quarter price increases were greatest in the Fort Lauderdale-Pompano Beach-Deerfield Beach, FL Metropolitan Statistical Area (MSA) where prices increased by 7.2 percent. Prices were weakest in the Charleston-North Charleston, SC MSA, where they fell 6.5 percent.
  • Fifteen of the 20 MSAs with the highest annual appreciation rates were in California.
  • The monthly seasonally adjusted purchase-only index for the U.S. has increased for 22 of the last 24 months (November 2013 and January 2012 had decreases).

FHFA’s “distress-free” house price indexes have recently reported lower quarterly appreciation than FHFA’s traditional purchase-only indexes. In half of the areas covered, the new series—which removes short sales and sales of bank-owned properties—shows lower quarterly appreciation than the purchase only series. During the last year, the share of Fannie Mae and Freddie Mac- mortgages financing distressed sales has fallen by half or more in three-quarters of the areas covered.

Regulator Sounds Alarm on Bitcoin, Mt. Gox Goes Blank

While plenty of consumers and investors ponder both the value and future of bitcoin, one U.S. state securities regulator is warning about dealing with exchanges that handle trading in the virtual currency, according to MarketWatch’s Chuck Jaffe.

Joseph Borg, the state securities administrator in Alabama and a past president of the North American State Securities Administrators Association, told MarketWatch he planned to issue a consumer alert early Tuesday — ultimately releasing that statement late Monday just as the drama surrounding bitcoin exchange Mt. Gox escalated sharply — a suggesting that if consumers and investors have trouble redeeming bitcoins or cashing out of their accounts, they stop trading — or adding to their holdings on account — until issues are resolved.

Borg has been involved in a wide range of high-profile cases in his 20 years on the Alabama Securities Commission, perhaps most notably pushing for the formation of the multistate task force that ultimately shut down Stratton Oakmont, the investment firm that became the basis for the recent movie “The Wolf of Wall Street.”

That’s particularly bad news for Mt. Gox, the largest bitcoin exchange, as Borg said his move was prompted by seeing a string of correspondence showing the frustrations some Gox customers have faced in trying to get their money out.

After exchanging emails or chatting with about 60 cryptocurrency traders (some have already moved away from BTC), it’s clear to me that issues related to making withdrawals from one’s accounts are all too common, with some characterizing the money as being held in “Mt. Gox jail.”

Investors describe repeatedly being asked to provide information that any reputable financial company should not have had to request, such as linked bank-account numbers, amounts on account with the exchange—both in bitcoin and in dollars—and more. Expedited requests—where customers were willing to pay fees of 5% to have withdrawals processed “manually”—wound up taking weeks and were going unfilled; Borg noted that, in this day and age, any suggestion that “manual processing” is faster is alarming.

Borg told MarketWatch he planned to cite recent reports from a survey by CoinDesk, a leading bitcoin news and information site, showing that nearly two-thirds of Mt. Gox users were still awaiting funds; some had waited as long as three months. He mentioned numerous examples—again, in some cases after looking at emails Mt. Gox users shared with MarketWatch—in saying, “If it was an investment we were talking about, we’d be moving to shut somebody down or to make them step up and take care of business properly. … If it took you a month or two or three to get your money out of a brand-name brokerage firm, you’d be worried that something bad is going on, and that’s with a firm where you really aren’t worried that your money is gone. …Their experiences, honestly, look very bad.”

More than a dozen regulators I spoke with for this column said they saw issues exactly in line with Borg’s concerns but felt that bitcoin exchanges were out of their purview, even if the customers—the theoretical victims if an exchange were to collapse—were in their state or region. It’s largely out of the regulators’ purview because most of the operators are located offshore.

“Dealing with these exchanges should be no different than dealing with your bank or your financial institution,” Borg said, “and we would tell you that you never do business with a bank that does not know you have money on account, or that is asking for your passwords or that doesn’t seem to remember the account links you established when you started the account. Now we are saying that you should never do business with a bitcoin exchange that has the same problems, or that has to ask you how much bitcoin you’ve got.”

Borg noted that the visible issues some investors have had with certain exchanges might have investors wondering if the entire cryptocurrency world is a rip-off. But he stopped far short of that kind of warning, saying it’s entirely possible that investors’ experiences could vary entirely based on how they trade bitcoin, in the same manner in which stock investors would have different experiences using a respected brokerage firm and a boiler-room shop. Gox is arguably the biggest name, but it’s clear from my discussions with traders that it is also the operation that gets the least respect, particularly among veteran traders. Mt. Gox did not respond to a request for comment.

