UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





(Mark One)[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended: March 31, 2011Or[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____________ to _____________Commission File Number: 000-51842  SEFE, INC.(Exact name of registrant as specified in its charter)
  Nevada

20-1763307(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)
  1900 W. University Dr.

Tempe, AZ

85281(Address of principal executive offices)

(Zip Code)
  (480) 294-6407(Registrant's telephone number, including area code)
  (Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes [X]   No [   ]





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that ht registrant was required to submit and post such files).


Yes [   ]   No [X]





Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:





Large accelerated filer
[   ]
Accelerated filer
[   ]Non-accelerated filer
[   ]
Smaller reporting company
[   ]








Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes [   ]   No [X]





Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:





Common Stock, $0.001 par value
60,150,000 shares(Class)
(Outstanding as at May 16, 2011)





SEFE, INC.





Table of Contents





PagePART I – FINANCIAL INFORMATIONUnaudited Financial Statements
1Condensed Balance Sheets
1Condensed Statements of Operations
2Condensed Statements of Cash Flows
3Notes to Condensed Financial Statements
4Management's Discussion and Analysis of Financial Condition and Plan of Operation
12Controls and Procedures
18PART II – OTHER INFORMATIONUnregistered Sales of Equity Securities
19Exhibits and Reports on Form 8-K
20SIGNATURES
21




-i-
 Table of Contents


PARTI – FINANCIAL INFORMATION





Unaudited Financial Statements





SEFE, Inc.


(A Development Stage Company)


Condensed Balance Sheets


March 31,


December 31,2011


2010(Unaudited)


(Audited)ASSETSCurrent assets:Cash

$
30,041


$
-Prepaid expenses and deposits


232,411



100,000Total current assets


262,452



100,000Fixed assets, net of accumulated depreciation of $11,808 and $6,325as of March 31, 2011 and December 31, 2010, respectively


97,867



103,351Other assets, net of accumulated amortization of $2,271 and $1,369as of March 31, 2011 and December 31, 2010, respectively


8,554



9,456Total assets

$
368,873


$
212,807LIABILITIES AND STOCKHOLDERS’ (DEFICIT)Current liabilities:Accounts payable

$
9,792


$
61,258Bank overdraft


-



6,324Accrued interest


39,077



24,044Notes payable, net of discount of $117,778 and $0, respectively


462,222



310,000Notes payable – related party


295,000



295,000Payroll liabilities


-



31,604Total current liabilities


806,091



728,230Total liabilities


806,091



728,230Stockholders’ (deficit):Common stock, $0.001 par value, 200,000,000 shares authorized,60,150,000 and 60,000,000 shares issued and outstandingas of March 31, 2011 and December 31, 2010, respectively


60,150



60,000Additional paid-in capital


447,180



162,330Deficit accumulated during development stage


(944,548
)


(737,753
)Total stockholders’ (deficit)


(437,218
)


(515,423
)Total liabilities and stockholders’ (deficit)

$
368,873


$
212,807




The accompanying notes are an integral part of these condensed financial statements.




-1-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Condensed Statements of Operations





For the three months ended


September 24, 2004March 31,


(Inception) to2011


2010


March 31, 2011RevenueSales, net of allowance of $107

$
-


$
-


$
464Cost of sales


-



-



273Freight in


-



-



95Gross profit


-



-



96Expenses:Advertising and marketing


1,766



-



9,344Depreciation and amortization


6,386



-



14,079Executive compensation


90,000



-



216,395General and administrative expenses


20,862



4,670



99,167Professional fees


54,478



1,175



187,860Impairment expense


-



-



214,414Total expenses


173,492



5,845



741,259Loss before other expenses


(173,492
)


(5,845
)


(741,259
)Other expense:Interest expense


(33,303
)


-



(58,385
)Total other expense


(33,303
)


-



(58,385
)Loss before provision for income taxes


(206,795
)


(5,845
)


(799,548
)Provision for income taxes


-



-



-Net (loss)

$
(206,795
)

$
(5,845
)

$
(799,548
)Weighted average number ofcommon shares outstanding – basic and fully diluted


60,098,333



156,900,000Net (loss) per share – basic and fully diluted

$
(0.00
)

$
(0.00
)




The accompanying notes are an integral part of these condensed financial statements.


-2-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Condensed Statements of Cash Flows


For the three months ended


September 24, 2004March 31,


(Inception) to2011


2010


March 31, 2011Cash flows from operating activitiesNet loss

$
(206,795
)

$
(5,845
)

$
(799,548
)Adjustments to reconcile net loss to net cash(used in) operating activities:Shares issued for services – related party


-



-



17,000Bad debt expense


-



-



-Depreciation and amortization


6,386



-



14,079Impairment expense


-



-



213,976Amortization of beneficial conversion feature


17,222



-



17,222Changes in operating assets and liabilities(Increase) in prepaid expenses and deposits


(132,411
)


-



(232,411
)Increase (decrease) in accounts payable


(51,466
)


-



9,792Increase in accrued interest


15,033



-



39,077(Decrease) in payroll liabilities


(31,604
)


-



-Net cash (used) by operating activities


(383,635
)


(5,845
)


(720,813
)Cash flows from investing activitiesAcquisitions of fixed assets


-



-



(54,476
)Net cash provided by financing activities


-



-



(54,476
)Cash flows from financing activitiesBank overdraft


(6,324
)


