Should Government Limit the Export of Fossil Fuels?

Presidential Hopefuls Float Plans to Curb Fossil Fuels

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With Democratic 2020 presidential hopefuls embracing green energy to curb climate change, proposals to ban hydraulic fracturing (fracking), limiting U.S. exports of fossil fuels and carbon taxes have all entered the public debate.  Due to the increased use of hydraulic fracturing and horizontal drilling, the United States has significantly increased its production of crude oil and natural gas.  The U.S. Energy Information Administration expects total crude oil and petroleum net exports to average 750,000 barrels per day (b/d) in 2020 compared with average net imports of 520,000 b/d in 2019.  U.S. liquefied natural gas (LNG) exports are expected to average 4.7 billion cubic feet per day (Bcf/d) in 2019 and 6.4 Bcf/d in 2020 as three new liquefaction projects are commissioned.  This has resulted in significant economic and political gains.  As the country moves from limiting its dependence on energy imports to becoming a significant exporter of energy, should it consider restricting exports in the interest of curbing climate change?  Restricting exports would have both positive (bull) and negative (bear) implications for energy producers, consumers and investors.

Research – Comtech (CMTL) – Strong Q1; Can The Momentum Be Maintained?

Thursday, December 5, 2019

Comtech Telecommunications Corp. (CMTL)

Strong Q1; Can The Momentum Be Maintained?

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long-distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs develop, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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1Q20 Results. Revenue of $170.3 million, EPS of $0.26, and Adjusted EBITDA of $20.6 million all exceeded our forecasts of $168 million, $0.15, and $17.8 million, respectively. In 1Q19, revenues were $160.8 million, EPS $0.14, and adjusted EBITDA $18.0 million. Adjusted EPS totaled $0.32 compared to $0.22 last year. Strong results from the Commercial Solutions segment drove quarterly results.

Contract Wins and Acquisitions Driving Results.  New contract wins, such as the $98.6 million Army contract announced in October, the $325 million, 10-year troposcatter award for the U.S. Marines, and…




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Research – QuoteMedia (QMCI) – What Investors Are Looking For

Thursday, December 5, 2019

QuoteMedia (QMCI)

What Investors Are Looking For

QuoteMedia, based in Fountain Hills, Arizona, provides cloud-based financial data, market news feeds, and financial software solutions.  Its customers include financial service companies, online brokerages, clearing firms, banks, media portals, public corporations, and individual investors.  The company provides a single source solution providing products such as streaming quotes, charting, historical data, technical analysis, news, and research.  Information can customized and provided to multiple platforms including terminals and mobile devices.

Michael Kupinski, DOR, Senior Research Analyst, Noble Capital Markets, Inc.

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Large market opportunity. We believe that investors would like to see faster revenue growth from the company given the large market opportunity for financial information and services.

Tweaking Q4 estimates. We are lowering our Q4 2019 revenue estimate, which anticipates a smaller sequential quarterly improvement in revenues than originally thought (6.1% versus 7.3%). We are lowering our cash flow estimate from $556,000 to $463,000 due to lower revenues. Our full year 2019 revenue estimate is…



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New Era of Gene Therapy

New Era of Gene Therapy

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Gene therapy is a biological product that mediates its effect by transcription and/or translation of transferred genetic material by integrating into the host genome. It is administered as nucleic acids, viruses, or genetically engineered microorganisms. In gene therapy, a normal gene is inserted into the genome, often via a viral vector, to replace an abnormal gene responsible for causing a certain disease. The first clinical protocol introducing a foreign gene into humans was approved by the Recombinant DNA Advisory Committee (RAC) in December 1988. On September 14th, 1990, the U.S. Food and Drug Administration (FDA) approved for the first time treatment of a human patient with an experimental gene therapy. Two children were suffering from adenosine deaminase deficiency (ADA-SCID), a monogenetic disease leading to severe immunodeficiency. They were treated with white blood cells taken from their own blood (autologous therapy) and modified ex vivo to express the normal gene for making adenosine deaminase. After twelve years performing experimental protocols, Glybera (alipogene tiparvovec) became the first approved gene therapy, intended to treat lipoprotein lipase (LPL) deficiency, by European Medicines Agency in 2012 (Exhibit 1). However, Glybera was never approved by FDA in the U.S.

Exhibit 1. History of Gene Therapy

Source: T. Wirth et al., Gene 525 (2013)
162–169

Over the three decades since the first clinical trial, there have been many attempts using gene therapy for treatment of various indications. Among over 2 thousand clinical trials, the majority focused on cancer indications (65%, Exhibit 2). Despite many early failures, there is an increasing number of therapeutic successes in human clinical trials being reported in recent years. As a result, investments in gene therapy technologies are increasing rapidly. The disease targets of gene therapy are currently center around rare, inherited genetic diseases.

