UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2013
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period From _____ to _____
Commission File Number 000-27727
SAVICORP
(Exact name of small business issuer as specified
in its charter)
Nevada |
91-1766174 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
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2530 S. Birch Street
Santa Ana, California |
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92707 |
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(877) 611-7284 |
(Address of principal executive office) |
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(Postal Code) |
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(Issuer's telephone number) |
Securities registered under Section 12(b) of the Exchange Act:
Securities registered under Section 12(g) of the Exchange Act: Common
Stock, $0.001 par value
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 preceding 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to Form
10-K.
Yes ¨
No x Delinquent filers are disclosed herein.
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 o |
Accelerated filer o |
Non-accelerated filer (Do not check if a smaller reporting company) o |
Smaller reporting company x |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨
No x
The aggregate market value of the Common Stock
held by non-affiliates (as affiliates are defined in Rule 12b-2 of the Exchange Act) of the registrant, computed by reference to
the closing price on June 30, 2013, was $37,963,129.
As of May 8, 2015 there were 5,994,510,962 shares of issuer’s
common stock outstanding.
SAVICORP
FORM 10-K
For the Fiscal Year Ended December 31, 2013
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Part I |
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Item 1. Description of Business. |
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Item 2. Description of Property. |
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Item 3. Legal Proceedings. |
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Item 4. Submission of Matters to a Vote of Security Holders. |
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Part II |
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Item 5. Market for Common Equity and Related Stockholder Matters. |
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Item 6. Management's Discussion and Analysis or Plan of Operation. |
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Item 7. Financial Statements |
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Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. |
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Item 8A. Controls and Procedures. |
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Item 8B. Other Information. |
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Part III |
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Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. |
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Item 10. Executive Compensation. |
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Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 12. Certain Relationships and Related Transactions. |
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Item 13. Exhibits. |
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Item 14. Principal Accountant Fees and Services. |
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Signatures. |
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PART I
FORWARD-LOOKING INFORMATION
This Annual Report of SaviCorp on Form 10-K
contains forward-looking statements, particularly those identified with the words "anticipates," "believes,"
"expects," "plans," “intends”, “objectives” and similar expressions. These statements
reflect management's best judgment based on factors known at the time of such statements. The reader may find discussions containing
such forward-looking statements in the material set forth under "Legal Proceedings" and "Management's Discussion
and Analysis and Plan of Operations," generally, and specifically therein under the captions "Liquidity and Capital Resources"
as well as elsewhere in this Annual Report on Form 10-K. Actual events or results may differ materially from those discussed herein.
ITEM 1. DESCRIPTION OF BUSINESS.
Overview
In 2013, SaviCorp began to expand its revenue
from new business activities in international markets. We were still devoting substantial efforts to business planning and the
search for sources of capital to fund our efforts. We have acquired all rights to certain technology for the production of a gasoline
and diesel engine emission reduction device which we believe delivers superior emission reduction technology and operating performance.
This technology is an emission reduction device believed to reduce harmful exhaust emissions in gasoline and diesel engines, and
increase fuel efficiency.
History
We were originally incorporated as Energy Resource
Management, Inc. on August 13, 2002 and subsequently adopted name changes to Redwood Energy Group, Inc. and Redwood Entertainment
Group, Inc., upon completion of a recapitalization on August 26, 2002. The re-capitalization occurred when we acquired the non-operating
public shell of Gene-Cell, Inc., a public company. Gene-Cell had no significant assets or operations at the date of acquisition
and we assumed all liabilities that remained from its prior discontinued operation as a biopharmaceutical research company. The
historical financial statements presented herein are those of Redwood Entertainment Group, Inc. and its predecessors, Redwood Energy
Group, Inc. and Energy Resource Management, Inc.
The public entity used to recapitalize the
Company was originally incorporated as Becniel and subsequently adopted name changes to Tzaar Corporation, Gene-Cell, Inc., Redwood
Energy Group, Inc., Redwood Entertainment Group, Inc., and finally its current name, Savi Media Group, Inc. In 2012, Savi Media
Group, Inc. changed its name to SaviCorp.
Automotive Ventilation Systems
During a normal compression in an automotive
engine, a small amount of gases in the combustion chamber escape past the pistons. Approximately 70% of these gases, known as blow-by
gases, are unburned fuel that can dilute and contaminate the engine oil, causing corrosion to critical engine parts, and cause
a build-up on sludge. As the engine speed increases, the pressure in the crankcase increases as a result of the blow-by gases.
When the pressure gets too great in the crankcase, it can cause oil to leak past seals and gaskets, causing oil leaks. If the pressure
is not relieved, it would cause all of the oil to blow out of the engine. Prior to 1963, cars used road draft tubes that just let
the hydrocarbon emissions from the crankcase out into the open air. In 1963, automobiles created a positive crankcase ventilation,
which consists of a valve, called the PCV valve, which creates a metered opening, and a hose that runs to the car’s intake
manifold. The intake manifold has a vacuum effect that sucks the blow-by gases from the crankcase into the intake manifold, where
the gases are burned. This process reduces the emissions produced by the engine as only the results of the burned gases are emitted.
Our Product
SaviCorp’s primary business is the sale
of two inventions: the DynoValve & DynoValve Pro. The DynoValve is an OEM replacement for the present Positive Crankcase Ventilation
(“PCV”) valve installed on most gasoline engines in the United States and in most other countries of the world. After
exhaustive research and patent pending applications, on September 10, 2010, the Air Resources Board of the California Environmental
Protection Agency issued Executive Order D-677, permitting the advertisement, sales and installation of the DynoValve on certain
gas-powered vehicles in California. The savings, in both fuel economy and emissions, have surpassed the Company's expectation and
our products are available now on the market. The Company believes this is "Green Technology" and substantially reduces
automobiles’ "carbon footprint".
DynoValve & DynoValve Pro have the following
positive features:
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Addresses carbon footprint (substantially reduces carbon monoxide emissions through smog emission tacking); |
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Improves fuel use and mileage; |
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Increases engine performance (Dynamometer readings show a dramatic increase in overall engine performance); |
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Fuel use and oil consumption is substantially reduced; |
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The savings in over-all fuel, oil and engine service requirements are significant; |
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Carbon Credits are generated by the use of the DynoValve & DynoValve Pro; |
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The expense of fitting DynoValve is recaptured with short use and dependent on mileage use (within 6 to 12 months for passenger cars but 2 months with a taxi); |
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Useable with marine engines as well; |
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The Company hopes to have the DynoValve Pro (diesel) available in 2015, which should be used by large fleet owners, locomotive, heavy equipment, stationary engines and marine engines as well as ocean liners. |
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Suitable for original factory applications on new engines as well as retrofitting used vehicles. |
The Company’s mission is to become a
leading provider of multiple fuel efficiency and emission reduction technologies and related systems that solve practical emission
reduction and engine combustion system problems. The Company’s strategy is to have a broad and highly competitive product
line, skilled professional management and attain international brand recognition and market acceptance. Our main objective is to
design, develop, manufacture and distribute exhaust emission and fuel efficiency technologies to world markets to significantly
increase fuel efficiency and reduce emissions around the globe.
SaviCorp’s management team has over 80
years of combined experience in entrepreneurial ventures, technology development companies, venture financing, management, product
development & marketing and administration. In addition, the Company’s strategic plan is structured to attract the best
management for directing the development and growth of its organization in order to fulfill the Company’s aggressive market
penetration mission.
Market Opportunities: SaviCorp is evolving
from an aftermarket fuel-saving and emission-reduction product development company into a market-driven company. Our Management
has comprehensive experience in introducing new products and technologies and is seeking to capitalize on our capabilities within
our chosen market. The company is developing dynamic internal/external sales and marketing staff that will be charged with expanding
distribution channels and penetrating high-value markets. Brand name recognition and broad market acceptance are the primary objectives
of SaviCorp’s business development efforts.
Overall, there are numerous competing products
on the market for consumers. It is no secret that fuel prices will remain high for the foreseeable future and, as a result, there
are many fuel-saving devices under development by entrepreneurs and assorted technology companies. In this economic environment,
most consumers are looking for products that will reduce their overall fuel and vehicle operating costs, allowing them to stay
within their current household budgets. Most fuel-saving devices currently in the marketplace are variants of magnetic control
devices, purporting to improve fuel economy by realigning fuel molecules as they pass through a magnetic field. Gasoline is a mixture
of hydrocarbon molecules that vary in size and shape. Longer molecules tend to burn slower and incompletely while leaving unburned
hydrocarbons that eventually form various exhaust pollutants. The magnetic devices on the market seek to delay the burning of short
hydrocarbons and hasten the burning of the longer hydrocarbons (by reducing long molecules to short molecules). The general theory
regarding a magnetic field’s possible effect on fuel may have some merit; however, in practice it has been found that any
effect that the magnets may have with respect to changing the molecular composition of gasoline is minor and vanishes well before
gasoline actually enters a vehicle’s engine because the molecules do not stay aligned after leaving the magnetic field. The
EPA, Popular Mechanics, and even the Discovery Channel’s “Mythbusters” program have undertaken independent tests
of such products. None of the tests conducted by these organizations showed any benefit from magnetic field devices.
Aside from the magnetic field devices described
above there are many other types of “fad” or pseudo-scientific fuel-saving devices currently on the market that have
been shown not to work; this has produced significant skepticism that taints legitimate devices that are under development. There
are, however, some good products that have demonstrated their efficacy through rigorous independent and verifiable laboratory testing.
SaviCorp’s DynoValve® product is
an example of a product that is grounded in solid science and engineering know-how that has demonstrated its efficacy in both laboratory
and field tests.
Although SaviCorp believes that we have no
direct competition in the marketplace, retail pricing may be dictated by the average consumer’s disposable income. In order
for the DynoValve® to attain a leadership role in the industry, SaviCorp will need to price the product to reflect the value
brought to end-users. As the market expands, future products should be priced more aggressively to increase market penetration
and achieve a position of planned-for market dominance. SaviCorp’s goal of establishing sales and marketing partnerships
and/or alliances will further our market penetration.
As the year 2012 progressed, our customer base
expanded. A major key to our longer-term success is our ability to arrange for sales and installations with customers operating
large numbers of vehicles, commonly referred to as “fleets.” For our purposes, fleets can vary in size from 25 to 15,000
vehicles. Fleets can be located in specific geographical areas, such as within a city, within a county or two, part of a state,
within a state or multiple states in a region of the US, or nationwide. For now, the Company is focused on fleets within the US.
There are few product sales in Canada. We have patents pending in many “industrial” countries, including Mexico and
Canada.
Typically, in the early stage, our relationship
with a fleet size customer involves “proving” our technology on a test basis with a few vehicles operating as part
of the customer’s fleet. We guarantee a 10% improvement in fuel efficiency. Once a customer has experienced “real time”
results out in the field, our products gain acceptance and the rate of sales and installations take off at a faster pace. In almost
all cases to date, we have exceeded the 10% guarantee. Generally, the longer vehicles are driven with our product in place, the
more performance improves with the passage of time. Our results to date have varied from an 8% to 100% improvement. Currently,
we have no fleets with less than a 15% rate of improvement. Fleets with Ford F-150s (4.6 litre engines) and Chevy light trucks
(4.7 litre) are getting between 30% and 49% fuel savings.
In 2013, we have made major inroads in
the Middle Eastern country of Dubai and others. We have a 5 year licensing agreement with DynoGreen Tech (“DGT”)
that we entered into in 2013. Regarding our progress, our original commitment for 2,000 DynoValves (sold at $250 each) equate
to $500,000. In order for DGT to fulfill and maintain this 5 year licensing agreement, they are required to purchase 500
additional DynoValves per quarter (an additional 2,000 DynoValves / $500,000 per year) for a total of $2,500,000 over a 5
year span. With the initial investment of $500,000, this totals $3,000,000 for their 5 year licensing agreement. We have
already delivered 2,000 of those DynoValves. The areas that are included in this agreement are UAE, Dubai, Malaysia, India,
and Africa. DGT has not made any additional purchases since 2013 and thus has not met their minimum volume requirements for
2014 or the first quarter of 2015.
We sent a mechanic to Dubai to convince the
Dubai Department of Standardization to mandate the DynoValve on all government vehicles and eventually to the general population
(“the mandate”). When any country attempts to mandate a new individual product, there are usually issues. Understandably,
there should not be certain vehicle exclusions for this particular mandate, therefore the DynoValve needs to be installable on
all makes and models.
In our case, one issue is that many vehicles
in these Middle Eastern countries are not compatible with the DynoValve or it simply does not fit. In order to resolve this compatibility
issue, we’ve created a new product called the “DynoCap.” The DynoCap is an oil cap that has a fitting which fits
directly on top of the oil cap allowing the DynoValve to sit either horizontally or vertically thus making it adaptable to virtually
any gas driven engine that has a place to add oil, not limited to automobiles.
The new cap is now being tested at our corporate
headquarters in Santa Ana, CA. We have vehicles travelling all over California to ensure performance is as effective as our standard
DynoValve, when connected directly to the vehicle’s crankcase ventilation system. We have provided a few DynoCaps to Dubai
to demonstrate how the compatibility issue has been resolved, and provided samples for their own testing with the device in their
own countries. A provisionary patent and trademarks for the name have been filed with the US Trade and Patent Office and a PCT
will be filed for the whole world.
The second issue is the wiring harness, which
was originally created for the USA and met compliance regulations according to American standards. The Department of Standardization
and the UAE affiliates did not approve of the exposed colored wires. As a result, we modified the wiring harness and completely
molded all the connectors, improving the appearance which is actually beneficial for us. This brand new wiring harness was delivered
to Dubai for their approval. The group loved it and guaranteed 100% that Savvy Green (our associate company in Dubai) would be
given confirmation and status on the mandate (Preferred Vendor Status).
If SaviCorp gets this mandate, we may increase
sales by possibly 50,000 units every 90 days or less. If this works as well as the DynoValve, it will cut installation time by
at least 50%. Once tested, we will continue the process of obtaining an executive order for the DynoCap. We will also have quick
release hoses as well as the vertical and horizontal versions. We hope it will also work on other fuels as well, and will expand
our testing regarding this as soon as we can.
Our Company spokesperson, Lauren Fix AKA “The
Car Coach,” has appeared on several local TV shows. With her recent appearance with John Stossel on Fox Business Channel,
we received many calls as well as made several sales. Hopefully with her connections and her network of followers, we can obtain
more sales.
“The DynoValve Pro Lite” is ready
to go. This unit is very similar to the standard DynoValve Pro, with the exception of the oil separator, making it a much smaller
unit since natural gas is much cleaner than diesel fuel. We are able to convert these, and we have some testing scheduled for Fullerton,
CA School District for their co-generation plant as well as their school buses, which run on CNG (Compressed Natural Gas). This
product is now being manufactured. We hope to take some of these test samples and begin installations and testing for results so
we can introduce this to all CNG fleets out there. Most trucks and buses in California are now being converted to CNG. Hopefully,
we will be able to hit that market and be able to offer the DynoValve Pro Lite CNG version. We also have a very large food supplier
that is willing to lend some of their vehicles for testing.
If all goes well in the Middle East, it appears
that DynoGreen Tech, LLC (“DGT“) as well as Savvy Green would like to have an exclusive distribution agreement to supply
to all of Africa, Russia, and Europe. We believe it is too premature to make a commitment at this time without seeing their success
with the existing countries they are currently licensed for. Although, they’ve been extremely successful in a short period
of time, so we are hopeful and looking forward to revisiting this again.
The goal of the Company is to try to spread
ourselves with the DynoValve Pro Lite and DynoCap right now. Hopefully we will increase business in the US and be able to branch
out completely in the Middle East as well as eventually promote in Europe and other countries. We are speaking with the Philippines
on some potential agreements.
The DynoCap looks very promising because it
reduces installation time and it becomes more compatible to 2 stroke engines, motorcycles, small bikes, or large polluting 2 stroke
and diesel engines. It will be less expensive to introduce without worries of having to separate the oil or clean the oil because
all we are doing is capturing the vapor and recycling it. We are hoping to make the DynoCap in a smaller version to fit 2 stroke
vehicles.
We at SaviCorp are doing everything we can
to build our capabilities to service an expanding customer base and help clean up the planet one vehicle at a time.
DynoValve Overview
Dyno: an instrument designed to measure power, exhaust emissions,
and fuel economy.
Valves: devices that regulate the flow of gases through apertures
by opening and closing.
In the 1960's, the PCV system appeared on new
American domestic cars. The PCV system allows gases to escape in a controlled manner from the crankcase of an internal combustion
engine. We believe that our DynoValve products are the most significant advances in PCV valve technology since the first engine
exhaust emission control system.
We also believe the DynoValve (gasoline) &DynoValve
Pro (diesel) are the first and only electronically controlled PCV/Crankcase Oil Recovery Emission Control Systems available.
DynoValve
The DynoValve products are electronically controlled
PCV/ Crankcase Oil Recovery Emission Control Systems (“COREC”). Independent test results by Environmental Testing Corporation,
CEE, of California show that with DynoValve products, there is a reduction of all exhaust emissions, especially in nitrogen oxide
(“NOx”) while simultaneously reducing fuel and oil consumption. There are currently two types of DynoValve products
– DynoValve and DynoValve Pro.
DynoValve is a patented PCV valve and designed
for use in automotive gasoline powered vehicles. The DynoValve replaces Original Equipment Manufacturer (“OEM”) PCV
valves. DynoValve eliminates the vacuum problems associated with today’s standard PCV valves by optimally regulating the
flow of engine blow-by-gases. This ventilation is accomplished with the use of an electronically controlled reprogrammable microprocessor.
The electronically-controlled DynoValve regulates the flow of blow-by gases returning to the engine intake system, thereby improving
fuel mileage and reducing hydrocarbons (HC), carbon monoxide (CO) and oxides of nitrogen (NOx) exhaust emissions.
DynoValve Pro
DynoValve Pro is a closed crankcase emission
control and oil recovery system designed for diesel engines. It filters particles and oil droplets from the blow-by gases. The
filtered gas is then returned to the air intake system of the crankcase and the filtered oil is returned to the engine crankcase.
By recycling the crankcase emissions through DynoValve Pro, harmful gases and oil film that causes engine and environmental problems
is filtered. Maintenance costs may be lowered with the reduction of oily residue that coats the engine and its components or the
prevention of clogged radiators and air cleaners. DynoValve Pro helps engines operate at full efficiency while improving performance
and lowering the costs of operation. We currently are seeking the required approvals from the Air Resources Board of the California
Environmental Protection Agency to advertise, sell and install DynoValve Pro in California.
Both DynoValve and DynoValve Pro can regulate
the flow of gases depending on engine speed. This is accomplished by designing the DynoValve products & IP to be electronically
activated by using a reprogrammable microprocessor that processes data from the engines' revolutions per minute (RPM).
Both DynoValve and DynoValve Pro are available
in various sizes and versions and can be installed by a mechanic in approximately 1 to 2 ½ hours.
The DynoValve products are an improvement on
the current pollution positive crankcase ventilation reduction controls, including the implementation of cleaner fuels and
related hardware. While these measures have had the intended effect of reducing pollution causing emissions, they have not eliminated
the emissions to an acceptable level. Our technology is more effective than passive systems currently in use, provides excellent
fuel efficiency and virtually eliminates fugitive crankcase emissions. The goal of the Crankcase Ventilation System technology
is to provide a more aggressive method of emission reduction that is not possible by
passive means and improves fuel efficiency.
Independent Testing
We have sought out and have received independent
testing results, which have validated our claims. At our request, tests were conducted by California Environmental Engineering,
a greater Los Angeles area based leading independent environmental testing firm, over the last eight years. Overall, California
Environmental Engineering is a consulting firm specializing in the testing of environmental and engine instrumentation. California
Environmental Engineering provided a written conclusion after testing that provides, in part:
“We have evaluated the data from
the test runs in the demonstration of the Crankcase Ventilation System. We can attest to the positive effect of the Crankcase Ventilation
System. In conclusion, the technology has demonstrated that it has both economic and environmental benefits".
In 2014, the Company began a series of independent
third-party tests with ECO Logic at the EPA laboratories located at Olson Eco-Logic laboratories. These tests will continue at
least into FY- 2015.
Additional testing has been performed by KLD
Environmental Consultations with similarly positive results.
The Company has filed the EPA Section 511 application
which seeks to obtain ISO-9001 manufacturing certification for its DynoValve family of automotive products. This is an expense
and resource-intensive process which will continue well into FY-2015.
Pricing
We have been selling DynoValves on a retail
basis for $399, with some discounts given to early adopters and test clients. Installation fees typically run around $100. Wholesale
prices have been in the $200 to $300 range.
Marketing Strategy
Our initial market segment focuses on developing
and maintaining strategic partnering and marketing relationships with high profile, name-brand organizations. Initially, we will
market through a select group of commercial retailers and focus to sign agreements with strategic partners or major commercialization
partners. This will allow us to rapidly access our market through pre-existing relationships and to minimize overhead during the
development of a sustainable revenue base.
In order to widen our market channels, we have
and continue to implement an ongoing marketing campaign in parallel to our negotiation with major retail distributors and strategic
partners so that we can respond effectively to the needs of the market while creating a direct access to its potential clients/and/or
customers and insuring prompt delivery of our products. The target market will be local cities across the nation and major cities
worldwide. As disclosed, we are also marketing our products directly to corporate fleets, municipalities, government entities and
OEM’s.
