EFSF released fiscal Q3 numbers today, and there really isn’t anything but positives in the numbers. I looked, but I can’t find much of anything negative to say.
In fact, the balance sheet improvements are quite remarkable. For a pretty small company only doing about $1 million in annual sales, the balance sheet is great.
As of the end of January, EFSF had no debt, $1.13 million in cash, 428K in receivables, and $1.6 million in prepaid expenses. Guess what the prepaid expenses are? Advertising media buys for the coming campaigns.
On the minus side, you have $100k in payables- big deal. This balance sheet has improved by leaps and bounds in the past year.
There is one minor negative I could find- Shares I&O increased to 180 million from 165 last quarter. This is the price of not being profitable, and raising $1 million in cash. Note the big expense on the income statement for consulting- most of the share increases are built into that number.
On the revenue side – the percentage increases are great, but the top line number is still too low- only $310k for the quarter, which was more than 3 times the same quarter one year ago. Not enough, but the big media campaigns are about to start.
As you can see from the chart, the headlines are driving small stocks down, and EFSF is not immune.
The stock tried to break out above that downtrend line, but couldn’t hold. Might be a great mulligan for those who didn’t participate when it traded up in the past two weeks.
This company is perfectly positioned to launch these Direct Marketing campaigns. It’s starting by the end of the month. If it works, and the market starts behaving better, this one could really pay off from these levels.
These numbers are ok, certainly not earth shattering. While everyone knew there was no reason to believe there would be blow-out numbers or this quarter, I feel like there was still a cautiously optimistic sentiment that the numbers might surprise on the upside just a tad. Say, a nice 500K for the quarter.
Question is, with no such pleasant surprise occurring, are we going to be beaten back down to 16-17 cents, or is this factored in at this point? Thoughts?
Editor: The top line number is completely factored in without doubt. The company has been focusing all its market resources on the coming direct ad campaigns, which kick up in very short order. If you were looking for an eye opener, it was definitely the balance sheet. It’s in really extraordinary shape relative to where it could be. Let’s hope we are talking extraordinary on the top line from the next report.
Agreed, things look hopeful. Can’t wait to see the numbers in about two more quarters.
Editor: The company is perfectly positioned- now, we just have to keep our fingers crossed on the direct marketing campaigns. They are in great shape going into them.
Tanking. Again. No one cares. No one’s impressed. Losing faith once again.
Editor: Perhaps no one will respond until the numbers start to roll in from the direct marketing campaign. I will report the facts as they come out. If investors want to act out in front of the event, there will be taking more risk, and they will get more reward if they are right. If they are wrong, they will lose money. I think the pullback in the stock is more related to what I call the “whew” factor- the stock starts to rebound, people who wish they had sold before it went down say “whew”, and get out- especially in this kind of market where investors are being bombarded with negative headlines every day. Very often, the forces that started the stock back up will reassert themselves, and the folks who sold on the anemic rebound will wish they stayed in. It’s all predicated on the campaign. I would focus on that more than the stock price.
With all the behind the curtain great things going on with EFSF you would think it would be above .25 not down to .17. 1)What is your take on what is going wrong here? 2)Also can you find out what in the world is going on with pureffect is it a bust or a go?3)You also said you might have some time slots for the new Cinnergen commercials do you have them yet?4)What happened at the trade show? 5)Did you ever get a update on the Bird flu conference? See if you can clear things up for us confused and abused long term shareholders. Thank you
Editor: That’s a lot of questions. I’m not surprised to see the stock back down thanks to what I call the “Whew” factor. People that have been sitting in this stock for a while went “whew” and sold it on the rather anemic rebound. The forces that started the stock up could reassert themselves. Since the company could be turning an important corner, those folks might end up wishing they had hung in there. When a stock that has done poorly for a long time starts a rebound phase, it might take several tries to get through resistance. As far as Pureffect- the company won’t say a word as they don’t want to end up with egg on their face again. They will let everyone know when there is a firm launch date, which might be a little closer at hand than people realize. The commercial time slots will come out soon. I have nothing on the Bird Flu conference as I really don’t care that much about it. If direct marketing campaign is all I care about for the next 3 months- I want to see numbers- as I have been saying, this becomes a whole different story if $10 million in revs materializes- that would end dilution and allow for some cash flow to develop the “wild card” products. That’s what I’m really concerned about.
Since you seem to have access to the company. I found it very interesting that not only did they flood the dilution with common stock, but they now have preferred stock also. I have never seen a company issue a new type of stock without any type of press release or possible filing if it is material. Do you know what the terms of the 10k shares of preferred stock that were issued?
