Wednesday, June 6, 2012

SEFE, balloons and other spark attracting bubbles

I am a collector of peculiar stock market press releases. I cannot read this release (by far this year's best) without tears of laughter welling in my eyes...

No further comment but I expect comment from my readers.


Disclosure: short - but the borrow is so tight that being short is hardly worthwhile...

SEFE, Inc. (OTCBB/OTCQB: SEFE), a sustainability company engaged in offering innovative, pioneering solutions for the world’s energy needs, today provides the following letter to its stockholders and the investment community from its CEO, Don Johnston.
To our valued Shareholders:
I’d like to update you on the status of the company’s technological developments and operational changes. We’ve made much progress in the last four years, taking a seemingly impossible concept and developing it into a solution with many applications in different industries. We call our system the Harmony III.
Briefly, the Harmony III utilizes the phenomena of atmospheric corona discharge by a proprietary collection element held in the air by a balloon. The earth’s natural electrical field drives the discharge, and ions in the lower atmosphere provide a sink for the current. The solution is a high voltage and relatively low current technique by nature and requires a careful approach to handling the power.
Our engineering team has been extremely busy, and we’ve filed for patents on many of the aspects of this unique energy gathering system. The last 90 days have been very productive, and we’d like to share the results with you.
We’ve filed for a patent on our strain reduction system that uses an elastic bungee between a balloon and the tether attached to the balloon. As wind pushes on the balloon, the immediate pressure is absorbed by the elastic bungee rather than the balloon or the tether. This reduces the immediate force and tension, protecting critical components from damage.
Additionally, we’ve filed for patent protection on our tether contact system. The tether contact system is designed to minimize the electrical path length on the power tether. The system uses a proprietary mechanism to complete the power circuit, removing the unused power tether from the path. This system functions in tandem with the dynamic electrical converter and the electrostatic motor-generator as an efficiency booster. This allows for the same hardware to be used no matter what the flight elevation of the aerostat (the technical name for the balloon) may be.
We’ve also filed for patent protection on our system for detecting the concentration of atmospheric ions in the lower atmosphere at varying elevations. The charge detection system will play a critical role in broadening SEFE’s client base, allowing us to quickly determine how to best deliver the required amount of power to the client.
As our research and methodologies have progressed, we’ve realized we need a better balloon launch and retrieval system. So our engineers came up with the “Balloon Launch Assist” system, which uses a secondary stabilizing balloon on top of the primary lift balloon. This invention allows the balloon to be launched and retrieved in a simple manner, without a need for the extra manpower usually associated with the initial launch of a balloon. The secondary balloon provides upward lift and prevents the primary balloon from tipping over, ensuring stability during the critical stages of initial balloon deployment as well as during retrieval. The invention is currently in the patent application process with the U.S. Patent and Trademark Office. A patent-pending number has not yet been issued.
We’re also in the process of designing an electrostatic motor that operates as a generator when supplied with a high voltage-low current power source. This motor will be a key piece of the electrical generation hardware for our Harmony III system. It is designed to work side-by-side with our electrical converter to produce usable AC power directly for immediate consumption, delivery to an electrical grid, or stored for later use.
Our engineers have modified the original ion detector design for a more flight suited geometry which we are calling our “Cubic Wire Detector.” The IP for this technology has been categorized as a "continuation-in-part" application, adding a variation to SEFE's patent-pending application for Collection of Atmospheric Ions while claiming priority based on the original patent, which was filed with the U.S. Patent and Trademark Office on May 12, 2011. The variation employs an open-frame cubic box with alternating wires rather than parallel plates to collect atmospheric ions. The Cubic Wire Detector provides valuable insight into where the most abundant source of atmospheric charge is located.
We believe the cubic wire geometry is more suited to the flight environment and in its second iteration will also be able to capture directionality, depletion, and charge mobility measurements. The alternating wires are held at a high voltage and the ions that pass between the wires are accelerated by the high voltage and measured as a current. The team has developed a custom software routine to automate the data collection and allow for the test operator to adjust test parameters in flight. The software has gone through several iterations over the past year and is currently performing as expected in laboratory tests utilizing an ion source.
As you can see, our engineers are very busy developing Harmony III so it can become a huge success. Our operational staff has adeptly kept pace with several important developments, as well.
While we continue our efforts to advance the capabilities of the Harmony III system, we are working the marketing side at the same time. We’ve launched Revmodo to keep investors and the public up to date on developments in clean energy and the clean energy business. Revmodo has created an online presence that is geared toward driving potential new business to SEFE through community outreach initiatives and education of the public about the growing clean technology space.
Shea Gunther and Michael d’Estries, two award-winning green marketing veterans whose experience ranges from Glamour to Forbes, and from the Huffington Post to the Mother Nature Network and GE’s, built the site for us and we are very pleased with their efforts. We feel that Revmodo will provide us with unique opportunities to foster new clean energy concepts, and believe it will also enable access to a wide variety of potential business partners that will bolster our company’s commercial opportunities. If you have not yet viewed the Revmodo site, I encourage you to do so.
Earlier this year, we moved our headquarters to Boulder, Colorado. We believe our Boulder facility provides us with an optimal setting for continued testing and perfection of our Harmony III system. We’re also pursuing a partnership with the University of Colorado’s Department of Electrical and Computer Engineering. We plan to work with both the Colorado Center for Power Electronics and the Center for Environmental Technology to perform research and development related to the physics and engineering of the Harmony III system. We believe the University will be a valuable partner in our efforts to further advance the development of our atmospheric energy technology.
Finally, we have set the following milestones on the path toward commercializing the Harmony III:
  • Completing the data collection to determine how much electricity can be generated and stored by each unit over a period of time based on location, altitude, weather, and other factors;
  • Securing contracts with mining organizations and/or utility companies;
  • Implementation of the communications, monitoring methodologies, and security for each unit through our Network Operations Center (NOC) where applicable.
Please feel free to contact us with any questions you may have. We very much appreciate the continued support of our investors and are committed to delivering long-term shareholder value to all of you.
Donald C. Johnston, CEO
SEFE, Inc.
4700 Sterling Drive
Boulder, CO 80301
T: (303) 444-0584
F: (303) 444-0571
About SEFE, Inc.
SEFE focuses on pushing the boundaries of what’s possible, embracing innovation and employing the cutting-edge to solve problems, and offering sustainable solutions to a world hungry for invention, direction and leadership. SEFE is technology- and solutions-driven, focusing on developing inventions that provide a real-world impact and true profitability. So, success is measured by both a sustainable return on investment, as well as a project’s sustainability from an environmental perspective.  