-



-Donated capital


-



300



830Issuance of common stock


150,000



-



179,500Proceeds from note payable


270,000



5,809



460,270Proceeds from note payable – related party


-



-



185,000Payments to from note payable


-



-



(20,270
)Net cash provided by financing activities


413,676



6,109



805,330Net increase (decrease) in cash


30,041



264



30,041Cash at beginning of period


-



11



-Cash at end of period

$
30,041


$
275


$
30,041Supplemental disclosures:Interest paid

$
-


$
-


$
-Income taxes paid

$
-


$
-


$
-Non-cash activities:Shares issued for services – related party

$
150,000


$
-


$
167,000Number of shares issued for services – related party


150,000



-



17,150,000Shares issued for assets and debt

$
-


$
-


$
30,000Number of shares issued for assets and debt


-



-



30,000,000Acquisition of notes payable for assignment agreement

$
-


$
-


$
250,000Warrants issued for services

$
-


$
-


$
-Number of warrants issued for services


-



-



125,000




The accompanying notes are an integral part of these condensed financial statements.


-3-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 1 – Basis of presentation





The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.





These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these condensed interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2010 and notes thereto included in the Company's annual report on Form 10-K.  The Company follows the same accounting policies in the preparation of interim reports.





Results of operations for the interim periods are not indicative of annual results.





Note 2 – History and organization of the company





The Company was originally organized on September 24, 2004 (Date of Inception) under the laws of the State of Nevada, as Midnight Candle Company.  On July 20, 2010, the Company amended its articles of incorporation to change its name from Midnight Candle Company to SEFE, Inc.  The Company is authorized to issue up to 200,000,000 shares of its common stock with a par value of $0.001 per share.





The business of the Company is to commercialize the ability to harvest atmospheric electricity.  The Company has limited operations and in accordance with FASB ASC 915-10, “Development Stage Entities,” the Company is considered a development stage company.





Note 3 – Going concern





The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As shown in the accompanying financial statements, the Company has incurred a net loss of ($799,549) for the period from September 24, 2004 (inception) to March 31, 2011, and had minimal net sales of $464.





In order to continue as a going concern, the Company will need, among other things, additional capital resources.  The Company is significantly dependent upon its ability, and will continue to attempt, to secure equity and/or additional debt financing.  The Company has recently issued debt securities and is contemplating conducing an offering of its common stock to raise proceeds to finance its plan of operation.  There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.





The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.  These conditions raise substantial doubt about the Company's ability to continue as a going concern.  These financial statements do not include any adjustments that might arise from this uncertainty.


-4-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 4 – Accounting policies and procedures





Use of estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.





Loss per share


Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”.  Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. The Company had no dilutive common stock equivalents, such as stock options or warrants as of March 31, 2011.





Revenue recognition


The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.





Sales related to long-term contracts for services (such as engineering, product development and testing) extending over several years are accounted for under the percentage-of-completion method of accounting.  Sales and earnings under these contracts are recorded based on the ratio of actual costs incurred to total estimated costs expected to be incurred related to the contract under the cost-to-cost method based budgeted milestones or tasks as designated per each contract. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable.





For all other sales of product or services the Company recognizes revenues based on the terms of the customer agreement.  The customer agreement takes the form of either a contract or a customer purchase order and each provides information with respect to the product or service being sold and the sales price.  If the customer agreement does not have specific delivery or customer acceptance terms, revenue is recognized at the time of shipment of the product to the customer.





Recent Accounting Pronouncements


The company evaluated all of the other recent accounting updates through ASU 2011-01 and deemed that they would not have a material effect on the financial position, results of operations or cash flows of the Company.


-5-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 5 – Prepaid expenses and deposits





As of March 31, 2011, the Company had prepaid expenses and deposits totaling $100,000, which represent a non-refundable deposit of advertising and marketing costs to a vendor for services to be rendered.  The deposit will be expensed when the Company either proceeds with, or terminates, the agreement.





On January 12, 2011, the Company entered into a legal retainer agreement with a law firm, for which the Company paid a legal retainer of $2,500.  The retainer will be expensed at the sole discretion of the law firm and all ongoing legal fees are billed to the Company as incurred.





On February 11, 2011, the Company entered into three consulting agreements, for which the Company issued an aggregate of 150,000 shares of common stock with a fair market value of $150,000.  The deposit is expensed over twelve months, which is the term of the agreements.  As of March 31, 2011, the Company has recognized $20,089 in consulting expense against this prepaid expense and $129,911 remained in prepaid expenses.





Note 6 – Debt and interest expense





Through March 31, 2011, the Company borrowed a total of $15,000 from a former officer and director of the Company.  The notes bear no interest, are due on demand and contain no prepayment penalty.





On August 19, 2009, the Company entered into a Revolving Line of Credit Promissory Note for a total of $30,000.  At the time of the transaction, the holder was not a related party; however, as of December 31, 2010, the holder is materially controlled by a director of the Company and is thus considered to be a related entity.  Any principal balance borrowed against the Note accrues interest at a rate of 10% per year.  The entire unpaid balance and interest accrued thereupon are due on December 31, 2011.  Unpaid balance and interest accrued thereupon are due on December 31, 2011.  The Company has not borrowed against this note and the balance due as of March 31, 2011 is $0.





On June 25, 2010, the Company entered into a Bridge Loan Agreement, whereby the Company borrowed $120,000 from a related party entity.  The loan is due and payable in full on the earlier of June 25, 2011 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $120,000.  Interest expense through March 31, 2011 in relation to this note is $9,173.  In connection with the loan, and for no additional consideration, the Company issued to the note holder an aggregate of 450,000 shares of common stock.  See Note 5 – Stockholders’ Equity for additional discussion regarding the issuance of shares.





