The eFoodSafety Limbo: How Low Can You Go?
June 10, 2008 @ 6:40 pm
Time for an update on eFoodSafety. The stock is not trading well. For all those who haven’t noticed, and I’m sure everybody has, the stock is trading at a new all time low.
What’s the problem? In my view, the market is making the assumption that the Direct Response campaign they launched around March 1st is not delivering exhilarating results. In fact, the company has not provided any disclosure that would give investors information suggesting the DR campaign is generating any kind of major result. Their last disclosure used the word “Moderate”. Here’s the quote: ” The results to date of the direct-response campaigns have shown an initial moderate increase in product sales.”
The press release went on to state the DR campaign had generated traffic to the ecommerce web sites for Cinnechol and Cinnergen far in excess of expectations. The problem- conversions to customers- implication- interest positive, but not closing the deal. Modifications being made.
I visited the ecommerce web site today- www.cinnergendirect.com- The video ran fine in my browser, and the content looked relatively compelling to me. I believe it was slightly different than the original version, and perhaps is now generating better conversions.
It was never my expectation sales would go through the roof as soon as a few commercials ran. In fact, in my interview with Tim O’Leary, CEO of Respond2, he suggested these kinds of campaigns are often successful after a period of trial and error.
Technically, there’s no way to sugar coat the truth. The stock is a mess. $.165 had served as support since October of 2004 when this stock first traded.
I had set my SSL (suggested stop loss) at $.16. Therefore, if you are still holding the stock, it has either not dropped to your personal SSL, or you are simply a long term investor, in which case you don’t care about a stop loss level.
Technically, I can’t call any sort of bottom. We are into uncharted territory. Here’s a long term chart as measured on a weekly basis since it first started trading:
You can see the blip to a new all time low. I’m not sure it’s a fundamental issue. I believe it’s more group related and seasonal. The stock is already trading as if we were in the heart of the summer doldrums. Low volume drift down.
Also, with recession looming and gas prices rocketing, discretionary consumer non durables is not the hottest group on Wall Street.
The company is in the lengthy process of developing a number of natural and non toxic health care solutions. These kinds of products have a big future, but money is tight now- even for speculators.
I’m still sticking with the theme I have stuck to throughout 2008. For the OTC Journal, they have until the end of 2008 to demonstrate they are capable of generating $8 to $10 million in annual revs. If they do it, I’ll hang in there and be excited. If they don’t, I’ll drop it and move on.
On May 1 EFSF entered it’s fiscal Q4. This means their year ends July 30- we won’t see a 10k until the end of October, and then a 10Q will be do shortly thereafter. It’s a ways out.
This thing is due for a break pretty soon. I have seen a number of smaller issues make new lows, shake everyone out, then rebound. If you’re looking for me to pound the table and say it’s a screaming buy, you will be disappointed. I can’t say that. It might be, but there is no technical data to suggest it.
I don’t know where the bottom is, but we’re due for a positive development. Perhaps a surprise on PurEffect.
If you are brave soul who’s not risk averse, get into this stock now. If you’re one of those kinds of guys who believes you have to buy when no one wants something, and the tide will turn, this could be a tailor made opportunity for you.
Technically, I cannot call this one a trade, so I would recommend traders stay away. I don’t believe there’s a lot of downside risk from here, but it’s impossible to call this the bottom. It might be. Time will tell.
As always, comments and questions are welcome.
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Hi in your words “but the company is not giving them good reasons to believe. Things can change. ” What would be your ideal scenario for change? What would EFSF have to do in the next six months to get you bullish on the stock like you were last year when it was .50? Forget about the rest of the markets. Spell it out for us and maybe we can check these things off the list as the get done. I think that we finally will have the Pureffect launch started and that imo could be step number one. Then what needs to be accomplished? Thanks in advance
Editor: I have spelled this out in the past. First and foremost- I would like to know that the DR marketing campaign is working, and we are seeing at least $900k in monthly sales- I believe this stock is worth a lot more if the company can just demonstrate it can be running at $10 million in annual sales. I don’t care if it comes from Cinnergen, Cinnechol, or PurEffect- or all of them together. Secondly, they have to make money at that run rate. They can’t be spending more on advertising that it’s worth. This would put them in a position of strength, and allow them to move forward with some of the other products in their portfolio- especially Oraphyte, which I believe could be a wild card. We need to see hard evidence this is coming together. The Fall will be it. If they don’t get it done, I’ll be moving on from this idea. If they get it done, they have the potential to move from $10 million to $50 million. The first $10 is much harder than the $50 million.