We sell directly to retail customers and distributors. The targeted
channels for this would be:
The goal will be to establish strategic
partnerships and marketing relationships with high profile, name brand organizations. We could private label, co-label or customize
our products, allowing partners to rapidly penetrate their customer base by using their name and reputation.
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Catalog, Retail & OEM. |
The goal will be to establish sales
and marketing partnerships with compatible companies that directly sell and ship goods to consumers through catalog sales. This
will be a further means of market penetration. Catalogs increase overall outreach into the marketplace, providing a venue in which
products can be directly positioned against competition, and influence buyer awareness and acceptance on an extremely broad scale.
We will work with catalog partners to stretch marketing and advertising budgets through co-op marketing means, including direct
mail efforts.
Ongoing direct mail will also be
an important sales technique to further penetrate the consumer market once our product lines are established. By concentrating
on magazine circulation research and mailing list data, we will be able to quickly pinpoint buyers, fine tune our message for specific
demographic segments and maximize sales through advertising and direct mail. Also, using a third party order entry provider will
ensure timely response and turnaround of prospect queries and orders and give the Company the flexibility to further increase sales.
Much of the work accomplished for
direct mail and information distribution can be directly applied to the Company’s Web Site. This will make the products,
Company, and technical information more cost effective and accessible in a timely fashion. It will also enable a more timely distribution
of product information updates and potentially increase sales of our products. We plan to use social networking (i.e. Twitter,
Facebook, etc.) as a way to further market our products. Currently we do have a small number of product sales generated from our
website. See www.savicorp.com.
It is estimated there were 248 million vehicles
on the road in the US alone at the end of 2010. The average age of these vehicles is estimated by the National Automobile Dealers
Association to be ten and a half years. Since the introduction of the Industrial Age, the United States has been the biggest producer
of CO2 emissions on the planet. The US produced 22% of the World’s greenhouse gas emissions in 1995. Current estimates predict
this will rise to more than 15% by 2035, topped at that point by China’s 17% and Eastern Europe/former Soviet Unions’
19%.
The Company believes the scope of business
opportunities within the State of California alone is significant. California has 36 first, second and third-tier cities with over
100,000 residents. This does not include 217 fourth-tier cities with 25,000 to 100,000 residents. Each of these cities operates
numerous municipal, corporate and small business fleets of vehicles that are potential customers for SaviCorp’s products
and services. SaviCorp management believes that this is a viable market for devices designed to mitigate the effects of blow-by
gases using crankcase ventilation system and emission reduction products.
Although SaviCorp believes that we have no
direct competition in the marketplace, retail pricing since 2008 has been largely driven by the average consumer’s disposable
income. In order for the DynoValve® to achieve primacy in the industry, SaviCorp has been compelled to price its products to
reflect the value brought to end-users. As the market expands, future products should be priced more aggressively to increase market
penetration and achieve a position of planned-for market dominance. SaviCorp’s goal of establishing sales and marketing partnerships
and/or alliances will supplement market penetration.
Used Car
Retail Sales:
Car dealerships selling used and new vehicles
are prime candidates constituting a viable but as yet untapped market for SaviCorp’s products. Used cars are normally identified
as certified pre-owned vehicles, age ranging from one to 5 years old. A common car dealership sales tactic is to offer aftermarket
products to buyers during the loan application process. In recent years, the sale of used cars has become a major source of profits
for car dealerships in the wake of shrinking margins on new cars. To make them acceptable to more customers, most dealerships promote
certified pre-owned vehicles to customers who want a warranty on their used car. This often raises the price, but in return provides
customers with peace of mind. In the current economic environment, the relative demand for used cars has increased as sales of
new cars have declined. Due to the fact that the product has the potential to lower operating costs as well as extend the useful
life of a vehicle—a proposition that is very appealing to consumers—the DynoValve marketing campaign is being targeted
to include the used car retail market.
Fleet Sales:
As the year 2014 progressed, our customer base
expanded. A major key to our longer-term success is our ability to arrange for sales and installations with customers operating
large numbers of vehicles, commonly referred to as “fleets.” For our purposes, fleets can vary in size from 25 to 15,000
vehicles. Fleets can be located in specific geographical areas, such as within a city, within a county or two, as part of a state,
within a state or across multiple states in a region of the US, or nationwide. For now, the Company is focused on fleets within
the US. There are few product sales in Canada. To pave the way for future market expansion related to fleet sales, the Company
has arranged to license patents pending in many “industrial” countries, including Mexico and Canada.
Typically, in the early stage, our relationship
with a fleet size customer involves “proving” our technology on a test basis with a few vehicles operating as part
of the customer’s fleet. We guarantee a 10% improvement in fuel efficiency. Once a customer has experienced “real time”
results out in the field, our products gain acceptance and the rate of sales and installations take off at a faster pace. In almost
all cases to date, we have exceeded the 10% guarantee. Generally, the longer vehicles are driven with our product in place, the
more performance improves with the passage of time. Our results to date have varied from an 8% to 100% improvement. Currently,
we have no fleets with less than a 15% rate of improvement. Fleets with Ford F-150s (4.6 liter engines) and Chevy light trucks
(4.7 liters) are getting between 30% and 49% fuel savings.
State of
California Fleet Vehicles:
We believe our business opportunities within
the State of California alone are enormous. The state has 36 cities with over 100,000 residents and 217 cities with 25,000 to 100,000
residents. Each of these cities operates numerous municipal, corporate and small business fleets of vehicles that are potential
customers for SaviCorp. SaviCorp management believes that this is a viable market for blow-by gases related crankcase ventilation
system and emission reduction products.
Pilot Tests:
Typically, in the early stage, our relationship
with a fleet size customer involves “proving” our technology on a test basis with a few vehicles operating as part
of the customer’s fleet. We guarantee a 10% improvement in fuel efficiency. Once a customer has experienced “real time”
results out in the field, our products gain acceptance and the rate of sales and installations takes off at a faster pace. In almost
all cases to date, we have exceeded the 10% guarantee. Generally, the longer vehicles are driven with our product in place, the
more performance improves with the passage of time. Our results to date have varied from an 8% to 100% improvement. Currently,
we have no fleets with less than a 15% rate of improvement. Fleets with Ford F-150s (4.6 litre engines) and Chevy light trucks
(4.7 liter) are getting between 30% and 49% fuel savings.
Dubai - Licensed
Product Marketing:
In 2013, we made major inroads in the Middle
Eastern country of Dubai and others. The Company executed a 5-year licensing agreement with Dubai-based Dyno Green Technologies
[DGT] in Q-2. The original licensing commitment provided for the purchase and sale of 2,000 DynoValves (sold at $250 each), which
equates to an initial order of $500,000. In order for DGT to fulfill and maintain this 5-year licensing agreement, they are obliged
to purchase 500 additional DynoValves per quarter (an additional 2,000 DynoValves / $500,000 per year) for a total of $2,500,000
over a 5-year span. With the initial investment of $500,000, this totals a $3,000,000 commitment for their 5-year licensing agreement.
The first order of 2,000 DynoValves has been delivered. The Exclusive Marketing and License Agreement includes 10 sub-classes of
territories which include UAE, Dubai, Malaysia, India, and Africa.
Seeking a
Mandate In Dubai:
The Company sent a team of technical specialists
to Dubai to convince the Dubai Department of Standardization to mandate the DynoValve on all government-owned vehicles and eventually
to the general population (“the mandate”). When any country attempts to mandate a new individual product, numerous
political and cultural issues have to be dealt with. Understandably, there should not be certain vehicle exclusions for this particular
mandate, therefore the DynoValve needs to be installable on all makes and models.
The wiring harness originally created for use
in the USA met compliance regulations according to American standards. However, the Department of Standardization and the UAE affiliates
did not approve of the exposed colored wires supplied with the product. As a result, we modified the wiring harness and completely
molded all the connectors, improving the units appearance. This new architecture for the wiring harness was delivered to Dubai
for their approval. The group loved it and guaranteed that Savvy Green (our marketing and distribution associate company in Dubai)
would be given confirmation and status on the mandate (Preferred Vendor Status).
DynoGreen Tech, LLC (“DGT“) as
well as Savvy Green have requested an exclusive distribution agreement to supply DynoValve products to all of Africa, Russia, and
Europe. We believe it is too premature to make a commitment at this time without seeing their success with the existing countries
they are currently licensed for. Although they’ve been extremely successful in a short period of time, we are hopeful and
looking forward to revisiting this again during 2014. Nevertheless, if SaviCorp is awarded the UAE mandate, we could increase sales
by possibly 50,000 units every 90 days or less.
LA County
Fire Department:
On October 2010, a 24-month field test was
concluded with the Los Angeles County Fire Department (LACoFD). LACoFD retrofitted 10 gasoline-powered vehicles with the “DynoValve®.”
During the test, three vehicles were removed from service for various reasons unrelated to the beta field test. The remaining seven
vehicles, after installation and adjustments to fine-tune and optimize the DynoValve® to each particular vehicle, successfully
completed field-testing without any adverse impact on vehicle performance and/or maintainability. Overall, the vehicles achieved
a significant reduction in emissions during the 24 months of testing.
The test vehicles exhibited substantial reductions
in the following pollutants: hydrocarbons (HC), carbon monoxide (CO), and oxides of nitrogen (NOx). The LACoFD has expressed interest
in testing the DynoValve Pro®, a product that is intended for use on diesel engines, as soon as the company is ready to release
the product for testing and evaluation. The opportunity with the Los Angeles County Fire Department (LACoFD) is potentially very
large; the agency has 190 stations with 22 battalions covering 2,200 square miles and 58 cities.
McCarthy
Construction Company:
On December 9, 2010, SaviCorp announced that
McCarthy Construction Company (St Louis, MO) had completed six weeks of testing on five randomly chosen vehicles from within its
fleet. The results for each vehicle were significant emissions reduction, improved engine performance, and reduced fuel consumption.
Following these initial results, McCarthy Construction Company decided to test an additional five vehicles at another facility.
These additional tests went well, and we proceeded with the installation of our DynoValve® on some 250 vehicles that service
its Newport Beach, California facility. McCarthy Construction Company believes that the device has the potential to extend the
useful life of its vehicles by one or two years while also reducing the company’s fuel costs. McCarthy Construction Company
employs 2,000 people and operates in all 50 states. McCarthy is headquartered in St. Louis, Missouri with regional offices in Phoenix,
Arizona; Las Vegas, Nevada; Seattle, Washington; Portland, Oregon; Dallas, Texas; Sacramento, San Francisco and Newport Beach,
California. The 136-year-old company is involved in large projects, having constructed airports, bridges, highways, hospitals,
office buildings, retail/industrial centers, universities and research centers throughout the US. Here’s a link to a press
release about McCarthy: (http://www.savicorp.com/news/23-mccarthy-construction-leaving-green-footprints-with-savicorps-dynovalve.aspx
).
North Carolina
Police Department:
North Carolina’s Stallings Police Dept’s
25 Ford Crown Victoria (2011) fleet experienced a MPG Increase of 31.58% after the installation of DynoValve. This is the type
of success we hope to translate into contracts with larger public service entities nationwide.
Berg Electric:
Berg Electric is another ongoing Company success
story - “As a large consumer of gasoline [it’s] our hope this small step, coupled with a number of other ongoing green
initiatives will, not only help reduce our operating costs, but ultimately help reduce our carbon footprint; our consumption of
fossil fuels; and improve our position as a good corporate citizen in America,” stated Robert Moreno, a Berg Electric spokesperson.
“The product does a good job at increasing efficiency in existing technology, with little impact and minimal up-front costs,
so we see it as a cost-effective option,” Moreno continued. “It’s important to us to find green solutions and
products because, we recognize our responsibility as a corporate citizen and the positive impact we can have on the communities
in which we do business.” http://www.savicorp.com/news/52-savicorp-awarded-bergelectric-fleet-contract.aspx. You can read
the press releases on our web
Market Options
Under Active Investigation and Development
| 1. | Western Regional Ford Dealerships |
| 2. | Eastern Region GM Dealerships |
| 3. | Consolidated Edison Fleet Testing |
| 4. | United States Postal Service Tests |
| 5. | LAPD Ford Interceptor Tests |
| 6. | City of Los Angeles Fleet Tests |
| 7. | City of Fontana Police Vehicle Roundup |
Suppliers
We currently have all of the production completed
by His Divine Vehicle (“HDV”), a related entity owned by our CEO Serge Monros as determined by our licensing agreement
with HDV.
Intellectual Property
We also own certain trademarks associated with
the marketing of our products. DynoValve and DynoValve Pro have been registered with the US Patent and Trademark Office. We also
claim copyright to certain white papers and marketing pieces. Due to our inability to generate commercial sales of our products,
all patent costs were fully impaired in 2006.
The DynoValve products are the subject of several
pending U.S. patent applications (US-2010/0076664-A1 and US-2010/0180872-A1) held by Serge V. Monros, Chief Executive Officer and
Chairman of the Board of the Company. There are corresponding applications that have been filed in a number of foreign countries.
HDV, an affiliate of Mr. Monros, manufactures the “DynoValve” and “DynoValve Pro” products based on these
patent applications and then sells them to the Company for resale pursuant to the Product Licensing Agreement dated November 15,
2008, as amended on December 16, 2009. Under the Product Licensing Agreement, the price at which HDV sells the products to the
Company is subject to change at any time upon written notice. The Company may determine the prices that it charges to its customers.
The Product Licensing Agreement is non-exclusive and automatically renews on an annual basis provided certain sales volumes are
achieved and the Company is otherwise not in breach. HDV may, after an applicable cure period, terminate the Product Licensing
Agreement earlier if it believes that the Company is deficient in meeting its responsibilities. HDV may amend the Product Licensing
Agreement at any time by giving notice to the Company, unless the Company objects within ten days of such notice.
As consideration for HDV entering into the
Product Licensing Agreement, the Company agreed to issue to Mr. Monros and HDV, if and when available, an aggregate of 500 Million
shares of Common Stock, 5 Million shares of Series A Preferred Stock and 5 Million shares of Series C Preferred Stock. In July,
2011, HDV and Mr. Monros entered into a revised licensing agreement which modified the prior consideration paid to an aggregate
of 600 Million shares of Common Stock, 6.5 Million shares of Series A Preferred Stock and 2.5 Million shares of Series C Preferred
Stock.
Mr. Monros has continued the process of preparing
patent applications for the other versions of the DynoValve products & related IP. In March, 2013, the Company entered into
a five (5) year Master Distribution Agreement with His Divine Vehicle to sell the DynoValve and DynoValve Pro in various international
territories. The consideration for the agreement was guaranteeing a minimum annual volume, payment for the DynoValves acquired
and a three percent (3%) royalty payment. The Company has entered into an agreement with DynoGreen Tech, LLC ("DGT")
to sell the DynoValve products in the licensed territories. As part of the license agreement, DGT agreed to acquire 100,000,000
shares of common stock in SaviCorp for $100,000 and was provided options to acquire an additional 400,000,000 shares at $0.001
if exercised within 30 days, or $0.002 if exercised within 60 days. DGT exercised its options and acquired an additional 400,000,000
common shares for $400,000. Due to these investments, DGT is considered a related party. In addition, the stock purchase and stock
options provided for in the licensing agreement were considered a sales discount. DynoValve sales to DGT totaling $715,000 in 2013
were discounted in full due to these sales discounts.
In March, 2015, the Company entered into an
exclusive licensing and distribution agreement for North America with DynoValve Mfg, LLC, an affiliate of Mr. Monros. The consideration
for the agreement was payment for the DynoValves acquired and a three percent (3%) royalty payment.
Competition
Numerous competing products are currently offered
under various brand names. There are many fuel-saving devices currently under development by entrepreneurs and assorted technology
companies whose projects are described via the World Wide Web and the Internet. In this economic environment, most consumers are
looking for products that will reduce their overall fuel and vehicle operating costs while allowing them to stay within their current
household budgets. Taken as a whole, however, the inventory of competitive offerings has proven to be something less than effective
when retrofitted to existing rolling stock.
The industry is marked by competition in two
industry segments: emission reduction and fuel efficiency. The DynoValve family of products is designed to compete within both
segments. We face competition from numerous foreign and domestic companies of various sizes, most of which are larger and have
greater capital resources than are currently available to SaviCorp. Competition in these areas is further complicated by possible
shifts in market share due to emerging technological innovations, changes in product emphasis and applications, and new entrants
with greater capabilities or better prospects.
Passive crankcase ventilation systems are mandated
as part of every vehicle’s emission-control system in the US. The Environmental Protection Agency is responsible for setting
emissions standards that all vehicles must meet. These emissions standards must be met by all new vehicles produced and sold in
the US. All manufacturers of automobiles and light duty trucks are constantly engaged in the process of developing technologies
designed to lower emissions and augment fuel efficiency.
Competing Products:
Additionally, the Company competes against
other companies that develop after-market products touted to lower emissions and/or increase fuel efficiency. Some of these competitors’
products include (a) Racor’s CCV, (b) Majestic SAFE-T-PRODUCTS Refilter™, (c) Save the World Air, (d) Inc’s Mark
I ZEFS device, and (e) Indigo Electronics CVS for boats. We are aware of no products that compete directly with the DynoValve.
The marketplace is replete with products that compete in the realm of fuel saving products, fuel additives, and cigarette lighter
plug-in devices. Examples of some of our competitors’ products include:
|
1. |
Racor Crankcase Ventilation Device: list price: $368.00, manufactured by Parker Hannifin Corporation, Racor Division, Cleveland, Ohio 44124. Racor’s marketing literature claims that ‘…Racor CCV systems offer superior protection against contaminated crankcase blow-by and provide engine operators a highly effective solution.’ Racor provides no publicly verifiable independently tested performance results that compare with the DynoValve. During our own in-house tests of the Racor products, the patented DynoValve system demonstrates superior oil coalescence and crankcase pressure control under the most severe conditions. |
|
2. |
Refilters™ Device: Majestic Companies, Ltd. is incorporated in Maryland. No data on the device exists online. According to EDGAR online, Refilters™ could be retrofitted to existing heavy-duty diesel engines. http://sec.edgar-online.com/majestic-safe-t-products-ltd/sb-2-securities-registration-small-business/2002/11 /12/section21.aspx |
|
3. |
Mark I ZEFS Device: Save the World Air, Inc.
Price: unknown. According to its manufacturer, the ZEFS devices create magnetic fields to reduce the size of the fuel molecules
passing from the carburetor or center point fuel injector of the vehicle to the inlet manifold prior to combustion. They claim
that this creates an atomization process that enhances the efficiency of combustion, which reduces harmful toxic emissions and
increases fuel economy. ZEFS device has been granted a patent [see United States Patent Application No. 10/275946]. Save the World
Air Inc. makes a Zero Emission Fuel Saver (ZEFS) technology that is intended to reduce tailpipe pollutants and increase fuel efficiency
in gasoline and diesel-powered vehicles. No independently validated test results are available to confirm their claims.
RAND Corporation has conducted independent
tests but cannot confirm the benefits of ZEFS. "RAND's analysis of laboratory testing data provided by Save the World Air
that deals with the performance of the ZEFS device installed in vehicles found at best mixed results from the tests and therefore
could not confirm the effectiveness of the technology in actual use," said Michael Toman, director of the Environment Energy
and Economic Development program at RAND, which carried out the study. |
|
4. |
Atomic 4 AT-4CVS Crankcase Ventilation system device: Complete Retrofit Kit is $240.00 to $265.00 (Indigo Electronics, Williamsburg, VA 23185). The product (according to Indigo Electronics) completely eliminates Crankcase ‘smoke’. The product claims to eliminate fouling of carburetor air passages and improve overall performance. No independent test data or results have been published. |
Government Regulations
We believe that we are in compliance with all
applicable regulations that apply to our business as it is presently conducted. Our individual manufactured products, as such,
are not subject to certification or approval by the U.S. Environmental Protection Agency or other governmental agencies domestically
or internationally before they are sold. However, such agencies may test and certify a sample engine fitted with our devices before
we are allowed to engage in certain activities, like selling or marketing our products in certain jurisdictions. For example, on
September 10, 2010, the Air Resources Board of the California Environmental Protection Agency issued Executive Order D-677, permitting
the advertisement, sales and installation of the DynoValve on certain gas-powered vehicles based on emissions test data generated
on two vehicles. We intend to seek a similar order for DynoValve Pro. Our sales and marketing activities may be limited until we
receive the necessary authorizations from the applicable environmental regulations.
Depending upon whether we manufacture or license
our devices in the future and in which countries such devices are manufactured or sold, we may be subject to regulations, including
environmental regulations at such time. However, we are not aware of any existing or probable governmental regulations that may
have a material effect on the normal operations of our business. There also are no relevant environmental laws that require compliance
by us that we have not complied with that may have a material effect on the normal operations of the business.
Employees
During 2013, we had consulting agreements with
all management and staff members. We regularly utilize the services of consultants on an as-needed basis. As of May 1, 2015, the
Company had 8 full time employees. In addition, we hire independent contractor labor on an as needed basis. Historically none of
our employees belonged to a collective bargaining union. We have not experienced a work stoppage and historically our employee
relations have been good.
