Savoy Energy Corp - FORM 10-Q/A

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - Savoy Energy Corp	f10qa033111_ex32z1.htm
EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATION - Savoy Energy Corp	f10qa033111_ex31z2.htm
EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - Savoy Energy Corp	f10qa033111_ex31z1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A


X .	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended March 31, 2011

.	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period _________ to _________

	Commission File Number: 333-151960

Savoy Energy Corporation

(Exact name of small business issuer as specified in its charter)

Nevada

26-0429687

(State or other jurisdiction of

incorporation or organization)

(IRS Employer Identification No.)

2100 West Loop South, Ste. 900

Houston, Texas 77027

(Address of principal executive offices)

(713) 243-8788

(Issuer’s telephone number)

11200 Westheimer, Suite 900

Houston, TX 77042

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) 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 issuer 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 (§ 229.405 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 . No .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.


Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	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 .

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 79,800,463 common shares as of June 28, 2011.

EXPLANATORY NOTE

As disclosed in our Current Report on Form 8-K as filed with the Securities and Exchange Commission (“SEC”) on September 4, 2012, the Board of Directors of Savoy Energy Corporation (“Savoy” or the “Company”) determined that the consolidated financial statements for the year ended December 31, 2010 and for the three months ended March 31, 2011 included in our Quarterly Report on Form 10-Q for the period ended March 31 2011 could no longer be relied upon as a result of errors in such reports.

The Company is filing this Amendment on Form 10-Q/A (this “Amendment”) to amend its Quarterly Report on Form 10-Q for the three months ended March 31, 2011 (the “Form 10-Q”), as filed with the Securities and Exchange Commission (the “Commission”) on July 1, 2011, This Amendment is being filed solely for the purpose of restating the Consolidated Financial Statements to correct an error in accounting for certain convertible promissory notes as explained more fully in Notes 1 and 6 of the accompanying notes to consolidated financial statements as well as to expense $10,000 in fees as explained more fully in Note 5 of the accompanying notes to consolidated financial statements, which were originally recorded as a reduction in additional paid-in capital. New certifications from our Principal Executive Officer and Principal Financial Officer are also included as Exhibits 31.1, 31.2 and 32.1 to this Form 10-Q/A.

This Amendment on Form 10-Q/A does not reflect events occurring after the filing of the original Form 10-Q or modify or update those disclosures affected by subsequent events. Except for the items described above or contained in this Amendment, this Amendment continues to speak as of the date of the original Form 10-Q, filed with the SEC on July 1, 2011 and does not modify, amend or update in any way the financial statements or any other item or disclosures for events occurring after the filing of the original Form 10-Q on July 1, 2011.

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

Item 1:	Financial Statements	4

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3:	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4:	Controls and Procedures	22

PART II – OTHER INFORMATION

Item 1:	Legal Proceedings	23

Item 1A:	Risk Factors	23

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3:	Defaults Upon Senior Securities	24

Item 4:	(Removed and Reserved)	24

Item 5:	Other Information	24

Item 6:	Exhibits	24

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements


Consolidated Balance Sheets (unaudited) as of March 31, 2011 and December 31, 2010;	5

Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2011 and 2010;	6

Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2011 and 2010;	7

Notes to Consolidated Financial Statements (unaudited).	8


SAVOY ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS (unaudited)

				March 31,		December 31,
				2011		2010
				Restated		Restated
ASSETS
CURRENT ASSETS
	Cash and cash equivalents	$		6,877	$	9,170
	Total current assets			6,877		9,170

	OIL AND GAS PROPERTIES, FULL COST METHOD
	Properties subject to amortization			679,744		718,630
	Accumulated depletion, depreciation, amortization and impairment			(650,349)		(653,576)
	Oil and Gas Properties, Net			29,395		65,054

TOTAL ASSETS		$		36,272	$	74,224

LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
	Accounts payable and accrued liabilities		$	164,429	$	198,004
	Advances from unrelated party			151,003		151,003
	Accrued interest payable			39,764		36,774
	Notes payable (net of discount of $74,741 and $79,130, respectively)			424,759		438,870
	Derivative liability			121,444		93,628
	Total current liabilities			901,399		918,279