Comment by Mike — 7/22/2008 @ 4:20 pm
I just wanted to throw in a few words to those hard working, good souls out there who, instead of being unable to buy an opportunity because of fear, are unable to SELL because of fear when they should for themselves and their families. I think efoodsafety could get a deal with some outfit for Oraphyte. If that happens, the stock will move. BUT, I also believe the downside risks, from right here are substantial and many good folks can’t get themselves to SELL/STOP OUT and re-evaluate like you have suggested over and over and over again. You told EVERYONE TO SELL AT .16 on a stop basis. Then, they didn’t. Then, they complain. Then, they have problems because, based on the flagrant nature of some of these blogs, they’ve put way too much in this security and don’t know what they are doing OR what they are GOING to do.
My point summary is this: many here have gone over their threshold in all aspects of that word. They could make money by buying efsf WHEN Oraphyte news hits because there are, afterall, 145-185MM shares to move and if the deal is good enough, the shares will KEEP MOVING for money to be made THEN.
I’m not sure I accomplised anything, but I felt compelled. Thanks for listening.
What’s next?
Editor: I have simply been pointing out to people that if they decide to hold these microcap stocks below either my or their own SSL, they are now long term investors, and need to look at it that way. As such, don’t worry about where the stock is trading to in the short term. The stock will respond to the long term performance by the company. In the case of EFSF, a lot of folks want to believe, but the company is not giving them good reasons to believe. Things can change. I think we’re about at the bottom here. It’s just a question of when it starts behaving better against a backdrop of a raging bear market and the dog days of August. Thanks for helping folks understand how they need to look at these things. I’ll keep trying to educate.
Comment by Lewis — 7/19/2008 @ 6:47 am
Why don’t you do an interview with Gruden? There are certainly many relevant topics for discussion (product status?, revenues?, what’s up with stock price?, what is the focus? projections? etc.). Thanks. Joe
Editor: I would like to, but only when it will be productive. The company is in the middle of making adjustments to its DR campaign and on the cusp of some new initiatives. Therefore, I think it makes some sense to wait until she can really talk about the future with some detail. There’s no point in an interview where she says we are working on stuff, but can’t talk about where we are at this point.
Comment by joe — 7/17/2008 @ 8:03 pm
So if you’ve gotten a comprehensive update on what’s going on — what IS going on? Is it positive?
Editor: I cannot disclose anything that isn’t current public information. However, I can say that the company is not doing nearly as poorly as the stock would have you believe, and in my view news flow and numbers could be picking up in fairly short order.
Comment by Carson — 7/17/2008 @ 6:08 pm
Do you have an update did you try to set up that interview with Ck41 yet?
“Editor: Those are very tough questions to answer. The idea of doing an interview with the CEO of CK41 is really good, and I’ll get the ball rolling to see if they are willing. If PurEffect starts selling in July or August, I have to assume it would be a major positive for the stock. However, I believe the real major positive will come when investors can turn on their TV and regularly see an infomercial with celebrity endorsements- some of whom are unnamed as of this time, but will be in the future. At that point, I could easily see a double or triple in the stock. As far as a solution to Bird Flu- that would make it one of the all time dream stocks. That would give you your ten or twenty bagger. An accepted treatment for bird flu could be sometime out, but you never know.
Editor: I have gotten a pretty comprehensive update on what’s going on at the company. That interview could come later in August or September. Stand by. No, they are not going out of business. It’s an absurd statement at this point in time from whomever is saying it. Could be like a bank stock when some sanity returns to the markets.
Comment by Mike — 7/17/2008 @ 7:42 am
What do you make of the big blocks today and yesterday? Good news on the way ? Maybe insiders buying at this crazy low price?
Editor: I have no indication insiders are buyers, but I don’t think the insiders are wealthy enough to be big buyers of their own shares. For my own personal cash, I am not prepared to start buying these smaller stocks yet. I believe there are easy doubles in some of them when the market improves. These are some of the craziest times I have ever seen, with the S&P down 27 days in a row- or nearly. I am waiting for complete wash outs. There could continue to be sell pressure on these stocks just because people need to raise cash to defend the margin calls on their other stocks. I’m pretty close to be willing to buy- perhaps in August. You are right- the prices are pretty absurd.