On June 25, 2010, the Company entered into a Bridge Loan Agreement, whereby the Company borrowed $145,000 from a non-related entity.  The loan is due and payable in full on the earlier of June 25, 2011 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $145,000.  Interest expense through March 31, 2011 in relation to this note is $11,084.  In connection with the loan, and for no additional consideration, the Company issued to the note holder an aggregate of 500,000 shares of common stock.  See Note 5 – Stockholders’ Equity for additional discussion regarding the issuance of shares.


-6-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 7 – Debt and interest expense (continued)





On June 25, 2010, the Company entered into a Bridge Loan Agreement, whereby the Company borrowed $25,000 from a non-related entity.  The loan is due and payable in full on the earlier of June 25, 2011 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $25,000.  Interest expense through March 31, 2011, in relation to this note is $1,911.  In connection with the loan, and for no additional consideration, the Company issued to the note holder an aggregate of 50,000 shares of common stock.  See Note 5 – Stockholders’ Equity for additional discussion regarding the issuance of shares.





Pursuant to the July 16, 2010 Intellectual Property Assignment Agreement, the Company assumed liabilities totaling $250,000 in the form of convertible notes payable, due equitably to two holders, one of which is a related party entity.  The notes are due and payable in full on May 5, 2011.  The notes bear an interest rate of 5% per annum.  As of March 31, 2011, the balance owed on this loan is $250,000.  Interest expense through March 31, 2011 in relation to these notes is $11,301.  The notes are convertible by the holders into shares of the Company’s common stock at a rate of $0.50 per share.





On November 2, 2010, the Company entered into a Bridge Loan Agreement, whereby the Company borrowed $50,000 from a related party entity.  The loan is due and payable in full on the earlier of November 2, 2011 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $50,000.  Interest expense through March 31, 2011 in relation to this note is $2,041.





On January 25, 2011, the Company entered into a Convertible Debenture Agreement, whereby the Company borrowed $100,000 from a third party entity.  The loan is due and payable in full on the earlier of January 25, 2012 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $100,000.  Interest expense through March 31, 2011 in relation to this note is $1,870.  The note is convertible at the sole discretion of the Company into shares of the Company’s par value common stock at a rate of $0.50 per share of common stock.  Resultantly, a discount of $50,000 was attributed to the beneficial conversion feature of the note, which amount is being amortized over a period of twelve months.  As of March 31, 2011, a total of $9,028 has been amortized and recorded as interest expense.





On February 14, 2011, the Company entered into a Convertible Debenture Agreement, whereby the Company borrowed $100,000 from a third party entity.  The loan is due and payable in full on the earlier of February 14, 2012 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $100,000.  Interest expense through March 31, 2011 in relation to this note is $1,295.  The note is convertible at the sole discretion of the Company into shares of the Company’s par value common stock at a rate of $0.50 per share of common stock.  Resultantly, a discount of $50,000 was attributed to the beneficial conversion feature of the note, which amount is being amortized over a period of twelve months.  As of March 31, 2011, a total of $6,250 has been amortized and recorded as interest expense.


-7-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 7 – Debt and interest expense (continued)





On March 11, 2011, the Company entered into a Convertible Debenture Agreement, whereby the Company borrowed $70,000 from a third party entity.  The loan is due and payable in full on the earlier of February 14, 2012 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $70,000.  Interest expense through March 31, 2011 in relation to this note is $403.  The note is convertible at the sole discretion of the Company into shares of the Company’s par value common stock at a rate of $0.50 per share of common stock.  Resultantly, a discount of $35,000 was attributed to the beneficial conversion feature of the note, which amount is being amortized over a period of twelve months.  As of March 31, 2011, a total of $1,944 has been amortized and recorded as interest expense.





As of March 31, 2011 the Company’s notes payable are reflected net of a $117,778 discount in these financial statements.





Note 8 – Stockholders’ equity





The Company was originally authorized to issue up to 100,000,000 shares of one class of common stock, par value $.001.  On October 15, 2008, the Company amended the Company’s Articles of Incorporation to increase the authorized capital stock of the Company from 100,000,000 shares with a par value of $0.001 per share to 200,000,000 shares of par value common stock





On June 25, 2010, the Company issued an aggregate of 1,000,000 shares of its par value common stock to two note holders, in connection with the Bridge Loan Agreements discussed in Note 4 – Debt and Interest Expense, above.  The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act at a price per share of $0.001.





On July 16, 2010, the founding shareholder and an officer and director of the Company returned and cancelled an aggregate of 144,900,000 shares of common stock of the Company.





On July 16, 2010, the Company issued 30,000,000 shares of its common stock valued at $30,000 to SEFE, Inc., pursuant to the July 16, 2010 Intellectual Property Assignment Agreement.





On November 29, 2010, the Company issued an aggregate of 17,000,000 shares of common stock for services rendered by two directors of the Company valued at $17,000.





On December 31, 2010, a note holder forgave the balance of a liability owed by the Company in the amount of $270.





On February 1, 2011, the Company issued an aggregate of 150,000 shares of common stock to three non-affiliated parties for consulting services rendered with a total value of $150,000.  See Note 5 for additional details concerning the consulting expense.





As of March 31, 2011, there have been no other issuances of common stock.


-8-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 9 – Warrants





On August 3, 2010, the Company issued warrants to purchase shares of the Company’s par value common stock to one non-affiliated entity in conjunction with a legal services agreement.  The warrant holder was granted the right to purchase 125,000 shares of common stock of the Company at an exercise price of $1.00 per share, for an aggregate purchase price of $125,000.  The aggregate fair value of such options totaled $0 based on the Black Schoeles Merton pricing model using the following estimates:  3.3% risk free rate, 106% volatility and expected life of the options of 24 months.





