The disappointment and debate continues to rage about eFoodSafety. I get more commentary and comments about this company than any other that I cover.
I hadn’t had an opportunity to comment on this week’s news concerning the PurEffect product launch by CK41.
In case you need a refresher, here’s the story. Over a year ago, EFSF entered into a licensing arrangement with new kid on the block CK41. CK41 is newly formed company in the business of marketing products through infomercials. The company is run by a bunch of ex-Gunthy Renker folks, so they are battle tested and proven.
PurEffect is EFSF’s answer to Proactive- the product sold by informercial with celebrity endorsements used to treat acne. Their #1 spokesperson is Jessica Simpson. They have no real competition in this field.
EFSF has entered into an arrangement with CK41 wherein they provide the product, CK41 provides the whole marketing campaign, and profits are split.
Both EFSF and its shareholders expected CK41 to commence a marketing campaign a full year ago. It’s launch has been indefinitely delayed, and the delays are finally drawing to a close.
This past Tuesday, EFSF announced CK41 has finally committed to a marketing campaign launch date. According to the press release, marketing will begin in July in the form of “a multi level internet campaign” as Phase I.
Phase II will include 1 and 2 minute commercials, and 30 minute infomercials. The press release does not specify when Phase II will begin other that to state after Phase I.
Investors are pretty much sick to death of waiting for this program to get going, but now at least there is a firm commitment and date to get the whole thing rolling.
I was encouraged that they have finally committed to rolling out the campaign. CK41 has already spent a lot of money on video production including paying a number of celebrity endorsers for their time, and it seems like they really have to go forward sooner or later. However, I was disappointed that they left the timetable for “Phase II” open ended. I suspect they feel it’s not worth buying all that media in the slow summer months, and will really kick it up in September. Let’s hope that’s the plan.
Here’s my big picture view on EFSF. I believe investors have been waiting for EFSF to deliver a blockbuster product that gets a huge retail reception and delivers $100 million in top line revs with big margins.
I would love to see that happen. In my view, the more likely scenario throughout the remainder of this year will be a smaller contribution from a lot of different fronts.
If the current marketing plans yields a few million in sales for Cinnergen and Cinnechol, and PureEffect gets rolling with $3 to $5 million this year, by year’s end you have a company delivering $10 million in annual revs and a reasonable bottom line.
The company’s Q2 will be important in my view. Their fiscal Q2 is August, Sept, and October.
I believe the company needs to generate $2 to $2.5 million in that time frame. If they can’t achieve these kinds of numbers it will be time to consider moving on and abandoning the idea. However, between all the products in various phases of commercial release, this sales level should be achievable.
If it is achieved, the stock is probably a double from current levels with additional potential out in front.
I could show you the chart, but it’s pretty much the same look for sometime now. It trades between $.15 and $.20, and holds within that range.
If it trades much below $.15 to $.155, it might be time to look at capital preservation and get out. This train is not high speed yet, but appears to be slowly gathering momentum. I just hope the stock can follow suit and some point in the near future.
Comments and questions are welcome.
Once again you were straight forward and it helps me in my future trade. I read the PR just as you stated.
ot: I will say one thing about the EFSF Yahoo message board for EFSF. They are the most loyal investors I have ever seen.
Reminds me of S.C. Gamecock fans. 109 years of mediocrity and we fill the football stadium.
Editor: You have to have faith. Faith is defined as belief in the absence of data. Spurrier has gotten it done before, so have a little faith. Think about Red Sox fans- I believe it was 108 years. I live in Southern Cal- I have to hear from all these darn USC fans- they make me ill. I went to Colorado, and will be a Buffs fans no matter how bad the season. No matter what happens, there’s always next year.
You say you use Cinnergen everyday. Where do you buy it from or do they give it to you free?Do you have a sugar problem and if you do what has it done for you?I used the immune bar and dint get sick all winter have you tried those?What do you think it will take to turn this stock price around. You would think with all the goods news it should start to make a reverse to the upside. Is there any toxic funding going on?
Editor: Yes- I use Cinnergen every day as it helps me metabolize carbs better and keep my weight down. I don’t have a sugar or glucose problem, but I do love simple carbs like sugar, and I love breads. My body just deals with them a little better by drinking a capful first thing in the AM. I will also drink an occassional cap full if I’ve eaten something with a lot of sugar. I have tried all the Immune bars. I think it’s a great product, but a little high in calories for me to eat regularly. I love the flavor profiles. I think the market’s perception of significant increases in sales is what it is going to take to get the stock going. There is no toxic financing going on I am aware of. On their last financial statement, it seemed like they had enough cash to get the DR campaign really rolling. FYI- I ordered my last batch of Cinnergen from the web site like everyone else. http://www.cinnergendirect.com.
As this stock continues to drift down on no positive news, have you given up on this stock, and sold your position?