Comment by Anonymous — 7/15/2008 @ 7:38 am
if you love the question than answer it. the rumor is all over your blogs and all you have to say is this may be the bottom zero may also be the bottom can we here from the company?
Editor: I’m not sure I understand your question. All I know is over the years when people have gotten mentally so extreme that they start saying companies are going out of business, I have found that signals some sort of bottom, or close to it. In the case of EFSF, all I can do is go back and look at their financial filings and determine they have the financial where with all to remain in business. Can we hear from the company?- I expect to in the next two weeks, but I don’t know if good news will move the market at this point. We’ll see. In my view the company is not going out of business anytime soon, and I’ll be when we see financials, you will see a company with a reasonable amount of cash that’s not losing too much money.
Comment by Anonymous — 7/14/2008 @ 4:16 am
hey come clean it you hold 1.5 mil share you should know whats going on is this company going under?
Editor: I love questions like this. It means we might finally be coming to a bottom. No, the company is not going under.
Comment by Anonymous — 7/11/2008 @ 11:59 am
Guess I don’t hang out in the right circles to get the inside info. Who’s circulating this rumor about EFSF? And I can’t help but ask myself: if ESFS management cares anything at all about the company’s name, why haven’t they responded to it?
Editor: It was just a comment somewhere here in the BLOG.
Comment by Irvt — 7/11/2008 @ 6:43 am
re: Last blog Well that explains the stocks poor performance and the no news vacum from the company on the sales of there products
Editor: I guess so.
Comment by Rob — 7/10/2008 @ 4:01 am
Its about time you mentioned that. “I do in fact start to believe someone is very short this stock.” Its been pointed out that HILL has been pushing this stock down from .25.Now you just mentioned that you think there is a huge short in the stock come on man. When the good news hits the shorts will be calling you for more of the shares you have been selling. How many have you sold so far about 600,000? They will be calling you for the rest of your shares but I hope you don’t sell them on the cheap. Cinnergen sales are taking off and they should be able to do about 500′000 a month in sales on it once the TV adds hit prime time. The testing should be done by now .This could be your best pick ever. OraPhtye just got a patent how come you didn’t mention that or do a new blog on it. I think that is great news for when the licence deals are signed mo money for Ef shareholder. You should be pounding the table on what a buy efsf is down here. Its a gift to those that buy it down here. Pureffect will start the promotion this month and we all have been waiting years for that. The Co. balance sheet looks the best it has ever looked from the last 10q. This stock is ready to explode on the right news.
Editor: With regard to your comment on my selling, the facts are that I bought about 50k and sold about 550k over the last six months. I still have about 1.5 million shares. If you average it out, it’s about 3500 shares a day, which is an absurdly low number and a miniscule percentage of the shares traded. This stock would be exactly where it is with or without my trades. If you don’t like the tiny amount I have sold, you are welcome to send me a check to help cover the costs of running the operation. Bandwidth alone runs $10k per month. Now- onto the serious side of your comments. I don’t believe whether or not someone is supposedly short is any reason to ever invest in a stock. I have heard complaints about illegal naked short sellers for years, and only seen it come to fruition in a couple of examples. You should only own the stock if you like the company and the price. If they generate increasing sales and hopefully profits, you will make money somewhere down the road. If Cinnergen sales are increasing, that would be a great reason to pile in at these levels. I don’t have any information Cinnergen sales are increasing from the company, but I believe it is an excellent product, and I have the blood chemistry results to prove it works for me. The long awaited PurEffect campaign would also be a major positive for the company. I totally agree with you that this stock is moving into absurdly oversold levels. This is a brutal summer, and any company related to selling anything to US consumers is taking it on the chin. I have written about this extensively- the best time seasonally is to buy micorcaps is around the end of July and into early August for big gains before the end of the year. Recently, I heard a rumor the company was going out of business. When you start hearing crap like that, it’s a sign you’re at a bottom. This one is due for a cycle back up. I’ll bet those with the intestinal fortitude to buy between now and the end of August do very well before the year is out. If the facts you provide are accurate, this one is going to rebound once we get past today’s tough environment.
Comment by Anonymous — 7/9/2008 @ 7:11 am
is the rumor true efsf is going out of business?
Editor: When I hear stuff like that, I do in fact start to believe someone is very short this stock. Based on the last quarterly financial release this seems to be a totally ridiculous comment. That’s the kind of stuff that makes for a bottom. It’s possible, but highly unlikely in my view.