RISKS RELATED TO BUSINESS
You should carefully consider the following
risk factors and all other information contained herein as well as the information included in this Annual Report in evaluating
our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties,
other than those we describe below, that are not presently known to us or that we currently believe are immaterial, may also impair
our business operations. If any of the following risks occur, our business and financial results could be harmed. You should refer
to the other information contained in this Annual Report, including our financial statements and the related notes.
Risks Relating to Our Business:
We Have a Limited Operating History Upon Which You Can Base An
Investment Decision.
Our company was formed on August 13, 2002,
and through December 31, 2010 we had not sold any products and did not have any agreements for the sale of our products or licensing
of our technology. Therefore we have a limited operating history upon which you can make an investment decision, or upon which
we can accurately forecast future sales, if any. Furthermore, once we begin producing products for sale we may not be able to market
our technology and products sufficiently to generate public interest in our goods. If only a small portion of the population decides
to use our products, we will experience limits on our revenues and our ability to achieve profitability. You should, therefore,
consider us subject to the business risks associated with a new business. The likelihood of our success must be considered in light
of the expenses, difficulties and delays frequently encountered in connection with the formation and initial operations of a new
business.
We Have a History Of Losses Which
May Continue, Which May Negatively Impact Our Ability to Achieve Our Business Objectives.
We incurred net operating losses of $4,907,773
for the year ended December 31, 2013 and $4,416,000 for the year ended December 31, 2012. We cannot assure you that we can achieve
or sustain profitability on a quarterly or annual basis in the future. Our operations are subject to the risks and competition
inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. Revenues
and profits, if any, will depend upon various factors, including whether we will be able to generate revenue. To date we have not
generated any revenues from our business activities. As a result of continuing losses, we may exhaust all of our resources prior
to completing the development of our products. Additionally, as we continue to incur losses, our accumulated deficit will continue
to increase, which might make it harder for us to obtain financing in the future. We may not achieve our business objectives and
the failure to achieve such goals would have an adverse impact on us, which could result in reducing or terminating our operations.
If We Are Unable to Obtain Additional Funding
Our Business Operations Will be Harmed.
We will require additional funds to sustain
and expand our research and development activities. As of December 31, 2013, we anticipate that we will require up to approximately
$2,000,000 to fund our operations for the next twelve months, depending on revenue from operations. Additional capital will be
required to effectively support the operations and to otherwise implement our overall business strategy. Even if we do receive
additional financing, it may not be sufficient to sustain or expand our research and development operations or continue our business
operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The
inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business
operations. If we are unable to obtain additional financing, we will likely be required to curtail our research and development
plans.
If We Do Obtain Additional Financing Our
Then Existing Shareholders May Suffer Substantial Dilution.
In the event we are able to find addition financing,
such additional funds will likely be obtained through additional equity financing. If we raise additional funds by issuing equity
securities, existing stockholders may experience a dilution in their ownership. In addition, as a condition to giving additional
funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders.
Our Independent Auditors Have Expressed
Substantial Doubt About Our Ability to Continue As a Going Concern, Which May Hinder Our Ability to Obtain Future Financing.
In their report dated May 7, 2015, our independent
auditors stated that our financial statements for the year ended December 31, 2013 were prepared assuming that we would continue
as a going concern. Our ability to continue as a going concern is an issue raised due to our accumulated deficit of $290,806,761
at December 31, 2013. In addition, at December 31, 2013, we were in a negative working capital position of $10,269,512 and had
a stockholders' deficit of $10,279,879. Our ability to continue as a going concern is subject to our ability to generate a profit
and/or obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, generating
sales or obtaining loans and grants from various financial institutions where possible. Our continued net operating losses increase
the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.
Many of Our Competitors are Larger and Have
Greater Financial and Other Resources than We do and Those Advantages Could Make it Difficult for Us to Compete With Them.
The general market for our products and services
is extremely competitive and includes several companies which have achieved substantially greater market shares than we have, have
longer operating histories, have larger customer bases, and have substantially greater financial, development and marketing resources
than we do. If overall demand for our products should decrease it could have a materially adverse effect on our operating results.
Competition in the US Market is Fierce,
With Significant Technical Developments Occurring Within the Past Several Years.
The market place is becoming more competitive
with other product offerings including fuel additives, fuel line magnetic devices, inline catalytic converters, liquid injection
systems and oil additives. While none appear to be offering the type of emission reduction technology and quality solution that
we are producing, this may change as new emission type technology and related approaches emerge.
We Acquired Rights to Our Technology from
One of the Founding Investors Without a Valuation Opinion or Arm’s Length Negotiations.
We acquired rights to our technology from one
of the founding investors for a price and consideration which we believe to be reasonable but this price was not negotiated on
an arm’s length basis nor was the transaction based upon a valuation opinion supporting that price. As a result, there is
no assurance that price paid nor terms are reasonable. If the price paid was not reasonable or the terms of such transaction were
not reasonable, we may have incurred costs which do not reflect the true value of the assets acquired and such costs may have unreasonably
limited our likelihood of achieving our financial goals.
A Manufacturer's Inability to Produce Our
Goods on Time and to Our Specifications Could Result in Lost Revenue and Net Losses.
While our new facility has limited manufacturing
abilities, we will depend upon independent third parties, including His Divine Vehicle, an entity owned by our CEO, for the manufacture
of substantially all of our products. Our products will be manufactured to our specifications by domestic or foreign manufacturers.
The inability of a manufacturer to ship orders of our products in a timely manner or to meet our quality standards could cause
us to miss the delivery date requirements of our customers for those items, which could result in cancellation of orders, refusal
to accept deliveries or a reduction in purchase prices, any of which could have a material adverse effect as our revenues would
decrease and we would incur net losses as a result of loss of sales of the product, if any sales could be made. Further, because
quality is a leading factor when customers and retailers accept or reject goods, any decline in quality by our third-party manufacturers
could be detrimental not only to a particular order, but also to our future relationship with that particular customer.
As a Result of Our Industry, We Need to
Maintain Substantial Insurance Coverage, Which Could Become Very Expensive or Have Limited Availability.
Our marketing and sale of products and services
creates an inherent risk of claims for liability. As a result, we have secured and will continue to maintain insurance in amounts
we consider adequate to protect us from claims. We cannot, however, be assured to have resources sufficient to satisfy liability
claims in excess of policy limits if required to do so. Also, there is no assurance that our insurance provider will not drop our
insurance or that our insurance rates will not substantially rise in the future, resulting in increased costs to us or forcing
us to either pay higher premiums or reduce our coverage amounts which would result in increased liability to claims.
Any Inability to Adequately Protect Our
Proprietary Technology Could Harm Our Ability to Compete.
Our future success and ability to compete depends
in part upon our proprietary technology, patents and trademarks, which we attempt to protect with a combination of patent, copyright,
trademark and trade secret laws, as well as with our confidentiality procedures and contractual provisions. These legal protections
afford only limited protection and are time-consuming and expensive to obtain and/or maintain. Further, despite our efforts, we
may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.
Any patents related to the products
we sell could be invalidated, circumvented or challenged. If challenged, our patents might not be
upheld or their claims could be narrowed. Our intellectual property may not be adequate to provide us with competitive
advantage or to prevent competitors from entering the markets for our products. Additionally, our competitors could
independently develop non-infringing technologies that are competitive with, equivalent to, and/or superior to our
technology. Monitoring infringement and/or misappropriation of intellectual property can be difficult, and there is no
guarantee that we would detect any infringement or misappropriation of our proprietary rights. Even if we do detect
infringement or misappropriation of our proprietary rights, litigation to enforce these rights could cause us to divert
financial and other resources away from our business operations.
Our Products may Infringe Upon the Intellectual
Property Rights of Others and Resulting Claims Against Us Could be Costly and Require Us to Enter Into Disadvantageous License
or Royalty Arrangements.
The automotive parts industry is characterized
by the existence of a large number of patents and frequent litigation based on allegations of patent infringement and the violation
of intellectual property rights. Although we attempt to avoid infringing upon known proprietary rights of third parties, we may
be subject to legal proceedings and claims for alleged infringement by us or our licensees of third-party proprietary rights, such
as patents, trade secrets, trademarks or copyrights, from time to time in the ordinary course of business. Any claims relating
to the infringement of third-party proprietary rights, even if not successful or meritorious, could result in costly litigation,
divert resources and our attention or require us to enter into royalty or license agreements which are not advantageous to us.
In addition, parties making these claims may be able to obtain injunctions, which could prevent us from selling our products. Furthermore,
former employers of our employees may assert that these employees have improperly disclosed confidential or proprietary information
to us. Any of these results could harm our business. We may be increasingly subject to infringement claims as the number of products
and the numbers of features grow.
If We Are Unable to Retain the Services
of Mr. Monros or If We Are Unable to Successfully Recruit Qualified Personnel, We May Not Be Able to Continue Our Operations.
Our success depends to a significant extent
upon the continued service of Mr. Serge Monros, our Chief Executive Officer, Chief Financial Officer and Chief Technology Officer.
Loss of the services of Mr. Monros could have a material adverse effect on our growth, revenues, and prospective business. We do
not maintain key-man insurance on the life of Mr. Monros. In addition, in order to successfully implement and manage our business
plan, we will be dependent upon, among other things, successfully recruiting qualified personnel. Competition for qualified individuals
is intense. There can be no assurance that we will be able to find, attract and retain existing employees or that we will be able
to find, attract and retain qualified personnel on acceptable terms.
If We Become Subject to Additional Laws
or Regulations Related to Our Products, We May Not Be Able to Continue Our Operations.
We are or may be subject to numerous federal,
state, local and foreign laws and regulations governing our operations, including the handling, transportation and disposal of
our products and our non-hazardous and hazardous substances and wastes, as well as emissions and discharges into the environment,
including discharges to air, surface water and groundwater. Failure to comply with such laws and regulations could result in costs
for corrective action, penalties or the imposition of other liabilities. Changes in environmental laws or the interpretation thereof
or the development of new facts could also cause us to incur additional capital and operation expenditures to maintain compliance
with environmental laws and regulations. We also may be subject to laws and regulations that impose liability and cleanup responsibility
for releases of hazardous substances into the environment without regard to fault or knowledge about the condition or action causing
the liability. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of previously owned or
operated properties. The presence of contamination from such substances or wastes could also adversely affect our ability to utilize
our leased properties. Compliance with environmental laws and regulations has not had a material effect upon our earnings or financial
position; however, if we violate any environmental obligation, it could have a material adverse effect on our business or financial
performance.
Risks Relating to our Convertible Debt
and Warrants:
There Are a Large Number of Shares Underlying
Our Convertible Debentures and Warrants That May be Available for Future Sale and the Sale of These Shares May Depress the Market
Price of Our Common Stock.
As of December 31, 2013, we had 5,970,327,669
shares of common stock issued and outstanding, convertible debentures outstanding that may be converted into a maximum of 2,171,917,400
shares of common stock and outstanding warrants to purchase 997,333,334 shares of common stock. All of the shares, including all
of the shares issuable upon conversion of the convertible debentures and upon exercise of our warrants, may be sold pending removal
of any restrictions. The sale of these shares may adversely affect the market price of our common stock.
The Issuance of Shares Upon Conversion of
the Convertible Debentures and Exercise of Outstanding Warrants May Cause Immediate and Substantial Dilution to Our Existing Stockholders.
The issuance of shares upon conversion of the
secured convertible debentures and exercise of warrants may result in substantial dilution to the interests of other stockholders.
Although the convertible debt holders may not convert their convertible notes if such conversion would cause them to own more than
4.99% of our outstanding common stock, this restriction does not prevent them from converting and/or exercising some of their holdings
and then converting the rest of their holdings. In this way, the debt and warrant holders could sell more than their limit while
never holding more than this limit.
Risks Relating to Our Common Stock:
There Are a Large Number of Shares Underlying
Our Series A and C Convertible Preferred Stock and the Issuance of Shares Upon Conversion of the Series A and C Convertible Preferred
Stock Would Cause Immediate and Substantial Dilution to Our Existing Stockholders.
As of December 31, 2013, we had 5,970,327,669
shares of common stock issued and outstanding and series A and C convertible preferred stock that may be converted into 2,171,917,400
shares of our common stock. The issuance of shares upon conversion of the series A and C convertible preferred stock would result
in substantial dilution to the interests of other stockholders.
Our Officers And Directors Owned a Significant
Interest in Our Voting Stock And Investors Did Not Have Any Voice in Our Management.
As a result of ownership of convertible preferred
stock, our officers and directors, in the aggregate, beneficially own approximately 8.7% of our outstanding common stock as of
December 31, 2013. As a result, these stockholders, acting together, had the ability to control substantially all matters submitted
to our stockholders for approval, including:
|
· |
election of our board of directors; |
|
· |
removal of any of our directors; |
|
· |
amendment of our certificate of incorporation or bylaws; and |
|
· |
adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us. |
As a result of their ownership and positions,
our directors and executive officers collectively are able to influence all matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held
by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common
stock. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain
control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
If We Fail to Remain Current in Our Reporting
Requirements, We Could be Removed From the OTC Markets Which Would Limit the Ability of Broker-Dealers to Sell Our Securities and
the Ability of Stockholders to Sell Their Securities in the Secondary Market.
Companies trading on the OTC Markets, such
as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their
reports under Section 13, in order to maintain price quotation privileges on the OTC Markets. If we fail to remain current on our
reporting requirements, we could be removed from the OTC Markets. As a result, the market liquidity for our securities could be
severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to
sell their securities in the secondary market.
We Could be Removed From the OTC Markets
Which Would Limit the Ability of Broker-Dealers to Sell Our Securities and the Ability of Stockholders to Sell Their Securities
in the Secondary Market.
The Company received a letter from the Securities
and Exchange Commission, Los Angeles Regional Office, dated May 9, 2011. The letter informed us that the SEC had entered into a
“formal order of investigation” into “Savi Media Group, Inc.” The letter included a “Subpoena DucesTecum,”
meaning the Company was given a prescribed period of time to produce all requested documents and information contained in the subpoena.
An index of the source of all such produced information and an authentication declaration were also to be supplied. The stated
purpose of the investigation is a fact-finding inquiry to assist the SEC staff in determining if the Company has violated federal
securities laws. The SEC states there is no implication of negativity or guilt at this stage of the investigation. The SEC investigation
appears to be ongoing since all info has been supplied to the best of the company’s knowledge. There is a risk that the SEC
could take action adverse to the ability of the company to continue marketing its stock in the secondary markets.
Our Common Stock is Subject to the "Penny
Stock" Rules of the SEC and the Trading Market in Our Securities is Limited, Which Makes Transactions in Our Stock Cumbersome
and May Reduce the Value of an Investment in Our Stock.
The Securities and Exchange Commission has
adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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· |
that a broker or dealer approve a person's account for transactions in penny stocks; and |
|
· |
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
In order to approve a person's account for
transactions in penny stocks, the broker or dealer must:
|
· |
obtain financial information and investment experience objectives of the person; and |
|
· |
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior
to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which,
in highlight form:
|
· |
sets forth the basis on which the broker or dealer made the suitability determination; and |
|
· |
that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute
transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose
of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks
of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the rights and remedies available to an investor in
cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for
the penny stock held in the account and information on the limited market in penny stocks.
ITEM 2. DESCRIPTION OF PROPERTY.
We do not own any real property. We currently
lease our 40,000 square foot corporate headquarters located at 2530 South Birch Street, Santa Ana, CA 92707. Our telephone number
at that office is (877) 611-7284 and our facsimile number is (714) 641-7113. The lease is for a one-year period with an annual
lease payment of $110,000 and an annual extension option. We believe that these facilities are adequate for our current and immediately
foreseeable operating needs.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, we may become party to litigation
or other legal proceedings that we consider to be a part of the ordinary course of our business.
The Company received a letter from the Securities
and Exchange Commission, Los Angeles Regional Office, dated May 9, 2011. The letter informed us that the SEC had entered into a
“formal order of investigation” into “Savi Media Group, Inc.” The letter included a “Subpoena DucesTecum,”
meaning the Company was given a prescribed period of time to produce all requested documents and information contained in the subpoena.
An index of the source of all such produced information and an authentication declaration were also to be supplied. The stated
purpose of the investigation is a fact-finding inquiry to assist the SEC staff in determining if the Company has violated federal
securities laws. The SEC states there is no implication of negativity or guilt at this stage of the investigation.
We hired the Los Angeles law firm of Troy Gould
to represent us in the matter of this investigation. As of the date of this filing, we believe we have provided all requested material
to the SEC. Updates on the investigation will be supplied by supplemental filings hereto.
Status of prior private investments; $0 in
2007 (although HDV sold $13,000 of its shares), $0 in 2008 (although HDV sold $445,750 of its shares), $0 in 2009 (although HDV
sold $448,000 of its shares), $910,742 in 2010, $1,827,543 in 2011, and $629,500 in the first three quarters of 2012. There is
concern that these private placement securities sales were not made in compliance with applicable law (lack of material disclosure
and/or failure to file securities sales notices as required by federal law) and the Company may need to offer rescission rights
to the investors.
In 2006, the Company issued shares for services
valued at $611,768. There were issued shares for services valued at $1,416,060 in 2007; shares for services valued at $14,625 in
2008, shares for services valued at $380,500 in 2009, shares for services valued at $236,920 in 2010, shares for services valued
at $3,370,273 in 2011, and shares for services valued at $3,165,039 during the first 3 quarters of 2012. We have no plans to offer
rescission for these share issuances.
We offered rescission to many of the 2011 investors
in late 2011 (“2011 rescission offer”). The legal sustainability of these rescission offers is also being looked at
by Counsel. The results of our rescission offers, in terms of rescission offers accepted by shareholders, were very encouraging.
We had seven rescissions offers accepted and refunded $31,000 plus interest.
Generally, we believe we have good relationships
with our shareholders. Our plan is to offer rescission to most shareholders obtaining privately offered shares from us since January
1, 2007 through 2011. The Company has pledged to use our best efforts, in good faith, to honor any accepted rescission offer. However,
there is no assurance that rescission offer acceptances will not have a material effect on our finances or that we will be able
to re-pay those electing to rescind in a complete and timely manner. As of the date hereof, the Company has postponed their plans
to offer rescission to earlier purchasing shareholders, deeming it advisable to wait until the common stock price increases and
they have more operating cash available to pay for the cost of undertaking this endeavor. The Company has booked a liability to
account for this rescission liability and marks the liability to market on a quarterly basis. The rescission liability as of December
31, 2013 is $784,809.
The Company received a letter dated June 7,
2013 with a Civil Complaint titled Arnold Lamarr Weese, et al v. SaviCorp filed in the Northern District of West Virginia. In addition
to SaviCorp, Serge Monros and Craig Waldrop are being sued individually. Settlement discussions failed and Plaintiff's counsel
began service of Process. The Company and Mr. Monros have hired Shustak and Partners to defend the claim. The defendants have sued
for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempts to hold the
Company and Mr. Monros responsible for alleged improprieties of Waldrop. The Company finalized a negotiated settlement and received
court approval on April 7, 2015. The Company has recorded a $1,101,179 liability based on the settlement agreement. This consists
of $100,000 cash payment for legal fees paid over a period of five months and net common shares to be issued of 296,050,421 valued
at $1,001,179.
We may become involved in material legal proceedings
in the future.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS.
Pursuant to a written consent of a majority
of stockholders dated August 19, 2005, in lieu of a special meeting of the stockholders, the majority of stockholders approved
the following actions:
1. |
|
To elect five directors to the Company's Board of Directors, to hold office until their successors are elected and qualified or until their earlier resignation or removal; |
2. |
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To ratify certain financing transactions requiring potential stock issuances in excess of currently authorized capital stock; |
3. |
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To amend the Company's Articles of Incorporation, as amended, to: |
(a) |
|
increase the number of authorized shares of common stock, par value $.001 per share (the “Common Stock”), of the Company from 1,000,000,000 shares to 6,000,000,000 shares; |
(b) |
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increase the number of authorized shares of preferred stock, par value $.001 per share (the “Preferred Stock”), of the Company from 30,000,000 shares to 40,000,000 shares; |
4. |
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To ratify the selection of Ham, Langston &Brezina, L.L.P. as independent registered public accounting firm of the Company for the year ending December 31, 2005; and |
5. |
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To adopt the Company’s 2005 Incentive Stock Plan. |
There have been no stockholders meeting since
August 19, 2005.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
MARKET INFORMATION
Our common stock is quoted on the OTC Markets
under the symbol “SVMI”.
For the periods indicated, the following table
sets forth the high and low closing prices per share of common stock.
|
Fiscal Year 2013 |
|
High |
Low |
First Quarter |
$0.0050 |
$0.0008 |
Second Quarter |
$0.0080 |
$0.0030 |
Third Quarter |
$0.0067 |
$0.0036 |
Fourth Quarter |
$0.0038 |
$0.0019 |
|
Fiscal Year 2012 |
|
High |
Low |
First Quarter |
$0.0135 |
$0.0065 |
Second Quarter |
$0.0094 |
$0.0065 |
Third Quarter |
$0.0070 |
$0.0030 |
Fourth Quarter |
$0.0036 |
$0.0008 |
HOLDERS
As of April 15, 2015, we had approximately
859 holders of our common stock. The number of record holders was determined from the records of our transfer agent and does not
include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered
clearing agencies. The transfer agent of our common stock is Worldwide Stock Transfer, LLC, located at 1 University Plaza, Suite
505, in Hackensack, NJ 07601.