The following is a summary of the status of all of the Company’s stock warrants as of March 31, 2011 and 2010 and changes during the three months ended on those dates:





Number

Of Shares


Weighted-Average

Exercise PriceOutstanding at December 31, 2009


0


$
0.00Granted


0


$
0.00Exercised


0


$
0.00Cancelled


0


$
0.00Outstanding at March 31, 2010


0


$
0.00Granted


0


$
0.00Exercised


0


$
0.00Cancelled


0


$
0.00Outstanding at December 31, 2010


0


$
0.00Granted


125,000


$
1.00Exercised


0


$
0.00Cancelled


0


$
0.00Outstanding at March 31, 2011


125,000


$
1.00Granted


0


$
0.00Exercised


0


$
0.00Cancelled


0


$
0.00Warrants exercisable at March 31, 2010


0


$
0.00Warrants exercisable at March 31, 2011


41,667


$
1.00





The following tables summarize information about stock options outstanding and exercisable at March 31, 2011:





STOCK OPTIONS OUTSTANDINGRange of

Exercise Prices


Number of

Shares

Outstanding


Weighted-Average

Remaining

Contractual

Life in Years


Weighted-

Average

Exercise Price$
1.00



125,000



0.71


$
1.00125,000



0.71


$
1.00





STOCK OPTIONS EXERCISABLERange of

Exercise Prices


Number of

Shares

Exercisable


Weighted-

Average

Exercise Price$
1.00



41,667


$
1.0041,667


$
1.00





As of March 31, 2011, there were 125,000 stock options outstanding to acquire shares of our common stock.


-9-
 Table of Contents


SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 10 – Agreements





On July 16, 2010, the Company entered into and closed an Intellectual Property Assignment Agreement by and between SEFE, Inc., a Delaware corporation, the Company and Ms. Helen C. Cary, the majority shareholder of the Company’s issued and outstanding common stock.  In accordance with the Assignment, the Company acquired all of SEFE’s right, title and interest in and to various information, inventions, discoveries, writings, expressions, ideas, know-how, concepts, techniques, innovations, systems, processes, procedures, methods, prototypes, designs, and technical data involving or relating to certain atmospheric static electricity collectors, as generally described in four U.S. Patent Applications.  In exchange for the assignment of the Patents, the Company agreed to the following:





1.
The assumption of liabilities of SEFE, in the aggregate of $250,000;


2.
The issuance of 30,000,000 shares of the Company’s unregistered common stock; and


3.
The cancellation by Ms. Cary of 144,900,000 shares of the Company’s common stock owned by her.





On August 3, 2010, the Company entered into a legal services agreement with a law firm for certain services to be provided over a period of three months.  The monthly retainer was $2,500 and did not take effect until approximately October 2010.  As of March 31, 2011, the Company paid a total of $5,000 in accordance with the agreement and currently owes a balance of $2,500.  As additional compensation, the Company issued options to purchase 125,000 shares of common stock of the Company, with an exercise price of $1.00.  As stated in Note 9, above, the aggregate fair value of such options totaled $0 based on the Black Schoeles Merton pricing model using the following estimates:  3.3% risk free rate, 106% volatility and expected life of the options of 24 months.  No additional amounts are due and the agreement has expired as of December 31, 2010.





On August 4, 2010, the Company entered into a Media Services Agreement with a vendor for advertising and marketing services to be rendered in the amount of $500,000.  In accordance with the terms of the Agreement, the Company paid to the vendor a non-refundable deposit of $100,000.  The Agreement shall be in full force and effect until the services contracted for are provided by the vendor or the Company notifies the vendor of its inability or unwillingness to proceed.  In the event the Company does not terminate the agreement and the services are provided, the Company will be expected to pay an additional balance of $400,000 upon completion.  During the three months ended March 31, 2011 and 2010, the Company recorded $0 and $0 of expenses related to this Agreement, respectively.





Note 11 – Related party transactions





On August 19, 2009, the Company entered into a Revolving Line of Credit Promissory Note for a total of $30,000.  At the time of the transaction, the holder was not a related party.  However, as of June 30, 2010, the holder is materially controlled by a director of the Company and is thus considered to be a related entity.  The Company has not borrowed against this note and the balance due as of June 30, 2010 is $0.





On June 25, 2010, the Company entered into a Bridge Loan Agreement, whereby the Company borrowed $120,000 from a related party entity.  In connection with the loan, and for no additional consideration, the Company issued to the note holder an aggregate of 500,000 shares of common stock.





On July 16, 2010, in connection with the Intellectual Property Assignment Agreement the Company assumed liabilities totaling $250,000 in convertible notes payable, of which $125,000 was issued to a related party entity.




On November 3, 2010, the entered into a Bridge Loan Agreement, whereby the Company borrowed $50,000 from a related party entity.





Through March 31, 2011, the Company borrowed a total of $15,000 from an officer of the Company.  The notes bear no interest, are due on demand and contain no prepayment penalty.


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SEFE, Inc.


(A Development Stage Company)


Notes to Condensed Financial Statements





Note 12 – Subsequent Events





The Company’s Management has reviewed all material events through the date of this report in accordance with ASC 855-10, and believes there are no further material subsequent events to report.


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Management'sDiscussion and Analysis of Financial Condition and Plan of Operation





Forward-Looking Statements





This Quarterly Report contains forward-looking statements about SEFE’s business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available.  We can give no assurance that the expectations indicated by such forward-looking statements will be realized.  If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, SEFE’s actual results may differ materially from those indicated by the forward-looking statements.