Borg did say—and suggest that his published warning would state—that the validity of any cryptocurrency “is a matter of perception.”

The big issue is not the value of the currency so much as “execution” and “settlement” of transactions. Because cryptocurrencies aren’t backed by any government and operate, in most cases, through offshore exchanges, most regulators have been watching the evolution of these issues into investments without feeling as if they have any jurisdiction.

The bitcoin users I’ve spoken to are quick to acknowledge that the bad experiences are mixed in with the good. A number have told me that they believe that Mt. Gox will fail—and must—for bitcoin to move forward and build its reputation.

Even as bitcoin becomes more mainstream, however, there are questions. A bitcoin automated-teller machine was installed recently in Boston’s South Station and was quickly overrun with interest; that said, a local television station reported that one issue with using bitcoin was that the $21 it had put into the cryptocurrency was worth just over $19 when the station went to use it a short time later at Thelonious Monkfish, a Cambridge fusion restaurant that accepts bitcoin for payment. The difference was simply the minute-by-minute fluctuations in the exchange rate.

The CEO of Mt. Gox resigned from the Bitcoin Foundation over the weekend, following a slew of technical issues that have hindered the bitcoin exchange.

Bitcoin users—in fact, users of the nearly 100 lesser-known cryptocurrencies currently in early trading stages around the globe—seem willing to overlook a lot of issues when a currency is new and emerging, and they believe they will be proven right in the end about the profit potential in trading virtual currencies.

It doesn’t matter to them that bitcoin and the other currencies sound a bit like a story from a sci-fi movie script, or that the currency was born less than a decade ago, or that it has no government backing. Those facts, if anything, arouse interest in traders rather than temper it.

That’s why Borg felt he had to become the first regulator to step in.

“If someone wants to give this a try and they know what they are getting into, fine,” he said. “I can’t say this is an investment scam or a scheme. But I can say something here that I think applies to all investments—but especially anything where you really can’t expect to have any legal recourse if things go bad: if you try trading these things and you can’t get your money out, maybe you should stop right there until you can. Sure, it’s a new thing, but that doesn’t mean that the same old warning signs won’t still be a clue that you are headed to trouble if you keep going.”

As of Tuesday morning, content on the entire Mt. Gox site, which had been functioning earlier Monday evening, has been deleted, and accessing the site yields an answer from the site’s server but displays nothing. On CoinDesk, the price of a bitcoin fell at one point to as low as $418.76 and in recent action was off nearly 10% at $492.30.

U.S. Economy Adds 113,000 Jobs in January

The U.S. added 113,000 jobs in January and the unemployment rate fell to another post-recession low, but the pace of hiring appears to have slowed over the past few months, according to new government figures.

The second straight disappointing employment report suggests that unusually cold and snowy weather in the past two months is not the chief cause of a slowdown in job creation. In December, the economy added just 75,000 jobs, a meager gain that many economists had initially blamed on bad weather, as reported by MarketWatch.

One worrisome sign is a sudden freeze in hiring in health care, one of the nation’s fastest growing industries over the past two decades. Health-care providers cut jobs for the first time on record, raising questions about whether the rollout of Obamacare is roiling the industry.

The nation’s unemployment rate, meanwhile, dropped to 6.6% from 6.7% in December, the Labor Department said Friday. That’s the lowest level since October 2008, and in a good sign, the decline occurred because more people found jobs and not because the labor force shrank again.

In another bit of good news, the so-called labor force participation rate edged up to 63.0% after retouching a 35-year low of 62.8% in December.

The participation rate reflects the percentage of people who hold a job or are looking for one. A surprisingly sharp decline in participation over the past few years is largely responsible for the falling unemployment rate.

In U.S. markets, investors shrugged off the lower-than expected increase in employment and stocks advanced. Economists polled by MarketWatch had forecast an increase of 190,000 jobs.

Kate Warne, an investment strategist at Edward Jones, said investors aren’t convinced the economy is slowing, and if it is, investors probably would expect the Federal Reserve to reverse course and pump more stimulus into the economy in a move that would help stocks.

“It will take more than a month or two of weak data to conclude the jobs market is becoming weaker,” she said. “It’s a yellow flag, not a red flag.” Inside the report The private sector once again generated all the employment growth, adding 142,000 jobs in January. That’s up sharply from 89,000 in December but well below the norm over the past year. Hiring rose the fastest in January in professional and business services, construction and manufacturing.

U.S. Ranks 19th in World for Retirement Security

U.S. retirees are facing worse conditions for their golden years than retired workers in many other developed countries -- from Canada and the United Kingdom to South Korea, reports CNN Money.

