eFood- Rumors Of Their Death Have Been Greatly Exaggerated

eFood’s quarterly numbers came out yesterday, and I had a chance to review the 10Q filing this morning.

The company didn’t mention the revenue number in its press release, which I believe was simply absurd. Instead, it focused on the achievement of generating $5,400 in cash flow profits- which is certainly a step in the right direction.

Here’s how they arrive at that number- they take the loss of $500k, subtract off the loss the $505k in non cash expenses they booked, and come up with $5.4k more in cash than when they started the quarter.

Here’s what they didn’t bother to cover in the press release- revenues- revenues went from $321k this quarter in ’07 to $292k this quarter in ’08- a 10% drop in revenues.

So, where do all these non cash expenses come from, and how do they pay for them? Here’s where I was very pleasantly surprised-consulting expenses $552k- based on history, one would expect the company was handing out many millions of shares to whomever they pay to generate that expense. Not the case.

In fact, the number of shares I&O was 193 million- the shares I&O at the end of the last quarter- 192 million shares. This represents about .005% dliution- one half of one percent.

Therefore, over the past 3 months there was nearly zero dillution- that’s the first time this has happened in many quarters.

At the end of the quarter, the company still had about $1.76 million in cash and cash equivalents. Pretty darn good in light of the revenue number.

I must admit, I was very pleasantly surprised to see the number of shares I&O remain static. This bodes very well for the possibility of price appreciation when buyers come back to the market. They must have a big expense related to shares issuance that they are amortizing over a longer period of time.

From here on the big issue is revenues- can they drive increasing revenues from either their DR campaign, which has been revamped- or the wild card of PurEffect finally going to market in a major way?

I know many of you like to see a chart- and here it is:

Here’s a look at the last year of price performance. As you can see, it’s a mess, and trading at new all time lows.

For those of you who have chosen to hang in there, the company is still around, and still has a shot at getting that top line moving. They simply have to execute.

Just to clarify- I am not suggesting you need to buy the stock today. If you are still holding the stock, you are far from dead. The company is managing its cash very well. I would suggest buying the stock when that top line gets moving to the upside.
Stay tuned for more in this adventure.

Comments and questions are welcome.

34 thoughts on “eFood- Rumors Of Their Death Have Been Greatly Exaggerated

  1. When is Pureffect going to launch?

    Editor: I don’t know. I know they finally have a web site up, and people are taking that as a positive.

  2. So when do you think the top line will start moving? Some time in the last quarter or in the first? Thanks for your advice. Verland

    Editor: In this case, I am reactive, not proactive. This means I won’t believe the top line is improving until it’s improving. There have been too many delays, promises, and failures. So, I won’t predict it. However, I will say I am optimistic and hopeful they can make it happen.

  3. Yes, it was nice to see that they at least did not lose money. It will be nicer if they can get some momentum behind their small profit and keep it increasing, no easy task in the current economic environment.

    Editor: There won’t be any momentum until that top line starts moving up. You can say they are doing a good job managing their cash, but that’s about it.

  4. In case you haven’t seen this, I just copied it from FoxNews: NEW YORK DEVELOPING: New York attorney general announces investigation into short-selling of stocks of Wall Street firms.

    Editor: Interesting stuff. I wouldn’t be surprised if they get to the bottom of some rumor mills designed to spread inaccurate impressions. For me, I am quite excited the SEC if finally going to start enforcing the rules that have been on the books since the 30′s. A major step in the right direction.

  5. What are the chances of a PurEffect Launch NOT happening. Is it likely that they will NOT launch? Also, what is the worst case timeframe, if you had to guess…just take a swag at it..on Oraphyte coming to market in any form whatsoever.

    Thanks!

    Editor: Based on history, I would say the chances of Pureffect not happening are quite real. I was told they were in production on the infomercials in March of 2006, and there still hasn’t been a single airing. Oraphyte- the company is still sticking to the end of the year as a timetable for some progress.

  6. Can you check to see if the company will give us an update on the progress of the development and marketing of their various products? We have not heard of NumaDerm, Proxmorin, Citroxin, Oraphyte, etc. Also, can we get some radio stations and air times of the Cinnechol Radio Show? One observation on the radio show … it seems possible to create a radio show that highlights the health risks of high cholesterol, the drugs that have failed to treat it and the natural solution for it but would’nt the company get even more bang for the buck if they make a more general health radio show and present more of their products in various segments of the show? Just my two cents. They don’t have to stop what they are doing now and go back into the development of a new show but evolve the show to start including more EFSF products. Can you ask them to put me on the board?

