The Mission Report

The MissionIR Report - April 2015

In-depth analysis, timely updates, latest market news


Market News

Company Updates


Asia’s Expanding Nuclear Program to Benefit UEC

Uranium prices are hovering just under $40 a pound amid slighted supply and anticipation of even more demand as Asia, particularly China, expands its nuclear program and Japan prepares to restart its Sendai reactors. The uranium spot price has increased 11.3% so far this year, and many energy analysts remain bullish on the commodity for the year ahead.

As the only producer in the world that doesn’t hedge against price movements, U.S.-based Uranium Energy Corp. puts itself in an “elite class” that it expects will benefit from rising prices.

“A once-in-a-generation opportunity may be in development here, and I want you to know that our Company is uniquely prepared and positioned for the turnaround in uranium prices and the global expansion in nuclear power,”

UEC president and CEO Amir Adnani stated in a recent letter to shareholders. UEC’s fully licensed Hobson processing facility is the core of all its South Texas projects, including the Palangana in-situ recovery (ISR) mine, the permitted Goliad ISR project, and the development-stage Burke Hollow ISR project.

In total, UEC has six wholly owned ISR projects surrounding its Hobson processing plant, which has a 2 million pound per year physical capacity. Palangana is operating on a small scale pending ramp-up when the price of uranium is in a viable range; Goliad is fully permitted for production with its first production area; and Burke Hollow is in the permitting and expansion phase. In the last 12 months the company has drilled more than 200 holes as it works to expand its resources in South Texas.

Additionally, the company has 20 projects in the southwestern U.S., including a pipeline of advanced-stage projects in Arizona and Colorado. In Paraguay UEC maintains one of the largest ISR property positions in the world with approximately 1 million acres of prospective area.

As the number of nuclear plants coming online around the world continues to increase and the spot price moves higher, UEC appears well-positioned for a strong year ahead. The company relies on the guidance of its senior management team, several of which are advisors, speakers and/or board members with domestic and global industry organizations including the International Atomic Energy Agency, World Nuclear Fuel Market and the Uranium Producers of America.

Target, MasterCard Close-in on $20M Settlement

Target is nearing a settlement with MasterCard, Inc. to cover the approximately $20 million in costs that banks incurred in the aftermath of the retailer’s massive 2013 data breach, the Wall Street Journal reported, citing people familiar with the terms of negotiations.

The hefty settlement comes after months of negotiations to determine how much Target should reimburse financial institutions for reissuing credit and debit cards as a result of the breach, as well as some fraud that resulted from the exposure of customer information.

Target’s data breach triggered quick action from card-issuing financial institutions as they took measures to minimize consumer damage by sending new cards to customers and even reissuing cards to others even if no fraudulent activity had been detected.

Once particular hang-up in negotiations is due to a wave of other breaches, including an even larger breach at Home Depot, which followed Target’s breach. According to the Wall Street Journal’s report, Target representatives content they shouldn’t have to reimburse banks for reissuing cards that would need to be reissued due to the other breaches.

While it’s a pricey settlement, the $20 million is a mere speck compared to the $252 million Target incurred after at least 40 million credit cards were compromised in the 2013 holiday shopping season.

The deal could be announced as soon as this week and MasterCard will divvy the reimbursed funds to the financial institutions that issue credit and debit cards under its brand, including Citigroup, Capital One Financial and J.P. Morgan, the newspaper reported. Target is in separate negotiations with Visa.

U.S. Builder Sentiment Climbs 4 Points to Year High

Homebuilder confidence in the market for newly built, single-family homes in April rose 4 points, reaching the highest level of the year thus far, The National Association of Home Builders (NAHB) reported Wednesday.

The NAHB/Wells Fargo Housing Market Index (HMI) increased to a level of 56, higher than predictions the index would rise to 55. With the spring buying season in full swing, homebuilders are confident that low interest rates and job growth will keep the market moving.