DIVIDENDS
We have never declared or paid any cash dividends
on our common stock. We do not anticipate paying any cash dividends to stockholders in the foreseeable future. In addition, any
future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial
condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant.
RECENT SALE OF UNREGISTERED SECURITIES
For the year ended December 31, 2013, the Company
issued the following:
In January 2013, the Board of Directors authorized
the issuance of 50,625,000 common shares to accredited and non-accredited investors for total proceeds of $20,500.
In February 2013, the Board of Directors authorized
the issuance of 92,500,000 common shares to accredited and non-accredited investors for total proceeds of $43,000.
In March 2013, the Board of Directors authorized
the issuance of 48,127,694 common shares to accredited and non-accredited investors for total proceeds of $40,100.
In April 2013, the Board of Directors authorized
the issuance of 340,000,000 common shares to accredited and non-accredited investors for total proceeds of $322,500.
In April 2013, 27,000,000 common shares were
returned in the Botkin Settlement. These shares were valued based on the common stock price on the date of settlement.
In May 2013, the Board of Directors authorized
the issuance of 36,400,000 common shares to accredited and non-accredited investors for total proceeds of $18,500.
In May 2013, 14,843,750 common shares were
issued in the Bingham settlement. These shares were valued based on the common stock price on the date of settlement.
In June 2013, the Board of Directors authorized
the issuance of 50,000,000 common shares to accredited investors in exchange for $15,000 of convertible debt.
In January 2013, the Board of Directors authorized
the issuance of 1,000,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $40,000.
In February 2013, the Board of Directors authorized
the issuance of 700,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $35,000.
In March 2013, the Board of Directors authorized
the issuance of 200,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $20,000.
In May 2013, the Board of Directors authorized
the issuance of 3,388,500 Preferred C shares to accredited and non-accredited investors for total proceeds of $338,850.
In July 2013, the Board of Directors authorized
the issuance of 200,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $10,000.
In August 2013, the Board of Directors authorized
the issuance of 900,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $47,500.
In September 2013, the Board of Directors authorized
the issuance of 2,250,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $137,500.
In October 2013, the Board of Directors authorized
the issuance of 2,100,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $110,000.
In November 2013, the Board of Directors authorized
the issuance of 3,200,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $185,000.
Throughout the year, the Board of Directors
also authorized the issuance of 749,900,000 common shares, 1,351,667 Preferred A shares and 60,000 Preferred C shares for services
rendered by independent contractors issuances based on the market value of the stock.
Since 2013, the Board of Directors authorized
the issuance of an aggregate of 12,301,666 shares of its Preferred A shares and 298,311 shares of its Preferred B shares to accredited
and non-accredited investors for total proceeds of $1,824,500. In addition, the Board of Directors has authorized the issuance
of an aggregate of 500,000 shares of its common stock, 1,700,000 shares of its Preferred A shares and 97,950 shares of its Preferred
B shares to accredited and non-accredited investors for services rendered valued at an aggregate of $3,525,450. No sales commissions
were paid in connection with these issuances and all investors reviewed or had access to all of the Company’s filing pursuant
to the Securities Exchange Act of 1934, as amended.
ITEM 6. MANAGEMENT’S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION
The following information should be read in
conjunction with the financial statements and the notes thereto contained elsewhere in this report. The Private Securities Litigation
Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Information in this Item 6, "Management's
Discussion and Analysis or Plan of Operation," and elsewhere in this 10-K that does not consist of historical facts, are "forward-looking
statements." Statements accompanied or qualified by, or containing words such as "may," "will," "should,"
"believes," "expects," "intends," "plans," "projects," "estimates,"
"predicts," "potential," "outlook," "forecast," "anticipates," "presume,"
and "assume" constitute forward-looking statements, and as such, are not a guarantee of future performance. The statements
involve factors, risks and uncertainties including those discussed in the “Risk Factors” section contained elsewhere
in this report, the impact or occurrence of which can cause actual results to differ materially from the expected results described
in such statements. Risks and uncertainties can include, among others, fluctuations in general business cycles and changing economic
conditions; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology
that can reduce the demand for the Company's products, as well as other factors, many or all of which may be beyond the Company's
control. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results.
The Company disclaims any obligation to update the forward-looking statements in this report.
Business History
We were originally incorporated as Energy Resource
Management, Inc. on August 13, 2002 and subsequently adopted name changes to Redwood Energy Group, Inc. and Redwood Entertainment
Group, Inc., upon completion of a recapitalization on August 26, 2002. The re-capitalization occurred when we acquired the non-operating
entity of Gene-Cell, Inc. Gene-Cell had no significant assets or operations at the date of acquisition and we assumed all liabilities
that remained from its prior discontinued operation as a biopharmaceutical research company. The historical financial statements
presented herein are those of SaVi Media Group, Inc. and its predecessors, Redwood Entertainment Group, Inc., Redwood Energy Group,
Inc. and Energy Resource Management, Inc.
The public entity we used to recapitalize was
originally incorporated as Becniel and subsequently adopted name changes to Tzaar Corporation, Gene-Cell, Inc., Redwood Energy
Group, Inc., Redwood Entertainment Group, Inc., Savi Media Group, Inc., and finally to SaviCorp.
Business Summary
Until 2011, we were considered a development
stage enterprise because we had no significant operations, had not yet generated revenue from new business activities and were
devoting substantially all of our efforts to business planning and the search for sources of capital to fund our efforts. We had
acquired all rights to "blow-by gas and crankcase engine emission reduction technology" which we intended to develop
and market on a commercial basis.
This technology is an emission reduction device
believed to reduce harmful exhaust emissions in gasoline and diesel engines, and increase fuel efficiency. Phase one testing at
California Environmental Engineering indicated notable reduction in tailpipe emissions and Particulate Matter (PM) while improving
fuel economy. The reductions were 5.1% in hydrocarbons, 5.1% in carbon monoxide, 5.5% in nitrogen oxides, while increasing fuel
economy by 0.3%.
We currently have the right to market and distribute
the DynoValve and DynoValve Pro products, which provides for increased fuel economy and reduced emissions in automotive applications
for both new and existing vehicles and may be used in other non-automotive applications. Personal watercraft, small engine powered
lawn equipment, and stand-alone power generation engines are additional markets that we intend to develop. The technology may be
sold internationally and we are pursuing opportunities simultaneously domestically and internationally.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial
condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and our estimates are based on historical experience
and on various other assumptions that are believed to be reasonable under the circumstances. These estimates and assumptions provide
a basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from our estimates under different assumptions or conditions, and these differences may be material.
We believe that the following critical accounting
policies affect our more significant judgments and estimates used in the preparation of our financial statements:
Income Taxes
We use the liability method of accounting for
income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences on future years of temporary
differences between the tax basis of assets and liabilities and their financial amounts at year-end. We provide a valuation allowance
to reduce deferred tax assets to their net realizable value.
Stock-Based Compensation
Effective January 1, 2006, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), Share-Based Payment (SFAS 123R),
and began expensing at fair value on a straight-line basis the costs resulting from share-based payment transactions.
Prior to 2006, the Company elected to follow
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations
in accounting for stock options granted to employees as permitted by SFAS No. 123, Accounting for Stock-Based Compensation
(SFAS 123), as amended by SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure. Under
APB 25, the Company did not recognize share-based payment expense in its financial statements because the stock option awards qualified
as fixed awards and the exercise price of the Company’s employee stock options equaled the market price of the underlying
stock on the date of grant.
Convertible Notes - Derivative Financial Instruments
The convertible notes issued to His Divine
Vehicle, Inc. and DS Enterprises, Inc. in 2009, and to Steve Botkin in 2012 have been accounted for in accordance with SFAS No.
133 and EITF No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's
Own Stock."
The Company has identified that these debenture
have embedded derivatives. These embedded derivatives have been bifurcated from the host debt contract and accounted for as derivative
liabilities in accordance with EITF 00-19. When multiple derivatives exist within the convertible notes, they have been bundled
together as a single hybrid compound instrument in accordance with SFAS No. 133 Derivatives Implementation Group Implementation
Issue No. B-15, "Embedded Derivatives: Separate Accounting for Multiple Derivative Features Embedded in a Single Hybrid Instrument."
The embedded derivatives within the convertible
notes have been recorded at fair value at the date of issuance and are marked-to-market each reporting period with changes in fair
value recorded to the Company's income statement as "Net change in fair value of derivative liabilities." The Company
has utilized a third party valuation firm to fair value the embedded derivatives using a lattice model with layered discounted
probability-weighted cash flow methods.
The fair value of the derivative liabilities
are subject to the changes in the trading value of the Company's common stock, as well as other factors. As a result, the Company's
financial statements may fluctuate from quarter-to-quarter based on factors, such as the price of the Company's stock at the balance
sheet date and the amount of shares converted by note holders. Consequently, our financial position and results of operations may
vary from quarter-to-quarter based on conditions other than our operating revenues and expenses.
Plan of Operations
We believe that there are several critical
elements for the building of a successful company that has the capacity to utilize the technology we have licensed for the implementation
of immediate and long-term solutions to the global challenges of air, water, and land pollution.
|
1. |
People - this includes a qualified board of
directors, advisory board members, management, employees, sales people, project managers, installers and consultants, etc.;
|
|
2. |
Projects - a credible portfolio of projects
that have the appropriate risk-return ratio in order to generate potentially significant shareholder value;
|
|
3. |
Capital - based upon the reputation of the
people and the quality of the projects, there must be sufficient capital in order to launch the company and to provide for additional
financing;
|
|
4. |
Technology - the most advanced interpretation
methods, techniques and methods should be utilized in order to maximize the potential for finding and developing immediate and
long term solutions to the global challenges of air, water, and land pollution;
|
|
5. |
Favorable positioning - the international influence
of the oil and gas companies along with the automotive & diesel industries requires a combination of secured relationships
with their appointed leadership in these various industries as well as with all the various local and international governmental
entities; and
|
|
6. |
Distribution and installation- the competitive nature of the automotive &diesel industry requires a unique approach and a significant capital commitment in order to secure the latest in hi-tech equipment to expedite large scale distribution and installation of our products. |
Complete testing phases in order to secure
revenues, licensing agreements, and contracts.
We are continuing to test our emission control
devices on select engines in order to obtain certification and validation of our technology.
Become a technology partner to the various
entities that are focused on environmental solutions.
We are presently participating in a consortium
of companies with emission reduction technologies for the problem solving of both our local environmental challenges and to assist
in China’s pursuit of immediate solutions to the particular needs in their environment.
Complete distribution/licensing agreements
for various entities and geographic areas.
We are continuing to expand our partners both
internationally and domestically through various licensing and/or distribution agreements for the sale of our products to specific
industries or markets. We have continued to test our emission control devices on select engines in order to obtain validation of
our technology for the target vehicles of each of these partners. Completion of these steps will lead to revenue growth and profitability
for SaviCorp.
During the years ended December 31, 2013 and
2012, we had limited sales and we expect to require additional cash of a minimum of approximately $2,000,000 over the next twelve
months. Those funds, if available, will be used for continued operation as we grow sales. Additional financing will need to be
obtained. Sources of funding may not be available on terms that are acceptable to management and existing stockholders, or may
include terms that will result in substantial dilution to existing stockholders.
Results of Operations
During the period from inception, August 13,
2002, to December 31, 2010, we had not generated any revenue from operations. During the year ended December 31, 2013, we generated
$764,000 in gross revenues. This represented a growth of 654% over 2012 revenues of $101,362. The majority of the sales were with
DynoGreen Tech (“DGT”), a distributor in the Middle East. In addition to acquiring in excess of $700,000 of DynoValve
products in 2013, DGT acquired Company stock and were issued short term stock options under their licensing agreement. Under GAAP
guidance, the stock options were considered a sales incentive and were netted against DGT sales with the excess value expensed
as stock based compensation. DGT is considered a related party. Excluding related party revenue, sales decreased from $101,362
in 2012 to $41,475 in 2013. This was primarily because the company focused on growing international markets. Sales in 2012 mostly
consisted of small fleets in the US. Despite the growth in revenue, expenses far exceed revenue as loss from operations for 2013
was $4,907,773, an increase of 11.1% over 2012 loss from operations of $4,416,000. This increase was primarily a function of expensing
the options issued to DGT.
During the year ended December 31, 2013, we
incurred $2,053,545 in Other Expense. During the year ended December 31, 2012, we generated $9,099,776 in Other Income. Other Income/Expense
consists of change in fair value of derivative instruments, interest expense, loss on debt settlement, loss on legal settlement
and change in fair value of rescission liability. The primary reason for the drop in Other Income/Expense from 2012 to 2013 was
due to a negative change in the fair value of derivative instruments in 2013 compared to a positive change in fair value of derivative
instruments in 2012.
Net loss for the year ended December 31, 2013
was 6,961,318. This is a drop from the net profit for the year ended December 31, 2012 of $4,683,776. The drop in net profit is
primarily due to a drop in the Other Income/Expense due to a drop in the change in fair value of derivative instruments which is
primarily a function of the increase of our common stock price.
At December 31, 2013, we are in a negative
working capital position of $10,269,512 and had a stockholders' deficit of $10,279,879. Our auditors have opined that such matters
raise substantial doubt about our ability to continue as a going concern. We financed our operations mainly through the sale of
common stock and have been entirely dependent on outside sources of financing for continuation of operations. We will continue
to pursue funding for our business. There is no assurance that we will continue to be successful in obtaining additional funding
on attractive terms or at all, nor that the projects towards which additional capital is assigned will generate revenues at all.
Plan of Operation
During the year ended December 31, 2013, we
incurred losses from operations and we expect to require additional cash of approximately $2,000,000 over the next twelve
months. Those funds will be used to expand sales.
Our plan of operations will require sources
of funding that may not be available on terms that are acceptable to management and existing stockholders, or may include terms
that will result in substantial dilution to existing stockholders.
Liquidity and Capital Resources
As of December 31, 2013, the Company had $60,612
in cash, $6,615 in accounts receivable, $51,325 in inventory, $22,233 in net fixed assets and $18,333 in pre-paid assets.
Total current liabilities were $10,406,397
as of December 31, 2013, consisting of convertible debt, net, of $715,742, derivative liabilities of $5,231,535, accounts payable
and accrued liabilities of $2,388,059, notes payable of $25,778, settlement payable of $1,101,179, rescission liability of $784,809
and accounts payable assumed in recapitalization of $159,295.
We had a negative working capital of $10,269,512
as of December 31, 2013.
As a result, our independent registered public
accounting firm, in its report dated May 8, 2015, has expressed substantial doubt about our ability to continue as a going concern.
Our average monthly operational expenses have been $373,739 per
month for the year ended December 31, 2013.
Our ability to continue as a going concern
is dependent upon several factors. These factors include our ability to:
|
· |
further implement our business plan; |
|
· |
obtain additional financing or refinancing as may be required; |
We believe it is imperative that we raise an
additional $5,000,000 of capital in order to implement our business plan. We are attempting to raise additional funds through debt
and/or equity offerings. We intend to use any funds raised to pay down debt and to provide us with working capital. There can be
no assurance that any new capital would be available to us or that we would have adequate funds for our operations, whether from
our revenues, financial markets, or other arrangements will be available when needed or on terms satisfactory to us. Any additional
financing may involve dilution to our then-existing shareholders.
We have no other commitments from officers,
directors or affiliates to provide funding. If we are unable to obtain debt and/or equity financing upon terms that we deem sufficiently
favorable, or at all, it would have a materially adverse impact upon our ability to pursue our business strategy and maintain our
current operations. As a result, it may require us to delay, curtail or scale back some or all of our operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.
There were no recent accounting pronouncements
that have had or are likely to have a material effect on our financial position or results of operations.
ITEM 7. FINANCIAL STATEMENTS.
See Financial Statements beginning on F-1
this Annual Report on Form 10-K.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
During the fiscal years ended December 31,
2013 and December 31, 2012, neither the Company nor anyone acting on its behalf has consulted with M&K with respect to (i)
the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion
that might be rendered on the Company's financial statements, and neither a written report nor oral advice was provided to the
Company that M&K concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing,
or financial reporting issue or (ii) any matter that was either the subject of a "disagreement" or "reportable event"
as those terms are defined in Item 304(a)(1) of Regulation S-K.
ITEM 8A. CONTROLS AND PROCEDURES
a) |
Evaluation of Disclosure Controls and Procedures. As of December 31, 2013, the Company’s management carried out an evaluation, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of the Company’s system of disclosure controls and procedures pursuant to the Securities and Exchange Act, Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were ineffective, as of the date of their evaluation, for the purposes of recording, processing, summarizing and timely reporting material information required to be disclosed in reports filed by the Company under the Securities Exchange Act of 1934. This assessment was made based on the need to amend prior filings due to embedded derivatives within various convertible securities and the lack of sufficient personnel to process transactions. We have hired an outside expert to evaluate and value derivative financial instruments in any and all convertible securities and when we obtain additional financing will hire additional personnel and implement procedures to properly account for and disclose all transactions. |
b) |
Changes in internal controls. There were no changes in internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is likely to materially effect, the Company’s internal control over financial reporting. |
ITEM 8B. OTHER INFORMATION
None.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS.
The following information sets forth the names of our officers and
directors, their present positions with us, and their biographical information.
Names: |
Ages |
Officer Titles |
Board of Directors |
Serge Monros |
64 |
Chief Executive Officer, Chief Financial Officer, Chief Technology Officer |
Director |
Phil Pisanelli |
67 |
|
Director |
Rudy Rodriguez |
63 |
Secretary and Treasurer |
Director |
Directors are elected to serve until the next
annual meeting of stockholders and until their successors are elected and qualified. Currently there are five seats on our board
of directors.
Currently, our Directors are not compensated
for their services, although their expenses in attending meetings are reimbursed. Officers are elected by the Board of Directors
and serve until their successors are appointed by the Board of Directors. Biographical resumes of each officer and director are
set forth below.
Mr. Serge Monros has been the Chief
Technology Officer and a director since August 2004. Since January, 2007, Mr. Monros has also served as the Chief Executive Officer.
Since January, 2009, Mr. Monros has also served as the Chief Financial Officer. Since 2004, Mr. Monros has been the owner of His
Divine Vehicle, a Santa Ana, California technology company.
Mr. Rudy Rodriguez has been our Chief
Operating Officer since June 2005 and a director since November 2005. Since February 2000, Mr. Rodriguez has been the procurement
manager for American Range, a commercial cooking equipment manufacturer located in Pacoima, California. Prior to February 2000,
Mr. Rodriguez was the director of purchasing at Wilbur Curtis Company, Inc., a commercial coffee and tea equipment manufacturer
located in Los Angeles, California.
Mr. Phil Pisanelli has been a director
since August 2004. Since January 1981, Mr. Pisanelli has been the calibration manager for Boeing, Inc., located in Palmdale, California.
Audit Committee
The Board of Directors was reconfigured in
January, 2007. The previous members of the Audit Committee of the Board as of December 31, 2005 are no longer directors. The present
Board has not appointed an Audit Committee. None of the current Board of Directors is qualified to serve as an “audit committee
financial expert”, as defined in the Regulations of the Securities and Exchange Commission. Phil Pisanelli is our only “independent
director”, as defined in the Regulations of the Securities and Exchange Commission.
Code of Ethics
The Company has adopted a “Code of Business
Ethics for Savi Media Group, Inc.” The Code is applicable to all employees of the Company, including its principal executive
officer, principal financial officer, principal accounting officer, or persons performing similar functions. The Company will provide
a copy of the Code of Ethics, without charge, to any person who submits a request in writing to the President of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
OF 1934
Section 16(a) of the Securities Exchange Act
of 1934 (the “Exchange Act”) requires the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file with the Commission initial reports of ownership
and reports of changes in ownership of the Company's Common Stock and other equity securities of the Company. Officers, directors
and greater than ten percent shareholders are required by the Commission's regulations to furnish the Company with copies of all
Section 16(a) forms they filed.
We have been provided with copies of all forms
(3, 4 and 5) filed by officers, directors, or ten percent shareholders within three days of such filings. Based on our review of
such forms that we received, or written representations from reporting persons that no Forms 5s were required for such persons,
we believe that, during fiscal 2007, all Section 16(a) filing requirements have been satisfied on a timely basis for members of
the Board of Directors and Executive Officers.
ITEM 10. EXECUTIVE COMPENSATION.
The following tables set forth certain information
regarding our CEO and each of our most highly-compensated executive officers whose total annual salary and bonus for the fiscal
years ending December 31, 2013, 2012, and 2011 exceeded $100,000. Of the salaries shown during 2013, 2012, and 2011, $19,300, $10,800,
and $18,833 were paid. The remaining was accrued as of December 31, 2013:
SUMMARY COMPENSATION TABLE |
|
|
|
|
|
|
ANNUAL COMPENSATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual |
Restricted |
Options |
Other |
|
Name & Principal |
|
|
|
Compen- |
Stock |
SARs |
LTIP |
All Other |
Position |
Year |
Salary ($) |
Bonus ($) |
sation ($) |
Awards($) |
(#) |
Payouts($) |
Compensation |
|
|
|
|
|
|
|
|
|
Serge Monros |
2013 |
216,000 |
- |
216,000 |
- |
- |
- |
- |
CEO, CFO |
2012 |
144,000 |
- |
144,000 |
- |
- |
- |
- |
|
2011 |
144,000 |
- |
144,000 |
- |
- |
- |
- |
Employment/Consultant Agreements
We have no employment or consulting agreements
with any of our officers.
