eFoodSafety: The Good, The Bad, and the Not So Ugly

EFSF is sitting in this mid $.30s range kind of grinding around. I wanted to share a couple of mid summer thoughts about this idea, and prepare you for what might be great, and what might not be so great.

Here’s what I am excited about today: PurEffect. PurEffect has the potential to be a huge product for the company. The CK41 team has launched a number of very successful products via infomercial, and now that we know the production has started, and there will be viable personalities endorsing the product, it makes for a great speculation at the get go. I have heard projections in the hundreds of millions in sales over the life cycle of the product, and in this case I believe we have a real shot. Remember- this is a recurring revenue product. Users must reorder monthly. If they use it and like it, sales could grow to unheard of levels.

Here’s a minor negative- Cinnergen- while I don’t know the exact levels, I can tell you Cinnergen is not taking off as robustly as the company would like. I know they thought retail distribution would be a little more widespread by now, and once the product gets on the retail shelf they have no control over how it is displayed. To their credit, they are taking matters in their own hands with the launch of the ecommerce site. All businesses will have challenges- it’s how they deal with the challenges that measures the upside. Eventually, this product should take off- Why? because it works. I know it works thanks to you. I have received emails from OTC Journal subscribers who are diabetics and take the product. They have reported to me that Cinnergen allows them to eliminate or take less of their medication. Once this is identified by the masses as a potential weight loss product, it could really rocket.

Oraphyte is simply a waiting game. I don’t know if Dupont will pick the product up for distribution, I can only hope. Someone erroneously reported that Dupont has rejected the product- it is not true- Dupont is in the testing phase right now.

Today, the company announced it will begin clinical trials for its Cold treatment, ColdZap. It’s probably a little early to factor this product into your thinking about the future, but if this is anything like Airborne, there is huge potential here as well.

Here are a couple of minor negatives you need to wrestle with if you are going to continue to be a shareholder: 1. You will no doubt here about AmeriFinancial registering to sell 1 million shares through Rule 144. This requires an SEC filing. I am informed Amerifinancial owns these shares through the settlement of a law suit. I am also informed they are limited to 10,000 shares per day and no more than 10% of the previous week’s total volume. This will not result in any major supplies hitting the market and sabotaging the stock price. However, the market makers might use the information to knock the stock down, in which case it would be a buying opportunity. I don’t know if this is the only incident of its kind pending, and I don’t know anything about the law suit. However, it is a non event in my view except in how it could effect the way the stock trades.

2. Minor negative, and this is ongoing- simply the number of shares I&O. Over the years, as this company has developed and had a couple of false starts, the number of shares I&O has grown to a pretty big number. The last quarterly number was 156 million, meaning at $.35 the market is saying the company is worth $56 million. 18 months ago there were 128 million I&O, so the number is remaining under control and growing at a very reasonable pace for a virtual pre revenue company. However, in order for the stock to go up $.10, the market must buy into believing the company is worth $15 million more. With the products they have ready for commercialization, it will take a bit of good fortune to see this one rolling up to $1 or more, but that’s the nature of speculation.

I won’t bother with the chart today. You will see a stock that has weathered it’s summer capitulation phase and has rebounded off the bottom. It is gathering the energy for another move- I’m not sure which way, but we are closing in on commercialization as some really big numbers over the coming months and years.

Comments and questions are welcome.

17 thoughts on “eFoodSafety: The Good, The Bad, and the Not So Ugly

  1. Probably your most negative blog entry to date. Raises some concerns, without a doubt. Questions for you, if you please:

    1. I would very much like to know WHY AmeriFinancial wants to sell 1 million shares?

    2. Your “minor negative” seems a bit more than minor to me. Basically, it means we need far more explosive news than typical in order to drive the stock price up. The percentages of stocks like this delivering explosive news are rather low.
    3. Where the heck is Cinnechol????
    4. Your Cinnergen insight says to me we are in for disappointing numbers in the August quarter release. I know for a fact many of EFSF’s loyal investors are waiting patiently for these numbers, and should they be poor, I fear a lot of folks will throw in the towel and sell.

    Editor:

    1. I don’t know. People sell all the time for various reasons. Also, filing is not selling. They don’t have to sell any. I just inform everyone.

    2. Explosive news- how about a deal with Dupont on Oraphyte- how about the PurEffect informercial kicking off- that’s just two. There could be many more with their product line.