The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.





There may be other risks and circumstances that management may be unable to predict.  When used in this Quarterly Report, words such as,  "believes,""expects," "intends,""plans,""anticipates,""estimates"and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.





Overview





We were originally incorporated in the State of Nevada on September 24, 2004 as “Midnight Candle Company.” On July 16, 2010, we entered into an Intellectual Property Assignment Agreement by and between SEFE, Inc., a Delaware corporation, Ms. Helen C. Cary, the majority shareholder of our issued and outstanding common stock, and Midnight Candle Company.  In accordance with the Assignment, we acquired all of SEFE’s right, title and interest in and to various information, inventions, discoveries, writings, expressions, ideas, know-how, concepts, techniques, innovations, systems, processes, procedures, methods, prototypes, designs, and technical data involving or relating to certain atmospheric static electricity collectors, as generally described in four U.S. Patent Applications. In exchange for the assignment of the Patents, we agreed to the following:





1.
The assumption of liabilities of SEFE, in the aggregate of $250,000;


2.
The issuance of 30,000,000 shares of the Registrant’s unregistered common stock; and


3.
The cancellation by Ms. Cary of 144,900,000 shares of the Registrant’s common stock owned by her.





For a more detailed explanation of the above transactions please see the Company’s Form 8-K filed with the SEC on July 19, 2010, and subsequent amendments made thereto.





The Assignment resulted in a change of control, as SEFE (Delaware) became our majority shareholder, owning 72.1% of our issued and outstanding common stock.  Control was assumed from Ms. Cary, who is no longer our principal shareholder.





On July 20, 2010, we amended our articles of incorporation with the Secretary of State of Nevada to change our name from Midnight Candle Company to “SEFE, Inc.”





SEFE was founded to develop and bring to market a renewable source of energy that naturally occurs in the atmosphere.  The goal of our company is to use our proprietary methodologies and inventions to capture and convert this naturally occurring atmospheric static electric energy to usable energy.  SEFE's energy production methodologies and technologies are un-intrusive to existing communities, are easily adoptable, provide high output and leave a small carbon footprint.  The SEFE system is designed to operate by capturing static electricity from the atmosphere and making it usable for utility companies; mining, construction, or other site-specific industrial concerns; relief organizations; among others.  Our technology does function to the extent that it has been tested.  This is a renewable source, but also one that is non-polluting, efficient, and economical.




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Subsequent to the period ended March 31, 2011, as covered by this report, we filed three patent applications in relation to our energy collection systems with the United States Patent and Trademark Office, as follows:
 
 1.
Application No.: 13/103,988
 Title: Strain Reduction On A Balloon System In Extreme Weather Conditions
 Filing Date: May 9, 2011
 Inventor: Mark E. Ogram
 
 The subject matter described herein relates to strain reduction on a balloon system in extreme weather conditions. The strain reduction is achieved by using an elastic bungee between a balloon and the tether attached to the balloon.  As wind pushes on the balloon, immediate pressure caused by the wind is cushioned on the elastic bungee rather than on the balloon or the tether, thereby reducing immediate force and tension on either the balloon or the tether.  Thus, the balloon system that includes the balloon and the tether is protected from damage that can possibly be caused by tension due to pressure.
 
 2.
Application No.:  13/103,963
 Title:  Atmospheric Energy Collection
 Filing Date:  May 9, 2011
 Inventor:  Mark E. Ogram
 
 The subject matter described herein is an atmospheric energy collector.  The atmospheric energy collector includes of a windsock arrangement that has a large up-wind opening on one side and that tapers from the larger up-wind opening on the one side to a small down-wind opening on the other side.   The up-wind side is secured to a tether such that an electrically conducting material (e.g. metal) included in construction of the atmospheric energy collector is connected to the tether.  The windsock arrangement is extended outwards by wind and the like atmospheric conditions such that the electrically conducting material collects the atmospheric energy and transfers the collected energy to the tether.
 
 3.
Application No.:  13/106,759
 Title:  Collection of Atmospheric Ions
 Filing Date:  May 12, 2011
 Inventor:  Ryan Coulson et al.
 
 The subject matter described herein relates to a method for collection of atmospheric ions subject to an electron avalanche associated with a gas multiplication effect between parallel plate collectors.  A voltage source can be provided.  The voltage source can provide a voltage that can cause a high electric field between two consecutive plates of the plurality of parallel plates.  The high electric field can cause an electron avalanche that can cause electron multiplication.  Energy associated with these multiplied electrons can be extracted, and studied to give insight into where the most abundant source of atmospheric charge is located.  Related apparatus, systems, techniques and articles are also described.


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Results of Operations





We are focused on developing our proprietary technology that harvests static electricity in the earth’s atmosphere.  We have not generated revenues from this line of business.  Our operations remain in the development stage and we are unable to predict when, if ever, we will begin to generate revenues.  Due to a change in business, year to year comparisons are not significant and are not a reliable indicator of future prospects.  Resultantly, no comparison will be presented in this report.





In the course of our operations, we incur operating expenses composed largely of general and administrative costs and professional fees.  General and administrative expenses are essentially the cost of doing business, and encompass, without limitation, the following: licenses; taxes; general office expenses, such as postage, supplies and printing; utilities; bank charges; website costs; and other miscellaneous expenditures not otherwise classified.  Accounting fees include: auditing by our independent registered public accountants, bookkeeping, tax preparation fees for filing Federal and State income tax returns and other accounting-specific consulting services.  Professional fees include: transfer agent fees for printing stock certificates; consulting costs for marketing and advertising; general business development; and Edgarization fees for the submission of reports and information statements with the U.S. Securities and Exchange Commission.  We have also incurred costs that are the result of the development and testing of our proprietary technologies which aim to harvest atmospheric electricity.





