MissionIR Small-Cap Investor Blog: January 2014

Friday, January 31, 2014

CytRx Corp. (CYTR) Announces Pricing of $75M Public of Common Stock at $6.50 per Share

CytRx, a biopharmaceutical research and development company specializing in oncology, today issued a news release pricing its previously announced underwritten public offering. The company is now offering 11.5 million common shares at a public offering price of $6.50 a share. That is intended for gross proceeds of around $75 million, before the deduction of underwriting discounts and commissions and estimated offering expenses payable by CytRx are taken into consideration.

The net proceeds of the public offering will be used to fund clinical trials of the company’s drug candidate, aldoxorubicin, as well as for general corporate ends. The underwriters have been given the option of being able to purchase an additional 1.725 million shares of common stock for 30 days. It is expected that the offering will close on or around Wednesday, February 5, 2014.

Jeffries LLC is serving as the offering’s sole book-running manager while Oppenheimer & Co. Inc., Aegis Capital Corp., and H.C. Wainwright & Co., LLC are functioning as co-lead managers for the offering’s duration.

CytRx is offering the shares pursuant to a shelf registration statement on Form S-3, including a base prospectus, which had been filed with and now declared effective by the SEC. A preliminary prospectus supplement related to the offering was filed with the SEC on January 30, 2014, and a final prospectus supplement related to the offering will be filed with the commission sometime today.

When available, copies of the final prospectus supplement and the accompanying prospectus can be found at: http://www.sec.gov.

For more information on CytRx, visit: www.cytrx.com/

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DryShips, Inc. (DRYS): Macros Look Strong, But Liquidity Can Pose a Threat

DryShips felt the impact of fluctuating dry bulk shipping spot rates, as 33% of the company’s fleet is exposed to spot rates. Dry bulk shipping rates fell this month due to several factors such as:

1. This year, the Chinese New Year falls on January 31, and because of the holiday, most of China and Vietnam will be shut down from January 29 through February 6. Due to the holidays, shipping to Asian countries slowed down for the month of January, which consequently impacted shipping rates. It is a seasonal trend, and the shipments are expected to improve beginning next month.

2. Another cause for the price fall is coal shipment suspension in Colombia, from where Europe imports 20% of its coal. Colombia passed a rule requiring coal producers to build a direct ship loading facility at the port instead of using cranes and barges in order to reduce pollution. Loading facilities are expected to be installed by March this year, which will normalize the shipment.

Since mainly short-term factors are influencing spot prices, the situation will improve once these situations normalize. The outlook for dry bulk trade is expected to be positive this year. In 2014, dry bulk export demand is expected to grow 8% compared to fleet growth of 6%, so demand is expected to exceed the supply of vessels which will reverse the trend.

With rising global dry bulk trade, shipping spot rates will also improve, and DryShips is in a good position to take advantage of the rising rates due to its exposure to spot rates. Out of its 24 Panamax vessels, 16 are operating on the spot rate basis. Its two Supramax vessels are also operating on the spot rate basis.

Most of the company’s Capesize vessels are currently in long-term contracts on a fixed rate basis, and the majority of these vessels’ contract periods will end in 2018. Operating on a fixed rate basis will help the company in the current low spot price scenario, as Capesize vessel spot prices fell about 50% this month compared to last month. The current Capesize spot price is about $11,000, but its 10 vessels are operating at price of more than $20,000. When shipping spot rates are falling, using a fixed rate is an advantage for the company, but as prices are expected to rise in coming months, the company will only receive the benefits of rising prices from its Panamax and Supramax vessels.

Spot rates’ impact on other dry shippers

DryShips has two main competitors, Genco Shipping & Trading (GNK) and Diana Shipping (DSX). Spot rate volatility will have a different impact on each of these companies. Genco has 53 vessels and 42 of these vessels operate on spot rates or link to the spot rate. These 42 vessels include 9 Capesize, 8 Panamax, 12 Supramax, and 13 Handysize and Handymax vessels. Therefore, volatility in spot rates for all five classes of vessels will affect the company’s revenue. On the other hand, all 36 of Diana Shipping’s vessels operate on the fixed rate basis, providing the company with stable revenue, despite movement in the spot rate prices.

DryShips, on the other hand, is nimble enough to be able to adjust to price volatility since its Capesize vessels are in fixed rate contracts, while Panamax and Supramax operate on spot rates.

New equity offering to improve financial position

DryShips has shown intentions to resume its $200 million market price equity offering program, which it suspended in the beginning of December last year. The company stated that the reason behind this offering is to repay some or all of this year’s mandatory debt repayment of $150 million. DryShips already issued 6,892,233 equity shares under the program which generated gross proceeds of about $24.1 million. With the remaining $175 million, analysts are expecting the company to issue about 37 million shares. With the potential share offerings, dilution may have a negative impact on the share price over the short-term.

However, additional equity will help the company improve its liquidity position. At the end of the third quarter in 2013, the company had $678.6 million of cash and cash equivalents. The additional proceeds through equity sales will further strengthen the company’s financial position.

Potential events can change the company’s liquidity position

The company’s four new Panamax vessels are expected to be delivered this year. However, the company stated that the vessel developing company, Rongsheng, is facing difficulties, and there is a high probability that the vessels may not be delivered. If delivery occurs, the company has to allocate about $98 million for the remaining contracts.