The United States ranked 19th in retirement security for the second year in a row, according to a report from Natixis Global Asset Management that ranked 150 countries based on health care, finances, economic well-being and quality of life factors.

European countries took eight of the top 10 spots, buoyed by strong social programs for older citizens. No. 1 Switzerland, for example, is known for its strong public and private pension system, while third-place Austria has an "exceptional" universal healthcare system.

In contrast, American workers are increasingly having to save for retirement on their own or through workplace 401(k) plans, while high healthcare costs remain an added burden.

"The responsibility for financial security in retirement is falling even more heavily on individuals than ever before and this trend is likely to continue as government resources become more scarce," John Hailer, CEO of Natixis in the Americas and Asia, said in a statement.

Meanwhile, Australia rose to fifth place this year, boasting a growing economy and extremely low levels of unemployment. Nearby New Zealand rose from 22nd to ninth place, in part due to improved income equality.

South Korea also climbed the list this year, rising from 27th to 17th, thanks to strong economic growth and higher interest rates that help retirees' savings grow.

Here's a look at how the United States ranked in the four categories and why:

Health (U.S. ranks 21st): Health-care spending is higher per person in the United States than any other country, yet life expectancies are lower than in most advanced Western countries. For example, someone born today in the United Kingdom is expected to live to 81 years old vs. just 79 years in the United States.

And even as the Affordable Care Act takes effect, high costs continue to limit Americans' access to medical care.

In contrast, Austria, Germany and France are world leaders for access to quality healthcare, according to Natixis.

Finances (U.S. ranks 22nd): The United States scored low here because it's among the bottom 10 countries for government indebtedness. Another factor: low interest rates that stick savers with pitiful returns.

Meanwhile, Chile and Australia rank among the top countries for finances because they have less government debt, low inflation and better interest rates for savers.

Quality of life (U.S. ranks 24th): Americans are "generally satisfied with their quality of life," but environmental factors such as water pollution took a toll on the U.S.'s rank. Switzerland, Norway and Denmark are the top three here, scoring high marks for both lifestyle and the environment.

Material (or economic) well-being (U.S. ranks 36th): Despite enjoying among the highest per-capita incomes in the world, the United States' rank is dragged down by persistent unemployment and massive income inequality.

Countries that beat the U.S. on these issues include Norway, Luxembourg, Austria and oil-rich Kuwait.

Natixis worked with CoreData Research, a London-based financial research firm, to create the index using a variety of data indicators from the World Bank, Gallup and the World Health Organization, among other sources

Wells Fargo Tops List of Most Valuable Banking Brands

Wells Fargo has the most valuable brand in the banking world, reports MarketWatch. The U.S.-based bank tops the list once again for the second-straight year, according to a report by Brand Finance.

Four of the top five most valuable banks in the world are U.S. banks. After Wells Fargo, HSBC Holdings plc takes the second spot, followed by Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co.

The Brand Finance Banking 500 list ranks the world’s biggest banks by their brand value. The results, published in the February edition of The Banker magazine, reflect industry trends and indicate future developments.

The consulting firm calculates the value of the brand by determining the royalties a corporation would have to pay to license its brand if it did not own it.

Wells Fargo WFC added $4.2 billion of brand value to reach a total of more than $30 billion in brand value. The bank’s strength in lending and the U.S. economy’s recovery has driven up revenues and helped Wells Fargo overtake J.P. Morgan to become the world’s most profitable bank, according to the report.

Wells Fargo has enjoyed a more favorable reputation than its peers, whether among customers or not, according to Brand Finance. It currently has a rating of AAA-, up from AA+ a year earlier.

Bank of America and Citi are nipping at their heels with a brand value of $26.6 billion and $24.5 billion respectively, according to Brand Finance.

HSBC, UBS AG and BNP Paribas are Europe’s biggest winners, with an increasing brand value of $4 billion, $3.35 billion and $1.6 billion, respectively.

However, brand value dropped for banks in some of the BRIC countries, including banks in Russia, India and Brazil. Meanwhile China’s banks remained strong, with three Chinese banks making it into the global top 10.

ForceField Energy, Inc. (FNRG)

ForceField energy recently sold its 60% interest in Wendeng He Xie Silicon Co. (“Wendeng”) and closed operations at Zibo Baokai Commerce and Trade Co. ("Baokai") to significantly improve ForceField’s working capital, cut operating losses related to these business segments, and to sharpen its focus on its continuing key business segments.