For the three months ended March 31, 2011, we incurred operating expenses in the amount of $173,492, composed of $5,484 in depreciation related to furniture, fixtures and equipment acquired from SEFE (Delaware), $902 in amortization expense attributable to certain intangible assets acquired from SEFE (Delaware), executive compensation paid to officers of $90,000, $20,862 in general and administrative expenses and $54,478 in professional fees.  In the comparable three month period ended March 31, 2010, operating expenses totaled $5,845, consisting primarily of general and administrative costs of $4,670 and professional fees in the amount of $1,175.





Since our inception on September 24, 2004 through March 31, 2011, aggregate operating expenditures were $741,259.  Our operating expenses are tied directly to our ongoing operations and growth.  As a result, we anticipate expenditures increasing through the foreseeable future and may vary dramatically from period to period.





During the three months ended March 31, 2011, we recorded interest expense of $33,303, related to debt financing we have obtained to fund our expected operational strategies.  In the three months ended March 31, 2010, interest expense totaled $0.  Since inception to March 31, 2011, we incurred $58,385 in interest expense.





We have experienced net losses in all periods since our inception.  Our net losses for the three months ended March 31, 2011 and 2010 were $206,795 and $5,845, respectively.  Our net loss since the date of our inception through March 31, 2011 was $799,548.  We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow.





Liquidity and Capital Resources





As of March 31, 2011, we had $30,041 of cash on hand.  Our management believes this amount is not sufficient to maintain our operations for at least the next 12 months.  We are actively raising additional capital by conducting additional issuances of our equity and debt securities for cash.  We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms.  As such, our principal accountants have expressed doubt about our ability to continue as a going concern because we have limited operations and have not fully commenced planned principal operations.





On August 19, 2009, the Company entered into a Revolving Line of Credit Promissory Note with a non-related, third party entity for a total of $30,000.  Any principal balance borrowed against the Note accrues interest at a rate of 10% per year.  The entire unpaid balance and interest accrued thereupon are due on December 31, 2011.  As of the date of this report, we have not drawn any funds on this line of credit and we anticipate within the next 12 months to cancel this arrangement and close the line of credit





On June 25, 2010, we entered into three Bridge Loan Agreements, whereby we borrowed an aggregate of $290,000.  The loans are due and payable in full on the earlier of June 25, 2011 or at the closing of a private placement offering that nets us a minimum of $2,000,000.  The loans bear an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, we did not make any payments toward the Loans and the balance due is $290,000.  Interest expense through March 31, 2011 in relation to these notes is $22,168.


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Pursuant to the July 16, 2010 Intellectual Property Assignment Agreement, we assumed liabilities totaling $250,000 in the form of convertible notes payable, due equitably to two holders, one of which is a related party entity.  The notes are due and payable in full on May 5, 2011.  The notes bear an interest rate of 5% per annum.  The notes are convertible by the holders into shares of our common stock at a rate of $0.50 per share.  As of March 31, 2011, no payments have been made on these notes and the balance owed is $250,000.  Interest expense through March 31, 2011 in relation to these notes is $11,301.  The notes are convertible by the holders into shares of the Company’s common stock at a rate of $0.50 per share.





On November 2, 2010, we entered into a Bridge Loan Agreement, whereby we borrowed $50,000 from a related party entity.  The loan is due and payable in full on the earlier of November 2, 2011 or at the closing of a private placement offering that nets us a minimum of $2,000,000.  The loan bears an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, the principle balance owed on this loan is $50,000.  Interest expense through March 31, 2011 in relation to this note is $2,041.





During the three months ended March 31, 2011, we entered into three Convertible Debenture Agreements, whereby we borrowed an aggregate of $270,000 from a third-party entity.  The loans bear an interest rate of 10% per annum, payable on maturity.  As of March 31, 2011, no payment have been made on these loans and the principle balance owed is $270,000.  Interest expense through March 31, 2011 in relation to these notes is $3,568.  The notes are convertible at the sole discretion of SEFE into shares of our common stock at a rate of $0.50 per share.  We recorded a discount of $135,000 to the beneficial conversion feature of the notes, which amount is being amortized over a period of twelve months.  As of March 31, 2011 these notes payable are reflected net of a $117,778 discount in the financial statements accompanying this quarterly report.  As of March 31, 2011, a total of $17,222 has been amortized and recorded as interest expense.





Our management  expects to incur  up to, but not in excess of, $300,000 in research and development costs.


We do not have any off-balance sheet arrangements.





We currently do not own any significant plant or equipment that we would seek to sell in the near future.





We have not paid for expenses on behalf of any of our directors.  Additionally, we believe that this fact shall not materially change.