Also, the company’s convertible notes worth $700 million are going to mature in December this year. The company suggested that it will try to extend maturity by refinancing through the note holders, but even if it doesn’t refinance due to additional equity sales, the company will be in a better position to redeem the notes.

Conclusion

Due to short-term factors, shipping rates are currently on the lower side, but the rates are expected to rise due to positive dry bulk trade outlook. Since almost one-third of its fleet is exposed to the spot rates, DryShips will reap the benefits. However, the company’s liquidity position may change in the coming months due to events like new vessel deliveries and maturing convertible notes. The company has also stated its intention to resume its equity sales, which will further increase dilution risk.

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YOU On Demand (YOD) Announces Expanded Relationship with Disney to Offer Mobile Movies On Demand in China

Leading Chinese multi-platform entertainment and video-on-demand company YOU On Demand Holdings, Inc. has announced the expansion of its cooperation to offer feature films from Disney Media Distribution through the YOU On Demand mobile service.

Through YOU On Demand, Disney library titles like “Alice in Wonderland” and “Pirates of the Caribbean” will now be available, and popular Marvel library titles will be available through the company’s Subscription Video On Demand (SVOD) package. New releases like “Thor: The Dark World” and “Saving Mr. Banks” will also be available through the company’s Transactional Video On Demand (TVOD) service.

“We are very proud to announce our expanded partnership with Disney as we continue to bring the best in entertainment to mobile users in China,” YOU On Demand Chairman Shane McMahon stated in the news release. “Disney films define quality family entertainment, and we’re thrilled that YOU On Demand will be showcasing Disney content to the world’s largest media audience. This partnership marks the next step in YOU On Demand’s commitment to provide rich and diverse content to customers anytime and anywhere on a wide variety of platforms, including mobile, digital cable, IPTV, Over-the-Top and online.”

With the addition of Disney content, YOU On Demand will continue pursuing the expansion of its mobile distribution presence in China. The company will add Disney titles to its current Hollywood lineup through the newly launched mobile app YOU Cinema, as per a recently announced distribution agreement with Huawei, a leading global information and communications technology (ICT) solutions provider and the third largest smartphone manufacturer in the world. The YOU Cinema app currently comes preloaded on Huawei Mate smartphones.

For more information about YOU On Demand, visit www.yod.com

CYREN (CTCH) Announces Availability of Cloud-Based Web Security Service

CYREN, previously operating as Commtouch®, a prominent internet security solutions supplier to the world’s largest service providers and software vendors, announced that CYREN WebSecurity, the company’s first service launch through its robust cloud infrastructure, has been made commercially available. CYREN is now capable of immediately partnering with service providers and software vendors to provide end users secure browsing, at any time, from any device, anywhere.

An opportunity exists for the company in the cloud-based Secure Web Gateway as a Service market to serve businesses with an existing exposure to potentially catastrophic Internet security risks. CYREN WebSecurity is perfectly suited to cater to the tremendous growth in the Security as a Service markets because of its ability to deliver low cost and high utility of cloud-based applications. The Security as a Service market will continue to experience impressive growth driven by BYOD trends, an increasingly mobile workforce, and the management and accessibility of information assets beyond the boundaries of traditionally secured network perimeters.

CYREN WebSecurity has a unique structure capable of thriving in this new way of working, enabling CYREN partners to rapidly capture the fast-growing market opportunity through the availability of a comprehensive solution for roaming users, smartphones and tablets, including BYOD. The company’s GlobalView™ Cloud infrastructure, its patented Recurrent Pattern Detection™ technology, and an industry leading transaction base are all valuable factors in the delivery of a unique cloud-based Secure Web Gateway service. Easy to set up and manage, it provides an intuitive customer experience that delivers on the SaaS promise of doing more for less.

“We are excited to see the emergence of state-of-the-art cloud based protection for mobile and roaming users,” said Tom O’Brien, CEO of MXSweep, a leading European provider of cloud-based security services and CYREN design partner. “CYREN WebSecurity will help MXSweep deliver the easy to consume and best of breed cloud based security that our customers expect.”

“Arming partners with the ability to rapidly deploy new security services throughout any ecosystem, CYREN WebSecurity opens up significant new revenue streams,” said Brett Wilson, vice president of products at CYREN. “CYREN WebSecurity provides our partners with the speed, accuracy and real-time insight that their end customers demand without the unnecessary burdens of additional capital expense and expert human resources. We see CYREN’s robust cloud infrastructure as a true catalyst for growth – and today’s launch of CYREN Web Security is the latest step in harnessing its full capabilities.”

For further information, please visit www.cyren.com

Thursday, January 30, 2014

VolitionRx Ltd. (VNRX) Dubbed “Bright Biotech” by Wall St. Cheat Sheet Contributor

VolitionRx was one of two companies recently highlighted in an article published in Wall St. Cheat Sheet that emphasized the long-term impact of positive news and/or achievements in the biotechnology industry.

“One way to offset the current market uncertainty is to look for news driven stocks that appear to be paving the way for future growth. This is especially true in the biotechnology sector where one positive news announcement can help pave the way for years of innovation. Two companies that have released recent positive announcements include Medivation (NASDAQ:MDVN) and VolitionRx (VNRX.OB). Investors should keep their eyes on both of these promising companies.”