“The HMI component index measuring future sales expectations rose five points in April to its highest level of the year,” NAHB Chief Economist David Crow said in a statement. “This uptick shows builders are feeling optimistic that the housing market will continue to strengthen throughout 2015.”

Based on its monthly survey, NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” Readings above 50 indicates that more builders view conditions as good than poor.

All three HMI components registered gains in April. The component charting sales expectations in the next six months jumped five points to 64, the index measuring buyer traffic increased 4 points to 41, and the component gauging current sales conditions rose three points to 61.

Looking at the three-month moving averages for regional HMI scores, the South rose one point to 56 and the Northwest held steady at 42. The Midwest fell by 2 points to 54 and the West dropped three points to 58.

Market Review for Smith & Wesson, Delta and BoA

Shares of Smith & Wesson (SWHC) jumped 13% in Wednesday’s morning trade after the gun maker said it received stronger-than-expected firearm orders and raised its Q4 guidance accordingly.

The company now sees fiscal Q4 2015 sales of between $175 million to $179 million, up 8% from its projections six weeks ago, and GAAP EPS between $0.34 and $0.36. On a non-GAAP basis, the company expects EPS to be between $0.39 and $0.41.

For full 2015 fiscal year, the company expects GAAP EPS between $0.84 and $0.86. On a non-GAAP basis, the company expects EPS to be between $0.96 and $0.98.

While the Smith & Wesson’s fiscal 2014 sales won’t match its record of $626.6 million last year, its latest forecast for full-year sales of between $546 million and $550 million are on track with 2013 sales of $587.5 million. 2013 net income was $78.7 million, more than four times 2012 results. Smith & Wesson’s fiscal year runs through the end of April.

Delta Air Lines (DAL) shares ticked higher after the airline carrier posted an adjusted Q1 profit of $372 million, or $0.45 per share, beating analyst estimates by a penny. Revenues of $472 million were roughly in line with estimates.

"Delta's business is performing well, producing the best March quarter, both operationally and financially, in Delta's history," Delta CEO Richard Anderson said in a statement. "While the strong dollar is creating headwinds with international revenues, it also contributes to the lower fuel prices which will offset those headwinds with over $2 billion in fuel savings this year. We are looking at June quarter operating margins of 16-18 percent with over $1.5 billion of free cash flow—these record results and cash flows show that the strong dollar is a net positive for Delta."

The company said it benefited from lower fuel costs but felt the crunch of a strong dollar. Due to foreign currency issues, Delta said it will cut its international flights by 3% in the winter.

Bank of America (BAC) posted a year-over-year bottom-line improvement and turned to profit in Q1, $0.02 short of analyst estimates.

Shares of Bank of America slipped lower in Wednesday’s trade as the bank reported Q1 net income of $3.4 billion, or $0.27 per diluted share, compared to a loss of $276 million, or $0.05 per share, in the year-ago period. The Charlotte, North Carolina, bank’s 2013 loss was due to legal reserves of $6 billion, a move that was followed by a $16.65 billion mortgage-securities settlement with the Justice Department a few months later.

Despite a swing to profit, the 2014 figure was below analyst expectations for earnings of $0.29 per share.

Net revenue amounted to $21.2 billion in 2014, down 6% from $22.7 billion in the prior-year quarter and just shy of the Zacks Consensus Estimate of $21.5 billion. Bank of America attributed $211 million of the revenue decline to market-related adjustments on its debt securities portfolio due to the impact of lower long-term interest rates.

ENGlobal (ENG)

ENG was recently awarded a contract to engineer and design a hydrodesulfurization unit to be installed for a major midcontinent refiner. Work on the project began immediately, and the company expects to complete the project later this year. This new contract, along with a recently extended agreement with Xcel Energy, demonstrates the scope and diversity of ENGlobal’s capabilities.

The company recently reported its Q4 and full-year 2014 financial results. Q4 revenue increased 6.3% to $26.9 million compared to $25.3 million in the fourth quarter of 2013. Net income from continuing operations was $0.8 million, or $0.03 per diluted share, compared to income of $0.4 million, or $0.02 per diluted share, for the comparable quarter of 2013. Full-year revenues increased 21.1% to $107.9 million compared to $89.1 million for the fiscal year ended December 28, 2013.