Anonymous said...

very entertaining. even more entertaining are the comments on the Revmodo website from shareholders....

Anonymous said...

Do this guys have a properly done feasibility study published anywhere?

Release looks hilarious like hell, but frankly, I can imagine this stuff working in the end (mind "imagine", not "expect"). I can see nothing inherenty counter-scientific or counter-economical with the idea.

However they are definitely just at the very start of development (balloon launch assist my glorious ass;) Never understood why in absence of any real progress everyone feels so compelled to press about their "more flight suited geometry".) so it looks like a fine short short-term. My point is just, if in several years something like this ends up as a working production prototype, I won't be extra surprised.

I'll be more surprised if it's still the same company under same management, yeah ;)))


Anonymous said...

Uh oh the Revmodo site at the link above:
What are the price benefits of atmospheric energy over other renewables like wind and solar?

Unfortunately we do not have a highly accurate cost model at this time. The technology is “ballpark” competitive with other renewable sources."

Was I asking for feasibility study? Disregard that.

longshorttrader said...

"Please feel free to contact us with any questions you may have. We very much appreciate the continued support of our investors and are committed to delivering long-term shareholder value to all of you."

Maybe I should call him just for fun. Dare me to, and I will.

Wilfried said...

John, as a long-time reader of your blog I think there should be occasional updates on what happened to companies like these that were mentioned by you. I darkly remember Blacklight and Zion Oil...

Michael Goode said...

Did they just the bungee cord?

(I'm short too but will cover soon - I'm mostly a daytrader).

Luke said...

Was the release dated 1april? In any event, I'm calling Bullshit.

Robert in Chicago said...

With their CEO being named Don Johnston, I am highly disappointed that they moved to Boulder from Arizona rather than Florida, preferably one of the hard-core scammer homes like Palm Beach or Boca. I can see him standing on that awful broad-leafed grass in his tangerine-colored t-shirt, white sportcoat, 3-day stubble and Ray Bans, hoisting a balloon in the air... (If you don't get the Miami Vice reference, then you're not old enough to have seen Billy Bragg in 1987.)

Robert in Chicago said...

P.S. We were short but covered several weeks and several dimes ago. The easy money is gone and the borrow cost is too high to wait around for the hard money.