LONG-TERM LIABILITIES
	Asset retirement obligations			2,057		8,555
TOTAL LIABILITIES				903,456		926,834

STOCKHOLDERS’ DEFICIT
	Preferred stock, $.001 par value; 10,000,000 shares authorized and none issued and outstanding			-		-
	Common stock, $.001 par value; 300,000,000 shares authorized, 66,746,000 and 63,646,000 shares issued and outstanding, respectively			66,746		63,646
	Additional paid-in capital			1,909,057		1,832,657
	Accumulated deficit			(2,842,987)		(2,748,913)
	Total stockholders’ deficit			(867,184)		(852,610)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT			$	36,272	$	74,224

See notes to consolidated financial statements


SAVOY ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

		For the Three Months Ended
		March 31,
		2011		2010
		Restated
REVENUE
Oil and gas revenues	$	3,516	$	18,755
Total revenues		3,516		18,755

COSTS AND EXPENSES
Lease operating expenses		3,035		12,931
General and administrative expense		106,522		650,242
Depletion, depreciation, amortization and impairment expense		65		3,291
Accretion expense		100		926
Gain on sale of working interest		(96,827)		-
Total costs and expenses		12,895		667,390
Operating loss		(9,379)		(648,635)

OTHER INCOME (EXPENSE)
Interest expense		(82,513)		(1,630)
Loss on settlement of debt		(12,000)		(207,100)
Change in fair market value of derivative liability		9,818
Total other income (expenses)		(84,695)		(208,730)

Net loss	$	(94,074)	$	(857,365)


Basic and diluted net loss per common share	$	0.00	$	(0.02)

Weighted average common shares outstanding-basic and diluted		66,236,000		39,175,444


See notes to consolidated financial statements


SAVOY ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)


				For the Three Months Ended
				March 31,
				2011		2010
				Restated
Cash flows from operating activities:
	Net loss		$	(94,074)	$	(857,365)
Adjustments to reconcile net loss to net cash used in operating activities:

		Depletion, depreciation, amortization and impairment		37,565		3,291
		Amortization of discount on convertible notes		34,389		-
		Change in fair market value of derivative liabilities		(9,818)		-
		Interest expense associated with issuance of convertible debt		7,634		-
		Accretion expense		101		926
		Stock based compensation		1,500		524,000
		Loss on settlement of debt		12,000		207,100
		Gain on sale of oil and gas properties		(96,827)		-
		Changes in assets and liabilities
		Accounts receivable		-		1,125
		Accounts payable and accrued liabilities		(6,705)		15,099
Net cash used in operating activities				(114,235)		(105,824)

Cash flows from investing activities:
	Proceeds from sale of oil and gas properties			102,100		-
	Capital expenditures for development of oil and gas properties			(158)		-
	Purchase of oil and gas properties			-		(16,180)
Net cash provided by (used in) investment activities				101,942		(16,180)

Cash flows from financing activities:
	Proceeds from issuance of debt			30,000		80,000
	Repayment of long-term debt			(20,000)		-
Net cash provided by financing activities				10,000		80,000

Net decrease in cash and cash equivalents				(2,293)		(42,004)
Cash and cash equivalents, at beginning of period				9,170		60,345
Cash and cash equivalents, at end of period			$	6,877	$	18,341

Supplemental cash flow information:
	Cash paid for interest		$	-	$	-
	Cash paid for income tax		$	-	$	-
Non cash investing and financing activities:
	Beneficial conversion feature		$	36,000	$	-
	Common stock issued for debt		$	42,000	$	57,500
	Debt discount for derivative liability		$	30,000	$	-

See notes to consolidated financial statements

SAVOY ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – RESTATEMENT

The Company has restated its financial statements as at December 31, 2010 and for the year then ended to reflect:

an adjustment to record the initial derivative liability of $100,281 with a corresponding note discount of $95,500 and interest expense of $4,781;

an adjustment to record the fair value change of the derivative liability from the issuance dates of the 2010 Notes to December 31, 2010, resulting in a decrease in the derivative liability and a decrease in change in fair value of derivative liabilities of $6,653;

an adjustment to record the amortization of the note discount of $16,370; and

a reclassification of $35,000 to reduce additional paid-in capital and increase general and administrative expense. See Note 6.