To read the full article visit http://wallstcheatsheet.com/stocks/2-biotechnology-stocks-with-a-bright-future.html/

Contributor Tom Meyer starts with a run-down of Medivation, a biopharmaceutical company focused on the rapid development of novel therapies to treat serious diseases, such as cancer, for which there are limited treatment options. The company’s flagship product, XTANDI, is FDA-approved for the treatment of patients with metastatic castration-related prostate cancer who have previously been treated with chemotherapy.

As an introduction to life sciences company VolitionRx, Meyer describes the company’s goal to make non-invasive, simple-to-use cancer blood tests similar to the tests that are currently available for diabetics. VolitionRx’s R&D is currently centered in Belgium as the company is initially focused on marketing its products in Europe due to an easier path to regulatory approval there. The company’s primary focus at this time is on the colorectal cancer market, though its technology has the potential to be expanded into other cancers.

Meyer breaks-down into layman’s terms the science behind VolitionRx’s cancer blood tests, as well as the company’s ongoing clinical activities before concluding that:

“The colorectal cancer market is in need of much better diagnostics. The current available options include colonoscopies (invasive and expensive) and FIT/FOBT faecal-based tests (unpleasant and don’t screen for pre-cancerous polyps). If VolitionRx can successfully get some of its products to market, the company should see a dramatic climb in its share price. Also, investors should begin to see a run-up in the company’s share price as VolitionRx gets closer to revenue production.”

For more information, visit www.volitionrx.com

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Porter Bancorp, Inc. (PBIB) Subsidiary PBI Bank to Be Honored at 10th Annual Best Places to Work in Kentucky Awards

Porter Bancorp, which runs a series of 18 full-service banking offices across 11 counties in some of Central Kentucky’s best markets (including metropolitan Louisville, as well as the surrounding counties of Henry and Bullitt) via their subsidiary PBI Bank, was proud to report today that PBI Bank has been named as one of the select few medium-sized companies eligible to receive the Best Places to Work in Kentucky award for 2014, as administered by the Kentucky Chamber of Commerce, in collaboration with the Kentucky Society for Human Resource Management (KYSHRM) and dedicated “Best Places to Work” program developer, Best Companies Group.

This is a prestigious distinction for PBIB and clearly heralds to all that not only is PBI Bank one of the best employers in the state, but that the company is of tremendous value to the overall state economy, as well as helping to bolster the state’s business and workforce profile. Winner rankings for the 10th annual Best Places to Work in Kentucky are scheduled to be announced this April 24 at Heritage Hall in the Lexington Convention Center and represent the combined analytical effort of the vast KYSHRM organization, which has a membership exceeding 1.5k HR and business professionals spanning 13 local chapters across the state in all industries.

President and CEO of PBI Bank, John T. Taylor, pointed directly to what he feels is the operation’s most important asset, their employees, before pledging to continue to drive the kind of high standards that have garnered PBIB this key distinction by heartily rewarding integrity, teamwork, and service excellence. PBIB had $1B in assets as of September 2013 and running the gauntlet of the two-step process for this award, beating out the stiff competition first in the policy, practices, and demographics competition (25% of score) and then rocking the employee survey portion (75%), shows that the well-oiled PBIB machine has a deep customer-oriented bench of happy talent, as well as the sector muscle to deliver for shareholders.

The rigorous scoring methodology employed by Best Companies Group (BCG) is at the heart of this award’s prestige and their reputation in the industry over the last decade since inception speaks for itself. Combining comprehensive reporting with extremely granular surveying tools, BCG has mastered the filigree art of highly-customized data gathering solutions, resulting in some of the most articulate trend analysis available today. BCG is a division of Central Penn Business Journal and Next Magazine publisher Journal Multimedia, a multi-title publisher for a whole host of respected, award-winning business and consumer publications, as well as a developer of websites, video content and events.

PBI Bank will be recognized at the ranking ceremony and all the winners will subsequently be formally recognized via feature in a magazine that is to be distributed state-wide, bringing yet more patrons through the doors of this bank, whose brand is already known for unparalleled customer service and a history that stretches back to 1902.

For more information, visit PBI Bank online at www.PBIBank.com

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With EPA Deadline Ahead, Midwest Energy Emissions Corp. (MEEC) Receives Multi-Year Commitments from Major U.S. Power Producer

Midwest Energy Emissions (ME2C), a developer of proprietary, cost-effective mercury capture technologies to power plants and other large industrial coal-burning units in the United States and Canada, reports that it has received firm commitments from a major U.S. power producer for multi-year, mercury pollution control for Mercury and Air Toxic Standards (MATS) compliance.

The commitments are for a fleet of nine generating units capable of achieving mercury removal levels compliant with MATS at a significantly lower cost and with less operational impact than currently used methods. ME2C estimates that revenues for this relationship will grow to roughly $30 million per year by 2016 with initial revenues beginning in 2014.

“This is a significant milestone achievement for our team and shareholders, with anticipated annual revenues of over $30 million per year when the full fleet of this single power provider is under MATS compliance. We further believe that this is just the beginning of the adoption of our technology by others and expect to be making additional commercial announcements soon,” CEO Alan Kelley stated in the news release.