Editor: I didn’t catch the issuance of the preferred stock, so I don’t really know anything about it. However, as a general comment, I would say dilution is what happens when you don’t make enough money to fuel your expansion, and you have to finance small losses. As a shareholder, we can only hope the numbers out of the coming direct marketing program will generate lots of positive cash flow. To their credit, cash wise they are well financed going into this program. However, it needs to work. I did read they raised $1 million in cash, but there wasn’t an 8K filing, meaning they did not think it was a material change.
I noticed in the 10QSB that the company sold 10,000 shares of Preferred Stock for 500,000. Do you know who purchased those shares? From what I’ve heard from several people, thats not a good sign. It would seem that they had to put up part of the company or intellectual property for that money, before whoever it was that loaned it, would loan it to them.
Editor: No- I noted they raised $1 million, but don’t know who made the investment. I don’t know why you believe they would have to pledge some asset- it’s probably just an equity investment with a conversion feature. It’s a pretty small amount of money, but does represent more dilution.
What’s your take on the high volume today (3/24/08)? Do you know of any big sellers that are dumping at this level? With the marketing campaign just around the corner you would think that we would start to see some positive price movement especially with the strong overall market today.
Editor: I am moderately encouraged by the action in the stock over the last couple of days. It seems to be finding a bid. I’m pretty sure things will change for the better with the company. Hard to tell with the market in the short term. Tough microcap environment.
Editor.
I traded EFSF online with Ameritrade about a year or so. My position is higher than current price but I am confident i would be OK. Yesterday when I tried to purchase more, ameritrade nofitied me that i had to call a broker to place the order. I called today they told me they put a special treatment on purchase, and not on selling. That means i have to call a broker to buy EFSF, but still can sell this stock online.
This is first time i am in this situation. I would like your comments on that. does it mean it is very hard for institutions to push up the price?
Editor: That’s the first time I’ve ever heard of anything like that. I will look into it and see what I can find out.
Ameritrade is not doing this only on the buy side it is for anyone opening a new position. Short or long. The stock has been pushed down for no reason by some sneaky bastards. When this stock starts to run on the upside the shorts will be screaming for shares.
Editor: I’m going to see what I can find out about this. Very interesting. Perhaps this stock is being shorted.
it is no longer a problem at Amertrade to open a postion it has been corrected.Let the shorts burn now.
Editor: Very interesting- why the heck would something like that happen?
Did responds 2 get any feed back from the ads on A&E and the weather channel did anybody see them? The amout of time it has taken to do this thing they could have made a movie
Editor: I am told the commercials start airing on a regular basis on March 31- that’s Monday. We’ll see what kind of disclosure the company offers on where, when, and how many.
Did any commercials air today on the 31st?I see the new Cinnechol site is up and running. this is a good sign but the stock just goes no where.WHY?
Editor: I don’t know what networks and what times. I’m sure the company will provide some information during the course of this week.
Do you do any promoting for EFSF anymore and if you do what kind do you do? Do you feel this Co is heading in the right direction now? I do but I see the stock price is still heading in the wrong direction. Why do you think that is?The market looks better but still EFSf can’t move up.
Editor: I cover the stock as part of my normal course of business. I have provided a lot of information about the direct marketing campaign- in great detail including a public interview with the CEO of the company who is creating the campaign. Now, it’s just a question of the program working. I have often said there is nothing wrong with this company that $10 million in sales won’t fix. Perhaps the market simply wants to wait and see if it works. After all, the first commercials ran yesterday. Perhaps the current Bear Market has curtailed investor appetite for these kinds of risky issues. If it works, sooner or later the stock will work its way higher.
Horribly disappointing action today – the day they confirm they’re on target for the two product launches. Nothing, it seems, will move this stock, outside of good numbers. And I think we’re still 2 quarters away from that. IF it evens happens. I vehemently disagree with the notion that “This is the time to get in”. I think people who want to invest in this so-called company have MONTHS. Unless there’s something imminent that I’m missing. Very, very frustrated long time shareholder here.
Editor: I don’t know why you expect that one day of commercials is going to miraculously turn the stock up. Clearly, investors have an appetite to avoid risk in the current market environment. This is a high risk situation. Everybody has known for a long time this was starting. It’s the right move for the company. It is my sense the market wants some idea it is working, and the market’s current aversion to risk is definitely hurting this particular stock. It looks to me like the market overall will start to improve, and investors soon be willing to take more risk. I didn’t believe this would be an overnight fix, and there were no surprises here. I can’t tell you to continue to hold the stock- that is your choice. However, if this works, eventually this one should work higher. I know it’s a move they had to make, and was probably long overdue.
its friday any feedback on the new ads? Any word on when they showed I didnt see any did you?