ForceField also recently launched a turnkey LED lighting retrofit program for franchisees at the 2014 Caribla and Association of Kentucky Fried Chicken Franchisees ("AKFCF") Convention. The launch initiative is driven by the success of ForceField's first LED lighting retrofit program installed at a KFC location in Latin America owned by QSR International, a leading multi-brand Master Franchise restaurant developer with 145 restaurants located in 15 countries throughout Latin America and the Caribbean. Further strengthening its relationship and opportunity with franchisees in the quick service restaurant marketplace, ForceField has been approved as a registered vendor by the Caribla Franchise Association ("CFA").

About ForceField Energy, Inc.

ForceField Energy, Inc. is an international manufacturer, distributor, and licensee of alternative energy products and solutions. ForceField has two primary segments through which it focuses on the largest and fastest-growing areas of the global renewable energy market: industrial waste heat recovery and conversion, and commercial LED lighting products.

TransPacific Energy (TPE), a subsidiary of ForceField Energy, has patented a technology that uses “waste heat” from various industry processes and other sources to provide clean electricity. The subsidiary’s process directly captures and converts heat from the heat source, without any heat transfer fluids, at temperatures from 80ºF up to 900ºF. This is a far broader range than any other competing systems on the market, unlocking a countless number of new applications.

TPE sells systems directly to customers for their installation and operation. The company owns, installs and operates ORC systems, sells electricity, licenses its technology for specific applications and markets and conducts research and development for new ORC applications and renewable energy.

Through its exclusive multinational distribution agreement with Lightsky, ForceField has a firm foothold in the commercial lighting products industry as well. The LED lighting market is growing at a 32% compound growth rate because of the absence of dangerous chemicals, government regulation phasing out old lighting technology, 50-70% lower energy costs, exceptionally long life, and beautiful illumination.

Methes Energies International Ltd. (MEIL)

Biodiesel solutions provider Methes Energies was recently featured in a Seeking Alpha article highlighting several key points as to why the company is poised for a “big year,” taking into consideration the overall biodiesel market and factors specific to Methes Energies.

“What significantly differentiates Methes Energies from other biodiesel producers is its ability to provide biodiesel manufacturing equipment and customized turnkey solutions to small and medium biodiesel producers … This diversification sets Methes Energies apart from other biodiesel companies. Given its increased biodiesel production, expansion into the Cellulosic biofuels market and the emerging revenue stream as a single source provider of biodiesel manufacturing equipment and services to other producers, Methes Energies is poised for a big year,” concludes the article.

Earlier this month, Methes became a Founding Member of the Ontario Biodiesel Association (OBA), which promotes the production and use of biodiesel in the Province of Ontario, Canada. OBA members have invested more than $80 million in plant and equipment to produce biodiesel in the province. Beside environmental benefits, the biodiesel industry provides a direct and indirect positive economic impact on the province and its agricultural sector.

Methes President Nicholas Ng said, "We are proud to be a founding member of the OBA and look forward to work together with other producers in the province. The timing of a mandate in Ontario could not be better and we are hoping for an early implementation as early as April 2014. Other provinces in Canada have strong mandates already in place including production incentives for biodiesel producers. Ontario is moving in the right direction and we are excited to be part of the process in helping the government drafting policies that will have a positive impact for all stakeholders."

About Methes Energies International Ltd.

Methes Energies uses its own proprietary technology to produce high-quality biodiesel processors and systems to capitalize on the growing demand for renewable energy, surging energy prices, and the value of biodiesel as a practical and realistic long-term replacement for conventional diesel fuel. The Company’s processors are flexible and can use a variety of virgin vegetable oils, used vegetable oil and rendered animal fat feedstock, allowing operators to take advantage of feedstock buying opportunities. Methes Energies also markets and sells high-quality biodiesel fuel produced at its 1.3 MGY (5 MLY) showcase production facility in Mississauga, Ontario, and at it’s 13 MGY (50 MLY) facility in Sombra, Ontario, to customers in the U.S. and Canada.

Methes Energies’ broad range of expertise and solutions include all aspects of the engineering, manufacturing, production, logistic, marketing and distribution processes. Among other services, the company leverages its cutting-edge biodiesel processors, pre-treatment systems, and other solutions to address real and specific biodiesel production challenges for large and small-scale biodiesel producers and entrepreneurs seeking to produce their own fuel.

In 2007 the company introduced the Denami 600, the industry’s first compact, full automated continuous flow biodiesel processor designed to run on a wide variety of feed stocks. This reliable, cost-effective and superior method of producing top-grade biodiesel exceeds current ASTM standards.