The U.S. Environmental Protection Agency’s (EPA) MATS rule requires that all coal-fired and oil-fired power plants in the U.S., larger than 25 mega-watts, must remove roughly 90 percent of mercury from their emissions beginning April 16, 2015, though some plants have been given extensions into 2016.

ME2C is quickly growing its reputation as a leading solution for power plants to achieve compliance, benefitting from decades of thorough research and testing.

“This very significant win for our company is the direct result of over 20 years of dedicated research and technology development in advanced mercury control solutions. We believe that our proprietary technology is truly the best in class, and this business commitment serves as validation of our belief,” Kelley said.

For more information visit www.midwestemissions.com

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Health Care Industry and Voice Biometrics — Growth Drivers for Nuance Communications, Inc. (NUAN)

On January 21, Nuance surprised investors by raising its EPS and revenue guidance for the first quarter ending in December 2013. The company raised its EPS guidance to $0.23 to $0.24, from an earlier guidance of $0.18 to $0.21. The increased revenue guidance stands at $467 million to $471 million. This has created optimism around the stock after a dismal performance in 2013.

Looking into 2014, the imminent shift to ICD-10 in the health care industry and the increasing use of voice biometrics in financial services are two potential accelerators of growth for the company’s top-line.

Shift from ICD-9 to ICD-10 in health care industry

An important trend in the health care sector is the impending implementation of coding standard ICD-10 in October 2014. ICD-10 includes five times more codes than ICD-9 contains. The new coding standard will significantly increase the number of codes used in billing systems once it is effective. As a result, documentation will take more time, increasing labor costs. This will drive health care companies to automate documentation and boost the revenue of providers of clinical information management (CIM) solutions.

The increasing need for automation in the health care industry has increased demand for Nuance’s CIM solutions. The company generated revenue of more than $100 million in fiscal-year 2013 for its CIM solutions and added 35 new customers. In fiscal-year 2013, the company introduced Clintegrity, an automation solution that supports the industry’s transition to ICD-10. This has helped the company’s existing customers that adapted ICD-9 in shifting to ICD-10 as well as its new customers.

The potential for the company’s CIM solutions is high because most health care providers have not yet implemented ICD-10 and are required to implement it by October 2014. Implementation of ICD-10 increases the demand for the company’s CIM solutions as customers increasingly opt for automation. Apart from that, this will also make the company’s ongoing transition smoother from a license-based revenue model to an on-demand revenue model as the company provides its Clintigrity solutions as a combination of on-demand services and term licenses.

Financial institutions are increasingly deploying voice biometrics

The demand for voice biometrics is growing from financial institutions, as they increasingly view it as the best way to secure customer accounts and financial information. Apart from security, voice biometrics also increases customer satisfaction and reduces costs associated with customer care. This increasing usage of voice biometrics is beneficial to Nuance.

Nuance successfully implemented its FreeSpeech voice biometrics for the institutions such as Barclays and Tatra Banka last year. After implementing voice biometrics, customer satisfaction increased at Barclays, while a reduced conversation time of 5% lowered costs. Another implementation at Tatra Banka reported that customer identification now takes 10 to 15 seconds, which has significantly improved customer satisfaction by 20% and secured customer transactions.

On Dec. 6, 2013, ING Bank Romania implemented Nuance’s voice biometrics for customer authentication. ANZ bank had also tested Nuance’s voice biometrics, indicating a growing use of voice biometrics in the financial industry. Nuance dominates the voice biometrics market with more than 35 million voice prints deployed, giving it around 80% of the total market. This gives the company an advantage in attracting more customers to its voice biometrics services as financial companies deploy them. The global voice biometrics market for the financial sector is expected to increase from $200 million in 2012 to $750 million by 2015. As the voice biometric market leader, Nuance will benefit greatly from the growth in this market.

The company’s executive compensation is too high

Compensation for Nuance executives is extraordinarily high compared to its operating income. In fiscal-year 2013, Nuance’s executive compensation was $43 million, almost 90% of operating income. The management is rewarding itself with hefty compensation.

This could change in the future, with Carl Icahn’s recently increased stake in Nuance to 19%. He has two members appointed on Nuance’s board of directors from his company Icahn Enterprises L.P. As a major shareholder, Icahn will push for changes that will increase shareholder value to increase the value of his stake. This may result in cost-cutting by management including a possible reduction in executive pay.

Conclusion

Nuance reported losses for the last four quarters, resulting in negative earnings of $115 million for fiscal-year 2013. As a result, the company’s stock fell more than 30% last year. However, the company has strong growth prospects for 2014.

The company’s leadership in the voice biometrics industry will help it benefit from the growing use of voice biometrics in the financial industry. Apart from that, the growing need for automation in the health care industry will help the company’s health care segment grow. Meanwhile, Icahn will push the company’s management to cut costs, which will increase operating income.

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Actinium Pharmaceuticals, Inc. (ATNM) CEO Featured in Exclusive Interview with MissionIR

Today before the opening bell, an interview with president and Chief Executive Officer Dr. Kaushik J. Dave, a 25-year veteran with extensive biotech and pharmaceutical experience, was released. The full audio interview is available at the following link: http://ATNM.MissionIR.com/interview.html.

Actinium is a biotech company leveraging modern science and its proprietary platform to develop and commercialize groundbreaking therapies for treatment in different types of cancer that currently do not have any approved treatment.