Exhibit 2. Various Indications Addressed by Gene
Therapy in Clinical Trials

Source: The Journal of Gene Medicine,
2017, John Wiley and Sons Ltd.

Can Modern Monetary Theory Work?

Countries are Promoting Growth by Raising Debt While Holding Rates Down

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Keynesian economic theory says that the government should expand and take on debt during downswings in the economic cycle and pay back the debt when the economy is strong.  Keynesian theory has been thrown out the window by Modern Monetary Theory (MMT) advocates who believe the government should grow the economy up to the point of full employment (sometimes advocating for guaranteed jobs at a minimum wage) regardless of economic conditions.  MMT challenges the notion that government spending should be funded by taxes, arguing that the government can finance expenditures by easing monetary policy.   At the root of the argument is the belief that government debt does not compete against the private sector’s ability to issue debt.  This is because the government has a unique ability to print money and the ability to influence interest rate levels through the Federal Reserve.  Can Modern Monetary Theory work?  Or is it creating a ticking time bomb that will create problems for future politicians and taxpayers?

Research – Harte-Hanks (HHS) – New Leadership For A New Phase?

Tuesday, December 03, 2019

Harte-Hanks Inc. (HHS)

New Leadership For A New Phase?

Harte-Hanks is a marketing services company that provides multichannel marketing solutions as well as consulting, data analytics, and strategic assessment. The company’s offerings focus on business-to-business, retail, finance, and automotive segments through digital, social, mobile, and print media offerings. Harte-Hanks strives to develop better customer relationships through its marketing and analytical services for clients. The majority of its revenue is derived from its marketing services in the retail, technology, and consumer brand segments.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

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Appoints a new C-level management team.  The company appointed Andrew Benett as Executive Chairman and CEO, Brian Linscott as COO, and promotes Lauri Kearnes to CFO position, replacing departing Mark Del Priore. Andrew Harrison stepped down as President but will remain with the company in an advisory role. Al Tobia, former Executive Chairman, will remain on the Board. While it was expected that there was a search for a new CEO, we are surprised by the sweeping management and Board changes.

A pivot in focus.  The new management represents a team with broad experience in the marketing services industry and a pivot in the company’s operating strategy, with a focus on revenue and cash flow growth from one of cost-cutting and right-sizing. We believe that investors are likely to be hopeful, but …



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Research – Aurania Resources (ARU:CA) – On the Road to Finding the Lost Cities?

Monday, December 2, 2019

Aurania Resources Ltd. (ARU:CA)

On the Road to Finding the Lost Cities?

Aurania Resources Ltd. is a Canada-based junior mining exploration company engaged in the identification, evaluation, acquisition, and exploration of mineral property interests, with a focus on precious metals and copper. Its flagship asset, The Lost Cities-Cutucu Project, is in southeastern Ecuador in the Province of Morona-Santiago. The company also has several minor projects in Switzerland.

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

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Discovery could lead the way to find the Lost Cities.  Vestiges of an old road were discovered in the central part of Aurania’s Lost Cities – Cutucu project. The road is believed to be one that linked two historic gold mining centers, Sevilla de Oro and Logrono de los Caballeros, both believed to be within the Lost Cities project area.

Next steps.  A LiDAR survey will be expedited over the area which should be able to detect extensions to the road and its termination at the historical mine sites. Findings will be incorporated into Metron’s data analytics process to…




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Research – Great Panther Mining Limited (GPL) – GPL Cuts 2019 Production Guidance Again; Lowering Rating to Market Perform

Monday, December 2, 2019

Great Panther Mining Limited (GPL)

GPL Cuts 2019 Production Guidance Again; Lowering Rating to Market Perform

Great Panther Mining Limited, headquartered in Vancouver, Canada, is a precious metals mining and exploration company that operates three mines. These include 1) the Tucano gold mine in Amapa State, Brazil, 2) the Guanajuato mine complex which includes the Guanajuato and San Ignacio mines in Mexico, and 3) the Topia mine in Mexico. Great Panther also owns the Coricancha Mine in Peru, which is expected to restart operations in 2020. The shares are traded under the ticker “GPR” on the Toronto Stock Exchange and under the ticker “GPL” on the NYSE American.

Mark Reichman, Senior Research Analyst, Noble Capital Markets, Inc.