Comment by Anonymous — 7/8/2008 @ 1:06 pm
Could ya, you know, maybe try to get us an update for heck’s sake????
Editor: I couldn’t agree more- will see if I can become the catalyst for some information about the current sales levels. The market is assuming the worst.
Comment by Stanley V — 7/7/2008 @ 1:24 pm
Have you had any word/indications from the company about how any of their marketing efforts are going? The silence is deafening as the PPS sinks lower and lower.
Editor: None whatsoever. I agree, the silence is deafening. The market is assuming it is not working at all, which is reflected in the PPS.
Comment by IrvT — 7/5/2008 @ 4:15 pm
is there any going on here or is this just dead nothing out of this company at all what a shame
Editor: indeed. I can’t predict with any certainty what might or might not happen from here.
Comment by Rob — 7/3/2008 @ 7:51 am
Any news on NumaDerm or PurEffect?
Editor: Not that I have been made aware of. I have been gone for some time, so I’m not sure what’s going on.
Comment by Lightbarer — 7/1/2008 @ 4:44 pm
Do you have any thoughts on the last pr about the oraPhyte patent or did you miss it being you were on vacation?
Editor: I did miss it. However, I believe it makes Oraphyte more valuable it and when it becomes adopted. It increases your upside. The market doesn’t really seem to care at this point.
Comment by Anonymous — 7/1/2008 @ 6:42 am
thoughts on the acquisition of the US Patent?
Editor: It makes Oraphtye more valuable if it becomes commercially adopted. It didn’t do much for the market at this time, but it bodes well for the future if the product gets to market. If it does, it could be huge.
Comment by Stanley V — 6/26/2008 @ 7:36 am
Any possibility that EFSF will reward their loyal customers? I am a long term investor in this stock and if I sell now, I’ll lose a substantial amount of money. Any possibility?
Editor: Are you a customer or a shareholder? A customer is a consumer of their products- which I am. A shareholder owns the stock, which I am also. In either case, if you still have the stock, you should have decided to tough it out and hold on through this downturn. Is it over for this company? I hardly think so. I’m sure it will have another life in the future. Is it getting beat up pretty bad as we move into the summer doldrums- you bet. I suspect we are pretty close to some sort of bottom or capitulation in the stock price. Hard to say for sure. My guess- buyers in the mid summer doldrums will do very well before the end of the year. That’s just a guess. The company needs to deliver growth.
Comment by Ilamuku — 6/20/2008 @ 11:17 am
What do you think about Sec. Paulson’s call for more regulation of the OTC market in the speech he made on Thursday?
Editor: I did not hear his comments, so I don’t know what form those regulations would take. Over the last couple of years the SEC has implemented some new regs which I believe are great- for example- Rule 415, which eliminates death spiral financings for small companies is outstanding. There still not doing enough on the naked short selling front. However, I believe Sarbanes Oxley is a disaster for small public companies. However, Congress laid that one on the SEC- they could have modified it to make it less onerous. I’ll see if I can find the text of his speech at the SEC web site and hear what he’s saying.
Comment by Irvt — 6/20/2008 @ 8:59 am
What a shame they did to EFSF it traded down to .11 .1)Are you still selling at this low level?Someone really wants to push it down hard. 2)Do you know who the market maker Hill is and why or how they could do this and get away with it? I think it should be looked into what do you think?
Editor: Yes, it’s kind of a shame to see the stock trade this low. Something positive is due to happen in here, but it’s painful to watch it continue to grind down. I may have sold a few shares this week, but not many. The company needs to deliver something very positive for investors to hang their hats on right now. I believe the market is looking for something with numbers. I’d love to get some hard facts on the DR campaign, or news PurEffect is going to go gangbusters in short order.
Comment by Anonymous — 6/19/2008 @ 1:11 pm
What happened to Enigma? Its seems to have vanished off this site?
Editor: I only wrote one edition on the company. No one seemed to be interested. The stock traded very poorly. We dropped them. I believe the company backed out of their shell and it’s a different company now. CYIL.ob on Yahoo.
Comment by Michael — 6/18/2008 @ 1:57 pm
is there anyway to get info on whats going on with this company and the dr campaign? in your interveiw with the ceo didn’t he say there would be weekly updates what happan to that?