Remuneration of Directors
We currently do not have in effect a policy
regarding compensation for serving on our board of directors. However, we do reimburse our directors for their reasonable expenses
incurred in attending meetings of our board and our non-employee directors are periodically granted shares or options to purchase
shares of our common stock.
Stock Option Plans
The 2005 Incentive Stock Plan was adopted by
the Board of Directors and approved by the stockholders in August 2005. The 2005 Plan provides for the issuance of up to 25,000,000
shares and/or options.
2005 Incentive Stock Plan
The primary purpose of the 2005 Incentive Stock
Plan is to attract and retain the best available personnel for us in order to promote the success of our business and to facilitate
the ownership of our stock by employees. The 2005 Incentive Stock Plan is administered by our Board of Directors. Under the 2005
Incentive Stock Plan, key employees, officers, directors and consultants are entitled to receive awards. The 2005 Incentive Stock
Plan permits the granting of incentive stock options, non-qualified stock options and shares of common stock with the purchase
price, vesting and expiration terms set by the Board of Directors.
Option/Stock Appreciation Right Grants in
2011
None.
Aggregate Option/SAR Exercises in 2011 and December 31, 2012
Option Values
None.
Equity Compensation Plan Information
|
|
|
Number of |
|
|
|
securities |
|
|
|
remaining |
|
Number of |
Weighted- |
available for future |
|
securities to be |
average exercise |
issuance under |
|
issued upon |
price of |
equity |
|
exercise of |
outstanding |
compensation |
|
outstanding |
options, |
plans (excluding |
|
options, warrants |
warrants and |
securities reflected |
|
and rights |
rights |
in column (a)) |
|
(a) |
(b) |
(c) |
|
|
|
|
Equity compensation plans approved by holders |
25,000,000 |
- |
25,000,000 |
|
|
|
|
Equity compensation plans not approved by security holders |
- |
- |
- |
Total |
25,000,000 |
- |
25,000,000 |
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following tables sets forth, as of December
31, 2013, the number of and percent of our common stock beneficially owned by
|
· |
by each person who is known by us to beneficially own more than 5% of our common stock; |
|
· |
by each of our officers and directors; and |
|
· |
by all of our officers and directors as a group. |
We believe that all persons named in the table
have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
A person is deemed to be the beneficial owner
of securities that can be acquired by him within 60 days from December 31, 2013 upon the exercise of options, warrants or convertible
securities. Each beneficial owner's percentage ownership is determined by assuming that options, warrants or convertible securities
that are held by him, but not those held by any other person, and which are exercisable within 60 days of December 31, 2013 have
been exercised and converted.
Savi Media Group, Inc. |
|
|
|
|
|
|
Related Parties |
|
|
|
|
|
|
December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficially |
Percent of |
|
|
Name |
|
Class |
Owned(1) |
Class(2) |
|
Title or Nature of Relationship |
|
|
|
|
|
|
|
Serge Monros |
(3) |
Common Stock |
326,433,957 |
5.23% |
|
CEO/CFO/Director |
2530 S. Birch Street |
|
|
|
|
|
|
Santa Ana, California 92707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil Pisanell |
(4) |
Common Stock |
21,000,000 |
* |
|
Director |
2530 S. Birch Street |
|
|
|
|
|
|
Santa Ana, California 92707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rudy Rodriguez |
(5) |
Common Stock |
202,000,000 |
3.36% |
|
COO/Director |
2530 S. Birch Street |
|
|
|
|
|
|
Santa Ana, California 92707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
All Officers and Directors |
|
Common Stock |
549,433,957 |
8.68% |
|
|
As a Group (3 persons) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cornell Capital |
(6) |
Common Stock |
991,666,667 |
14.24% |
|
|
101 Hudson Street, Suite 3700 |
|
|
|
|
|
|
Jersey City, NJ 07302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Saheed Kottoth |
(7) |
Common Stock |
528,666,667 |
8.57% |
|
|
|
|
|
|
|
|
|
Carol Ann Klove Family Trust |
|
Preferred A |
1,100,000 |
8.49% |
|
|
|
|
|
|
|
|
|
Scott Kelley |
|
Preferred A |
1,000,000 |
7.71% |
|
|
|
|
|
|
|
|
|
David Hayes Blanchard |
|
Preferred A |
1,000,000 |
7.71% |
|
|
|
|
|
|
|
|
|
Joseph Gimbel |
|
Preferred A |
1,630,000 |
12.57% |
|
|
|
|
|
|
|
|
|
Hartstein Investments, FLP |
|
Preferred A |
850,000 |
6.56% |
|
|
|
|
|
|
|
|
|
Neal Shindel and Joan Dengrove Family Trust |
|
Preferred A |
1,000,000 |
7.71% |
|
|
|
|
|
|
|
|
|
Lucius Blanchard Family Trust |
|
Preferred A |
2,000,000 |
15.43% |
|
|
|
|
|
|
|
|
|
Alexander M. Haig Jr. |
|
Preferred C |
500,000 |
5.71% |
|
Advisory Board Member |
|
|
|
|
|
|
|
Alexander P. Haig |
|
Preferred C |
500,000 |
5.71% |
|
Advisory Board Member |
|
|
|
|
|
|
|
Rudy Rodriguez |
|
Preferred C |
500,000 |
5.71% |
|
COO/Director |
|
|
|
|
|
|
|
John Orrock |
|
Preferred C |
750,000 |
8.57% |
|
|
|
|
|
|
|
|
|
Saheed Kottoth |
|
Preferred C |
2,000,000 |
22.84% |
|
|
|
|
|
|
|
|
|
Chul Chung |
|
Preferred C |
1,088,500 |
12.43% |
|
|
* Less than 1%.
(1) | | Beneficial Ownership is determined in accordance with
the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.
Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within
60 days of December 31, 2013 are deemed outstanding for computing the percentage of the person holding such option or warrant
but are not deemed outstanding for computing the percentage of any other person. |
(2) | | For purposes of calculating the percentage beneficially
owned, the number of shares of each class of stock deemed outstanding includes 5,970,327,669 common shares; 12,963,477 Preferred
A Shares and 8,755,697 Preferred C Shares outstanding as of December 31, 2013. |
(3) | | Includes 28,514,606 shares of common stock and includes
the conversion of the principal amount of 204,302 plus accrued interest through 12/31/13 of $66,141 converting into common shares
at the conversion rate of $0.0003 subject to ownership limitations, owned by His Divine Vehicle, Inc., of which Mr. Monros is
the Chief Executive Officer. |
(4) | | Includes 11,000,000 shares of common stock and 1,000,000
shares of common stock underlying series A convertible preferred stock. |
(5) | | Includes 152,000,000 shares of common stock and 50,000,000
shares of common stock underlying series C convertible preferred stock. |
(6) | | Includes 991,666,667 warrants to acquire common stock
at an exercise price of $0.0003. |
(7) | | Includes 328,666,667 shares of common stock and 200,000,000
shares of common stock underlying series C convertible preferred stock. |
Series A and C Voting Rights
Each share of Series A and C convertible preferred
stock shall be entitled to cast that number of votes per share as is equal to the number of votes that holder would be entitled
to cast had such holder converted his shares into shares of Common Stock on the record date for such vote. Each share of Series
A and Series C convertible preferred stock is convertible into 100 shares of common stock.
DESCRIPTION OF SECURITIES
COMMON STOCK
As of December 31, 2013, we were authorized
to issue up to 6,000,000,000 shares of Common Stock, $0.01 par value. As of December 31, 2013, there were 5,970,327,669 shares
of common stock issued and outstanding. Holders of the common stock are entitled to one vote per share on all matters to be voted
upon by the stockholders. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by
the Board of Directors out of funds legally available therefor. Upon the liquidation, dissolution, or winding up of our company,
the holders of common stock are entitled to share ratably in all of our assets which are legally available for distribution after
payment of all debts and other liabilities and liquidation preference of any outstanding common stock. Holders of common stock
have no preemptive, subscription, redemption or conversion rights.
We have engaged WorldWide Stock Transfer, LLC
as independent transfer agent or registrar.
PREFERRED STOCK
We are authorized to issue 40,000,000 shares
of preferred stock, $0.01 par value per share. As of December 31, 2013, there were 12,963,477 shares of series A preferred stock
issued and outstanding and 8,755,697 shares of series C preferred stock issued and outstanding. The shares of preferred stock may
be issued in series, and shall have such voting powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall
be stated and expressed in the resolution or resolutions providing for the issuance of such stock adopted from time to time by
the board of directors. The board of directors is expressly vested with the authority to determine and fix in the resolution or
resolutions providing for the issuances of preferred stock the voting powers, designations, preferences and rights, and the qualifications,
limitations or restrictions thereof, of each such series to the full extent now or hereafter permitted by the laws of the State
of Nevada.
The series A and series C preferred stock provides
for conversion on the basis of 100 shares of common stock for each share of preferred stock converted, with conversion at the option
of the holder or mandatory conversion upon restructure of the common stock and holders of the series A and series C preferred stock
vote their shares on an as-converted basis. Holders of the series A and series C preferred stock participates on distribution and
liquidation pari passu with the holders of the common stock. We have also filed certificates of Designation for series B preferred
stock but no stock of this class has been issued as of December 31, 2013. The series B preferred stock provides for conversion
on the basis of 10,000 shares of common stock for each share of preferred stock converted, with conversion at the option of the
holder or mandatory conversion upon restructure of the common stock and holders of the series B preferred stock vote their shares
on an as-converted basis. Holders of the series B preferred stock participates on distribution and liquidation pari passu with
the holders of the common stock.
WARRANTS
In connection with a repayment agreement dated
July 28, 2011, we issued YA Global warrants to purchase an aggregate of 25,000,000 shares of common stock, exercisable for a period
of three years at a price of $0.0119.
The warrants issued to YA Global provide for
certain anti-dilution protection in the event that (i) we issue shares of our common stock for a purchase price below the exercise
price of the various warrants or in the event we issue options or other convertible securities with a conversion price below the
exercise price, (ii) we effectuate a stock split, stock dividend or other form of recapitalization, or (iii) we declare a dividend
payment to the holders of our common stocks. The exercise price was reset on August 8, 2011 to $0.0005. The exercise price was
reset on January 30, 213 to $0.0003 and the number of warrants increased to 991,666,667.
In May 2010, the Company issued 5,000,000 warrants
at an exercise price of $0.01 exercisable for a period of 5 years to a law firm for services rendered.
In April 2012, the Company issued 666,667 warrants
at an exercise price of $0.015 exercisable for a period of six months to a law firm for services rendered.
In May 2013 as part of the DynoGreen Tech licensing
agreement for the Middle East, the Company issued 400,000,000 warrants at an exercise price of $0.001 if exercised within 30 days
and an exercise price of $0.002 if exercised within 60 days. All these warrants were exercised within 30 days.
OPTIONS
Gene-Cell, Inc. and Redwood Entertainment Group,
Inc. periodically issued incentive stock options to key employees, officers, and directors to provide additional incentives to
promote the success of the Company's business and to enhance the ability to attract and retain the services of qualified persons.
The Board of Directors approved the issuance of all stock options. The exercise price of an option granted was determined by the
fair market value of the stock on the date of grant. Reverse stock splits by the Company resulted in the reduction of outstanding
options to less than 85 shares with exercise prices that are so high that the exercise of the options will never be practical. Expiration
dates range from February, 2012 through July, 2012. There are no stock options outstanding as of December 31, 2013.
CONVERTIBLE SECURITIES
On December 15, 2009, the Company converted
accounts payable due to His Divine Vehicle, Inc. and DS Enterprises, Inc. into convertible promissory notes. The notes bear interest
at 8%, matured on April 15, 2010, and convert into common shares at the conversion rate of $0.003 subject to anti-dilution protection.
In August, 2011, the conversion rate was reset to $0.0005. In January, 2013, the conversion rate was reset to $0.0003.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation, as amended,
provide to the fullest extent permitted by Nevada law, our directors or officers shall not be personally liable to us or our shareholders
for damages for breach of such director's or officer's fiduciary duty. The effect of this provision of our Articles of Incorporation,
as amended, is to eliminate our rights and our shareholders (through shareholders' derivative suits on behalf of our company) to
recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches
resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the
indemnification provisions in our Articles of Incorporation, as amended, are necessary to attract and retain qualified persons
as directors and officers.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 (the “Act” or “Securities Act”) may be permitted to directors,
officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
Other than as disclosed below, there have been
no transactions, or proposed transactions, which have materially affected or will materially affect us in which any director, executive
officer or beneficial holder of more than 10% of the outstanding common stock, or any of their respective relatives, spouses, associates
or affiliates, has had or will have any direct or material indirect interest. We have no policy regarding entering into transactions
with affiliated parties.
We, having previously issued 4,000 shares of
common stock towards the acquisition of Savi Group, holder of patents from Serge Monros, subsequently issued 5,000,000 shares of
common stock, 5,000,000 shares of Series A preferred stock and 125,000,000 three-year stock options (to acquire shares of our common
stock at $0.00025 per share) to Serge Monros to complete the acquisition of the rights to the patents. Serge Monros also received
100,000 shares of common stock as compensation for his role as our chief technology officer. We also issued 17,560,000 shares of
common stock to associates of Serge Monros that were involved in the initial development of the patents that he owns.
As consideration for HDV entering into the
Product License Agreement, the Company agreed to issue to Mr. Monros and HDV, if and when available, an aggregate of 500 Million
shares of Common Stock, 5 Million shares of Series A Preferred Stock and 5 Million shares of Series C Preferred Stock. In September,
2009, HDV was awarded 300,000,000 common shares and 2,500,000 Preferred C shares for services rendered. In July, 2011, HDV and
Mr. Monros entered into a revised licensing agreement which modified the prior consideration paid to an aggregate of 600 Million
shares of Common Stock, 6.5 Million shares of Series A Preferred Stock and 2.5 Million shares of Series C Preferred Stock.
Mr. Monros has continued the process of preparing
patent applications for the other versions of the DynoValve products & related IP. In March, 2013, the Company entered into
a five (5) year Master Distribution Agreement with His Divine Vehicle to sell the DynoValve and DynoValve Pro in various internationally
territories. The consideration for the agreement was a guaranteeing a minimum annual volume, payment for the DynoValves acquired
and a three percent (3%) royalty payment.
In March, 2015, the Company
entered into a seven (7) year Master Distribution Agreement with Dynovalve Mfg, LLC, the current holder of the patents for the
DynoValve products and related IP and a related party to Mr. Monros, our CEO. The agreement is an exclusive agreement for North
America, China, Korea and the Middle East and a non-exclusive agreement for the rest of the world. The consideration for the agreement
was payment for products acquired and a three percent (3%) royalty payment.
We have no policy regarding entering into transactions
with affiliated parties.
ITEM 13. EXHIBITS.
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
Amended and Restated Articles of Incorporation, filed March 1, 2005, filed as an exhibit to the registration statement on Form SB-2 filed with the Securities and Exchange Commission (the “Commission”) on June 27, 2005 and incorporated herein by reference. |
|
|
|
3.2 |
|
Amendment to the Articles of Incorporation, as amended and restated, filed April 22, 2005, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference |
|
|
|
3.3 |
|
Certificate of Designation of Series A Preferred Stock, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference. |
|
|
|
3.4 |
|
Certificate of Designation of Series B Preferred Stock, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference. |
|
|
|
3.5 |
|
Certificate of Designation of Series C Preferred Stock, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference. |
|
|
|
3.6 |
|
By-laws, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference. |
|
|
|
4.1 |
|
Securities Purchase Agreement, dated July 10, 2006, by and between Savi Media Group, Inc. and Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.2 |
|
Secured Convertible Debenture issued to Cornell Capital Partners, L.P., dated July 10, 2006, filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
4.3 |
|
Warrant to purchase 1,000,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.4 |
|
Warrant to purchase 1,000,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.5 |
|
Warrant to purchase 300,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.6 |
|
Warrant to purchase 200,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.7 |
|
Warrant to purchase 150,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.8 |
|
Warrant to purchase 100,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference |
|
|
|
4.9 |
|
Warrant to purchase 60,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.10 |
|
Warrant to purchase 40,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.11 |
|
Warrant to purchase 30,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.12 |
|
Warrant to purchase 20,000,000 shares of Common Stock, dated July 10, 2006, issued to Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.13 |
|
Registration Rights Agreement, dated July 10, 2006, by and between Savi Media Group, Inc. and Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.14 |
|
Security Agreement, dated July 10, 2006, by and between Savi Media Group, Inc. and Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
4.15 |
|
Pledge and Escrow Agreement, dated July 10, 2006, by and among Savi Media Group, Inc., Cornell Capital Partners L.P., New Creation Outreach, Inc. and David Gonzalez, Esq. as escrow agent., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference. |
|
|
|
10.1 |
|
Agreement, dated as of April 6, 2005, by and between the Company and His Divine Vehicle, Inc., filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference. |
|
|
|
10.2 |
|
Agreement, dated as of June 17, 2005, amending the April 6, 2005 agreement between the Company and His Divine Vehicle, Inc., filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference. |
31.1 |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended |
|
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended |
|
|
|
32.1 |
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer) |
101.INS |
|
XBRL Instance Document |
|
|
|
101.SCH |
|
XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document |
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
The aggregate fees billed by our auditors,
for professional services rendered for the audit of the Company's annual financial statements for the years ended December 31,
2013 and 2012, and for the reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q during
the fiscal years were $44,000 and $14,000, respectively.
Audit Related
Our auditors billed us $44,000 and $0 for audited
related work during fiscal years 2013 and 2012, respectively.
Tax Fees
Our auditors billed us $0 and $0 for tax related
work during fiscal years 2013 and 2012, respectively.
All Other Fees
Our auditors did not bill us for any other
services during fiscal years 2013 or 2012.
The Board of Directors has considered whether
the provision of non-audit services is compatible with maintaining the principal accountant's independence.
SIGNATURES
In accordance with the requirements of the
Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SAVI MEDIA GROUP, INC.
Date: May 11, 2015 |
By: /s/ SERGE MONROS |
|
Serge Monros |
|
President, Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), Chief Technology Officer and Chairman of the Board of Directors |
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
In accordance with the
requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and
on the dates stated.