    3. Cinnechol has been delayed in its release. I am informed they are fine tuning the formula to keep the price at a reasonable level for consumers

    4. That’s possible- I know there will be substantial percentage growth- I don’t have any idea what the number will be.

  2. Given the recent concerns you’ve outlined, do you still feel the same way you outlined in your last blog entry:

    “I feel the downside risk at this point in somewhere in the $.28 to $.32 range.”

    Editor: In a word, yes. If it trades below those levels you might want to re evaluate your holdings, or it could be a tremendous opportunity to accumulate.

  3. One of the best blogs you have ever done, period. Thanks for your honest thoughts and your valuable opinion.

    Will you buy the dips, if they are worthwhile in magnitude?

    Thanks.

    Lewis

    Editor: Personally, no. Simply because I already own enough for the long term. I might be tempted if I had a little extra cash.

  4. Is there still a possible “wild card” product to which you’ve alluded to, that has yet to be mentioned or introduced to the public? (I am presuming the cold zap is not it)?

    Thanks in advance.

    Editor: Your supposition is correct. It is not ColdZap, and it’s still out there.

  5. Here is just a thought. AmeriFinancial might see a big jump to the upside coming and want to be in position to sell and capitalize on it.

    Editor: I have been in their position many times with SEC filings under Rule 144, and have often decided to hold for the longer term. The filing and the selling are two different things- the filing is good for 90 days, then they have to refile.

  6. Where and when did you see this filing about the shares to be sold I cant find it on the NASD site?Thanks and do you still feel good about your .75 target

    Editor: The SEC 144 filings are hard to find, and you can only get them through paid sources- Dow Jones has them but I don’t subscribe- perhaps I should. I still feel good about the $.75 target- I just have no idea what the stock will do over the course of the next month. You have people who could misinterpret the 144 filing, and year end audited numbers won’t be huge, so that could cause a little sell down. Beyond that, I am looking for PurEffect to carry the stock much higher in the Fall.

  7. Well, one very important thing to monitor, it seems, will be if in fact AmeriFinancial DOES indeed begin selling. One would have to wonder why on earth they would, particularly at these levels. Is there a way we can stay on top of this and take note if it starts to happen?

    Editor: There is no way to know whether they are selling their 10,000 shares per day, and if they do, who cares? It really has nothing to do with the future of the company.

  8. Can you explain the dynamic you have with the company, and the type of information you have access to that may be above and beyond what the public may have? Also, from a timing perspective, are you privvy to forthcoming news and press releases in advance of their official release? Does the company voluntarily share information with you at their discretion, or do you ask questions and seek answers from them? And finally, does the company read this blog and the corresponding shareholder questions and comments here? Thanks for your time.

    Editor- I communicate with the company through an IR contact. I sometimes might have information the public does not under my contractual relationship, but never share it. All comments and conclusions are drawn from public information and my personal interpretation of what is happening. Yes- I do know about public releases beforehand for the purpose of scheduling my coverage. The company does share information with me, and I can get questions answered. From time to time I have gotten feedback from the company about my writings in both the BLOGS and the individual editions- mostly to object if I have written something with a negative bias. However, I call it like I see it, whether they like it or not. They have no editorial control over my content, and the opinions expressed are my own. If I don’t believe the company has upside and they fail to make certain thresholds in their commercial roll out, I promise you they will hate the content I write. However, at this time I believe this company will be a far better company in one year than it is today. If it isn’t, I will drop it long before the fact.

  9. One clarification please – you mention that you look for PureEffect to carry the stock much higher in the Fall – I’m just curious on what you’re basing that on – simply the fact that the commercial will be running? Because the company would not have any sales numbers to disclose for quite some time (probably not until the new year.) So are you saying the PureEffect hype alone should propel the stock? Haven’t we been finding out that investors need hard numbers?

    Editor: Stocks trade based on investor perceptions of the future, not the past. I am making an educated guess the Pur Effect will do very well due to the following factors: 1. The clinical trial that proves it works 2. The market- the competitor has virtually owned this market for many years with no competition- consumers are ready for something new, and 3. Most importantly- the team from CK41 is very experienced and has rolled out a number of very successful informercial products, creating hundreds of millions in sales. They are betting their company on the success of this product. If you want to wait for the numbers to be convinced it is going to be successful, it is highly likely you will simply pay more for the stock. However, that is the nature of risk and speculation. Less risk, less upside. The market prices stocks based on where the company will be in six months, not where they have been.

  10. your insights are very honest and informing. Would you please rank your top 3 picks long term and medium term fundamentaly and support price action with technicals if available.