Iomab-B is the company’s lead program for bone marrow conditioning in patients with acute myeloid leukemia (AML) who do not have any curative treatment options. Iomab-B is poised to start a pivotal phase 3 study, backed by significant data from five completed phase 1 and phase 2 clinical trials.

“This program has the potential to disrupt the field of bone marrow transplant, and as a consequence, has attracted a significant amount of interest from the medical community,” Dr. Dave stated in the interview.

Actinium’s pipeline also includes Actimab-A, currently in phase 1/phase 2 clinical studies as a primary induction treatment of AML. The company’s business model is to leverage its expertise and strong partnerships with leading cancer institutions to further the development of these drug candidates.

Dr. Dave detailed his education and extensive background in the pharmaceutical industry and drug development, noting that his interest in joining Actinium stemmed from recognizing the company’s “significant unrealized potential for growth.” Dr. Dave also briefly touched on the blended expertise of the rest of Actinium’s leadership and board of directors.

“These folks, all of them, bring complementary skills… all of which make our team well-equipped to face challenges of a rapidly ascending biotech company,” he stated.

In 2013, Actinium achieved several important milestones, as explained by Dr. Dave in the interview, which have positioned the company to reach several key objectives in 2014, including:

• Iomab-B poised to start phase 3

• Interim phase 2 results for Actimab-A

• Uplist to Nasdaq or NYSE exchange

• Obtaining additional analyst coverage

• Establish strategic collaborations

Wrapping up the interview, Dr. Dave explained Actinium position in the biotech industry, how it is raising awareness in the investment community, and the company’s recent private placement of approximately $6.6 million in gross proceeds, which is allocated toward achieving the company goals for the year.

For more information, visit www.ActiniumPharmaceuticals.com

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Methes Energies International Ltd. (MEIL) Announces Affiliation with Ontario Biodiesel Association

Today before the opening bell, it was revealed that Methes Energies Canada Inc. has joined the Ontario Biodiesel Association as a Founding Member. The Ontario Biodiesel Association engages in promotion efforts on behalf of production and use of biodiesel in the Province of Ontario, Canada.

Members of the Ontario organization have made investments of over $80 million in plant and equipment for biofuel production in the province. Aside from environmental benefits, notably the biofuel industry exercises positive direct and indirect economic influences on Ontario and its agricultural sector.

Paul Grenier, Executive Director for the Ontario Biodiesel Association, said, “OBA’s strength is the unity of biodiesel producers, supporting Provincial policy development, to improve Ontario’s air quality by promoting increased use of Biodiesel. The OBA is working with the Ontario government, feedstock suppliers, and other key stakeholders to the industry to reach this goal.”

Methes Energies Canada Inc. 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.”

In May 2013, the Ontario Minister of Finance, the Honorable Charles Sousa, via the government’s budget, announced and committed to a consultation process for Ontario’s biofuel policy development. Having begun in July 2013, this process, Methes Energies Canada Inc. notes, along with the creation of the Ontario Biodiesel Association, shows the biofuel industry’s commitment to its industry participants’ collective interests and concerns.

For more information, please visit: www.methes.com

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AVT, Inc. (AVTC) Partners with Active Ride Shop for New Retail Vending Location

AVT, a provider of custom vending machines, automated retailing business opportunities, and self-service kiosks, has designed a new automated outdoor mall for Active Ride Shop, a widely popular skate and surf market retailer.

AVT’s integrated vending machines align with a relatively cashless society, utilizing advanced equipment, reporting, and support. For Active Ride, the new self-service system enables the retailer to reach new customers and expand brand awareness in a cost-effective and engaging manner.

“We are happy to have developed a dynamic, custom solution for Active — one of the most loved companies in North America,” Shannon Illingworth, founder and chairman of AVT stated in the news release. “As retailers continue to seek new ways to improve revenues and increase customer access to their products, AVT stands at the forefront by creating custom automated systems that engage, inspire and reward.”

Automation is a rising trend in the technology industry, driven by demand for quick, easy and accessible transactions. ATV’s vending machines are expanding into a range of applications, including retail, tools, safety equipment, office supplies, school lunches, medical supplies, and more.

For more information, visit www.autoretail.com

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Wednesday, January 29, 2014

Dakota Plains Holdings, Inc. (DAKP) Well-Positioned to Exploit Bakken Activity with Expanded Transloading Capacity and Frac Sand Terminal

Dakota Plains Holdings, the MN-headquartered provider of broad-spectrum crude oil offtake services spanning marketing, transloading, and trucking of crude and related products, is squarely focused on growing their Williston Basin (Bakken and Three Forks) centric operations through judicious capacity expansion of their optimally located New Town facility in Mountrail County, North Dakota.

With a sizeable and proprietary fleet of trucks, as well as over 1k railroad tank cars at their disposal (directly and indirectly) through existing JVs, it is little wonder DAKP pushed record volumes in their marketing/transloading figures for November 2013, with multiple daily gross rates exceeding 36k barrels per day. Direct connection to partner Canadian Pacific’s Class 1 Railway ensures a bright future for DAKP as they continue to serve Bakken/Three Forks interests well on into the future and their now culminating Pioneer Terminal JV expansion project should improve overall throughput/profitability handsomely.

