It seems there is a magical force in the Universe to which all things gravitate. I am writing this today to inform you EFSF has succumbed to the forces of gravity, and headed just where I thought it might head in a year end tax selling blow out (see the last BLOG on 12/14). That’s what a lot of these kinds of stocks do when shareholders have been disappointed by a shortfall in anticipated results.

Without further ado, here’s the chart. I’ve blown it up and extended it to make the gap as identifiable as possible. Look at the two green horizontal lines that delineate the gap, and its subsequent filling earlier today.

The stock has now officially completed a round trip from the level it was when I first wrote about the company.

That gap you see on the left side of the chart was created the first time I wrote about the stock.

Like a homing pigeon, the stock has flown back to its coup. Vacuum filled. Nature happy.

Fundamentally, all I can say is the company is improving. Technically, now is the time to swoop in and grab this stock if you are a buyer. You know all the facts about the company. I have certainly covered them over, and over, and over again. Don’t construe this to be my recommendation you should buy the stock today. There is a lot of controversy and disappointment, and you can read all about it in the archives. I’m saying now is the time if you are a buyer.

If you like the company and you want to own more stock, set aside your fears. Despite already owning 1 million shares which become eligible to be free trading next month, I might jump into 100k for a trade in the am. Since I own a lot, this would just be a trade for me. You might think a bit more long term depending on your goals.

Comments and questions are welcome.

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.

EFSF- more news on the path to the retail shelves for the product they believe could be applied transdermally as a potential preventative measure and/or therapy for MRSA Staph.

They announced the company would be going into a laboratory, and using a “Gold Standard� test to determine its efficacy.

Test results will be the first step- assuming a positive result, the path to the store counter would have to be next. However, it strikes me that they would have to show it works in an actual human application somehow, which might be tough. We’ll see how it all pans out. It’s another opportunity in the portfolio of IP that “could� turn into something big.

On to the main topic- the one of concern to the followers of this company- when are they going to generate more robust sales?

Disciples seem to have a very short fuse on this issue these days. Most of the emails of BLOG comments I receive are centered around that issue. Investors tend to be viewing the recent slate of product developments almost as a kind of slight of hand- a distraction if you will to avoid the main issue.

Here’s what I know- the company is moving in the direction of superior distribution for its existing products. They are in CK41′s back pocket nearly daily- putting their best foot forward to get that moving. They are pushing forward on several other fronts that might prove very fruitful.

In the meantime, considering the current microcap market malaise, and the current level of shareholder unhappiness, this issue might be plagued with a bit of tax selling this year.

I’ve had a number of questions about last year’s January gap. Here’s the chart:

I’ve had to expand the chart considerably to show a daily going back that far, but nevertheless you can clearly see the gap.

On Jan 10, ’07 the stock closed at $.18. On Jan 11, the stock opened at $.21, and never came back. Chartists call this a “gap�, and the theory is that all gaps eventually get filled. The whole in the chart acts like a kind of a vacuum to suck the stock back to that level, fill the gap, and start over.

I don’t believe there’s any logic to it. I do believe opportunistic traders will pounce on the stock if it ever does come back and fills that gap.

In the absence of any robust news on sales and/or a return to a healthy microcap environment this year, there is always the chance EFSF could “fill the gap�, at which point it would be a fantastic trading opportunity to go long.

I would guess the chances are worse than 50/50 for this drop for two reasons. 1. If investors wanted to make tax sales on this stock, they have probably done so already, and 2. I believe micros are going to pick up in short order.

Nevertheless, if this stock does fill that gap this year, I would pounce with reckless abandon. 2008 is a new year, with lots of new opportunity for achievement.

I’ve rarely seen a microcap company with so many potential blockbuster opportunities in its pipeline. I’m just asking for one big success.

Comments and questions are welcome.