    Editor: I’ll send on your comments and requests. It would be interesting to be in those board meetings. I suspect we’ll start hearing about some of these things soon.

  7. Thanks for posting my previous comments. Just another thought … EFSF should open up more to its shareholders for suggestions. Heck … they are only a few people but the shareholder base is many times greater and I imagine many of them have some business experience that would be useful. It is somewhat like the concept of wikinomics. Many companies have opened up their projects / challenges to the masses and have come up with very unique and effective solutions. In other words, they are not alone … there are many other EFSF owners out here. I, for one, am feeling a bit neglected …

    Editor: In the past, they have taken all sorts of steps to get out more information. I think they are reluctant to really open up as when they do, they set expectations, and they have not been able to deliver. Pureffect is a perfect example-they have had egg all over their face from that one. I think from here forward they will only share facts. However, your point is well taken.

  8. Hi,

    They seem to have a pretty good balance sheet…Over 3 Million in cash and no debt.

    Thats a lot better then most well know banks these days…hang in there…no reason this company won’t “Fly”…IMHO.

    Peace!
    Dan

    Editor: About $1.2 million in cash. The good news is their cash level is staying strong quarter over quarter. Now they have to get sales to go up. Then, the stock will go up. The cash just makes it a little less risky.

  9. Expenses are expenses. $500K negative net.

    Editor: not true. There a definitely different kinds of expenses. Paying cash for SG&A – just normal expenses- that is money out the door. When you have non cash expenses for depreciation, that’s a different kind of expense and clearly not as tough on the company. It’s accounting, not cash flow. Cash flow is the most important factor. In the case of EFSF, the shareholders are paying for the losses through dilution- more shares issued which makes your percentage of ownership go down. Based on the last quarterly numbers, they can be around for a long time, but they are still losing a lot of money on paper- just not losing cash. They are positioned to survive, but they need to sell more product.

  10. “Editor: Based on history, I would say the chances of Pureffect not happening are quite real.”Wow that is some statement from you.Being that said why do you think it will not happen. (1)do you think they should pull it from CK41 and let some other Co go with it.(2) Do you think the product is not good?(3) do you think it is to late to release the product or does it still have a chance with the statements that was made from EFSF and the one on the ck41 site? Do you think they are not telling us the truth?
    They say it is coming very soon .
    PurEffect ck41

    We expect to fully launch this product by within the Fourth Quarter, 2008. Please click here to visit http://www.pureffect.com.

    Thanks I wait for your opinion.

    Editor: I think you are misinterpreting my musing. People are asking me when PurEffect will launch. First of all, the company doesn’t tell me what’s going on day to day. Secondly, I am only making the comment based on history. I cannot assure anyone Pureffect will ever launch, as I don’t know for sure. Here’s the history- when I first looked at the company in December of 2006, the Pureffect informercials were supposedly “in production”. Since then, there have been numerous claims it would start up, including a claim it would get going this September. September is nearing a close, and we still haven’t heard anything concrete. Therefore, based on history, I cannot assure anyone Pureffect will ever be marketed. I believe it eventually will. I know the infomercials have been filmed, and the talent was paid. Why make the investment unless you intended to move forward? Can I make any promises?- no, it’s not in my control. Do I think it’s likely to happen? yes.

  11. I don’t know whats going to happen with this stock but I am long term. Now to the question this guy Lewis is your best supporter on this site and bashs your picks on other sites does he work for you bcause the perception is he does

    Editor: No, he does not work for me. I have swapped messages with him. He likes the OTC Journal, because he has made money here. However, he makes money because he is a very disciplined investor. He buys into volume, and sells when it starts going the other way. He has participated in some big wins because of that. The whiners are the people who have hung in long term and are now in deep loss positions. I’ve been doing this for a long time. I know when I get hot again, it will all change, and it will happen eventually.

  12. Pockets of large blocks here and there are going by lately. At the very least, seems like there’s some accumulation going on at these prices. Stands to reason, all the delays notwithstanding, Pureffect IS going to launch. It’s just the matter of when. Upon launch, there SHOULD be some price appreciation – even if it’s just 3 to 5 cents. Agree? I think the public, at this point, needs to see that Pureffect is a legitimate product in the company’s stable.

    Editor: I believe there will be price appreciation when the investors perceive that top revenue line will start moving to the upside. If it’s Pureffect that creates that perception, fine with me. If it’s something else, great. Not as risky as some might assume since they are doing such a great job preserving their cash, and there’s been no dilution in the last 4 months.

  13. This stock is really tanking today. Other than the lack of increased sales, do you know of anything about the company that would cause such a drop in PPS or is it just going down with the market in general?