Plan of Operation





SEFE has recognized an alternative source of energy that naturally occurs in the atmosphere.  This energy can be captured and converted to usable electricity with a proprietary methodology developed or otherwise owned by SEFE.  The SEFE system operates by capturing static electricity from the atmosphere and making it usable for utility companies.  This is a renewable source, but also one that is non-polluting and economical.  The SEFE system is designed to operate, and does function, to the extent that it has been tested, in the following manner:





Ø
An electrical lead held aloft by a suspension mechanism


Ø
Static electricity is absorbed by the lead


Ø
The direct current of electricity is converted to an alternating current using our proprietary methods


Ø
The collected electricity is sent to an isolated platform


Ø
The platform sends the current to a converter to do either one of the following:


o
Translate the direct current into an alternating current in usable form and


o
Convert the electricity back into direct current and stores it in batteries for later use


Ø
Electricity is communicated to existing residential and commercial locations (using the existing power distribution infrastructure from the utility companies)





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We currently work with a number of professional firms who provide various consulting, advisory and/or other service essential to our operations:


1. Greenberg Traurig, LLP – securities counsel
 2. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC – intellectual property, mergers and acquisitions and general counsel
 3. Agron Law Group – corporate counsel
 4. Weaver and Martin, LLC – independent registered certified public accounting firm




For additional information about our company and our business, you can visit our corporate website at www.sefelectric.com.  It currently contains access to our reporting information and we plan to continue providing access to our reporting information through this corporate website.




Ongoing data collection continues to measure the amount of atmospheric electricity available in various weather conditions, amounts of cloud cover, altitudes, and elevations above sea level.  We will capitalize on the information gleaned from our most recent and upcoming tests in order to move into fabrication of our commercial grade units.  We have strategically studied topography and weather conditions throughout the United States in order to determine the areas where we might harvest the maximum amount of electricity.  We have also conducted research into the relevant details of the largest mining concerns across the United States to determine how much electricity our units would be able to generate for those potential clients under their current conditions and, by extension, how much our units would be able to provide in savings to these potential customers.  In the event that we are unable to receive funding, it may be impossible for us to meet these stated milestones and continue on the path toward the generation of revenue.





We plan on generating revenue by selling the electricity produced by our Harmony III commercial grade units.  Milestones to be met on the way to this goal include:





1.
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.





2.
Fabrication of our initial commercial grade unit;





3.
Securing contracts with either mining organizations and/or utility companies





4.
Implementation of the communications, monitoring methodologies, and security for each unit through our Network Operations Center





We are a small, development stage company attempting to establish ourselves in a relatively new, untapped niche in the energy industry.  We are actively engaged in building our infrastructure, upon which we will establish a base of operations.  We are currently working on solidifying partnerships with multiple accredited universities in the United States.  We anticipate that these relationships will provide us with the manpower to complete the design, testing, and implementation elements for our commercial grade units as well as to build our intellectual property portfolio.  We are also developing a grant-writing program to generate interest and support for our project on a national basis.  We anticipate securing equity financing in order to provide the funding for our continued operation and move us into the fabrication of our commercial units.




Anticipated costs of all of the aforementioned efforts are estimated to total about $3,000,000 over the next twelve months.  In order to fund our proposed plan of operation, we are currently contemplating conducting an offering of our common stock to raise a minimum of approximately $3,000,000 up to a maximum of $8,000,000 to finance our plan of operations.  These funds are expected to be raised through equity financing, which will result in further dilution in the equity ownership of the shares currently issued and outstanding.  We are significantly dependent upon obtaining at least the minimum proceeds of this proposed offering in order to pursue the plan of operations set forth herein.  We cannot provide investors with any assurance that we will be able to raise any funds and we have no commitments to raise the additional funding.  In the event we are unable to locate at least the minimum offering amount contemplated, we may be unable to fully execute our business.


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Critical Accounting Policies





Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, recoverability of intangible assets, and contingencies and litigation.  We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.  The most significant accounting estimates inherent in the preparation of our consolidated financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily the valuation of intangible assets.  The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our consolidated financial statements.





Use of estimates





The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.





Intangible assets





Management regularly reviews property, equipment, intangibles and other long-lived assets for possible impairment. This review occurs quarterly, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, then management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. Management believes that the accounting estimate related to impairment of its property and equipment, is a “critical accounting estimate” because: (1) it is highly susceptible to change from period to period because it requires management to estimate fair value, which is based on assumptions about cash flows and discount rates; and (2) the impact that recognizing an impairment would have on the assets reported on our balance sheet, as well as net income, could be material. Management’s assumptions about cash flows and discount rates require significant judgment because actual revenues and expenses have fluctuated in the past and are expected to continue to do so.





The Company capitalizes the costs associated with the development of the Company’s website pursuant to ASC Topic 350.  Other costs related to the maintenance of the website are expensed as incurred.  Amortization is provided over the estimated useful lives of 3 years using the straight-line method for financial statement purposes.   The Company commenced amortization during the fourth quarter of the quarter ended September 30, 2010, once the economic benefits of the assets began to be consumed.  Amortization expense for the three months ended March 31, 2011 and 2010 totaled $902 and $0, respectively.





The Company reviews the carrying value of intangible assets for impairment whenever events and circumstances indicate that the carrying value may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.  In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to the amount by which the carrying value exceeds the fair value.  The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors.  On July 16, 2010, the Company obtained certain intangible assets through an Intellectual Property Assignment Agreement.  Management of the Company reviewed the intangible assets and has decided to write down the value of the assets.  As a result of this assessment, the Company recorded impairment expense of $213,976 as December 31, 2010.


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Revenue recognition





The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.





Sales related to long-term contracts for services (such as engineering, product development and testing) extending over several years are accounted for under the percentage-of-completion method of accounting.  Sales and earnings under these contracts are recorded based on the ratio of actual costs incurred to total estimated costs expected to be incurred related to the contract under the cost-to-cost method based budgeted milestones or tasks as designated per each contract. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable.





For all other sales of product or services the Company recognizes revenues based on the terms of the customer agreement.  The customer agreement takes the form of either a contract or a customer purchase order and each provides information with respect to the product or service being sold and the sales price.  If the customer agreement does not have specific delivery or customer acceptance terms, revenue is recognized at the time of shipment of the product to the customer.





