SEFE (SEFE) CEO Issues Letter to Shareholders

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 ecomagination.com, 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.

Sincerely,

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.

For more information, visit www.SEFElectric.com.

Forward-Looking Statements

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding our expected future financial position, results of operations, cash flows, financing plans, business strategy, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.