All the drama being created by commenter Charles reinvigorated us at BuyerssStrike! HQ.
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.
This purchaser must be the related party, but who is it?
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?
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….