The company also sells feedstock to its network of biodiesel producers, selling their biodiesel production and providing clients with proprietary software to operate and control their processors. Methes Energies remotely monitors the quality and characteristics of its clients' production, upgrades and repairs their processors as necessary, and advises clients on adjusting their processes to use varying feedstock to improve the quality of their biodiesel.

As a competitive and highly respected revenue-generating player in the North American biodiesel sector, Methes Energies is fast building a network of biodiesel operators and facilities to capitalize on buying power and economies of scale. The North American demand for biodiesel is sizeable and the company is well positioned for global expansion throughout Europe, South America, Africa and Asia.

Midwest Energy Emissions Corp. (MEEC)

Midwest Energy Emissions (ME2C) was recently contracted by a large coal-power cooperative in the Southwest U.S., a multi-year deal that ME2C estimates will generate revenues of $2 million annually starting in early 2015, with initial system installation revenues in 2014 of $2.4 million.

CEO Alan Kelley stated, "We are excited to announce that another electric power provider has chosen ME2C for removing mercury emissions to comply with MATS regulations. This further demonstrates the emergence of our best in class technology and the well-respected work that our team has put forth over the years."

Kelley continued, "We are very confident in the prospects of business growth over the coming months and years as utilities are required to comply with MATS. Our solution will reliably deliver on a value proposition unlike any other in the market today. With a critical focus on execution and service, we look forward to rapid adoption and significant revenue growth for our shareholders."

About Midwest Energy Emissions Corp.

Midwest Energy Emissions Corp. develops and delivers patented, cost-effective mercury capture systems and technologies to power plants and other coal-burning units in the United States and Canada. As a result of the company’s innovative, patented mercury removal technologies, customers can attain compliance with new, highly restrictive government emissions regulations, in the most effective and economical manner.

In 2011, the EPA issued its Mercury and Air Toxics Standards (MATS) for power plants. The new rule is intended to reduce air emissions of heavy metals, including mercury (Hg), from all major U.S. power plants. It is projected that the total national cost of this mandate will reach $9.6 billion annually. More than a dozen states have established even more stringent emission limits, further increasing demand for energy emission control technology.

Leveraging its partnership with University of North Dakota’s Energy & Environment Research Center (EERC), the premier center of mercury control research, Midwest Energy Emissions is well positioned to meet and exceed new government regulations with its exclusive patent rights to EERC’s mercury control technology. The company’s customer-centric mercury capture solutions use a combination of materials tailored specifically to customers’ coal-fired units.

Years of research and testing with the EERC has enabled Midwest Energy to deliver one of the most effective low-cost and high-capture solutions possible – typically without impacting operations or requiring extensive capital equipment changes. The total mercury solution offered by Midwest Energy Emissions is uniquely formulated to optimize mercury capture at any coal-fired unit.

VolitionRx Ltd. (VNRX)

VolitionRx recently commenced blood sample analysis for its largest clinical study to date, involving approximately 4,800 patients in a blind retrospective study to further establish the accuracy of the company’s proprietary NuQ® assays as an initial screening tool for detecting colorectal cancer. The clinical study, in collaboration with Hvidovre Hospital, Denmark, brings the company one step closer to bringing its NuQ assay to market.

“We greatly anticipate the results from this extensive study particularly as past studies have provided such promising and powerful results. If the findings match our expectations, these data would strongly support the potential of the Nucleosomics science and blood based diagnostics as a powerful aid to increasing the early detection of cancers,” said Professor Hans Jørgen Nielsen, professor of Surgical Oncology at Hvidovre Hospital in Denmark.

About VolitionRx Ltd.

VolitionRx Ltd. is a life sciences company focused on bringing to market its inexpensive, accurate, and scalable cancer detection blood tests. The company intends to use its NuQR suite of products to fill a looming void in cancer diagnostic testing, for which there currently is only one blood test in common clinical use.

NuQR is based on VolitionRx's proprietary NucleosomicsR technology, capable of measuring and identifying nucleosome structures in the blood. The company has secured strong intellectual property protection for its products, further strengthened by patent applications in the United States, Europe and worldwide. Following ongoing clinical trials and regulatory approval, VolitionRx will market its diagnostic and screening tests for individual cancers under the NuQR brand.

The company is currently conducting clinical trials for its first product, a diagnostic test for colorectal cancer. Colorectal cancer is the third most common cancer in the United States - current tests are expensive, invasive and unpleasant, resulting in a significant need for an improved alternative for colorectal diagnoses.

VolitionRx's primary office and laboratory are based in Namur, Belgium, from which the company's strong team of professionals spearhead corporate initiatives. The company's executive management team is further supported by a scientific advisory board staffed with senior scientists from around the world, as well as a highly experienced board of directors.


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