It’s all about monetizing assets. EFSF has assets- their products are their assets. They don’t appear on the balance sheet, but they are there. If they want their stock to trade much better than it currently is, they have to monetize those assets- or at least make investors believe they are going to monetize those assets.
Current quarterly numbers came out yesterday morning, and there were no big surprises. Quarter over quarter, revenues were up very nicely over the same quarter one year ago, and the company is continuing to do a nice job managing its cash.
Between cash and receivables, they still have over $900k, and liabilities are less than $100k. Who ever heard of a public company with less than $100k in liabilities?
Also, top line revenues are growing nicely- albeit not fast enough for shareholders, but nevertheless at a healthy clip. The top line, thanks to Cinnergen sales, was up from $198k to $327k- an increase of 65%- S&P 500 companies never deliver this kind of growth.
My conclusion- I still see this company as a kind of option that won’t expire on some very good products. They have a good portfolio, and they need to figure out how to monetize that portfolio to benefit their shareholders.
I believe steps are being taken to move in that direction starting next year. If they line up the right sales force, it will be interesting to see if the market is willing to give the company the benefit of the doubt before the sales roll in, or if the market needs to see the numbers come.
I’m not trying to defend their snail’s pace to market, I’m just pointing out some of the positives. I get enough negative feedback on the company, so I’m looking at the other side.
Considering the anemic sales history vs what we were led to expect, the company could be in far worse shape than it is. They can manage slow progress very well.
I want to be around to see how they manage prosperity.
The chart remains about the same:
I still believe this stock is a screaming buy if it comes back and fills the gap you see circled at the left side of the chart. For that to happen, it would have to trade down to $.18.
It has tried to get back there, but doesn’t seem to want to trade below $.20. It might never do it.
The lack of sales is already priced into the stock. The detractors are vocal, and have gotten their message to the company.
I believe there is lots of upside when everyone is so negative. Tax selling may force this one to stay in this range or go down a little for the remainder of the year.
It’s an accumulation right now- a screaming buy- even for a trade, if you see $.18.
This company seems to have three major facets required for success; R&D, Marketing, and Production. The R&D seems sound (but diverse). Marketing and Production seem weak. I might further suspect marketing would be sound if production could deliver. That might explain some of the delays. What do we know about the production aspects of any of their products? How does that work? Does EFSF decide on production run quantity or do they produce based on distributor requests (i.e. Walmart)? Are all resupply requests being met (quantities and schedule)? Can you find out? Who is making Cinnergen? Who is making the Immune bar? Who will make Purr-Effect? Are all these production right agreements in place? A potential issue I see is that each product is so different that a custom manufacturing rights agreement is required for each individual effort. Is there any synergy here with production? Thanks for the inputs. Joe
Editor: I haven’t really focused on supply issues, as I simply assume the supply would be there if the demand surfaces. It would be interesting to look at the weakness from the supply point of view. I will contact someone and find out if there are indeed any supply issues, or if the disappointing sales are simply a function of lack of demand.
What do you think of this link for PurEffect and why is the company mum about it?
http://www.celebbrokers.com/recentevents.html
Thanks,
Al
Editor: I have no idea why. If this is true, the company should be making a lot of noise.
The Celbrity Brokers URL is a pitch page…don’t make too much of it, they are selling the “star” not the product. There is a very high risk:reward ratio in the direct response TV (DRTV) infomercial business. In my view EFSF touted it too early and it became too much of a focus. Taking into consideration when the deal was first inked, CK41 has taken a long-long-long time to develop the creative approach, script, shoot and edit. CK41 reportedly has it now scheduled into the first quarter which is prime time for this DRTV stuff…EFSF is wise to be quiet about it until it has tested out and it either delivers, or it dies, or it falls in a marginal grey area. If it doee anythign but die, they will need to use that $900K wisely to manage expensive media buys and production and fulfillment. Wasn’t Cinnergen a DRTV bust and they moved it to retail?
Editor: I believe you share some really good observations. I don’t know about Cinnergen- I’ve been following the company since last January, so maybe that was before my time. Risky- definately. I don’t know that much about “infomercial” type products, but it seems there have been some huge wins, and I’m sure there are plenty of losers. I believe this is the only competing product to PurEffect- so perhaps it will catch on easily, or perhaps it will be a bust. I’m just looking for one big win in their whole portfolio.
Well the gap was filled now what? Do we go back up or do we just sit and wait. You said it was a great buy here.
Editor: Yes- see last night’s BLOG- I cover that very question.
crashing crashing crashing down.
EFSF – R.I.P.
Editor: Hopefully not. If you read the BLOG, you know I forecasted this level was a distinct possibility. I don’t know what’s going to happen from here. I know I’m thinking of buying, now that it has completed its one year round trip. Read last night’s blog, which came after this comment.
Why didn’t you post my comments or respond?
Editor: Not sure which comment you are referring to. I usually go through them every morning.