Markets should be getting an update from the company any day now on the Pioneer Terminal commissioning, which adds two 8.3k foot loop tracks, each capable of handling a 120 car unit train, as well as two crude storage tanks totaling 180k bbls in capacity. The rapidly developing inbound oilfield products activity at the Pioneer Terminal is also key for DAKP here, with the New Town facility’s four existing 2.5k foot tracks to be used in support of inbound oilfield supplies like frac sand, something for which the company is currently constructing a $15M terminal that (slated for completion in May of this year). The 750k tons per year frac sand terminal, announced earlier in 2013 and fully funded by top North American non-metallic industrial minerals producer, UNIMIN Corp., will carry some 8k tons of fixed sand storage, as well as featuring enclosed transloading.

The Pioneer Terminal expansion incorporates a high-speed loading facility capable of handling 10 rail cars at the same time, in addition to transfer stations for organizing crude coming in from trucks and local gathering pipelines, with one such pipeline already in service and a projected 8k BOPD feed rate. The fact that they executed this new expansion via JV, incurring only half the$50M price tag and are now in the final stages of completing a transition whereby DAKP will assume management of the Pioneer Terminal, with over 11k work-hours and zero lost time due to safety incidents, while also bringing the project in under budget, speaks volumes about the project’s development team. President and COO of DAKP, Gabe Claypool, who helped spearhead the company’s initial doubling of on-site capacity and creation of their key marketing/trucking JVs, was instrumental as the Pioneer Terminal expansion project team leader in achieving such success.

For more information, visit www.DakotaPlains.com

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Iteris, Inc. (ITI) and Tinga Enter Global Distribution Agreement

Iteris, a prominent supplier of intelligent traffic management information solutions, has entered into an agreement with Tinga to make Iteris’ products available on Tinga’s AIR Exchange™ (AIREX™). The deal gives Iteris the opportunity to have a presence on the first and only cloud-based independent marketplace that provides access to financially actionable information and reports to investors.

The agreement stipulates that Iteris’ traffic and weather information products and services will be offered on the AIREX online marketplace for use by asset managers, hedge funds, registered investment advisors, corporate buyers, and other investment professionals.

“Our partnership with Tinga demonstrates the need for our traffic and weather solutions in markets outside of transportation,” said Tom Blair, Senior Vice President, iPerform at Iteris. “Soon, global investors who seek relevant information to make important investment decisions will have direct access to purchase Iteris products and services through the Tinga AIR Exchange online marketplace. We look forward to working with Tinga and being the first in the traffic and weather management market to leverage their services.”

Stephen Kuhn, CEO of Tinga, commented: “For many investors, traffic and weather information is a key component of investment analysis and decision making. Using Tinga’s AIR Exchange, Iteris is now able to offer timely, accurate and actionable weather and traffic information that our customers need to be competitive in today’s investor environment. We’re excited to partner with Iteris, and look forward to offering its industry-leading products and solutions through the AIR Exchange.”

Iteris is known for developing the next generation of intelligent traffic and weather-related information solutions. These breakthrough solutions should usher in the power of big data to the prediction of traffic and weather conditions, and the delivery of actionable information to public and commercial marketplaces.

For further information, please visit www.tingatech.com and www.iteris.com

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Chanticleer Holdings, Inc. (HOTR): Lots of Exciting Developments

Chanticleer Holdings is an operating holding company that owns and operates several restaurant brands across the world. The company is well-known for its ownership stake in Hooters of America but has also been acquiring other brands with the intention of expanding its entire suite of brands both internationally and domestically.

In addition to Hooters of America, Chanticleer Holdings is also the owner and operator of American Roadside Burgers which currently has 5 restaurant locations along the eastern coast of the United States. The company also owns a majority interest in Just Fresh Restaurants which is a fresh food-focused casual dining brand that has 5 restaurant locations in Charlotte, NC.

Last week, Chanticleer Holdings announced a new distribution deal with Appalachian Mountain Brewery. Mike Pruitt, the CEO of Chanticleer Holdings, has agreed to assist AMB with distribution of its unique, craft beer into the restaurants it manages. Given the fact that U.S. consumers drink roughly $200 billion worth of beer each year, this distribution deal could draw in additional customers to the restaurants owned and managed by Chanticleer Holdings.

This deal follows the company’s earlier announcement to acquire Spoon Bar & Kitchen, a fine dining seafood restaurant. Chanticleer plans to expand the Spoon brand into a new, fast-casual dining concept. Given the developments at Chanticleer, it’s easy to understand how the company has managed to significantly improve its revenue stream over the past 3 years. Last year, the company generated $6.9 million in revenue, compared to just $1.5 million in 2011. Because of this impressive growth, shares have surged by 79% over the past 52 weeks. This is likely only the beginning.

For more information about Chanticleer Holdings and its subsidiaries, visit the website at http://www.chanticleerholdings.com

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Clean Energy Fuels Corp. (CLNE): Natural Gas Highway Driving Future Success

The number of natural gas vehicles (NGVs) in the North American region is expected to increase at a compounded annual growth rate of 17% through 2020. Buses will lead this growth followed by medium and heavy duty trucks, which are expected to grow at 22% and 19%, respectively. These numbers look promising for natural gas suppliers, and Clean Energy Fuels Corp. is in a good position to benefit from this opportunity. Apart from directly selling natural gas in compressed and liquefied forms, the company builds and sells natural gas filling stations to its customers. Last month, Clean Energy reported that its customers ordered 70% more natural gas vehicles in the first nine months of 2013, than in the same period in 2012. This will drive Clean Energy’s revenue growth in the coming quarters.