Name |
Position |
Date |
|
|
|
/s/ SERGE MONROS
Serge Monros |
Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and Director |
May 11, 2015 |
|
|
|
/s/ PHIL PISANELLI
Phil Pisanelli |
Director |
May 11, 2015 |
|
|
|
/s/ RUDY RODRIGUEZ
Rudy Rodriguez |
Chief Operating Officer and Director |
May 11, 2015 |
|
|
|
SAVICORP
TABLE OF CONTENTS
|
|
|
|
Page(s) |
|
|
Report of Independent Registered Public Accounting Firm |
F-2 |
|
|
Balance Sheets at December 31, 2013 and 2012 |
F-3 |
|
|
Statements of Operations for the years ended December 31, 2013 and 2012 |
F-4 |
|
|
Statement of Stockholders' Deficit for the period from December 31, 2011 to December 31, 2013 |
F-5 |
|
|
Statements of Cash Flows for the years ended December 31, 2013 and 2012 |
F-6 |
|
|
Notes to Financial Statements |
F-7 |
|
|
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Directors
SaviCorp
We have audited the
accompanying balance sheets of SaviCorp (the “Company”) as of December 31, 2013 and December 31, 2012 and the related
statements of operations, stockholders' deficit and cash flows for the twelve month periods then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits
in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the
financial statements referred to above present fairly, in all material respects, the financial position of SaviCorp as of December
31, 2013 and 2012 and the results of its operations and cash flows for the periods described above in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has an accumulated deficit, has negative working capital, and has a stockholders’ deficit. These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in
regard to these matters are described in Note 2 to the financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
May 8, 2015
SaviCorp
BALANCE SHEETS
December 31, 2012 and 2013
| |
December 31, 2013 | | |
December 31, 2012 | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 60,612 | | |
$ | 10,839 | |
Accounts Receivable | |
| 6,615 | | |
| 261 | |
Inventory | |
| 51,325 | | |
| 100,147 | |
Prepaid expenses | |
| 18,333 | | |
| 76,422 | |
Total current assets: | |
| 136,885 | | |
| 187,669 | |
| |
| | | |
| | |
Long term assets: | |
| | | |
| | |
Net fixed assets | |
| 22,233 | | |
| 14,785 | |
| |
| | | |
| | |
Total assets | |
$ | 159,118 | | |
$ | 202,454 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Convertible debt, net of unamortized discount of $0 and $0, in default | |
$ | 511,440 | | |
$ | 526,440 | |
Related party convertible debt, net of unamortized discount of $0 and $0, in default | |
$ | 204,302 | | |
| 204,302 | |
Notes payable, in default | |
| 10,778 | | |
| 10,778 | |
Notes payable, related party, in default | |
| 15,000 | | |
| 15,000 | |
Accounts payable and accrued liabilities | |
| 2,388,059 | | |
| 1,965,634 | |
Related party accounts payable | |
| – | | |
| 244,945 | |
Accounts payable assumed in recapitalization | |
| 159,295 | | |
| 159,295 | |
Settlements payable | |
| 1,101,179 | | |
| 1,580,252 | |
Rescission Liability | |
| 784,809 | | |
| 2,183,544 | |
Derivative liabilities - embedded derivatives | |
| 3,848,923 | | |
| 1,198,628 | |
Derivative liabilities - warrants | |
| 1,382,612 | | |
| 321,680 | |
Total current liabilities | |
| 10,406,397 | | |
| 8,410,498 | |
| |
| | | |
| | |
Long term liabilities: | |
| | | |
| | |
Convertible debt, net of unamortized discount of $0 and $0 | |
| 32,600 | | |
| 36,003 | |
| |
| | | |
| | |
Total liabilities | |
| 10,438,997 | | |
| 8,446,501 | |
| |
| | | |
| | |
Commitments and contingencies | |
| – | | |
| – | |
| |
| | | |
| | |
Stockholders' deficit: | |
| | | |
| | |
Series A convertible preferred stock; $0.001 par
value,19,000,000 and 10,000,000 shares authorized, 12,963,477 and 5,953,233 issued and outstanding at December 31, 2013
and 2012, respectively |
|
|
12,963 |
|
|
|
5,953 |
|
Series B convertible preferred stock; $0.001 par value,10,000,000 shares authorized, none issued and outstanding |
|
|
– |
|
|
|
– |
|
Series C convertible preferred stock; $0.001 par value,10,000,000 shares authorized, 8,755,697
and 4,409,609 issued and outstanding at December 31, 2013 and 2012, respectively |
|
|
8,756 |
|
|
|
4,409 |
|
Common stock: $0.001 par value, 6,000,000,000 shares
authorized, 5,970,327,669 and 4,756,016,619 shares issued and outstanding at December 31, 2013 and 2012, respectively |
|
|
5,970,328 |
|
|
|
4,756,017 |
|
Stock payable | |
| 1,420,384 | | |
| 1,406,768 | |
Additional paid-in capital | |
| 273,114,451 | | |
| 269,428,248 | |
Accumulated deficit | |
| (290,806,761 | ) | |
| (283,845,442 | ) |
| |
| | | |
| | |
Total stockholders' deficit | |
| (10,279,879 | ) | |
| (8,244,047 | ) |
| |
| | | |
| | |
Total liabilities and stockholders' deficit | |
$ | 159,118 | | |
$ | 202,454 | |
The accompanying notes are an integral part
of the financial statements
SaviCorp
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2013 and 2012
| |
December 31, 2013 | | |
December 31, 2012 | |
| |
| | | |
| | |
Revenue | |
$ | 41,475 | | |
$ | 101,362 | |
| |
| | | |
| | |
Cost of Goods Sold | |
| 464,384 | | |
| 70,312 | |
| |
| | | |
| | |
Gross Profit | |
| (422,909 | ) | |
| 31,050 | |
| |
| | | |
| | |
Operating costs and expenses: | |
| | | |
| | |
General and administrative expenses | |
$ | 4,484,864 | | |
$ | 4,447,050 | |
| |
| | | |
| | |
Loss from operations | |
$ | (4,907,773 | ) | |
$ | (4,416,000 | ) |
| |
| | | |
| | |
Other income and (expenses): | |
| | | |
| | |
Gain/(loss) on debt settlement | |
| 104,669 | | |
| (928,000 | ) |
(Loss) on legal settlement | |
| 479,073 | | |
| (1,580,252 | ) |
Change in fair value of financial instruments | |
| (3,950,096 | ) | |
| 13,896,345 | |
Change in fair value of rescission liability | |
| 1,398,735 | | |
| (2,183,544 | ) |
Interest expense | |
| (85,926 | ) | |
| (104,773 | ) |
| |
| | | |
| | |
Total other income and (expenses), net | |
| (2,053,545 | ) | |
| 9,099,776 | |
| |
| | | |
| | |
Net profit (loss) | |
$ | (6,961,318 | ) | |
$ | 4,683,776 | |
| |
| | | |
| | |
Weighted average shares outstanding | |
| 5,733,919,110 | | |
| 4,348,806,962 | |
Weighted average shares outstanding-diluted | |
| 5,733,919,110 | | |
| 5,385,091,162 | |
| |
| | | |
| | |
Net profit (loss) per common share - basic | |
$ | (0.00 | ) | |
$ | 0.00 | |
Net profit (loss) per common share - diluted | |
$ | (0.00 | ) | |
$ | 0.00 | |
The accompanying notes are an integral part
of the financial statements
SaviCorp
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period From December 31, 2011 to
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Preferred Stock A |
|
|
Preferred Stock C |
|
Common Stock |
|
Paid-In |
|
Stock |
|
Accumulated |
|
|
|
|
Shares |
|
Amount |
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Payable |
|
Deficit |
|
Total |
|
Balance at December 31, 2011 |
|
6,312,733 |
|
$ |
6,313 |
|
|
|
6,014,942 |
|
$ |
6,015 |
|
|
3,598,834,936 |
|
$ |
3,598,835 |
|
$ |
264,112,848 |
|
$ |
1,981,768 |
|
$ |
(288,529,219 |
) |
$ |
(18,823,440 |
) |
Common stock issued in exchange for consulting services and employee
compensation |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
414,343,445 |
|
|
414,344 |
|
|
2,826,695 |
|
|
– |
|
|
– |
|
|
3,241,039 |
|
Stock Options issued for consulting services |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
770 |
|
|
– |
|
|
– |
|
|
770 |
|
Common and preferred stock issued for cash under Regulation D offering |
|
– |
|
|
– |
|
|
|
100,000 |
|
|
100 |
|
|
344,355,238 |
|
|
344,355 |
|
|
327,045 |
|
|
– |
|
|
– |
|
|
671,500 |
|
Conversion of Preferred A to common |
|
(359,500 |
) |
|
(360 |
) |
|
|
– |
|
|
– |
|
|
35,950,000 |
|
|
35,950 |
|
|
(35,590 |
) |
|
– |
|
|
– |
|
|
– |
|
Conversion of Preferred C to common |
|
– |
|
|
– |
|
|
|
(1,705,333 |
) |
|
(1,706 |
) |
|
170,533,000 |
|
|
170,533 |
|
|
(168,827 |
) |
|
– |
|
|
– |
|
|
– |
|
Conversion of debt for common |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
142,000,000 |
|
|
142,000 |
|
|
1,813,407 |
|
|
– |
|
|
– |
|
|
1,955,407 |
|
Imputed interest on related party debt |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
26,900 |
|
|
– |
|
|
– |
|
|
26,900 |
|
Common stock repaid by Company |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
50,000,000 |
|
|
50,000 |
|
|
525,000 |
|
|
(575,000 |
) |
|
– |
|
|
– |
|
Net income |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
4,683,776 |
|
|
4,683,776 |
|
Balance at December 31, 2012 |
|
5,953,233 |
|
$ |
5,953 |
|
|
|
4,409,609 |
|
$ |
4,409 |
|
|
4,756,016,619 |
|
$ |
4,756,017 |
|
$ |
269,428,248 |
|
$ |
1,406,768 |
|
$ |
(283,845,442 |
) |
$ |
(8,244,047 |
) |
Common and preferred stock issued in exchange for consulting services
and employee compensation |
|
1,351,667 |
|
|
1,352 |
|
|
|
60,000 |
|
|
60 |
|
|
749,900,000 |
|
|
749,900 |
|
|
1,189,705 |
|
|
– |
|
|
– |
|
|
1,941,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common and preferred stock issued for cash under Regulation D offering |
|
9,450,000 |
|
|
9,450 |
|
|
|
4,488,500 |
|
|
4,489 |
|
|
567,652,694 |
|
|
567,653 |
|
|
786,858 |
|
|
– |
|
|
– |
|
|
1,368,450 |
|
Conversion of Preferred A to common |
|
(300,000 |
) |
|
(300 |
) |
|
|
– |
|
|
– |
|
|
30,000,000 |
|
|
30,000 |
|
|
(29,700 |
) |
|
– |
|
|
– |
|
|
– |
|
Conversion of debt for common |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
50,000,000 |
|
|
50,000 |
|
|
131,708 |
|
|
– |
|
|
– |
|
|
181,708 |
|
Stock Options issued with license agreement |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
1,500,683 |
|
|
– |
|
|
– |
|
|
1,500,683 |
|
Imputed interest on related party debt |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
13,261 |
|
|
– |
|
|
– |
|
|
13,261 |
|
Stock bought back from investors |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
(3,500,000 |
) |
|
(3,500 |
) |
|
(10,500 |
) |
|
– |
|
|
– |
|
|
(14,000 |
) |
Net stock received in settlement agreements |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
(12,156,250 |
) |
|
(12,156 |
) |
|
(53,475 |
) |
|
– |
|
|
– |
|
|
(65,631 |
) |
Common stock repaid by Company |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
78,414,606 |
|
|
78,414 |
|
|
773,354 |
|
|
(851,768 |
) |
|
– |
|
|
– |
|
Common and preferred stock loaned to Company |
|
(3,491,423 |
) |
|
(3,491 |
) |
|
|
(202,412 |
) |
|
(202 |
) |
|
(246,000,000 |
) |
|
(246,000 |
) |
|
(615,691 |
) |
|
865,384 |
|
|
– |
|
|
– |
|
Net income |
|
– |
|
|
– |
|
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
– |
|
|
(6,961,318 |
) |
|
(6,961,318 |
) |
Balance at December 31, 2013 |
|
12,963,477 |
|
$ |
12,963 |
|
|
|
8,755,697 |
|
$ |
8,756 |
|
|
5,970,327,669 |
|
$ |
5,970,328 |
|
$ |
273,114,451 |
|
$ |
1,420,384 |
|
$ |
(290,806,761 |
) |
$ |
(10,279,879 |
) |
The accompanying notes are an integral part
of the financial statements
SaviCorp
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2013 and 2012
| |
December 31, 2013 | | |
December 31, 2012 | |
Cash flows from operating activities: | |
| | | |
| | |
Net profit (loss) | |
| (6,961,318 | ) | |
| 4,683,776 | |
Adjustments to reconcile net income to net profit (loss) to net cash used by operating
activities: | |
| | | |
| | |
Compensatory common, preferred stock and warrant issuances | |
| 3,441,699 | | |
| 3,241,809 | |
Imputed interest | |
| 13,261 | | |
| 26,900 | |
Interest expense recognized on issuance and through accretion of discount on debt | |
| 7,810 | | |
| 3,027 | |
Change in fair value of derivatives | |
| 3,950,096 | | |
| (13,896,345 | ) |
Change in fair value of rescission and legal liability | |
| (1,877,808 | ) | |
| 2,183,544 | |
(Gain) Loss on extinguishment of debt | |
| (104,669 | ) | |
| 928,000 | |
(Gain) Loss on legal settlement | |
| – | | |
| 1,580,252 | |
Depreciation expense | |
| 6,359 | | |
| 2,727 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Changes in accounts receivable | |
| (6,354 | ) | |
| 600 | |
Changes in inventory | |
| 48,822 | | |
| 57,469 | |
Changes in pre-paid assets | |
| 58,089 | | |
| (59,753 | ) |
Changes in related party accounts payable | |
| (244,945 | ) | |
| (69,507 | ) |
Changes in accounts payable and accrued liabilities | |
| 479,488 | | |
| 459,925 | |
Net cash used by operating activities | |
| (1,189,470 | ) | |
| (857,576 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Acquisition of equipment | |
| (13,807 | ) | |
| (17,512 | ) |
Net cash used in investing activities | |
| (13,807 | ) | |
| (17,512 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds (net payments) from (on) notes payable | |
| (101,400 | ) | |
| 214,000 | |
Stock purchases | |
| (14,000 | ) | |
| – | |
Proceeds from sale of common and preferred stock | |
| 1,368,450 | | |
| 671,500 | |
Net cash provided by financing activities | |
| 1,253,050 | | |
| 885,500 | |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| 49,773 | | |
| 10,412 | |
Cash and cash equivalents at beginning of year | |
| 10,839 | | |
| 427 | |
Cash and cash equivalents at end of year | |
| 60,612 | | |
| 10,839 | |
The accompanying notes are an integral part
of the financial statements
SAVI CORP
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 2013 and 2012
1. |
Organization and Significant Accounting Policies |
SaviCorp (the "Company")
is a Nevada Corporation that has acquired rights to "blow-by gas and crankcase engine emission reduction technology"
which it intends to develop and market on a commercial basis. The technology is a relatively simple gasoline and diesel engine
emission reduction device that the Company intends to sell to its customers for effective and efficient emission reduction and
engine efficiency for implementation in both new and presently operating automobiles. The Company is considered a development stage
enterprise because it currently has no significant operations, has not yet generated revenue from new business activities and is
devoting substantially all of its efforts to business planning and the search for sources of capital to fund its efforts.
The Company was originally incorporated
as Energy Resource Management, Inc. on August 13, 2002 and subsequently adopted name changes to Redwood Energy Group, Inc. and
Savi Media Group, Inc., upon completion of a recapitalization on August 26, 2002. The re-capitalization occurred when the Company
acquired the non-operating public shell of Gene-Cell, Inc. Gene-Cell Inc. had no significant assets or operations at the date of
acquisition and the Company assumed all liabilities that remained from its prior discontinued operation as a biopharmaceutical
research company. The historical financial statements presented herein are those of Savi Media Group, Inc. and its predecessors,
Redwood Energy Group, Inc. and Energy Resource Management, Inc.
The non-operating public shell used
to recapitalize the Company was originally incorporated as Becniel and subsequently adopted name changes to Tzaar Corporation,
Gene-Cell, Inc., Redwood Energy Group, Inc., Redwood Entertainment Group, Inc., Savi Media Group, Inc., and finally its current
name SaviCorp.
Significant Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America 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 dates of the financial statements and the reported amounts of revenues and expenses during the periods. Actual results could
differ from estimates making it reasonably possible that a change in the estimates could occur in the near term.
Cash and Cash Equivalents
The Company considers all highly
liquid short-term investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company
had cash equivalents of $10,839 as of December 31, 2012 and $60,612 as of December 31, 2013.
Concentration of Credit Risk
Cash and cash equivalents are the
primary financial instruments that subject the Company to concentrations of credit risk. The Company maintains its cash deposits
with major financial institutions selected based upon management’s assessment of the financial stability. Balances periodically
exceed the $100,000 federal depository insurance limit; however, the Company has not experienced any losses on deposits.
Inventory
Inventories are stated at the
lower of cost, computed using the first-in, first-out method, or market. If the cost of the inventories exceeds their market value,
provisions are made currently for the difference between the cost and the market value.
Furniture and Equipment
Furniture and equipment is recorded
at cost. The cost and related accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the respective
accounts, and any resulting gains or losses are included in the results of operations. Depreciation is computed using the straight-line
method over the estimated useful lives of the related assets. Repairs and maintenance costs are expensed as incurred.
Impairment of Long-Lived Assets
The Company evaluates the recoverability
of long-lived assets when events and circumstances indicate that such assets might be impaired and determines impairment by comparing
the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Impairments
are charged to operations in the period to which events and circumstances indicate that such assets might be impaired.
Intangible Assets
Intangible assets are amortized
using the straight-line method over their estimated period of benefit. We evaluate the recoverability of intangible assets periodically
and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.
Income Taxes
The Company uses the liability method
of accounting for income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences on future
years of temporary differences between the tax basis of assets and liabilities and their financial amounts at year-end. The Company
provides a valuation allowance to reduce deferred tax assets to their net realizable value.
Stock-Based Compensation
The
Company adopted FASB guidance on stock based compensation on January 1, 2006. Under FASB ASC 718-10-30-2, all share-based payments
to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.
Pro forma disclosure is no longer an alternative. Stock and stock options issued for services and compensation totaled $3,241,809
and $3,441,699 for the years ended December 31, 2012 and 2013, respectively.
Valuation of Derivatives
The Company evaluates its convertible
instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify
as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting
treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In
the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as
other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion
date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become
subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification
date. We analyzed the derivative financial instruments (the Convertible Notes), in accordance with ASC 815. The objective is to
provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This
determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual
method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument
is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot
be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument
or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any,
must be evaluated, followed by an evaluation of the instrument's settlement provisions. The Company utilized multinomial lattice
models that value the derivative liability within the notes based on a probability weighted discounted cash flow model. The Company
utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets
(or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other
than in a forced or liquidation sale.
The derivative liabilities result
in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes. This derivative liability is
marked-to-market each quarter with the change in fair value recorded in the income statement. Unamortized discount is amortized
to interest expense using the effective interest method over the life of the Convertible Note. If the Note is converted or the
warrants are exercised, the derivative liability is released and recorded as additional paid in capital.
Profit/Loss Per Share
Basic and diluted net profit or
loss per share is computed on the basis of the weighted average number of shares of common stock outstanding during each period.
See Note 11 for a discussion of potentially dilutive instruments.
Fair Value of Financial Instruments
The Company includes fair value
information in the notes to financial statements when the fair value of its financial instruments is different from the book value.
When the book value approximates fair value, no additional disclosure is made.
New Accounting Pronouncements
In July 2012, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-02, “Intangibles - Goodwill and Other (Topic 350): Testing
Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08,
Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first
to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired
as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30,
Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim
impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual
and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the
most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for
issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued
ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin (SAB) No. 114. , Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting
Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs
pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial
position or results of operations.
In October 2012, the FASB issued
ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in
this update cover a wide range of Topics in the Accounting Standards Codification.
These amendments include technical
corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements.
The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04
is not expected to have a material impact on our financial position or results of operations.
In July 2013, FASB issued ASU No.
2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax
Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or
portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward
or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual
reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact
on the Company's Consolidated Financial Statements.
We have adopted recently issued
accounting pronouncements and have determined that they have no material effect on our financial position, results of operations,
or cash flow. We do not expect any recently issued but not yet adopted accounting pronouncements to have a material
effect on our financial position, results of operations or cash flow.
2. |
Going Concern Considerations |
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. In 2013, the Company had limited resources. At December
31, 2013, the Company is in a negative working capital position of $10,269,512 and has a stockholders' deficit of $10,279,879.
Additionally, as of December 31, 2013 the Company faced substantial challenges to future success as follows:
|
· |
The Company is delinquent on critical liabilities such as payments to key consultants. |
| · | The Company does not generate sufficient revenue to cover its expenses. |
| · | The Company does not have committed funding to cover its cash flow deficits. |
Such matters raise substantial doubt
about the Company's ability to continue as a going concern. These financial statements do not include any adjustment that might
result from the outcome of this uncertainty.
The goals of the Company
will require a significant amount of capital and there can be no assurances that the Company will be able to raise adequate short-term
capital to sustain its current operations, or that the Company can raise adequate long-term capital from private placement of its
common or preferred stock or private debt to emerge from its current status. There can also be no assurances that the Company will
ever attain profitability. The Company's long-term viability as a going concern is dependent upon certain key factors, including:
|
· |
The Company's ability to obtain adequate sources of funding to sustain it during its growth stage. |
|
· |
The ability of the Company to successfully produce and market its gasoline and diesel engine emission reduction device in a manner that will allow it to ultimately achieve adequate profitability and positive cash flows to sustain its operations. |
In order to address its ability
to continue as a going concern, implement its business plan and fulfill commitments made in connection with its agreement for acquisition
of patent rights, the Company hopes to raise additional capital from sale of its common and preferred stock. Sources of funding
may not be available on terms that are acceptable to the Company and its stockholders, or may include terms that will result in
substantial dilution to existing stockholders.
3. |
Accounts Payable and Accrued Liabilities |
Accounts Payable and Accrued Liabilities
at December 31, 2013 and 2012, consisted of the following:
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
838,701 |
|
|
$ |
526,760 |
|
Accrued wages payable |
|
|
1,289,565 |
|
|
|
1,230,227 |
|
Accrued interest expense |
|
|
259,793 |
|
|
|
208,647 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,388,059 |
|
|
$ |
1,965,634 |
|
4. |
Accounts Payable and Accrued Liabilities – Related Party |
The $15,000 amount due at December
31, 2012 and December 31, 2013 consist of $10,000 to Serge Monros and $5,000 to Greg Sweeney for payments made on behalf of the
Company related to the Herrera Settlement.
5. |
Accounts Payable Assumed in Recapitalization |
Accounts payable assumed in recapitalization,
represents the liabilities of the public shell, at the time, Gene-Cell, Inc. that the Company assumed as part of the recapitalization.
This balance is comprised of liabilities for legal fees and trade payables incurred by Gene-Cell, Inc. (See Note 1).
The Company received a letter dated
June 7, 2013 with a Civil Complaint titled Arnold Lamarr Weese, et al v. SaviCorp filed in the Northern District of West Virginia.
In addition to SaviCorp, Serge Monros and Craig Waldrop are being sued individually. Settlement discussions failed and Plaintiff's
counsel began service of Process. The Company and Mr. Monros have hired Shustak and Partners to defend the claim. The defendants
have sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempts
to hold the Company and Mr. Monros responsible for alleged improprieties of Waldrop. The Company finalized a negotiated settlement
and received court approval on April 7, 2015. The Company has recorded a $1,101,179 liability based on the settlement agreement.