    Editor: Sellers and no buyers. The real problem is no buyers. There are no buyers for anything right now. Could actually be starting to get to be a buy considering how well they are doing managing their cash, which is the best one could hope for.

  14. What is the situation with the company appraising you of things? Their track record – seemingly from your comments – is horrible in terms of keeping you in the loop. Are they continuing to be secretive and cut you out of any news and/or developments?

    Editor: I get an update about once a month with what they are working towards. They don’t seem to have much useful information. In August, it was suggested to me they planned a relaunch of the DR campaign, but I didn’t know it would be targeted mainly at radio. No update on the effectiveness of the campaign has been forthcoming. It was suggested the PurEffect campaign would launch by now- not happened to my knowledge, and another month has passed. I suspect anything that need financing from outside sources is not going to happen in the short term. There is no money available for anything. Therefore, I’m not big on sharing updates from this company- just actual progress. I like the way they are managing their cash and they haven’t been issuing any more shares. All it does is give shareholders a chance when and if they get the top line going north.

  15. …also, SURELY you must have some sense when, roughly, pureffect will be launching?

    Editor: I suspect that if they require funding, they are having a rough time. Money is very tough to come by. That would probably explain the delay, but I don’t know that to be a fact.

  16. What’s your take on Oraphyte – and the possibility of the company surprising us with a licensing agreement by year end? also, are they still testing it with universities, or are they looking for parters/buyers now? Would these be separate transactions, or an all in one newsbyte: i.e. “tests all proved 100% positive, and we’ve struck up a deal with Dupont…”

    ?

    Editor: I only know it is still being evaluated by Universities and the company is optimistic for getting a licensee by year’s end. If that were to happen, it would make things interesting.

  17. To give some hope to their investors, they should make comment on the FINAL results of university and DuPont testing of Oraphyte. BTW whatever happened to the USDA report on Oraphyte?

    Editor: They have publicly disclosed the testing won’t be done until towards the end of the year at the four involved Universities.

  18. its hard for me to believe this stock is so weak, do you the dreaded reverse split coming?

    Editor: Do I dread it? I guess not. It seems like this stock and the whole market are just an absolute mess. I guess they could recapitalize and start the dilution game all over. I have mostly seen moves like that with companies that had nothing but a story. This one still has the story, but also has some cash, and their cash levels are not dropping. It could go either way. However, if you think there’s no downside from these levels, that would be wrong. There is.

  19. Time to concede – this is over. Just another one of a million penny stocks that fall into anonymity due to mismanagement and poor leadership. Patricia Ross Gruden should feel like a complete failure – because that is what EFSF has become. You can tell her I said so too if you’d like.

    Editor: I would certainly agree with you on the “growth” side. All their efforts have failed. On the cash management side, I don’t agree. As of the last report, they have cash and aren’t burning it, so they still have a chance. I don’t know how good the chances are in this environment, but they still have a chance.

  20. Where’s the news?? It’s time for SOME kind of update from this so-called company.

    Editor: Tell me about it. I’ve asked. Here’s what I’ll say. No news, and no updates probably mean not much has changed. The company is protecting its cash and taking its burn rate down to about nothing. I don’t know if anything they are doing is helping to increase sales, but since they’ve been very quiet, I doubt you are going to see much change. Perhaps that’s a good thing in this environment.

  21. What ever happened to your interview with Ck41? Did you ever try to set one up? From their site they are saying they are ready to launch Pureffect.

    Editor: No information on that product has been forthcoming from the company. I don’t know where they stand. My guess would be it’s completely on hold- I know they have produced the content, but never launched the product. I would guess they needed to raise money to finance the campaign, but in light of the environment, don’t have the resources. That’s just a guess- I don’t have any facts to back it up- it just makes sense in the current environment. If I hear anything factual, I will share it.

  22. This is getting so bad, the latest theory on the Yahoo! boards are folks discussing if the EFSF shareholders have any grounds to file a law suit against PG and EFSF. A silly notion, perhaps, but nevertheless, one that indicates how enraged the shareholders are at the lack of communication and follow-through. I wonder how EFSF would react to the knowledge that this sort of discussion is transpiring? Idiots.

    Editor: The idea of a lawsuit seems pretty silly to me. Class action law suits are always instituted by predator law firms who put up the cost of the suit, and the keep about 40% of the proceeds. EFSF simply doesn’t have enough to be worth getting for any law firm. I’ve never seen anything like that instituted by shareholders who put up the money themselves. I agree, there should be some form of communication from the company, but I can’t make them do anything.