In the longer term, Clean Energy will benefit more as natural gas gains wider acceptance as an alternative fuel. This is bound to happen, as natural gas is a better option compared to gasoline and diesel. On average, natural gas is cheaper by almost $1.50 per gallon compared to gasoline and diesel, and the use of natural gas reduces emissions by almost 30%. Even though an NGV costs up to 20%-30% more than a comparable gasoline vehicle, the fuel benefits help recover the higher cost over the course of 2.5 years to six years, depending on the type of vehicle. As more people opt for NGVs, the selling price of NGVs should decrease as companies improve production efficiency.

For medium and heavy duty trucks, the higher cost of NGVs is not stopping transport companies from converting their fleet to natural gas. Clean Energy signed a multi-year agreement with United Parcel Service (UPS), wherein Clean Energy will supply liquefied natural gas (LNG) to UPS’s private stations in Houston and Mesquite. The regular supply to these two stations will ensure better revenue for Clean Energy in the upcoming quarters and beyond. In a separate agreement, the company will assist UPS’s natural gas fleet by opening three stations in Texas. These stations in Amarillo, Mesquite, and San Antonio are part of Clean Energy’s America’s Natural Gas Highway (ANGH) network.

Under the ANGH network, Clean Energy is developing LNG fuelling stations on the interstate highway system that will provide natural gas to trucks traveling across the U.S. The company plans to open 150 LNG fueling stations in the first phase, out of which 70 were completed as of September 30, 2013. The company will probably provide an update on the construction of its ANGH network when it announces its fourth quarter results. Recently, Clean Energy opened its first LNG station in Florida, and companies like UPS and Raven Transport, among others, will use it. As more and more fueling stations on the ANGH network become operational, Clean Energy will post better sales in the coming years.

What about the financials?

Although the development of filling stations on the interstate highway has further improved Clean Energy’s growth prospects, it has taken a toll on the company’s financial statements. Over the five-year period from 2008-2012, the company failed to generate annual profits and positive free cash flows. As a result, the company was forced to raise additional finances to continue its expansion plan. Last year, Clean Energy completed a convertible debt offering of $250 million, and the company will pay 5.25% interest in semi-annual payments beginning April 1, 2014. The increase in interest expenses will further impact the company’s profitability.

However, the company can offset its increased interest expenses by utilizing the funds efficiently. In order to see whether the company incurred capital expenditures (capex) efficiently, investors should compare the company’s past capex to sales ratio.

Historically, the company successfully translated its increasing capital expenditures into increasing sales. The company’s capex increased consistently from 2010-2012, showcasing higher investments made for its future. These investments paid off in the first nine months of 2013, as the company generated better revenue compared to its capex, helping reduce its capex-to-sales ratio. In 2014, the company will incur capex on the development of the remaining fueling stations on its ANGH network. Assuming the company displays similar efficiency with respect to generating revenue through its capex, we can expect Clean Energy to post increased revenue in the coming years.

Conclusion

The benefits that natural gas offers as an alternative fuel to gasoline and diesel will definitely lead to increasing demand for NGVs in the coming years. Clean Energy’s ANGH network will help it capitalize on the increase of NGVs. Even though the company’s financials have suffered from the funding of its projects, the company’s financial position continues to improve as more filling stations become operational.

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Actinium Pharmaceutics, Inc. (ATNM) Engages Goodwin Biotechnology to Supply Iomab™-B for Its Phase 3 Clinical Study

Today before the opening bell, Actinium Pharmaceutics reported that it has engaged Goodwin Biotechnology in a manufacturing supply agreement. In this agreement, Goodwin Biotechnology will be the overseer of the current Good Manufacturing Practices production of a monoclonal antibody that is expected to be used in an upcoming phase 3 clinical trial of Iomab™-B. Iomab™-B is to be used in preparation of patients for hematopoietic stem cell transplant (HSCT), which is commonly referred to as a bone marrow transplant (BMT).

“This agreement with Goodwin Biotechnology represents a major risk mitigation step in conducting our phase 3 trial of Iomab™-B,” said Kaushik J. Dave, President and CEO of Actinium. “Goodwin Biotechnology has significant experience in working with companies like ours and the capabilities to provide the scale-up needed for a late-stage clinical trial. Its competencies in process and product implementation, quality assurance, and GMP manufacturing make it ideally suited as a manufacturing partner for Actinium as we look forward to launching this pivotal phase 3 trial later this year.”

“We are very excited to be working with Actinium on Iomab™-B, their lead product candidate,” said Karl Pinto, CEO of Goodwin Biotechnology. “Actinium’s cutting edge proprietary platform is able to target different types of cancers that are without any approved treatment options. We look forward to a long-term partnership with Actinium, not only on Iomab™-B, but hopefully also on other products in their pipeline such as Actimab-A.”

Based out of New York, Actinium is a biopharmaceutical company developing innovative targeted payload immunotherapeutics for the treatment of advanced cancers. Currently, it is conducting a single, pivotal, multicenter Phase 3 clinical study of Iomab™-B. In that study, the radioimmunoconjugates and its treatment efficacy are being examined in refractory and relapsed Acute Myeloid Leukemia (AML) patients, who are over 55 years of age, with a primary endpoint of durable complete remission.