Editor: My interview was with the CEO or Respond2, not the CEO of EFSF. They report to EFSF- not the public. I don’t have any hard facts on how it’s going, but I’m assuming not great in the first month or two as both the rhetoric out of the company and the price of the stock are not reflecting anything great.
Comment by Rob — 6/16/2008 @ 5:46 am
how do you know if the volume is sellers or buyers?
Editor: I just look at the daily prints and see how many trade at the bid and the offer. It’s the in between ones that are impossible to gauge.
Comment by rob — 6/13/2008 @ 12:58 pm
I’m surprised you have any readers not that its your fault, but alot of the companies you pick are some sort of ponzi scam selling thing they can,t deliver That why they are mico’s they stay under the radar make there money than go way and the investor lose
Editor: Thanks for the contribution.
Comment by Anonymous — 6/13/2008 @ 10:15 am
Do you know if the company is still on track to launch PurEffect and NumaDerm in July? That is their latest from the press releases, correct? NumaDerm could really be any time now … What’s the latest?
Editor: As far as I know- yes- they are still on track.
Comment by Lightbarer — 6/13/2008 @ 7:51 am
Do you think there is really a very large short position in this stock like it has been claimed in the past? The Co has even put out releases about a squeeze price a couple of times. Do you think the shorts have pushed it down here because they could? What if anything could make the shorts start to cover? I have seen one market maker HILL constantly push this stock lower. What do you make of that?
Editor: Whether it is true or not, I believe it should not be a factor in your decision making process about this stock. If you like the company, or even just like the price, and take a position, you will simply make more money if and when there is a short squeeze. If the company doesn’t work out, some shorts will simply make more money. Either way, it’s all dependent on corporate performance. They can yap all they want about short sellers. The best way to get rid of a short is to perform. There’s the real question. Are they going to perform? I think a lot could happen between now and the end of the year, and I believe it is better than 50% most will be positive. The big question- will it be positive enough for investors? We’ll see.
Comment by Anonymous — 6/12/2008 @ 8:31 am
Their year ended Apr 30th. May begins 1st Q.
Editor: Correct- so we won’t see the 10k until the end of July if they file on time, and we won’t see the current quarter until mid September- that’s a long wait for the numbers we want to see today.
Comment by Bob — 6/12/2008 @ 6:11 am
I have used many of these type of products,over the years. I think it is priced too high, that’s why sales are flat or going nowhere. $19.99+shipping. I would buy it. I own the stock.
Editor: Perhaps that will be the next move. They do have the margins to be flexible on pricing.
Comment by pj jones — 6/11/2008 @ 6:00 pm
Just that PurEffect and ProActiv were both going to start an advertising campain in Sept 2006. One did and the other is still in the wing. It will take a small miracle just to make a dent in ProActiv market hold.
Ina.
Editor: That’s what $.14 stocks are all about- little surprise miracles. I don’t think it’s going to happen out of one product. They will see small increases out of several products.
Comment by Inane — 6/11/2008 @ 2:00 pm
I have a huge position in this company. I am wondering if you feel like they still have the cash to maintain this ad campaign?
Editor: A lot of it was prepaid as of the last 10Q- I hope they do as well, but we have no way of confirming the financial condition until the 10k comes out at the end of July.
Comment by Eric — 6/11/2008 @ 12:03 pm
Here’s my view on this company’s problem. Even when they release a press update, it is vague. They never come out with anything that is ” RAH RAH”. It’s always further testing, or in the future, or we hope it will. People, like myself, are starting to doubt wether there products actually can due or be as effective as they say they are. If Oraphyte is as effective as was stated a year ago, you would think they would be promoting the heck out of it. This leads me to believe that maybe it’s pretty good but not great. I hope I’m wrong but I have started to sell blocks of shares ad put them into other things. It’s frustating. They need to hire someone to write their press releases for them and more often.
Editor: I don’t believe in writing press releases often unless you really have something substantive to say. That having been said, I share your frustration. We don’t have a real indication that things are improving out of the company.
Comment by kenny R — 6/11/2008 @ 11:15 am
Still think this on line marketing concept sucks.
EFSF should affiliate with someone like ‘Swanson Vitamins’ (swansonvitamins.com) that actively markets a broad array of related product and sends catalogs all over. No one wants to buy just one item +pay shipping!!!
Editor: Interesting idea. Perhaps that would be a good direction to go. Certainly, if what they are doing now isn’t working, they need to change something.
Comment by DonnGranros — 6/11/2008 @ 10:15 am