    Editor: Right now, of the stocks I have written coverage on, it’s tough to pick them in order. However, I believe over the next month CPNE probably has the most short term upside with not that much risk at this price due to the fundamentals. NCNC is going to go crazy over the next several years- investors just need to catch on. Fundamentals and growth outlook are great for that one. Outside of the microcap realm, I have been calling Apple Computer for $200- I first wrote about it at $94 in March. PNWIF looks great technically and could have some event driven movement over the next month or two. EFSF is much riskier, but has some products with major upside- making it a great choice for the riskier end of your microcap portfolio. That’s just my personal opinion- believe me- I have been wrong many times.

  11. What is the likihood of any of our products/patents being bought outright, but not the whole company? Thanks.

    Editor: Unlikely until they have some major commercial breakthrough. If you’re looking for a buy out candidate, I like CPNE and PNWIF.

  12. So they release a press release about another distributor, and the stock actually drops and hits .28.

    Not good.

    I think it’s time to be realistic and think maybe there are some problems brewing. Lots of blind cheerleading on the Yahoo! message boards and here, and it’s starting to sound a little bit like whistling past the graveyard. News release after news release, and all the stock does is go DOWN.

    Editor: If you’re worried, just sell it. It’s been my experience that if you like the company, these low volume August sell downs are the best time to buy the bargains for later in the year.

  13. I love this dip! I just hope I can gather enough money to buy up!

    Editor: Lots of money has been made just buying in August.

  14. An increasing number of EFSF shareholders seem to be concerned about the silence around the EFSF-DuPont cooperation on Ora-Phyte (Citroxin).
    Let me briefly explain why such silence is absolutely normal and why the EFSF shareholders should remain patient for at least one more year on this highly prospective project:

    First, it is common practice for any company performing investigations on a new product to avoid disclosure of premature or uncompleted results of an ongoing investigation. Otherwise, unreasonable and detrimental speculation from outsiders could easily arise.

    Secondly, experience shows that the market-introduction of any new chemical or agricultural agent of whatever kind must satisfy a large bunch of regulatory requirements, like product liability, health issues and potentially undesired side-effects, as well as economical issues, like cost-benefit analyses. The only way for a company to satisfy these requirements is to perform and cautiously document on their own all analysis and tests in accordance with mostly standardized procedures, which must not always coincide with the procedures used by the FDA. It is easily conceivable that a field evaluation of OraPhyte will take at least one year, simply because most crops have a one-year cycle from seed to harvest. Thus, only after at least one year DuPont may have sufficient evidence to definitely evaluate all pros and cons of OraPhyte and make a final go or no-go decision. Moreover, it is frequent practice to start market introduction of a new product only with a limited number of selected customers under special contract with the manufacturer, being closely supervised and monitored by the manufacturer.

    Some optimism for the shareholders may however arise from the possibility of a contractual agreement with DuPont to pay well defined milestone contributions to EFSF, whenever satisfactory results are presented, being a common practice for many license cooperations.

    A lot of optimism can be based on the contract with nematode specialist Dr. Madon M. Joshi who presumably would not have contracted with EFSF if he were not convinced of the enormous prospects of OraPhyte in a multi-billion $ market as an environmentally friendly and highly welcomed nematode agent, presumably to replace presently used Methylene-Brimde.

    Editor: Thank you for your contribution. I agree- sometimes these things take a while and investors need to have a little longer fuse.

  15. What would you say is a great entry point in EFSF now?

    Editor: Can’t say right now. Will have an update next week.

  16. Im hearing something big is brewing at EFSF. Something that could even be bigger than Oraphyte and could be any day. Have you heard anything like this from them to?I hate to get excited but where else could you buy a .30 stock and know that they will be sharing revenues from Pureffect that could be over 100 million?

    Editor: I don’t know they will be sharing revenues over $100 million. I know the team doing the PurEffect informercial has introduced products that have done over $100 million, and they have some great personalities in the production. Not all the names are out yet. I don’t know what you have heard, but if the rumors make the stock go up, that’s fine with me.

  17. I’ve been sitting on these stocks for a long time- am completely an amateur, or whatever the name may be for someone that doesn’t have a clue? : ) Don’t own any other stocks, just became interested in the “products” that were “coming out” and/or being developed. Am a nurse and rancher- the Oraphyte seems to be an extremely HUGE potential? but then thought that with Cinnergen…….what say you at this time when stock is at 0.26 cents? thanks so much, Susan

    Editor: As I have been saying- I like this company a great deal. I liked the last quarterly numbers. However, the stock needs some kind of epiphanal event to get it rolling again. Doesn’t seem to respond to news like it used to.