The effect of the restatement increased total liabilities by $14,498, increased paid in capital by $35,000 and increased the net loss (accumulated deficit) for the year ended December 31, 2010 by $49,518.

Balance sheet


		As of December 31, 2010

		As Reported			Adjustments		As Restated
CURRENT LIABILITIES
Notes payable, net of discount	$		518,000	$	(79,130 )	(1)(3)	$	438,870
Derivative liability			-		93,628	(1)(2)		93,628
Total current liabilities			903,781		14,498			918,279

TOTAL LIABILITIES			912,336		14,498			926,834

STOCKHOLDERS’ DEFICIT
Additional paid-in-capital			1,797,657		35,000	(4)		1,832,657
Accumulated deficit			(2,699,415)		(49,498)	(1)(2)(3)		(2,748,913)
Total stockholders’ deficit			(838,112)		(14,498)			(852,610)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$		74,224	$	-		$	74,224

The Company has restated its financial statements as at March 31, 2011 and for the three months then ended to reflect:

an adjustment to record the initial derivative liability of $37,634 with the corresponding note discount of $30,000 and interest expense of $7,634 for the new convertible note issued on March 7, 2011,

an adjustment to record the fair value change of the derivative liability from the issuance date of the 2011 Note to March 31, 2011, and the fair value change from December 31, 2010 to March 31, 2011 on the 2010 Notes, resulting in a decrease in the derivative liability and a credit to other expenses of $9,818,

an adjustment to record the amortization of the note discounts of $34,389 and

a reclassification of $10,000 from reducing additional paid in capital to general and administrative expense. See Note 5.

reversing the original entries made where the Company recorded the beneficial conversion feature at a discount to the market value of the common stock. The discount related to the beneficial conversion feature was valued at $2,258 at inception. For the period ended March 31, 2011, $251 was initially charged to interest expense associated with the amortization of the debt discount. These entries have been reversed in the restated consolidated financial statements.

The cumulative effect of the restatements increased total liabilities by $48,710, increased additional paid-in capital by $42,742 and increased the net loss for the three months ended March 31, 2011 by $41,954 and accumulated deficit by $91,451.

Balance sheet


		As of March 31, 2011

		As Reported			Adjustments		As Restated
CURRENT LIABILITIES
Notes payable, net of discount	$		497,493	$	(72,734 )	(1)(3)	$	424,759
Derivative liability			-		121,444	(1)(2)		121,444
Total current liabilities			852,689		48,710			901,399

TOTAL LIABILITIES			854,746		48,710			903,456

STOCKHOLDERS’ DEFICIT
Additional paid-in-capital			1,866,315		42,742	(4)		1,909,057
Accumulated deficit			(2,751,535)		(91,452)	(1)(2)(3)		(2,842,987)
Total stockholders’ deficit			(818,474)		(48,710)			(867,184)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$		36,272	$	-		$	36,272

b) Statement of operations


		For the three months ended March 31, 2011

		As Reported		Adjustments		As Restated

General and administrative expense	$		96,522	10,000	(4)	$	106,522
Total costs and expenses			2,895	10,000			12,895
Operating income (loss)			621	(10,000)			(9,379)

OTHER EXPENSES
Interest expense			(40,741)	(41,772)	(1)(3)		(82,513)
Change in fair value of derivative liability			-	9,818	(2)		9,818
Total other expenses			(52,741)	(31,954)			(84,695)

Net loss	$		(52,120)	(41,954)			(94,074)

Basic and diluted net loss per common share	$		(0.00)	(0.00)			(0.00)

Weighted average common shares outstanding - basic and diluted			66,236,000				66,236,000

NOTE 2 - BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Savoy Energy Corporation ("the Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Savoy’s annual report filed with the SEC on Form 10-K/A for the year ended December 31, 2010, on October 9, 2012. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent year 2010 as reported in Form 10-K/A have been omitted.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Use of 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company’s consolidated financial statements are based on a number of significant estimates, including oil and gas reserve quantities which are the basis for the calculation of depreciation, depletion and impairment of oil and gas properties, and timing and costs associated with its retirement obligations.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and financial instruments which mature within three months of the date of purchase.