About ENGlobal

As a top-ranked provider of energy-related automation and engineering services, ENGlobal Corp. (ENG) emphasizes quality and safety to deliver innovative, energy-related automation integration services and EPCM projects for clients worldwide. Operating through two strategic business segments, ENGlobal provides its services to the energy, pulp and paper, and government sectors throughout the United States and internationally.

ENGlobal's Automation segment provides a wide range of services related to the design, fabrication and implementation of distributed control, instrumentation and process analytical systems. Products and services supporting the environmental technology fields are also offered by the Automation segment. The Engineering (EPCM) segment provides consulting services for the development, management and execution of projects requiring professional engineering, construction management, and related support services. Within the Engineering segment, ENGlobal's Government Services group provides engineering, design, installation and operation and maintenance of various government, public sector and international facilities, and specializes in the turnkey installation and maintenance of automation and instrumentation systems for the U.S. defense industry worldwide.

In its 29 years of operations, ENGlobal has created a global workforce of more than 400 industry leaders in a variety of fields, ranging from drafters and designers to technical specialists. The company’s highly experienced core leadership team has established a solid financial foundation and proven ability to consistently grow company revenues and value.

Inventergy Global, Inc. (INVT)

Inventergy Global struck agreements with several institutional investors and accredited investors who will purchase 4,673,914 shares of the company’s common stock at $0.46 per share for gross proceeds of $2.15 million. Inventergy says it will use the proceeds for working capital purposes in support of its IP licensing strategies.

Aligned with its broader growth strategy to increase earnings, reduce costs, improve cash flow and build shareholder value, Inventergy has reorganized various components of the product-based businesses of its eOn Communications Systems, Inc. (“ECS”) subsidiary. ECS’s products and services are now divided into three lines: a royalty bearing agreement with a third party for use of a private branch exchange business purchased from Inventergy’s predecessor; a value-added reseller business of biometric security and access control products; and a new business that provides outsourced sales, marketing and technical support services to business partners in the security products and services industry.

About Inventergy Global, Inc.

Inventergy Global, Inc. is an intellectual property (IP) licensing partner specializing in IP value creation. Led by industry veteran Joe Beyers, former head of global licensing for Hewlett-Packard, Inventergy identifies, acquires and licenses patented technologies to help market-leading technology companies monetize and achieve more value from their innovations.

Inventergy partners with world-class, market-significant companies who may lack internal manpower, budget or other resources necessary to realize appropriate return-on-investment. Through collaborative, business-centered, and forward-thinking strategies, the company is able to create portfolios with significant market potential and optimize the innovator’s overall return-on-investment.

Inventergy partners with world-class, market-significant companies who may lack internal manpower, budget or other resources necessary to realize appropriate return-on-investment. Through collaborative, business-centered, and forward-thinking strategies, Inventergy is able to create portfolios with significant market potential and optimize the innovator’s overall return-on-investment.

Net Element, Inc. (NETE)

Through a recently announced strategic partnership with TAS Group, Net Element is gearing up to launch promotional campaigns for TAS Campus, a Europay, MasterCard and Visa (EMV) chip-enabled prepaid solution to campus-related expenses. The TAS platform will open new possibilities that will make payment acceptance systems more user-friendly. An example application is for college students to use a multipurpose card that allows for payments, identification, RFID and controlled access – with additional capabilities for mobile wallet and wearable devices.

Net Element also recently reported is fiscal year 2014 results, posting an increase in annual revenues, a significant reduction in debt, and several corporate milestones. The adjusted loss from continuing operations for the year 2014, including special items, was $6.9 million, or a loss of $0.19 per share, as compared to an adjusted loss from continuing operations of $19.4 million or a loss of $0.68 per share, for the year ended December 31, 2013. Total 2014 revenues increased to $21.2 million, as compared to $18.7 million in 2013. Among other achievements, Net Element reduced its total debt by $27.7 million to $3.3 million at December 31, 2014.