Kid Dynamite said...

amazing - sounds like some science school dropouts sitting around smoking weed and putting out press releases.

question, though, John - do you normally make a habit of shorting micro-cap companies? I mean, this is a $25MM company, right? Do you find that it takes longer for your bear valuation thesis to shake out in situations like this?

Best Business Brands said...

Hold the fluorescent bulb in one hand and the balloon in the other. ... Touch the balloon to the glass and see if you can get a spark to jump. ... free to jump from one atom to the next, and they're attracted to some materials more than others. ... Bring the balloon close to the bubbles and they rise rapidly toward the balloon.

Anonymous said...

I'm not sure which is more worthy of humour - their patenting a balloon on an elastic string, or the patent office taking the application seriously!

hugh said...

Wilfred: Blacklight claims to be moving ahead with creating a product that can actually be sold. Their hubris is fascinating.

Anonymous said...

I know what I would do if I took over this company. And it would be glorious....

Ben Franklin said...

The balloon is a poor substitute for my kite, and the elastic tensioner is clearly a rip-off of my key; but replacing thunder with an ion-detection system is ... genius!

Tom said...

Creationism has turned into intelligent design.

Apparently, free energy has turned into atmospheric energy.

What will be the newer, friendlier name for perpetual motion?

cargocultinvestor said...

I don't know John.
Do you really want to bet against the kind of brain power that developed bungee cord technology to to... well I'm not really sure, but if that doesn't say "we're thinkin innovative thoughts" I don't know what does.

How do you find this stuff?

Aharon L said...

Do you think snake oil counts as a fossil fuel?

CrocodileChuck said...

Tesla's dream:

Anonymous said...

Whatever happened to Harmony I and Harmony II?

To be serious for just a second (yes, it's difficult): You know this is not a new idea at all, I remember seeing it described pretty much as they wrote at least 30 years ago. I suspect you need a really large collector at the top or you will get no power at all. The electrostatic motor will be unique; hey, much easier than converting multi-kilovolt power to usable lower voltages via nasty solid-state devices :)

The tethered balloons remind me of barrage balloons, so the users shouldn't have to worry about air raids.

From an engineering perspective, it sounds like it might be an interesting project to work on, at least while the money holds out.

Yoda said...

Use the force Luke.

Anonymous said...

The only thing i remember from high school science classes is that there is no such thing as free energy. My vote goes to this will be like all other "free" energy sources and harvesting energy will use more energy and resources than it produces rendering it useless.

Anonymous said...

Actually, with regards to physics and what most people post here, this should probably beg a second thought:

There is no thing as "free energy" for sure, but there is a "functionally free energy" produced from potential phenomena just all right.
Hydro, wind, solar, even more obscure stuff like tidal generators - all this lies in the same "functionally free without breaking any physics" field as the idea to put an energy of lightning (which potential difference between atmosphere and earth is) to work.

So as I wrote, the idea is not inherently counter-scientific the way true "perpetuum mobile" is.

Release is hilarious all the same, but for entirely businesslike reasons.


Anonymous said...

You can't say their website didn't warn people:
"They say you can’t make money out of thin air. But here at SEFE, we’re doing something better than that: We’re making energy out of thin air."

Jeffrey Hildebrand said...

Consider... There are two balloons and the ion capture balloon fails, patent an Attach Bungee Harness , the technical name is ABH, it should be designed to capture gravitational energy as the first balloon falls to earth.

Anonymous said...

This has GOT to be a late April Fool's joke right? Right??

S.W. said...

I did some work on this one a while back but couldn't find a borrow. I still couldn't put their 10k down. My favorite parts: 1) they have 3 full time employees and a CEO that is "prepared to dedicate additional time, as needed to execute our business strategies." 2) Their corporate office is provided rent free by a related party and their "Science and Technology Center" is located in a strip mall at a rate of $1,300 per month. 3) At year end, they had related party debt that was in default. In '12, they converted that debt into ~9mm shares at 3c per share.

OLGA said...

They attempt to sound pretty upbeat about their progress. This is the first time I've ever heard about anything like this although, with an engineering and science background, I have for years pondered if it was possible and economically feasible to extract energy from the atmosphere or earth's magnetic field. Don't know that I'd invest any money though at this stage.

Anonymous said...

ha,ha, what do you expect? It was a floundering candle company until July 2010 that never turned a profit since inception in 2004 and as their 10K says had "minimal revenues from that line of business".

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