This consists of $100,000 cash payment for legal fees paid over a period of five months and net common shares to be issued of 296,050,421
valued at $1,001,179.
The Company received a letter from
the Securities and Exchange Commission, Los Angeles Regional Office, dated May 9, 2011. The letter informed us that the SEC had
entered into a “formal order of investigation” into “Savi Media Group, Inc.” The letter included a “Subpoena
DucesTecum,” meaning the Company was given a prescribed period of time to produce all requested documents and information
contained in the subpoena. An index of the source of all such produced information and an authentication declaration were also
to be supplied. The stated purpose of the investigation is a fact-finding inquiry to assist the SEC staff in determining if the
Company has violated federal securities laws. The SEC states there is no implication of negativity or guilt at this stage of the
investigation.
The Company initially hired the
Los Angeles law firm of Troy Gould to represent us in the matter of this investigation. As of the date of this filing, the Company
believes it has provided all requested material to the SEC. Updates on the investigation will be supplied by supplemental filings
hereto.
Status of prior private investments;
$0 in 2007 (although HDV sold $13,000 of its shares), $0 in 2008 (although HDV sold $445,750 of its shares), $0 in 2009 (although
HDV sold $448,000 of its shares), $910,742 in 2010, $1,827,543 in 2011, and $629,500 in the first three quarters of 2012. There
is concern that these private placement securities sales were not made in compliance with applicable law (lack of material disclosure
and/or failure to file securities sales notices as required by federal law) and the Company may need to offer rescission rights
to the investors.
In 2006, the Company issued shares
for services valued at $611,768. There were issued shares for services valued at $1,416,060 in 2007; shares for services valued
at $14,625 in 2008, shares for services valued at $380,500 in 2009, shares for services valued at $236,920 in 2010, shares for
services valued at $3,370,273 in 2011, and shares for services valued at $3,165,039 during the first 3 quarters of 2012. We have
no plans to offer rescission for these share issuances.
We offered rescission to many of
the 2011 investors in late 2011 (“2011 rescission offer”). The legal sustainability of these rescission offers is also
being looked at by Counsel. The results of our rescission offers, in terms of rescission offers accepted by shareholders, were
very encouraging. We had seven rescissions offers accepted and refunded $21,000 plus interest.
Generally, we believe we have good
relationships with our shareholders. Our plan is to offer rescission to most shareholders obtaining privately offered shares from
us since January 1, 2007 through 2011. The Company has pledged to use our best efforts, in good faith, to honor any accepted rescission
offer. However, there is no assurance that rescission offer acceptances will not have a material effect on our finances or that
we will be able to re-pay those electing to rescind in a complete and timely manner. As of the date hereof, the Company has postponed
their plans to offer rescission to earlier purchasing shareholders, deeming it advisable to wait until the common stock price increases
and they have more operating cash available to pay for the cost of undertaking this endeavor. The Company has booked a liability
to account for this rescission liability and marks the liability to market on a quarterly basis. The rescission liability as of
December 31, 2013 is $784,809.
In connection with the sale of debt
or equity instruments, the Company may sell options or warrants to purchase our common stock. In certain circumstances, these options
or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may
contain embedded derivative instruments, such as embedded derivative features which in certain circumstances may be required to
be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.
The Company's derivative instrument
liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded
as charges or credits to income in the period in which the changes occur. For options, warrants and bifurcated embedded derivative
features that are accounted for as derivative instrument liabilities, the Company estimates fair value using either quoted market
prices of financial instruments with similar characteristics or other valuation techniques. The valuation techniques require assumptions
related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend
yield, and the expected volatility of our common stock price over the life of the option.
The following table summarizes the
convertible debt and warrant liabilities derivative activity for the period December 31, 2011 to December 31, 2013:
Description |
|
Convertible Notes |
|
|
Warrant Liabilities |
|
|
Total |
|
Fair value at December 31, 2011 |
|
$ |
10,189,518 |
|
|
$ |
6,041,518 |
|
|
$ |
16,231,036 |
|
Change in Fair Value due to Settlement/Issuance |
|
|
71,024 |
|
|
|
- |
|
|
|
71,024 |
|
Change due to Exercise/Conversion |
|
|
(885,407 |
) |
|
|
- |
|
|
|
(885,407 |
) |
Change in Fair Value |
|
|
(8,176,507 |
) |
|
|
(5,719,838 |
) |
|
|
(13,896,345 |
) |
Fair value at December 31, 2012 |
|
$ |
1,198,628 |
|
|
$ |
321,680 |
|
|
$ |
1,520,308 |
|
Change due to Exercise/Conversion |
|
|
(238,869 |
) |
|
|
- |
|
|
|
(238,869 |
) |
Change in Fair Value |
|
|
2,889,164 |
|
|
|
1,060,932 |
|
|
|
3,950,096 |
|
Fair value at December 31, 2013 |
|
$ |
3,848,923 |
|
|
$ |
1,382,612 |
|
|
$ |
5,231,535 |
|
For the year ended December 31,
2013, net derivative loss was $3,950,096. For the year ended December 31, 2012, net derivative income was $13,896,345.
The lattice methodology was used
to value the convertible notes and warrants issued, with the following assumptions.
Assumptions |
|
2013 |
|
|
2012 |
|
Dividend yield |
|
|
0.00% |
|
|
|
0.00% |
|
Risk-free rate for term |
|
|
0.10%-0.38% |
|
|
|
.16%-0.25% |
|
Volatility |
|
|
193% |
|
|
|
152% |
|
Maturity dates |
|
|
0.57-2.41 years |
|
|
|
0.0-2.54 years |
|
Stock Price |
|
|
0.0026 |
|
|
|
0.0010 |
|
The Cornell warrants issued on
7/24/11 (initial 25,000,000 warrants with an exercise price of $0.0119 and an expiration date of 7/10/14 reset to 991,666,667
warrants at $0.0003) had a term remaining of 0.56 years at 12/31/13. The HDV and DSE convertible notes matured on April 1, 2010
and are in default as of 12/31/12 and 12/31/13.
DS Enterprises:
On December 15, 2009, the Company
converted accounts payable due to DS Enterprises, Inc. into a convertible promissory note. The note bears interest at 8%, matured
on April 15, 2010, and converts into common shares at the conversion rate of $0.003 (reset to $0.000228) subject to anti-dilution
protection. This note was in default as of December 31, 2013 due to lack of payment upon maturity.
Gross accounts payable converted |
|
$ |
526,094 |
|
Plus accrued interest |
|
|
71,346 |
|
Net due |
|
$ |
597,440 |
|
Following is an analysis of convertible
debt due DS Enterprises at December 31, 2013 and December 31, 2012:
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
Contractual balance, in default |
|
$ |
511,440 |
|
|
$ |
526,440 |
|
Less unamortized discount |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Convertible debt |
|
$ |
511,440 |
|
|
$ |
526,440 |
|
This note is considered a derivative
instrument due to the anti-dilution protection related to the conversion feature. The Company recorded a derivative liability upon
issuance which resulted in the note discount ($597,440 at issuance) and a loss on modification recorded as interest expense in
the amount of $344,157. The Company also recorded $79,945 in interest expense upon the conversion of accounts payable to notes
payable.
During 2012, $62,000 of principal
was converted to 62,000,000 shares of common stock. During 2013, $15,000 of principal was converted to 50,000,000 shares of common
stock.
His Divine Vehicle - Related
Party:
On December 15, 2009, the Company
converted $204,302 of accounts payable due to His Divine Vehicle, Inc. into a convertible promissory note. The note bears interest
at 8%, matured on April 15, 2010, and converts into common shares at the conversion rate of $0.003 (reset to $0.000228) subject
to anti-dilution protection. This note was in default as of December 31, 2013 due to lack of payment upon maturity.
Following is an analysis of convertible
debt - related party at December 31, 2013 and December 31, 2012:
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
Contractual balance, in default |
|
$ |
204,302 |
|
|
$ |
204,302 |
|
Less unamortized discount |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Convertible debt |
|
$ |
204,302 |
|
|
$ |
204,302 |
|
This note is considered a derivative
instrument due to the anti-dilution protection related to the conversion feature. The Company recorded a derivative liability upon
issuance which resulted in the note discount ($204,302 at issuance) and a loss on modification recorded as interest expense in
the amount of $131,967 in 2009.
Steve Botkin:
On July 17, 2012, the Company entered
into a convertible promissory note with Steve Botkin. The note bears interest at 12%, matures on July 17, 2015 and converts into
common shares at the conversion rate of 80% of market. On August 9, 2012, the Company entered into a convertible promissory note
with Steve Botkin. The note bears interest at 12%, matures on August 9, 2015 and converts into common shares at the conversion
rate of 80% of market.
Following is an analysis of convertible
debt due Steve Botkin at December 31, 2013 and December 31, 2012:
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
Contractual balance |
|
$ |
– |
|
|
$ |
104,000 |
|
Less unamortized discount |
|
|
– |
|
|
|
(67,997 |
) |
|
|
|
|
|
|
|
|
|
Convertible debt |
|
$ |
32,600 |
|
|
$ |
36,003 |
|
This note is considered a derivative
instrument due to the variable conversion feature. The Company recorded a derivative liability upon issuance which resulted in
the note discount ($71,024 at issuance). A settlement agreement was reached with Botkin on April 8, 2013. The Company made a cash
payment of $36,400, received 27,000,000 shares of common stock from Botkin, issued a note payable to Botkin for $67,600. In addition,
Botkin waived $9,251 in accrued interest. The Company booked a $137,325 gain on settlement of this debt based on the common stock
price and the fair value of the derivative liability on the date of settlement.
In connection with the Herrera Settlement
Agreement, the Company issued promissory notes to former officers who made payments on behalf of the company. The Notes were issued
on November 15, 2008, bear interest of 12% and are due in one year from the date of issuance. The total due as of December 31,
2013 and December 31, 2012 includes $10,778 due to former officers who made payments or waived fees as part of the Herrera Settlement
Agreement and the $15,000 due to Mr. Monros and Mr. Sweeney recorded as related party debt to Mr. Monros and Mr. Sweeney.
The Company issued Steve Botkin
a note payable of $80,000 for accrued and unpaid wages. On 2/7/12, the Company issued Steve Botkin 80,000,000 shares as full consideration
for the note payable. Based on the market price of the stock at the time of issuance, the Company recorded a loss on settlement
of $928,000.
The Company files a U.S. Federal
income tax return. The components of the net loss before income tax benefit for the years ended December 31, 2013 and 2012 are
as follows:
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
Net income/(loss) before income taxes |
|
$ |
(6,961,318 |
) |
|
$ |
4,683,776 |
|
The components of the Company's deferred tax assets at
December 31, 2013 and 2012 are as follows:
|
|
2013 |
|
|
2012 |
|
Deferred tax assets |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Loss carry-forwards |
|
$ |
4,239,943 |
|
|
$ |
3,719,426 |
|
Valuation allowance |
|
|
(4,239,943 |
) |
|
|
(3,719,426 |
) |
|
|
$ |
– |
|
|
$ |
– |
|
At December 31, 2013, the Company
had generated US net operating loss carry-forwards of approximately $4,239,943 which will expire in various years between 2014
and 2033. The benefit from utilization of net operating loss carry forwards incurred prior to December 30, 2004 is significantly
limited in connection with a change in control of the Company. Such benefit could be subject to further limitations if significant
future ownership changes occur in the Company. The Company believes that a significant portion of its unused net operating loss
carry forwards will never be utilized due to expiration or limitations on use due to ownership changes.
At December 31, 2013 and December
31, 2012, the Company has no uncertain tax positions.
12. |
Commitments and Contingencies |
Legal Proceedings
From time to time, we may become
party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.
The Company received a letter from
the Securities and Exchange Commission, Los Angeles Regional Office, dated May 9, 2011. The letter informed us that the SEC had
entered into a “formal order of investigation” into “Savi Media Group, Inc.” The letter included a “Subpoena
DucesTecum,” meaning the Company was given a prescribed period of time to produce all requested documents and information
contained in the subpoena. An index of the source of all such produced information and an authentication declaration were also
to be supplied. The stated purpose of the investigation is a fact-finding inquiry to assist the SEC staff in determining if the
Company has violated federal securities laws. The SEC states there is no implication of negativity or guilt at this stage of the
investigation.
The Company initially hired the
Los Angeles law firm of Troy Gould to represent us in the matter of this investigation. As of the date of this filing, the Company
believes it has provided all requested material to the SEC. Updates on the investigation will be supplied by supplemental filings
hereto.
Status of prior private investments;
$0 in 2007 (although HDV sold $13,000 of its shares), $0 in 2008 (although HDV sold $445,750 of its shares), $0 in 2009 (although
HDV sold $448,000 of its shares), $910,742 in 2010, $1,827,543 in 2011, and $629,500 in the first three quarters of 2012. There
is concern that these private placement securities sales were not made in compliance with applicable law (lack of material disclosure
and/or failure to file securities sales notices as required by federal law) and the Company may need to offer rescission rights
to the investors.
In 2006, the Company issued shares
for services valued at $611,768. There were issued shares for services valued at $1,416,060 in 2007; shares for services valued
at $14,625 in 2008, shares for services valued at $380,500 in 2009, shares for services valued at $236,920 in 2010, shares for
services valued at $3,370,273 in 2011, and shares for services valued at $3,165,039 during the first 3 quarters of 2012. We have
no plans to offer rescission for these share issuances.
We offered rescission to many of
the 2011 investors in late 2011 (“2011 rescission offer”). The legal sustainability of these rescission offers is also
being looked at by Counsel. The results of our rescission offers, in terms of rescission offers accepted by shareholders, were
very encouraging. We had seven rescissions offers accepted and refunded $31,000 plus interest.
Generally, we believe we have good
relationships with our shareholders. Our plan is to offer rescission to most shareholders obtaining privately offered shares from
us since January 1, 2007 through 2011. The Company has pledged to use our best efforts, in good faith, to honor any accepted rescission
offer. However, there is no assurance that rescission offer acceptances will not have a material effect on our finances or that
we will be able to re-pay those electing to rescind in a complete and timely manner. As of the date hereof, the Company has postponed
their plans to offer rescission to earlier purchasing shareholders, deeming it advisable to wait until the common stock price increases
and they have more operating cash available to pay for the cost of undertaking this endeavor. The Company has booked a liability
to account for this rescission liability and marks the liability to market on a quarterly basis. The rescission liability as of
12/31/13 is $784,809.
The Company received a letter dated
June 7, 2013 with a Civil Complaint titled Arnold Lamarr Weese, et al v. SaviCorp filed in the Northern District of West Virginia.
In addition to SaviCorp, Serge Monros and Craig Waldrop are being sued individually. Settlement discussions failed and Plaintiff's
counsel began service of Process. The Company and Mr. Monros have hired Shustak and Partners to defend the claim. The defendants
have sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempts
to hold the Company and Mr. Monros responsible for alleged improprieties of Waldrop. The Company finalized a negotiated settlement
and received court approval on April 7, 2015. The Company has recorded a $1,101,179 liability based on the settlement agreement.
This consists of $100,000 cash payment for legal fees paid over a period of five months and net common shares to be issued of 296,050,421
valued at $1,001,179.
Lease Commitments
The Company is currently leasing
office space and adjacent research and development space on an annual basis from CEE, LLC, for $110,000 per year.
Common Stock
Following is a description of transactions
affecting common stock for the years ended December 31, 2012 and 2013.
Year Ended December 31, 2012
In January 2012, the Board of Directors
authorized the issuance of 14,603,571 common shares to accredited and non-accredited investors for total proceeds of $45,500.
In February 2012, the Board of Directors
authorized the issuance of 119,500,000 common shares to accredited and non-accredited investors for total proceeds of $248,500.
The Company converted $80,000 of debt, $11,000 of convertible debt and $377,382 of derivative liability into 102,000,000 common
shares
In March 2012, the Board of Directors
authorized the issuance of 37,866,667 common shares to accredited and non-accredited investors for total proceeds of $93,200. The
Company converted 20,000 of convertible debt and $539,025 of derivative liability into 40,000,000 common shares
In April 2012, the Board of Directors
authorized the issuance of 57,260,000 common shares to accredited and non-accredited investors for total proceeds of $122,300.
In May 2012, the Board of Directors
authorized the issuance of 12,000,000 common shares to accredited and non-accredited investors for total proceeds of $30,000.
In June 2012, the Board of Directors
authorized the issuance of 14,250,000 common shares to accredited and non-accredited investors for total proceeds of $47,000.
In July 2012, the Board of Directors
authorized the issuance of 4,375,000 common shares to accredited and non-accredited investors for total proceeds of $35,000.
In October 2012, the Board of Directors
authorized the issuance of 40,000,000 common shares to accredited and non-accredited investors for total proceeds of $20,000.
In November 2012, the Board of Directors
authorized the issuance of 32,000,000 common shares to accredited and non-accredited investors for total proceeds of $20,000.
In December 2012, the Board of Directors
authorized the issuance of 12,500,000 common shares to accredited and non-accredited investors for total proceeds of $10,000.
Throughout the year, the Board of
Directors also authorized the issuance of 414,343,445 common shares for services rendered by independent contractors issuances
based on the market value of the stock.
Throughout the year, 359,500 Preferred
A shares and 1,705,333 Preferred C shares were converted to 206,483,000 common shares.
In March, 2012, the Company repaid
50,000,000 common shares previously borrowed from directors of the Company.
Year Ended December 31, 2013
In January 2013, the Board of Directors
authorized the issuance of 50,625,000 common shares to accredited and non-accredited investors for total proceeds of $20,500.
In February 2013, the Board of Directors
authorized the issuance of 92,500,000 common shares to accredited and non-accredited investors for total proceeds of $43,000.
In March 2013, the Board of Directors
authorized the issuance of 48,127,694 common shares to accredited and non-accredited investors for total proceeds of $40,100.
In April 2013, the Board of Directors
authorized the issuance of 340,000,000 common shares to accredited and non-accredited investors for total proceeds of $322,500.
In April 2013, 27,000,000 common
shares were returned in the Botkin Settlement. These shares were valued based on the common stock price on the date of settlement.
In May 2013, the Board of Directors
authorized the issuance of 36,400,000 common shares to accredited and non-accredited investors for total proceeds of $18,500.
In May 2013, 14,843,750 common shares
were issued in the Bingham settlement. These shares were valued based on the common stock price on the date of settlement.
In June 2013, the Board of Directors
authorized the issuance of 50,000,000 common shares to accredited investors in exchange for $15,000 of convertible debt.
Throughout the year, the Board of
Directors also authorized the issuance of 749,900,000 common shares for services rendered by independent contractors issuances
based on the market value of the stock.
Throughout the year, 300,000 Preferred
A shares were converted to 30,000,000 common shares.
Throughout the year, 3,500,000 common
shares were bought back for $14,000.
Throughout the year, 246,000,000
common shares were loaned to the company and 78,414,606 common shares were issued to repay stock payable.
Stock Options
Gene-Cell, Inc., the company, used
in the recapitalization (See Note 1) periodically issued incentive stock options to key employees, officers, and directors to provide
additional incentives to promote the success of the Company's business and to enhance the ability to attract and retain the services
of qualified persons. The Board of Directors approved the issuance of all stock options. The exercise price of an option granted
was determined by the fair market value of the stock on the date of grant. Reverse stock splits by the Company resulted in the
reduction of outstanding options to less than 85 shares with exercise prices that are so high that the exercise of the options
will never be practical. Expiration dates ranged from March, 2012 through July, 2012. There are no stock options outstanding as
of December 31, 2013.
Incentive Stock Plan
During the year ended December 31,
2005 the 2005 Incentive Stock Plan was adopted by the Company’s Board of Directors and approved by the stockholders in August
2005. The 2005 Plan provides for the issuance of up to 25,000,000 shares and/or options. The primary purpose of the 2005 Incentive
Stock Plan is to attract and retain the best available personnel for us in order to promote the success of our business and to
facilitate the ownership of our stock by employees. The 2005 Incentive Stock Plan is administered by our Board of Directors. Under
the 2005 Incentive Stock Plan, key employees, officers, directors and consultants are entitled to receive awards. The 2005 Incentive
Stock Plan permits the granting of incentive stock options, non-qualified stock options and shares of common stock with the purchase
price, vesting and expiration terms set by the Board of Directors. No options have been issued under the Plan as of December 31,
2013.
Stock Warrants
In connection with the a repayment
agreement, we agreed to issue to YA Global warrants to purchase an aggregate of 25,000,000 shares of common stock, exercisable
for a period of three years at an exercise price of $0.0119. The warrants issued to YA Global provide for certain anti-dilution
protection in the event that (i) we issue shares of our common stock for a purchase price below the exercise price of the various
warrants or in the event we issue options or other convertible securities with a conversion price below the exercise price, (ii)
we effectuate a stock split, stock dividend or other form of recapitalization, or (iii) we declare a dividend payment to the holders
of our common stock. The exercise price was reset on August 8, 2011 to $0.0005 and the number of warrants increased to 595,000,000.
The exercise price was reset on January 30, 2013 to $0.0003 and the number of warrants increased to 991,666,667.