Fair Value of Financial Instruments

As at March 31, 2011, the fair value of cash, accounts receivable, accounts payable and notes payable approximate carrying values because of the short-term maturity of these instruments.

Oil and Gas Properties

The Company follows the full cost method of accounting for its oil and natural gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to income.

Depletion and depreciation of proved oil and gas properties is calculated on the units-of-production method based upon estimates of proved reserves. Such calculations include the estimated future costs to developed proved reserves. Oil and gas reserves are converted to a common unit of measure based on the energy content of 6,000 cubic feet of gas to one barrel of oil. Costs of undeveloped properties are not included in the costs subject to depletion. These costs are assessed periodically for impairment.

The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset. For the Company, asset retirement obligations (“ARO”) relate to the plugging and abandonment of drilled oil and gas properties. The amounts recognized are based upon numerous estimates including future retirement costs; future recoverable reserve quantities and reserve lives; and the credit-adjusted risk-free interest rate.

Ceiling test

In applying the full cost method, the Company performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the value of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties.

Oil and gas properties, not subject to amortization

The amortization of the oil and gas properties not classified as proved begins when the oil and gas properties become proved, or their values become impaired. The Company assesses the realizability of its properties not characterized as proved on at least an annual basis or when there is or has been an indication that an impairment in value may have occurred. The impairment of properties not classified as proved is assessed based on management’s intention with regard to future exploration and development of individually significant properties, and the Company’s ability to secure capital funding to finance such exploration and development. If the result of an assessment indicates that a property is impaired, the amount of the impairment is added to the capitalized costs in its full cost pool and they are amortized over production from proved reserves

Revenue Recognition

Revenues from the sale of oil and natural gas are recognized when the product is delivered at a fixed or determinable price, title has transferred, and collectability is reasonably assured and evidenced by a contract. For oil sales, this occurs when the customer's truck takes delivery of oil from the operators’ storage tanks.

The Company follows the “sales method” of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers, regardless of whether the sales are proportionate to its ownership in the property. A receivable or liability is recognized only to the extent that the Company has an imbalance on a specific property greater than its share of the expected remaining proved reserves.

Costs associated with production are expensed in the period incurred.

Stock-Based Compensation

Stock-based compensation expense includes the estimated fair value of equity awards vested during the reporting period. The expense for equity awards vested during the reporting period is determined based upon the grant date fair value of the award and is recognized as expense over the applicable vesting period of the stock award using the straight-line method.

Deferred Taxes

Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and accrued tax liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Earnings per Share of Common Stock

Basic net income per share calculations are determined by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted net income per share calculations are determined by dividing net income (loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. During the reporting period when they are anti-dilutive, common share equivalents, if any, are not considered in the computation.

Recent Accounting Pronouncements

The Company does not expect recent accounting standards or interpretations issued or recently adopted to have a material impact on the Company’s consolidated financial position, operations or cash flows.

Dividends

Dividends declared on our common stock are reflected as adjustments to retained earnings to the extent a surplus of retained earnings will exist after giving effect to the dividends. To the extent retained earnings are insufficient to fund the distributions; such payments constitute a return of contributed capital rather than earnings and are accounted for as a reduction to paid-in capital.

NOTE 4 - GOING CONCERN

The Company’s consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of March 31, 2011, the Company has a working capital deficit, has generated limited revenues and has an accumulated deficit. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and to develop a consistent source of revenues sufficient to meet operating expenses. The continuation of the Company as a going concern is dependent upon the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's operations.