About Net Element, Inc.

Net Element is a technology-driven group specializing in mobile payments and value-added transactional services that add convenience to mobile phone users’ lives and everyday commerce. The company’s innovations enable consumers to conduct commerce transactions from their mobile device, while online and offline payment capabilities allow merchants to reliably transact business anywhere and anyhow.

The company owns and operates TOT Group, Inc., a global mobile payments and transaction processing provider. TOT Group companies include Unified Payments, which was recognized by Inc. Magazine as the No. 1 fastest growing private company in America in 2012; Aptito, a next-gen cloud-based point of sale (“POS”) payments platform; and TOT Money, a mobile billing solutions provider and Russia’s top-ranked SMS content provider, according to Beeline, the country’s second largest telecommunications operator.

Net Element has headquarters in Miami, Florida, with international presence in selected emerging markets. Utilizing its global development centers and high-level business relationships, Net Element has positioned itself for continued growth in the mobile commerce and alternative payments environments.

VistaGen Therapeutics, Inc.

VistaGen continues to make progress on its clinical pipeline following a previously announced Cooperative Research and Development Agreement (CRADA) with the U.S. National Institute of Mental Health (NIMH). Under the CRADA VistaGen and the NIMH are conducting a phase 2 clinical study of AV-101 in subjects with Major Depressive Disorder (MDD). Dr. Carlos Zarate, chief of the Section on the Neurobiology and Treatment of Mood Disorders and chief of the Experimental Therapeutics and Pathophysiology Branch at the NIMH, will be the principal investigator of the NIH-funded study, which is expected to be completed this year.

In addition to depression, VistaGen is also pursuing applications of AV-101 for other indications involving the central nervous system, including chronic neuropathic pain, epilepsy and neurodegenerative diseases such as Parkinson’s and Huntington’s disease. The company’s alignment with the World Health Organization’s (WHO) call for a new approach to depression treatment, along with the NIH’s willingness to fully-sponsor the impending phase 2 clinical study, validates VistaGen’s primary focus of advancing AV-101’s potential as a revolutionary antidepressant.

About VistaGen Therapeutics, Inc.

VistaGen is a clinical-stage biopharmaceutical company developing innovative medicine for depression and diseases and conditions involving the central nervous system (CNS). VistaGen's AV-101 is a new generation orally-available NMDA receptor glycine B-site antagonist entering Phase 2 clinical development for Major Depressive Disorder. Based on preclinical studies, AV-101 may also have potential as a treatment for other CNS-related conditions, including chronic neuropathic pain and epilepsy, as well as neurodegenerative diseases such as Parkinson's disease and Huntington's disease.

AV-101's fundamentally novel mechanism of action places it among a new generation of glutamatergic antidepressants with breakthrough potential to treat millions of MDD sufferers worldwide who are poorly served by SSRIs, SNRIs and other current depression therapies. Like ketamine, AV-101 modulates (down-regulates) NMDA receptor channel activity. However, unlike ketamine's antagonistic activity, which results from its blocking the NMDA receptor channel, AV-101's antagonistic activity results from its selective binding to, and blocking of, the functionally-required glycine-binding co-agonist site of the NMDA receptor. Targeting the glycine-binding co-agonist site of the NMDA receptor may bypass potential adverse effects that occur with ketamine without affecting the robust efficacy observed in previous clinical studies. This may then result in the "glutamate surge" that has been associated with the rapid-acting antidepressant effects of ketamine.

VistaGen is also leveraging its proprietary pluripotent stem cell technology and clinically-predictive bioassay systems, CardioSafe 3D™ and LiverSafe 3D™, for drug rescue applications focused on producing proprietary new chemical entities (NCEs) that are novel, safer versions of drug candidates previously optimized and tested for efficacy by pharmaceutical companies and others but terminated before FDA approval due to heart or liver toxicity.


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