The Company issued 5,000,000 warrants
in May 2010 to a law firm for services rendered valued at $137,000 using a Black-Scholes-Merton model using the following inputs
(0.0% dividend yield, stock price of $0.0274, risk-free rate of 2.43%, volatility of 417%, 5 year remaining term). The warrants
expire in five years with an exercise price of $0.01.
The Company issued 666,667 warrants
in April 2012 to a law firm for services rendered valued at $770 using a lattice model using the following inputs (0.0% dividend
yield, stock price of $0.009, risk-free rate of 0.53%, volatility of 139%, 2.5 year remaining term). The warrants expire in thirty
months with an exercise price of $0.015.
In May 2013 as part of the DynoGreen
Tech licensing agreement for the Middle East, the Company issued 400,000,000 warrants at an exercise price of $0.001 if exercised
within 30 days and an exercise price of $0.002 if exercised within 60 days. All these warrants were exercised within 30 days.
As of December 31, 2013 the following
warrants remain outstanding:
|
|
|
|
|
|
Remaining |
Number of |
|
|
Exercise |
|
|
Life |
Warrants |
|
|
Price |
|
|
Years |
|
991,666,667 |
|
|
$ |
0.0003 |
|
|
0.56 |
|
5,000,000 |
|
|
|
0.0100 |
|
|
1.33 |
|
666,667 |
|
|
|
0.0150 |
|
|
0.76 |
|
|
|
|
|
|
|
|
|
|
997,333,334 |
|
|
$ |
0.0004 |
|
|
|
Preferred Stock
During the year ended December 31,
2005, the Company set preferences for its Series A, B and C preferred stock. The Company is authorized to issue 40,000,000 shares
of preferred stock, $0.01 par value per share. At December 31, 2011 the Company had 6,312,733 shares of series A preferred stock
issued and outstanding and 6,014,942 shares of series C preferred stock issued and outstanding. The Company’s preferred stock
may be issued in series, and shall have such voting powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall
be stated and expressed in the resolution or resolutions providing for the issuance of such stock adopted from time to time by
the board of directors.
The Series A and Series C preferred
stock provides for conversion on the basis of 100 shares of common stock for each share of preferred stock converted, with conversion
at the option of the holder or mandatory conversion upon restructure of the common stock and holders of the series A preferred
stock vote their shares on an as-converted basis. Holders of the series A preferred stock participates on distribution and liquidation
on an equal basis with the holders of common stock.
The series B preferred stock provides
for conversion on the basis of 10,000 shares of common stock for each share of preferred stock converted, with conversion at the
option of the holder or mandatory conversion upon restructure of the common stock and holders of the series A preferred stock vote
their shares on an as-converted basis. Holders of the series B preferred stock participates on distribution and liquidation on
an equal basis with the holders of common stock.
Following is a description of transactions
affecting preferred stock for the years ended December 31, 2012 and 2013.
Year Ended December 31, 2012
In June 2012, the Board of Directors
authorized the issuance of 100,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $10,000.
Throughout the year, 359,500 Preferred
A shares and 1,705,333 Preferred C shares were converted to 206,483,000 common shares.
Year Ended December 31, 2013
In January 2013, the Board of Directors
authorized the issuance of 1,000,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $40,000.
In February 2013, the Board of Directors
authorized the issuance of 700,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $35,000.
In March 2013, the Board of Directors
authorized the issuance of 200,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $20,000.
In May 2013, the Board of Directors
authorized the issuance of 3,388,500 Preferred C shares to accredited and non-accredited investors for total proceeds of $338,850.
In July 2013, the Board of Directors
authorized the issuance of 200,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $10,000.
In August 2013, the Board of Directors
authorized the issuance of 900,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $47,500.
In September 2013, the Board of
Directors authorized the issuance of 2,250,000 Preferred A shares to accredited and non-accredited investors for total proceeds
of $137,500.
In October 2013, the Board of Directors
authorized the issuance of 2,100,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $110,000.
In November 2013, the Board of Directors
authorized the issuance of 3,200,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $185,000.
Throughout the year, 300,000 Preferred
A shares were converted to 30,000,000 common shares.
Throughout the year, the Board of
Directors also authorized the issuance of 1,351,667 Preferred A shares and 60,000 Preferred C shares for services rendered by independent
contractors issuances based on the market value of the stock.
Throughout the year, 3,491,423 Preferred
A shares and 202,412 Preferred C shares were loaned to the company.
Potentially Dilutive Equity
Instruments
An analysis of potentially dilutive
equity instruments at December 31, 2013
Series A Preferred Stock convertible to common stock on a 100 for 1 basis |
|
|
1,296,347,700 |
|
Series C Preferred Stock convertible to common stock on a 100 for 1 basis |
|
|
875,569,700 |
|
|
|
|
|
|
Total |
|
|
2,171,917,400 |
|
Other Equity Transactions
Year Ended December 31, 2012
Interest was imputed on non-interest
bearing related party debt in the amount of $26,900 and credited to additional paid in capital.
Year Ended December 31, 2013
Interest was imputed on non-interest
bearing related party debt in the amount of $13,261 and credited to additional paid in capital.
14. |
|
Related Party Transactions |
The Company engaged in various related
party transactions involving the issuance of shares of the Company's common stock during the years ended December 31, 2013 and
2012.
During 2007, 2008, 2009, 2010 and
2011 His Divine Vehicle, Inc. ("HDV") incurred costs on behalf of the Company. At December 31, 2012, the Company owed
HDV $244,956 and Serge Monros $570,367 in accrued wages. At December 31, 2013, the Company had a receivable from HDV of $13,386
and owed Serge Monros $767,067 in accrued wages.
HDV, an affiliate of Mr. Monros,
manufactures the “DynoValve” and “DynoValve Pro” products and then sells them to the Company for resale
pursuant to the Product Licensing Agreement entered into on November 15, 2008. As consideration for HDV entering into the Product
Licensing Agreement, the Company agreed to issue to Mr. Monros and HDV, if and when available, an aggregate of 500 Million shares
of Common Stock, 5 Million shares of Series A Preferred Stock and 5 Million shares of Series C Preferred Stock. HDV loaned 1,000,000
Preferred A shares to the Company in 2008. As additional consideration for the Licensing Agreement, HDV waived $332,786 owed to
it by the company and Mr. Monros waived $306,000 in accrued wages. The excess value of the shares issued (common and preferred)
over the debt waived was expensed to research and development. In July, 2011, the stock consideration paid for the licensing agreement
was modified to increase the common shares by 100,000,000, increase the Series A Preferred Stock by 1,500,000 and reduce the Series
C Preferred Stock by 2,500,000.
The Board of Directors authorized
the issuance of an aggregate of 300,000,000 common shares and 2,500,000 Preferred C shares in exchange for services rendered by
His Divine Vehicle. His Divine Vehicle subsequently loaned back the 300,000,000 common shares and the 2,500,000 Preferred C shares.
On December 15, 2009, the Company
converted $204,302 of accounts payable due to His Divine Vehicle, Inc. into a convertible promissory note. The note bears interest
at 8%, matured on April 15, 2010, and converts into common shares at the conversion rate of $0.003 (reset to $0.0003) subject to
anti-dilution protection. The note matured and is currently in default due to lack of payment at maturity.
In January, 2013, His Divine Vehicle
loaned 196,000,000 common shares, 3,491,423 Preferred A shares and 202,412 Preferred C shares to the Company.
In March, 2013, the Company entered
into a five (5) year Master Distribution Agreement with His Divine Vehicle to sell the DynoValve and DynoValve Pro in various international
territories. The consideration for the agreement was guaranteeing a minimum annual volume, payment for the DynoValves acquired
and a three percent (3%) royalty payment. The Company is currently in default on this agreement.
In 2013, we have made major
inroads in the Middle Eastern country of Dubai and others. We have a 5 year licensing agreement with DynoGreen Tech
(“DGT”) that we entered into in 2013. Regarding our progress, our original commitment for 2,000 DynoValves (sold
at $250 each) equate to $500,000. In order for DGT to fulfill and maintain this 5 year licensing agreement, they are required
to purchase 500 additional DynoValves per quarter (an additional 2,000 DynoValves / $500,000 per year) for a total of
$2,500,000 over a 5 year span. With the initial investment of $500,000, this totals $3,000,000 for their 5 year licensing
agreement. We have already delivered 2,000 of those DynoValves. The areas that are included in this agreement are UAE, Dubai,
Malaysia, India, and Africa. DGT has not made any additional purchases since 2013 and thus has not met their minimum volume
requirements for 2014 or the first quarter of 2015.
As part of the license agreement,
DGT agreed to acquire 100,000,000 shares of common stock in SaviCorp for $100,000 and was provided options to acquire an additional
400,000,000 shares at $0.001 if exercised within 30 days, or $0.002 if exercised within 60 days. DGT exercised its options and
acquired an additional 400,000,000 common shares for $400,000. Due to these investments, DGT is considered a related party. In
addition, the stock purchase and stock options provided for in the licensing agreement were considered a sales discount. DynoValve
sales to DGT totaling $715,000 in 2013 were discounted in full due to these sales discounts.
15. |
|
Non-Cash Investing and Financing Transactions and Supplemental Disclosure of Cash Flow Information |
During the years ended December
31, 2013 and 2012, the Company engaged in various non-cash investing and financing activities as follows:
|
|
2013 |
|
|
2012 |
|
Settlement of Convertible Debt and Derivative Liabilities with common stock |
|
$ |
181,708 |
|
|
$ |
1,955,407 |
|
|
|
|
|
|
|
|
|
|
Conversion of Preferred Stock into Common Stock |
|
$ |
30,000 |
|
|
$ |
206,483 |
|
|
|
|
|
|
|
|
|
|
Preferred Stock Loaned/Common Stock Issued for Stock Payable |
|
$ |
171,279 |
|
|
$ |
(575,000 |
) |
|
|
|
|
|
|
|
|
|
During the years ended December
31, 2013 and 2012, the Company made no interest payments and no income tax payments.
16. |
|
Fair Value of Financial Instruments. |
The Company’s financial instruments
consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash,
accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.
The Company utilizes various types
of financing to fund its business needs, including convertible debt with warrants attached. The Company reviews its warrants and
conversion features of securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether
they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes
in fair value recognized in current earnings. At December 31, 2013, the Company had convertible debt and warrants to purchase common
stock, the fair values of which are classified as a liability. Some of these units have embedded conversion features that are treated
as a discount on the notes. Such financial instruments are initially recorded at fair value and amortized to interest expense over
the life of the debt using the effective interest method.
Inputs used in the valuation to
derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable
inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level one — Quoted market
prices in active markets for identical assets or liabilities;
Level two — Inputs other than
level one inputs that are either directly or indirectly observable; and
Level three — Unobservable
inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that
a market participant would use.
Determining which category an asset
or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
The Company’s derivative liability is measured at fair value on a recurring basis. The Company classifies the fair value
of these convertible notes and warrants derivative liability under level three. The Company’s settlement payable is measured
at fair value on a recurring basis based on the most recent settlement offer. The Company classifies the fair value of the settlement
payable under level three. The Company’s rescission liability is measured at fair value on a recurring basis based on the
most recent stock price. The Company classifies the fair value of the rescission liability under level one.
Based on ASC Topic 815 and related
guidance, the Company concluded the convertible notes and common stock purchase warrants are required to be accounted for as derivatives
as of the issue date due to a reset feature on the conversion/exercise price. At the date of issuance the convertible subordinated
financing, warrant derivative liabilities were measured at fair value using either quoted market prices of financial instruments
with similar characteristics or other valuation techniques. The Company records the fair value of these derivatives on its balance
sheet at fair value with changes in the values of these derivatives reflected in the consolidated statements of operations as “Gain
(loss) on derivative liabilities.” These derivative instruments are not designated as hedging instruments under ASC 815-10
and are disclosed on the balance sheet under Derivative Liabilities.
The following table presents liabilities
that are measured and recognized at fair value as of December 31, 2013 on a recurring and non-recurring basis:
Description | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Gains (Losses) | |
Derivatives | |
$ | – | | |
$ | – | | |
$ | 5,231,535 | | |
$ | (3,950,096 | ) |
Settlements Payable | |
| – | | |
| 1,101,179 | | |
| – | | |
| 479,073 | |
Rescission Liability | |
| – | | |
| 784,809 | | |
| – | | |
| 1,398,735 | |
Fair Value at December 31, 2013 | |
$ | – | | |
$ | 1,885,988 | | |
$ | 5,231,535 | | |
$ | (2,072,288 | ) |
The following table presents liabilities
that are measured and recognized at fair value as of December 31, 2012 on a recurring and non-recurring basis:
Description | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Gains (Losses) | |
Derivatives | |
$ | – | | |
$ | – | | |
$ | 1,520,308 | | |
$ | 13,896,345 | |
Settlements Payable | |
| – | | |
| 1,580,252 | | |
| – | | |
| (1,580,252 | ) |
Rescission Liability | |
| – | | |
| 2,183,544 | | |
| – | | |
| (2,183,544 | ) |
Fair Value at December 31, 2012 | |
$ | – | | |
$ | 3,763,796 | | |
$ | 1,520,308 | | |
$ | 10,132,549 | |
Stock Issuances:
Since 2013, the Board of Directors
authorized the issuance of an aggregate of 21,301,666 shares of its Preferred A shares and 298,311 shares of its Preferred B shares
to accredited and non-accredited investors for total proceeds of $1,824,500. In addition, the Board of Directors has authorized
the issuance of an aggregate of 500,000 shares of its common stock, 1,700,000 shares of its Preferred A shares and 97,950 shares
of its Preferred B shares to accredited and non-accredited investors for services rendered valued at an aggregate of $3,525,450.
No sales commissions were paid in connection with these issuances and all investors reviewed or had access to all of the Company’s
filing pursuant to the Securities Exchange Act of 1934, as amended.
Legal Proceedings:
The Company received a letter from
the Securities and Exchange Commission, Los Angeles Regional Office, dated May 9, 2011. The letter informed us that the SEC had
entered into a “formal order of investigation” into “Savi Media Group, Inc.” The letter included a “Subpoena
DucesTecum,” meaning the Company was given a prescribed period of time to produce all requested documents and information
contained in the subpoena. An index of the source of all such produced information and an authentication declaration were also
to be supplied. The stated purpose of the investigation is a fact-finding inquiry to assist the SEC staff in determining if the
Company has violated federal securities laws. The SEC states there is no implication of negativity or guilt at this stage of the
investigation.
We hired the Los Angeles law firm
of Troy Gould to represent us in the matter of this investigation. As of the date of this filing, we believe we have provided all
requested material to the SEC.
Status of prior private investments;
$0 in 2007 (although HDV sold $13,000 of its shares), $0 in 2008 (although HDV sold $445,750 of its shares), $0 in 2009 (although
HDV sold $448,000 of its shares), $910,742 in 2010, $1,827,543 in 2011. There is concern that these private placement securities
sales were not made in compliance with applicable law (lack of material disclosure and/or failure to file securities sales notices
as required by federal law) and the Company may need to offer rescission rights to the investors.
In 2006, the Company issued shares
for services valued at $611,768. There were issued shares for services valued at $1,416,060 in 2007; shares for services valued
at $14,625 in 2008, shares for services valued at $380,500 in 2009, shares for services valued at $236,920 in 2010, and shares
for services valued at $3,370,273 in 2011. We have no plans to offer rescission for these share issuances.
We offered rescission to many of
the 2011 investors in late 2011 (“2011 rescission offer”). The legal sustainability of these rescission offers is also
being looked at by Counsel. The results of our rescission offers, in terms of rescission offers accepted by shareholders, were
very encouraging. We had four rescissions offers accepted and refunded $13,000 plus interest.
Generally, we believe we have good
relationships with our shareholders. Our plan is to offer rescission to most shareholders obtaining privately offered shares from
us since January 1, 2007 through 2011. The Company has pledged to use our best efforts, in good faith, to honor any accepted rescission
offer. However, there is no assurance that rescission offer acceptances will not have a material effect on our finances or that
we will be able to re-pay those electing to rescind in a complete and timely manner. As of the date hereof, the Company has postponed
their plans to offer rescission to earlier purchasing shareholders, deeming it advisable to wait until the common stock price increases
and they have more operating cash available to pay for the cost of undertaking this endeavor. The Company has booked a liability
to account for this rescission liability and marks the liability to market on a quarterly basis. The rescission liability as of
12/31/13 is $784,809.
The Company received a letter dated
June 7, 2013 with a Civil Complaint titled Arnold Lamarr Weese, et al v. SaviCorp filed in the Northern District of West Virginia.
In addition to SaviCorp, Serge Monros and Craig Waldrop are being sued individually. Settlement discussions failed and Plaintiff's
counsel began service of Process. The Company and Mr. Monros have hired Shustak and Partners to defend the claim. The defendants
have sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempts
to hold the Company and Mr. Monros responsible for alleged improprieties of Waldrop. The Company finalized a negotiated settlement
and received court approval on April 7, 2015. The Company has recorded a $1,101,179 liability based on the settlement agreement.
This consists of $100,000 cash payment for legal fees paid over a period of five months and net common shares to be issued of 296,050,421
valued at $1,001,179.
Licensing Events:
Mr. Monros has continued the process
of preparing patent applications for the other versions of the DynoValve products & related IP. In March, 2013, the Company
entered into a five (5) year Master Distribution Agreement with His Divine Vehicle to sell the DynoValve and DynoValve Pro in various
international territories. The consideration for the agreement was guaranteeing a minimum annual volume, payment for the DynoValves
acquired and a three percent (3%) royalty payment. The Company is currently in default on this agreement.
In March, 2015, the Company entered
into a seven (7) year Master Distribution Agreement with Dynovalve Mfg, LLC, the holder of the patents for the DynoValve products
and related IP. The agreement is an exclusive agreement for North America, China, Korea and the Middle East and a non-exclusive
license worldwide. The consideration for the agreement was payment for products acquired and a three percent (3%) royalty payment.
Major Contracts:
In 2013, the Company has entered
into a 5 year licensing agreement with DynoGreen Tech, LLC ("DGT") to sell the DynoValve products in the licensed territories
(UAE, Dubai, Malaysia, India, and Africa). DGT has ordered 3,000 DynoValves as of 9/30/13. The DynoValves were shipped in the third
quarter of 2013. In order for them to fulfill and maintain this 5 year licensing agreement, they are required to purchase 500 additional
DynoValves per quarter for a total of $3,000,000 over a 5 year span.
In 2014, the Company entered into a 5 year licensing
agreement with Beijing FlyingGlob Environmental Technology Limited Company, a company established in the People’s Republic
of China. According to the terms of the Agreement, FlyingGlob will promote, distribute and sell SaviCorp's signature line of DynoValve®
automotive products within its exclusive territory, which is defined as the People's Republic of China and the Special Administrative
Regions of Hong Kong and Macau.
FlyingGlob entered into the distribution agreement,
which establishes a minimum annual purchase volume of 500,000 DynoValve® units during the first year. In support of this requirement,
FlyingGlob is to purchase an initial order of 50,000 units at a price of $8.25 million. During the final four years of the contract,
FlyingGlob has agreed to a minimum purchase of 5.5 million units, for a total minimum order of 6 million units during the five-year
term of the agreement. The successful distribution and sale of the 6 million units is estimated to produce revenues of approximately
$679.5 million. In addition, the agreement provides for a $30 million licensing fee to be paid by FlyingGlob that may be paid over
the term of the agreement.
EXHIBIT 31.1
Certificate of Principal Executive Officer
Pursuant to Rule 13a-14(a)/15d-14(a)
I, Serge Monros,
certify that:
1. |
|
I have reviewed this annual report on Form 10-K of SaviCorp; |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; |
4. |
|
The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: |
(a) |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
(b) |
|
[Omitted pursuant to SEC Release No. 33-8238]; |
|
|
|
(c) |
|
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
(d) |
|
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and |
5. |
|
The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): |
(a) |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and |
|
|
|
(b) |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. |
Date: May 11, 2015
/s/ SERGE MONROS
Serge Monros
Chief Executive Officer and Chief Financial Officer
EXHIBIT 31.2
Certificate of Principal Financial Officer
Pursuant to Rule 13a-14(a)/15d-14(a)
I, Serge Monros,
certify that:
1. |
|
I have reviewed this annual report on Form 10-K of SaviCorp; |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; |
4. |
|
The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: |
(a) |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
(b) |
|
[Omitted pursuant to SEC Release No. 33-8238]; |
|
|
|
(c) |
|
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
(d) |
|
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and |
5. |
|
The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): |
(a) |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and |
|
|
|
(b) |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. |
Date: May 11, 2015
/s/ SERGE MONROS
Serge Monros
Chief Executive Officer and Chief Financial Officer
Exhibit 32.1
CERTIFICATION OF CHIEF
EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual report of SaviCorp
(the “Company”) on Form 10-K for the period ending December 31, 2013 as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), I, Serge Monros, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
A signed original of this written statement
required by Section 906 has been provided to SaviCorp and will be retained by SaviCorp and furnished to the Securities and Exchange
Commission or its staff upon request.
Date: May 11, 2015 |
By: /s/ SERGE MONROS |
|
|
Serge Monros |
|
|
Chief Executive Officer and Chief Financial Officer |
|