Management periodically reviews all product returns and evaluates the need for establishing either a reserve for product returns or a product warranty liability. As of December 31, 2010 and 2009, management has concluded that neither a reserve for product returns nor a warranty liability is required.


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Controlsand Procedures





Evaluation of Disclosure Controls and Procedures





We maintain a set of disclosure controls and procedures designed to ensure that information we are required to disclose in reports filed under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.  Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.





Based upon their evaluation as of the end of the period covered by this report, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective in insuring that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.





Changes in Internal Control over Financial Reporting





There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.


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PARTII – OTHER INFORMATION





Unregistered Sales of Equity Securities





On June 25, 2010, the Registrant entered into three Bridge Loan Agreements (the “Notes”), with Lynn Cole Capital Corporation and Serio Capital, Ltd., and Mark J. Choury (collectively, the “Holders”), for $145,000, $120,000.00, and $25,000.00 respectively for an aggregate amount of $290,000.  The Notes are due and payable in full on the earlier of June 25, 2011 or at the closing of a private placement offering that nets the Registrant a minimum of $2,000,000 (“Maturity”).  The Notes bear an interest rate of 10% per annum, payable on Maturity.  In connection with the Notes, and for no additional consideration, the Registrant issued to the Holders an aggregate of 1,000,000 shares of common stock.





As a result of the Intellectual Property Assignment Agreement entered into on July 13, 2010, the Registrant issued an aggregate of 30,000,000 shares of common stock to SEFE, Inc.





The issuance of the shares to SEFE and the Holders was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.  All four persons who received shares were sophisticated investors who were familiar with the Registrant and its management and took the shares for investment without a view to distribution or resale.  All certificates issued contained a restrictive legend thereon.





On July 16, 2010, in accordance with the Intellectual Property Assignment Agreement, Ms. Helen Cary cancelled 144,900,000 of the 150,000,000 shares of our common stock owned by her.  Subsequent to the cancellation, Ms. Cary continues to hold 5,100,000 shares of our common stock.





On November 29, 2010, we issued a total of 17,000,000 restricted shares of common stock to David Ide and Shannon Kerr Swanson, both of whom serve on our board of directors.





We believe that the transactions delineated above are exempt from the registration provisions of Section 5 of the Securities Act as such exemption is provided under Section 4(2) because:





1.
This issuance did not involve underwriters, underwriting discounts or commissions;





2.
Restrictive legends are placed on all certificates issued;





3.
The distribution did not involve general solicitation or advertising; and





4.
The distribution was made only to insiders, accredited investors or investors who were sophisticated enough to evaluate the risks of the investment.  All sophisticated investors were given access to all information about our business and the opportunity to ask questions and receive answers about our business from our management prior to making any investment decision.





On February 1, 2011, the Company issued an aggregate of 150,000 shares of common stock to three non-affiliated parties for consulting services rendered with a total value of $150,000.  See Note 5 for additional details concerning the consulting expense.





During the three months ended March 31, 2011, we entered into three Convertible Debenture Agreements, whereby we borrowed an aggregate of $270,000 from a third-party, non-affiliated entity.  The loans are due and payable in full twelve months from the issuance dates or at the closing of a private placement offering that nets us a minimum of $2,000,000.  The loans bear an interest rate of 10% per annum, payable on maturity.  The notes are convertible at the sole discretion of SEFE into shares of our common stock at a rate of $0.50 per share.


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Exhibitsand Reports on Form 8-K





Exhibit Number
Name and/or Identification of Exhibit3
Articles of Incorporation & By-Laws(a) Articles of Incorporation filed September 24, 2004 (1)(b) By-Laws adopted September 27, 2004 (1)10
Material Contracts(a) Line of Credit (2)(b) Intellectual Property Assignment Agreement (3)(c) Bridge Loan Agreement with Lynn Cole Capital Corporation (4)(d) Bridge Loan Agreement with Serio Capital, Ltd. (4)(e) Bridge Loan Agreement with Mark J. Choury (4)31
Rule 13a-14(a)/15d-14(a) Certifications32
Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)(1)Incorporated by reference to the Registration Statement on Form SB-2, as amended, previously filed with the SEC.

(2)Incorporated by reference herein filed as exhibits to the Company’s Annual Report on Form 10-K/A previously filed with the SEC on June 25, 2010, and subsequent amendments made thereto.

(3)Incorporated by reference herein filed as exhibits to the Company’s Current Report on Form 8-K previously filed with the SEC on July 19, 2010, and subsequent amendments made thereto.

(4)Incorporated by reference herein filed as exhibits to the Company’s Current Report on Form 8-K previously filed with the SEC on August 26, 2010, and subsequent amendments made thereto.





8-K Filed Date
Item NumberJanuary 27, 2011
Item 2.03 Creation of a Direct Financial ObligationItem 9.01 Financial Statements and ExhibitsJanuary 28, 2011
Item 5.06 Change in Shell Company StatusFebruary 18, 2011
Item 2.03 Creation of a Direct Financial ObligationItem 9.01 Financial Statements and ExhibitsMarch 16, 2011
Item 2.03 Creation of a Direct Financial ObligationItem 9.01 Financial Statements and Exhibits


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SIGNATURES





Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





SEFE, Inc.(Registrant)Signature
Title
Date/s/ Wayne Rod
President
May 16, 2011Wayne Rod/s/ Wayne Rod
Principal Accounting Officer
May 16, 2011Wayne Rod
Chief Financial Officer