Just what goes on at 6821 E. Thomas Road? (SEFE, ECTY, SPDL)

All the drama being created by commenter Charles reinvigorated us at BuyerssStrike! HQ.

At one time, prior to the now famous Boulder CO office, but after moving from its Indio, CA birthplace, Sefe Inc. (SEFE) gave as its address 6821 E. Thomas Rd, Scottsdale, AZ. 85251.

The most recent SEFE 10K states:

We use office space at 6821 East Thomas Road, Scottsdale, Arizona 85251.  A related party provides this space to us at no charge.

A quick search on Zillow shows that this an unimpressive single family home, purchased by someone in January 2007, the height of the real estate bubble, for $575,000

This purchaser must be the related party, but who is it?

Thankfully, Maricopa County records can answer that question. According to county records, available here, the owner of that property is one of Humble Harold‘s companies, Ecotality (ECTY).

But nowhere in the SEFE 10K does it mention that Ecotality is the related party. Why did SEFE fail to mention this? Could it be the fact that ECTY and its principals are under investigation?

Not surprisingly, a Google search indicates that another company is located at this 6821 E. Thomas Rd address, commenter Charles‘ favorite company, Spindle (SPDL). See the search results here.

Sure enough, the most recent SPDL filing, available here, shows that address, and so do SPDL filings from before SEFE moved to Boulder. According to SPDL’s 10K for 2011:

Corporate Offices
We use office space at 6821 E. Thomas Road, Scottsdale, AZ 85251.  We lease approximately 1735 square feet of office space from Air Commercial Real Estate at a rate of $2,165 per month for a lease term of 12 months.  There are currently no proposed programs for the renovation, improvement or development of the facilities we currently use. We are currently renting month to month with plans to move to a nearby location which has not been contracted.

Besides the obvious contradiction between having a 12 month lease and leasing month-to-month, we also know that the owner of the property is not “Air Commercial Real Estate” but actually ECTY. Air Commercial Real Estate is actually just an association of real estate brokers. See their website here. And we know from the Maricopa records that this is not commercial space, this is a single family dwelling. Why is Spindle afraid to reveal the true owner of their HQ? Why could they not find properly zoned commercial space for $2k a month in a real estate market as poor as Arizona’s in this environment? And is ECTY properly accounting for their rental income?

A quick look at the ECTY 10K for 2011 reveals the following:

On January 19, 2007 we purchased a 1,735 square foot, stand-alone office building at a cost of $575,615. A total of $287,959 has been paid. The remaining balance of $287,500, net a tax credit of $156, is structured as an interest-only loan from a non-affiliated third-party, bears an interest rate of 6.75% calculated annually, with monthly payments in the amount of $1,617 due beginning on February 16, 2007. The entire principal balance is due on or before January 16, 2012. This debt was refinanced in the first quarter of 2012.

That is clearly the 6821 E. Thomas Road house. But the 10K does not mention at all that the space was being given to SEFE at no charge, and also being simultaneously leased to SPDL at $2165 per month. Nowhere is it mentioned that the space has been sublet, and nowhere in Note 3 (“Revenue Recognition”) to the ECTY financial statements is there any mention of rental income from their tenants. There is no evidence that the revenue was reported on the income statement. Can we believe that ECTY even received the money? If not, who did pocket it?

We also know that the entire house is only 1735 square feet. If SPDL was using 100% of it, as the filing indicates, then how could SEFE also be using the space? Unless, of course, they were working very very closely….

Sorry Charlie!

The content contained in this blog represents only the opinions of the author. The author may hold either long or short positions in securities of various companies discussed in the blog. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. This blog is not a solicitation of business: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.


  1. 6821 E. Thomas Rd. is actually zoned for office space. That stretch of Thomas Rd. has about a dozen homes that were rezoned, years ago, into offices due to the widening of Thomas Rd.

    [@Kek – Thanks for the info, the Maricopa county records, available here still indicate that this is a single family dwelling. Either way, we can certainly agree it can hardly be considered Class A office space. – Editor]

  2. Just read this today and SEFE was part of this list. What exactly does this mean?
    The following is a list of “threshold securities” from the Nasdaq Stock Market, published daily in compliance with the U.S. Securities and Exchange Commission’s Regulation SHO.

    The list consists of stocks for which sellers failed to deliver 10,000 shares or more in the past five trading days and the level of “fails” is a minimum of 0.5 percent of the shares outstanding. Securities are listed alphabetically by ticker.

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