Editor:I sell a little bit of my position in EFSF once or twice during the course of a week. It doesn’t add up to much, but it keeps the bills paid. The company is only reporting moderate growth, and I know people are looking for more. I have a very large position, so it makes sense for me to ease back a little bit. Currently, I own 1.6 million shares plus, which means I have sold about 400,000 over the course of 2008- that’s only about 4,000 a day on average. Therefore, I represent less than 1% of the average daily volume. I’ll probably continue on this path until I am down to 25% of the total position, or pull back completely if the company really starts to deliver big numbers, which could easily happen.
In this statement “or pull back completely if the company really starts to deliver big numbers, which could easily happen. ” What do you consider Big numbers?I know you said 10 mil a year, is that big or small ? What would 20 mil per year do?Thanks
Editor: Here’s my view- if the company is delivering $10 million in annual revs by year’s end, that will be pretty big numbers in my view as it will represent a 10 fold increase in sales. $20 million would be huge. If the company isn’t approaching those sorts of numbers by year’s end, I will abandon this idea. If they are, this company could have years of growth out in front of it as it will have proven it can market the products it develops.
I have an average stock price of $0.32 for 25,000 stocks. I am a long term investor. Do you suggest I take a loss if the stock drifts below $0.15 or should I wait it out for the fall? Also, does it matter if I can accumulate some EFSF stock cheaper to bring my overall stock price position down?
Editor: Tough question. Depends on your appetite for risk. Since you are a long term investor, accumulating at lower prices should be part of the process. However, the company isn’t really delivering big positive results- yet- I believe it depends on your appetite for risk. If you don’t mind the high risk nature of the investment, I would go ahead and add to your position. Then, we all keep our fingers crossed that the top line starts to improve dramatically. I’d like to see just a little more progress to make sure we are on the right track. So, either go ahead, or just wait a little and see if the sales really start improving through the DR program and the PurEffect launch.
CAN THIS STILL HAPPEN? from your first post on EFSF. I dont see why it cant what do you think?
“If they hit on just one of the three products I am going to show you today, sales could jump from about $1 million annually to $30 to $50 million plus annually. If so, we are looking at a potential 5 to 10 bagger from current levels: a $1 stock plus.”
Editor: Of course it could happen easily. Suppose Cinnergen becomes a viral product in the Diabetic community? The number of people in the US with Type II diabetes would blow your mind. PurEffect could easily be a $100 million product if they market it right. I believe they do about $400 million in Proactive. However, as I have written, I don’t believe this year it’s going to be one huge product. I believe it is more likely 3 or 4 products will contribute a couple million each, and the company will become financially much healthier. Off a platform of $8 to $10 million, they will be able to accomplish a lot. That’s how I see the possibilities for the remainder of 2008.
I know you keep saying if they do 10 millio in sales by the end of the year it will be big, but do they have the inventory or the production to do those types of numbers? And who and where are these products made? Nothing is ever said about that.
Editor: The manufacturing is outsourced to a US based company that can deliver as demand grows. I had heard the name some time ago, but I can’t recall it. I believe it’s in California.
How many shares do you project they will issue in the near future (3 months)? Thanks.
Editor: As far as I know, they don’t have plans to issue any shares. However, they no doubt will if they need to raise money, which would of course be a negative for the stock price.
can we say scam now
Editor: Why- because the stock is trading at a new low? What has changed, other than the price?
I couln’t hold any longer, but I would like to know when you think a good time to reenter may occur? Thanks for your advice Verland.
Editor: I don’t blame you. The stock is trading poorly, and at some point you have to decide to preserve your capital. I can’t say yet. I’d like more information on their financial performance, and more information on the DR campaign.
its has nothing to do with the price of the stock. its all the bs and not following up on anything. They have given any number on the dr are you still holding this stock at .14?
Editor: As I have been informing everyone, I sell a little bit two or three times a week. It’s a very small amount- it averages less than 4k shares daily- less than 1% of the daily volume. This is because I own a very large amount, and I want to reduce my exposure. At this pace, I will still be holding 2/3rds of the position when we get past the summer. If the numbers are improving by then, I will hang in there and expect much higher levels. If they aren’t, this position could prove difficult to liquidate. I simply see a reasonably healthy company by the end of the year if they can get $2 million sales contributions from several of their products. If not, it will be time to move on. Also, in light of the new low in the stock, you should not be holding this stock if you are not a long term investor. We can all agree this stock is not trading very well, and if preservation of capital is important to you, you might consider getting out.
I saw news today on OraPhyte. They are saying that testing is almost done and are giving the impression that they will be able to license it by the end of the year. This would certainly seem to be good news. What do you think?
Editor: Short term it’s a little disappointing to the market as every one wants everything to happen faster. However, I believe it is a positive development. Obviously, they want compelling evidence that the product works well before licensing. Longer term, it’s a big positive- perhaps test results will help the stock later in the summer, and a licensing agreement will be the big news towards the end of the year.
Well here we have it ORAPHYTE works great!!!
“The product provides excellent control of certain turf grass nematodes known to cause severe damage to golf courses and lawns. Based on these results, the company and the participating university for this study will conduct additional tests against a range of other common turf grass nematodes.