  23. Hello…helloooo….hello……..????? Anyone home at this company? Any coverage? Anything????

    Editor: I can only cover what the company publicly discloses, which has been nothing of late.

  24. I received a correspondence from Bill McPhillips (a representative from CK41 Direct) alleging that the company is still pushing to launch Pureffect some time during this Q. Thoughts? Insights?

    Editor: I have no information to confirm that, but it would be great if they do. My guess is it was a question of capital on CK41s part.

  25. Is this more likely a screaming buy right now or dead money for the rest of eternity?

    Editor: Tough question. I don’t know. I’m sure something positive will happen to put some life back into it sooner or later. So, my guess is it’s going to have another life of some sort.

  26. When does your coverage of EFSF end?

    Second question: When was the last time you exchanged any kind of correspondence from EFSF? (Email, phone, fax, morse code, or otherwise).

    Editor: It ends when I want it to. As I have stated, I need to know how they are going to generate $10 million in annual revs by the end of this year, or I’ll simply move on.

  27. Once again, When was the last time you exchanged any kind of correspondence from EFSF? (Email, phone, fax, morse code, or otherwise).

    Editor: About a month ago I had some correspondence with an affiliate of the company. I really learned nothing about what they are currently doing. It might as well have been in morse code. I am not getting any useful information to get any sort of feel for what they are trying to achieve now.

  28. larry lewis or whatever your name is why don’t you be honest and tell that guy the company cut you off and you have no info. call the company and they will comfirm are any of your pick above your ssl?

    Editor: First of all, none of the stocks I cover are above their SSLs. That’s a pretty stupid question, as they are published for all to see. If you owned any stock in 2008 with the exception of WalMart, and you set a stop loss, you should be out. I have repeatedly said this, and if you don’t get it you are simply an idiot. This is the worst bear market in history, so there’s little point in rehashing low stock prices. As I have said, I am only recommending two stocks right now, and only for people with a six month time horizon. As far as the Lewis comment goes, he likes me because he has been smart enough to actually make money on my ideas by being smart enough to sell when the stocks were up and liquid, which clearly you were not. As far as EFSF goes- you are quite right. They do not communicate, but I don’t take it personally. They aren’t communicating with anybody, probably because they have nothing to say right now.

  29. ANONYMOUS:

    Undoubtedly you are anonymous because you display the IQ of a box of rocks. Your questions alone reveal your overwhelmingly desperate need to place blame elsewhere and not on your un-named self. My name is Lewis Berry and I noticed a direct correlation between an ID on yahoo finance’s efsf and cgyv boards and your posts here. You even use the same language. Now, I suggest you focus on your decreasing negative net worth and less on who is making money while you’re not. On the efsf board, in June of ’07, on the run from .26 to .36, I told you to sell at 35 cents when I departed the stock. While shouldn’t listen to flakes like me on message boards, you ignored that and you ignored Mr. Isen’s stop losses and now you have your wee wee in your hand and your shirt on someone else’s back. I guess I’m saying that you might as well just buy GE right now at 15 bucks and thank me later for being kind to you while you are being unkind to everyone else around you.

    Does efoodsafety’s PurEffect relationship with CK41 strike you as expendible in this environment? I mean, could they actually terminate that agreement? Thanks.

    Editor: I’m not sure I really care about these postings. The numbers are the numbers, and no postings change that. The companies are going to do what they do, no matter whether people post good or bad stuff. EFSF, based on their public disclosure, is doing nothing about growth that I can determine. They have been great at preserving their cash, which might not be a bad idea in this environment considering where consumer spending is at. CGYV is growing like crazy, and no post can change that.

  30. In short…what the hell’s going on here????

    Editor: Not sure what you mean? Nothing has changed in the last few days that I know of. They have cash, and we have complete silence from the company in terms of what they are doing. Great portfolio of products, but haven’t proved they have come up with a formula to get them sold. Stock way down, but they’ve been great at conserving their cash. That’s as much as I know.

  31. Heavy volume today. Anything in particular causing that?

    Editor: Nothing I know of explains the volume. Perhaps it’s a good sign we are finally going to get some movement out of this company on the business model side.

  32. We’re now into December and still nothing but silence from this company. Maybe they will actually have something to announce about Oraphyte soon, but the silence is deafening. So far, they haven’t been successful at marketing a single product.

    Editor: Absolutely correct, and priced into the stock.

  33. What do you make of the higher volume of late? Tax selling or accumulation?

    Editor: I think everyone who wanted to sell has done so, and the stock might be able to trade up nicely if the company gives investors any reason to buy the stock. I don’t see higher volume- maybe a blip or two.