For more information on Actinium, visit: www.actiniumpharmaceuticals.com

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Risks Loom But Qualcomm Inc. (QCOM) Remains a Promising Growth Stock

Driven by exponential growth in smartphone shipments, chipmakers such as Qualcomm (QCOM) and Broadcom (BRCM) have seen their addressable markets increase. As smartphone manufacturers look to integrate more features, chipmakers need to continually upgrade their chipsets and release new ones, which is why demand for smartphone chips continues to remain strong.

The need for low power consuming processors for a better battery life has been a prime concern for various smartphone manufacturers, but Qualcomm seems to be addressing that need now. Windows RT is among the first operating systems that incorporates a processor to run on low power chipsets. It uses Qualcomm’s processors based on the ARM architecture.

Qualcomm has already been winning orders for its Snapdragon series of processors from smartphone manufacturers like Sony, Samsung, HTC, and Xiaomi. The sales of the Snapdragon 800 processors are expected to increase due to the increased deployment of 4G LTE in key markets such as the U.S. and China.

However, Broadcom poses a tough challenge to Qualcomm in chips for modems, wireless, and LTE applications. It recently acquired Japan-based LTE wireless chipset company Renesas Electronics for $164 million . Chips manufactured by Renesas are already certified by leading wireless carriers like AT&T, Vodafone, Orange, EE, and NTT Docomo. This deal gives further impetus to Broadcom in the 4G modem market, as it looks to cut into Qualcomm’s share. But then, Qualcomm has its own set of advantages.

Qualcomm’s licensing policy can leverage more growth in the future

Qualcomm is now focusing further on its licensing business to ramp up its top line. The company currently holds numerous wireless patents, enabling it to earn royalty fees from various handset manufacturers that use Qualcomm’s chipsets. Currently, the major chunk of its revenue comes from the sale of chipsets.

Qualcomm faces fierce competition from other chip manufacturers like Intel and Samsung. But with the focus on its licensing policy, it remains in a position to keep its revenue stable while also profiting from growth in smartphone shipments that use its intellectual property.

The only concern with the licensing policy would be the pricing of the handsets since Qualcomm does not have any control over that. But no business is risk-free and under any situation, Qualcomm is benefiting with this business strategy and expects further growth. The margin in the licensing business is higher than selling chips, and this has a positive effect on the bottom line.

A threat for Qualcomm

Qualcomm is facing regulatory problems in China. Recently, China’s National Development and Reform Commission (NDRC) launched an antitrust probe. This was a surprise for Qualcomm as it was not aware of any violation. The Chinese government’s policy of royalty further favors local suppliers, making life difficult for Qualcomm.

Organizations in China are spending heavily to acquire Chinese mobile chipmakers. Spreadtrum Communications and RDA Microelectronics were acquired by Tsinghua Unigoup. Both these companies were on similar technology platforms as that of Qualcomm, creating further competition for the chipmaker in the Chinese market.

RDA Microelectronics & Spreadtrum are known for their low-cost baseband chips. Players such as Qualcomm could face a fierce price war from both these companies, who can now count on financial support from Tsinghua.

Another threat

Apart from the above two companies, U.S. chipmaker Broadcom also has the potential to hurt Qualcomm’s stronghold on the LTE market in 2014. 2014 is an important year for Broadcom as it is relying heavily on the success of LTE growth.

On the other hand, the market for low-cost smartphones is on an upward trend, with the biggest market being China. Smartphones below $250 are anticipated to account for 46 % of the global smartphone market by 2018, up from 28% in 2012. To tap this budding market, Broadcom is collaborating with low-cost smartphone manufacturers in China.

Chinese manufacturers like TCL and K-touch have incorporated Broadcom’s dual core chipset for their 3G smartphones. These 3G smartphones are offered at affordable prices and could help Broadcom enjoy strong growth.

Broadcom should also benefit from the evolution of the Wi-Fi standard. It is a pioneer of 5G Wi-Fi and expects that its customers will gradually transition to 5G Wi-Fi going forward and help Broadcom grow further. However, Broadcom is late to the 4G modem party and the acquisition of Renesas could be thought of as a desperate move by the company as it looks to challenge Qualcomm. Qualcomm commands 63% of the cellular baseband market, according to Strategy Analytics, while Broadcom’s is still in the single digits. Thus, the road ahead for Broadcom isn’t as rosy as Qualcomm.

Conclusion

Broadcom is having difficulty growing its business. Revenue growth in the previous quarter was a mere 2.9% from the year-ago period. Comparatively, Qualcomm’s revenue grew 33% in the recently-reported fourth quarter while net income improved 18%. Also, Qualcomm is cheap at 19 times trailing earnings while Broadcom remains expensive at a P/E ratio of 34. Hence, Qualcomm’s diversification and leading position in the baseband market are reasons why investors should consider buying it to benefit from growing sales of mobile devices.

However, the threat of Chinese chipmakers cannot be ruled out for Qualcomm. Also, while Broadcom might not be a good investment, it can surely rain on Qualcomm’s parade through its partnerships in the Chinese market and its recent acquisition. Hence, investors should keep a close watch on Qualcomm and keep track of its business in China.

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