Editor: I haven’t been trying to find them as I don’t have the time right now. I have requested a schedule from the company we can publish so everyone can know when to view them.
Larry: This is not something I’m looking for you to comment on as much as I’m looking for comments from your other readers. I’ve written to EFSF’s investor relations people twice (nice, non accusatory emails ) in the past three weeks and have not received a reply either time. It’s like my emails are going into a black hole. I’m wondering if anyone else has had better luck? If the IR people aren’t going to do anything, there’s no sense in the company paying them.
Editor: Since I am not the company’s IR representative, I can’t comment on why that might be. However, I can say that is inexcusable. Shareholder communication is extremely important. Will forward on your comment. I have been asking for a schedule of commercials so we all can catch them.
another comment for readers has anyone seen any of the commercials?
Editor: I’ve been asking for a schedule.
To Irv T – unfortunately, this company has built a reputation on never returning calls or emails from investors. In fact, most shareholders will tell you, try as they might, they don’t even get anyone to pick up the phone. Reprehensible IR practices!
Editor: Seems like such an easy thing to do.
You know what really bothers me? You mention you’ve been asking for a schedule. Well, first, shouldn’t they be furnishing that to you (and everyone) anyway, unsolicited?? Seems like the professional and intelligent thing to do – give people a chance to follow along with the company’s initiatives (and hopefully, with their success).
But not ONLY do they not do that, even when you ASK for it, they delay giving it to you?
It’s almost like they’re going out of their way to be unresponsive, incompetent and shoot themselves in the foot.
Sorry to be blunt, but are they just complete IDIOTS??
Editor: This company wants to provide the information, but it may be a case of the way they are doing the media buys not putting them in a position to provide them. As you know, I share everything I can find out, and will do so when I find it out.
To what do you attribute the million shares of trading today (Tues) if you had to hazard a guess?
Editor: I luv it- I hadn’t noticed. Nice move. Cinnechol is now out, so perhaps the market liked it.
Where did the $0.04 push today come from?
Editor: Don’t know- but I like it. Nice to see a little rebound.
You know Larry you yourself need to clean up your act. What have you done for us lately. All you picks look to be on the lows of the year. Get a grip and put out some winners.EFSF will be fine without you. You are just a seller and not a buyer.
Editor: What have a I done for you lately? How about RIMM, LEH, SPY, GS, TWX, QQQQ- all short term trades in the last month, and all winners (the jury is still out on RIMM)- What a stupid comment. If you don’t realize that I am providing money making ideas in an environment when the micros are doing poorly, you’re just not paying attention. Check the Short Term trades in the BLOG- all winners. Smart investors, not the whiners, are paying attention. When micros get hot again, you will make money there. In the meantime, keep whining and not watching. It’s costing you a lot of money, but I’m making it by doing these trades.
Did you sell some stock recently?
Editor: I sell a very small amount every now and then because I need the money to run the company. However, I am still holding well in excess of 90% of my position.
Can we expect any new “state of the nation” blogs on the company anytime soon?
Editor: As related to EFSF? I would like to be able to publish some content on how the new direct marketing campaign is going, but I can’t publish until provided. I’d also like a schedule of when and where the commercials can be seen, but it has not been forthcoming.
Oraphyte. Come on EFSF – how about SOME kind of mention. Just an “testing is progressing” type of message. I don’t understand what they have to gain by keeping investors in the dark like this. Even with no news, an occasional “we’re still on track” type of mention is just good IR. Thoughts?
Editor: I only know they are working to accumulate more data at the university level. Hopefully, there will be some new information on it soon.
rimm leh spy twx QQQQ all winners that a stupid comment.people that read your blogs have there money in the lossing picks of the last year the ones you get paid for not the last month. why don’t you just answer the question
Editor: Here’s your answer. Go elsewhere. This is not for you. There are plenty of other places on the internet to get ideas. Go find someone else much smarter than me. It shouldn’t be too hard.
Brutal. One day later, stock gives 100% of the gain right back. Is this manipulation or what? Something doesn’t seem on the up and up. Seriously.
Editor: Clearly, when the stock pokes its nose up, there are sellers. Eventually, if we keep seeing volume surges, the sellers will become exhausted, and the gains will hold. I have no idea how long it will take or what kinds of volumes we will need to see, but that seems to be the pattern today.
Just want to say that I’m happy to see the stock trying to move up. The company could help with some good news, if there is some.
Editor: Assuming you are referring to EFSF- agreed- I am hoping when we have schedules and the commercials are easily viewable and sales are flowing in, we will see a more robust market for the stock. All we need is a little more volume to eat through excess supplies and impatient money, and we will get there.