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Production guidance lowered.  Management lowered its 2019 production guidance for the second time and now expects a full-year production of 142,000 to 149,000 gold equivalent ounces compared to previous guidance of 150,000 to 160,000 gold equivalent ounces. The Tucano mine is now expected to produce between 31,000 and 33,000 gold ounces during the fourth quarter versus prior expectations of 39,000 to 44,000 ounces.

Updating estimates.  We are lowering our 2019 EPS and EBITDA estimates to ($0.10) and $20.1 million from ($0.07) and $26.4 million, respectively. Our full-year 2020 EPS and EBITDA estimates have also been lowered to $0.04 and…


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Research – Akazoo (SONG) – Creating A New Vibe On Messaging

Wednesday November 27, 2019

Akazoo (SONG)

Creating A New Vibe On Messaging

Akazoo is a global, on-demand music and audio streaming and media and AI technology company, founded in 2010, with a focus on emerging markets and a presence in 25 countries. Akazoo’s premium service provides subscribers with unlimited online and offline high-quality music streaming access to a catalog of over 45 million songs on an ad-free basis. Akazoo uses patented AI for music recommendations and offers online and offline listening. Akazoo’s free, ad-supported radio service consists of over 80,000 stations and exists as a separate service and application. As consumers across the globe continue to shift their media consumption to mobile devices, Akazoo is equipped with a world-class mobile application and user experience which works seamlessly across a multitude of mobile devices and provides a high-quality user experience across a range of mobile networks from 2g to 4g LTE and soon 5g.

Michael Kupinski, DOR, Senior Research Analyst, Noble Capital Markets, Inc.

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Delivers music content on a messaging service. Akazoo inked an agreement with Rakuten Viber, one of the world’s largest messaging and voice over IP services with over 1 billion users, to deliver music content and lyrics. We believe that the agreement is among the first of its kind and could lead to agreements with other messaging providers.

Enhances in-market footprint.  Akazoo is in the majority of Viber’s 17 markets, which should provide enhanced opportunities to…



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Research – Comtech (CMTL) – Satellite Ground Equipment Acquisition

Wednesday, November 27, 2019

Comtech Telecommunications Corp. (CMTL)

Satellite Ground Equipment Acquisition

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long-distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs develop, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for the price target, fundamental analysis, and rating.

UHP Networks Acquisition.  Last week, Comtech announced it has agreed to acquire UHP Networks for $40 million. UHP is a leading provider of innovative and disruptive satellite ground station technology solutions. Financial and other information about the transaction will be provided on the 1Q20 conference call, which was December 6th last year.

Fast Growing. While we await additional info on the financials, we would note that UHP announced record sales results in 2017, confirming its reputation as the world’s fastest-growing VSAT technology. Company revenue has been growing at more than 40% CAGR over the last three years and…




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Is Tesla’s Cybertruck a Turkey?

Is Tesla’s Cybertruck a Turkey?

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One of the topics that is sure to make its way to dinner conversations across the U.S. this holiday season will be about Tesla’s Cybertruck.  Elon Musk unveiled and announced last week the car company, Tesla, would begin to take orders on their latest entry into the electric vehicle market. Musk’s presentation at the LA Auto Show created quite a buzz, both in the room and on most forms of news outlets. 

National news stations, business news, and bloggers with audiences as diverse as tech, hot rods, and even Congressman Thomas Massie, expressed strong opinions on both the vehicle and the announcement. Some of the reports raved about the design and the way the Cybertruck was revealed. Others made fun of the truck and aspects of his demonstration. Watercooler debates about both the style and delivery quickly ensued in workplaces throughout the country.

Should Tesla have tailored the design and presentation to be more in line with traditional car show announcements?

The “Pilgrims” of Today

The “Pilgrims” of
Today

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This week, across the U.S., families and friends, young and old, will gather to celebrate the “most American” of holidays, Thanksgiving. The gatherings will most surely include traditional foods of the holiday while families enjoy their own tradition of sharing and gratitude. Thoughts may also drift to almost 400 years ago when in 1621 a determined group of 102 Pilgrims persevered to achieve a mission they believed in – an accomplishment that has had a positive impact for centuries. They met challenges from the very beginning during their two-month-long voyage on the Mayflower, and they struggled as the first Winter took the lives of half the population of settlers. These resolute individuals share many of the same characteristics as today’s newer business owners who are making sacrifices in their own lives, for a better tomorrow for themselves and their descendants. 

Dictionary.com has four definitions for the word “entrepreneur,” the first reads: “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.” It’s not a stretch to call the original settlers of Plymouth Massachusetts entrepreneurs.   Their grit, ingenuity, initiative, and even willingness to learn and rely on others more experienced in their environment, was certainly entrepreneurial.