Am I crazy or is this some very good news for EFSF. It looks like they can do a license deal on that alone. very good news imo what do you think?
Editor: I think the market wanted to learn this was going to happen faster, but it’s great to learn they are getting positive results and have a plan to move forward. This is a wild card that could really help the stock at some point in the future.
as we can all see the market did not react to today lastest crying for wolf
Editor: Yes- some folks are disappointed in the Oraphyte release- all I ask for is honest disclosure. This struck me as a reality release- they gave the status, the plan, and what they hope to do when. Not a market mover at this time, but perhaps a wild card for down the road.
I was a little disturbed by your comments about getting out if the stock price gets below .15 cents. I live in a rural county in Ca, and although I am not an expert on nematodes I know that if you have a field infested with these gritters that; they will certainly reduce the production per acre of the grown crop, precautions have to be initiated with equiptment from one field to another, other fields can be infected just by the dirt clinging to tractor tracks or tires. By all reports from the current studies it seems to indicate that they are on the right track. I know that other factors play into your decision but these studies are just about completed. Sould one at least wait until then before getting out?
Editor: Jack- I believe you misinterpreted my suggestion. As I said, if you are a “trader” who is concerned with preservation of capital, you need to consider getting out. You cannot argue with the fact that the stock is trading at a new all time low, and some investors like to establish stop loss levels that have nothing to do with the progress of the company. It is a fact that EFSF has yet to be very successful at monetizing their portfolio of products, so a stop loss could be prudent if that’s right for you. If you are a long term investor, and don’t really care about the short term moves in the stock, you don’t have to think about selling. Oraphtye shows a great deal of promise and there is certainly a huge market for it, as you rightly point out. If you want to just hang in there and learn if they can commercialize it, you could make a lot of money. I am working on some content on the concept of stop losses for the site, that will be available soon.
I noticed that in their latest PR, EFSF didn’t say how long this new round of testing on Oraphyte is expected to last. I can’t help but wonder if we’re in for another year of tests.
Editor: I believe it stated two to three months, with a target timetable of landing licensees by the end of the year.
I just wanted to thank you again for this great pick. I have had many trades with only four down/stop outs on efsf for massive gains thanks to you. However, the current situation and I&O make a decent swing trade impossible. I took me two days to get out of the last one (.177 – .215). Moreover, the volume just isn’t there anymore. Anyway, I’m reading the OTC JOURNAL every day and always will. I can’t wait for the next pick. Most have been winners for the sellers. Great job. Moving on happily I am,
Lewis
Editor: I believe the current drop in the stock should be sufficient to wash everyone out who isn’t prepared to be long term. Wouldn’t surprise me to see it trade back up from here, but certainly a difficult situation.
Any progress on you ability to set up a interview with CK41? It would be a great way of letting us shareholders know what is going on. Do you think they are for real with their July date? At .14 is it worth putting more money into it if you are a long term investor?
Editor: I have placed a call to someone who can help me with that, but haven’t heard back. I will try again this evening. As far as more money goes, it simply depends on your risk tolerance. If you are prepared to risk more on this idea, and you are a long term investor, it’s probably a good time to consider adding. This new low should pretty much spook everyone out.
This is a BS company and everyone should get out and let them go under.
Editor: If everyone gets out, that will be the time they actually have success. It’s an unwritten rule in investing.
About how many readers would you guess you have?Out of those how many would you guess have a position in EFSF?Well if you advised to sell if it went lower than .155 well now you can understand what you had to do with it being at .13 now. You are the reason I bought this stock. Now I think im going to have to sell it because you advise to.Many things in the works but you have been selling to many shares.Do you think this stock still has a chance of having a run to the upside should I wait or sell?
Editor: I’m pretty sure there are about 100,00 fairly regular readers, and 25,000 who read all the time. I have no idea how many own EFSF, but I’m certain some do. The vast majority of those understand these kinds of stocks are very risky, and most understand that’s the nature of penny stocks. Unlike most guys who do what I do, they are just looking for someone to give them the straight story- not just tell them to buy. Read my comment in the current BLOG from last night. That will fully present my view at the current time. Here’s what I don’t know about you. I don’t know if you are more of a trader, or more of a long term risk taker. You need to know which you are. If you like this company, and want to hang in there for the long term, it’s probably more of a buy right now. If you are more interested in preservation of capital and want to limit your downside, it’s probably more of a sell right now. It depends on you, and you need to know yourself. Please read last night’s BLOG, and if you have any more questions, contact me directly at editor@otcjournal.com. Understand- I don’t run the company- I just find the idea- some work out- some don’t. This year has been tough, but post summer should be great. With regard to my selling- I’m just doing what I advise others to do. Based on the information coming out of the company, I believe I own too many shares. I want to continue to own some for the long term, but not as many as we have. I have to run the company, and it’s a source of revenue. Therefore, I consistently sell a little bit every week. Not enough to effect the market. I have been eligible to sell all want since January, and still have over 75% of the shares.