The Mayflower colonists did not go by the moniker “Pilgrims,” that tag came 200 years after their landing at Plymouth Rock. Instead they referred to themselves as the “Saints”  to indicate their purity and feelings of being special or chosen. This feeling must have been a strong driver as they risked so much in a way that is extreme by any standard in modern America.

Today’s Pilgrims

The risk-takers today, at least those looking to sacrifice more than others for the dream of a better tomorrow, whether for themselves and their families, or for the world at large, are the business entrepreneurs. Especially in fields that are “uncharted territory.” Some examples are companies relying on developing technology, scientific breakthroughs, or mineral exploration. As with most “firsts” there are always unknowns, long lead times before any profit, and a shortage of capital. These are among reasons building a business today, particularly in a groundbreaking field with unproven outcome, is a path taken by very few. Those that do, and then survive and thrive, have embraced being nimble, building alliances, persistence, belief in themselves, and asking for help when needed. 

“All great and honorable actions are accompanied with great difficulties, and both must be enterprised and overcome with answerable courage.” 
William Bradford, Second Governor, Plymouth Colony

 

Flexibility

The Pilgrims initially went to Holland where they expected to be welcomed by people of different religions.  Their main reason for having left England was to worship without constraints. The Pilgrims made their home at first in Holland, but the more secular life they found there was not going to lead to a future that matched their vision. They wanted to build their own colony where they would attract others who believed as they did – even if it meant starting with close to nothing.  As entrepreneurs, they didn’t accept an undesirable outcome; they pivoted, changed their plans and redirected their effort, deciding to establish themselves and their future near Virginia’s Hudson River. While traveling, storms pushed them into Massachusetts where they decided to rethink their plan once again. They then revised their plan and decided to find an area close to where they landed that would be suitable for farming.

To begin the two-month trip across the Atlantic, the Pilgrims borrowed money that, at the time, was an astronomical amount. The loan from, English capitalists looking to profit off the venture, was for 1700 pounds. At the time, the average Englishman earned a tenth of a pound per day. As colonists they first worked collectively to pay back this loan. They later divided acreage to work individually at farming their own land.

Alliances

After the first brutal Winter, the Pilgrims, who raised money in a business arrangement to finance their journey, again opened themselves up to being helped. This time by native Americans. They learned how to best plant corn, where to fish, how to trap beaver and other furs.  This helped lead the pilgrims to an abundance just one year later and a profit their second year. Their debt was fully paid off in 23 years.

There are now over 10 million living Americans who are descendants of the Mayflower passengers. The undeniable traits of the entrepreneurs we now call Pilgrims have impacted the world. Entrepreneurs of today share the same traits and skills of those that came before; intention toward a dream, plan, persevere, adjust, negotiate, orchestrate help, and implement. The impact of entrepreneurs continues to shape the world and continue to have a positive impact on the future with their efforts.

Giving Thanks

Ideas have the ability to change the world. Those ideas  that improve lives and positively impact the world are on the list of things we can  be thankful for.

https://www.history.com/topics/colonial-america/mayflowerhttps://www.reference.com/history/did-pilgrims-holland-873ed8cabf62ca05

https://www.reference.com/history/did-pilgrims-holland-873ed8cabf62ca05

 

https://www.history.com/topics/colonial-america/mayflower

 

 

Author: Paul S. Hoffman

Research – Euroseas (ESEA) – 3Q2019 Results In Line. Another Acquisition Adds Scale

Tuesday, November 26, 2019

Euroseas Ltd. (ESEA)

3Q2019 Results In Line. Another Acquisition Adds Scale

Euroseas Ltd. provides ocean-going transportation services worldwide. The company owns and operates containerships that transport dry and refrigerated containerized cargoes, including manufactured products and perishables; and drybulk carriers that transport iron ore, coal, grains, bauxite, phosphate, and fertilizers. As of March 31, 2017, it had a fleet of seven containerships; and six drybulk carriers, including three Panamax drybulk carriers, one Handymax drybulk carrier, one Kamsarmax drybulk carrier, and one Ultramax drybulk carrier. The company was founded in 2005 and is based in Maroussi, Greece.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to full report for price target, fundamental analysis and rating.

3Q2019 results stabilized in challenging container market.  Adjusted EBITDA, excluding dry dock expenses, of $2.0 million was slightly below our estimate of $2.1 million, mainly due to higher opex, which more than offset higher revenue.

Fine-tuning 2019 EBITDA estimate to reflect quarterly results and acquisitions.  To incorporate quarterly results and acquisition timing, adjusted EBITDA estimate (excluding dry dock expenses) moves to $9.0 million, down from our previous estimate of $9.3 million, and…



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