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern

NOTE 5 – OIL AND GAS PROPERTIES

During June 2010, the Company entered into an option agreement with a shareholder and working interest participant in certain oil and gas properties located in Gonzales County, Texas to allow the shareholder to put their interest in the properties to the Company. Pursuant to the option agreement, Savoy agreed to issue 2,640,000 shares of common stock to the shareholder, together with future monthly payments of $5,000 per month to the shareholder until the holding period lapses and the restrictive legend can be removed from the face of the share certificate. Upon the restriction removal, the monthly payment will cease and the shareholder has the option to assign their interest in the oil and gas properties to Savoy. The 2,640,000 shares of common stock have not been issued as of the date of this filing. During the three months ended March 31, 2011, the Company paid $10,000 to the shareholder under the agreement which is included in general and administrative expenses for the three months ended March 31, 2011.

In February 2011, the Company sold its 52.5% working and revenue interest and the support equipment on the Zavadil No. 1 well in Gonzales County, Texas to Lucas Energy, Inc. for cash proceeds of $65,000 and forgiveness of payables in the amount of approximately $25,000. The proceeds associated with the support equipment and forgiveness of payable totaling approximately $79,000 will be recorded as a gain on sale of assets. The proceeds associated with working and revenue interest totaling approximately $11,000 will be accounted for as a reduction of capitalized costs, with no gain or loss recognized.

In March 2011, the Company sold a 25,75% working and revenue interest and the support equipment on the Rozella Kifer No. 1 well in Gonzales County, Texas to Lucas Energy, Inc. for cash proceeds of approximately $37,000. The proceeds associated with the support equipment totaling approximately $14,000 will be recorded as a gain on sale of assets. The proceeds associated with working and revenue interest totaling approximately $23,000 will be accounted for as a reduction of capitalized costs, with no gain or loss recognized.

NOTE 6 – NOTES PAYABLE

On September 24, 2008, Plantation Exploration, Inc. entered into a financing agreement with Oil Investment Leases, Inc. (OIL) for cash advances totaling $290,000. On January 27, 2009 and May 4, 2009, the Company amended the September 24, 2008 agreement with OIL for advance cash payments under the demand loan and to assign the debt from Plantation Exploration to Savoy. The amended agreements provided for total borrowings of $335,000 and $360,000, respectively, due on demand. The interest is payable in-kind at 5,000 shares of common stock of the Company for each month the debt remains unpaid. During the three months ended March 31, 2011, the Company made no payment reductions. As of March 31, 2011, the outstanding balance of advances from OIL was $282,500.

On March 22, 2010, the Company borrowed $40,000 from non-related third parties bearing interest at 5% per annum. The loans are unsecured and the principal and accrued and unpaid interest is payable at maturity on November 30, 2010. The Company used the proceeds for working capital. On January 12, 2011, the Company amended this note to create a conversion feature.The convertible promissory note bears interest at 5% per annum and matures April 10, 2011, at which date the $40,000 and any accrued interest is payable or convertible at a price of $0.01 per share. On January 12, 2011, the holder elected to convert $10,000 to 1,000,000 shares of common stock valued at $14,000, based on fair market value using quoted market prices on the date of grant and the Company recorded a realized loss of $4,000 on settlement of debt. The outstanding principal balance of the convertible promissory note at March 31, 2011 was $30,000, which is classified as current debt. The Company evaluated the terms of the amendment to the note and concluded that the amended note did not result in a derivative; however, the Company concluded that there was a beneficial conversion feature since the amended note was convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature was valued at $12,000 at based on the intrinsic value of the discount. The discount was fully amortized at March 31, 2011 due to the short-term nature of the Note. For the period ended March 31, 2011, $12,000 was charged to interest expense associated with the amortization of the debt discount.

On March 22, 2010, the Company borrowed $40,000 from non-related third parties bearing interest at 5% per annum. The loans are unsecured and the principal and accrued and unpaid interest is payable at maturity on November 30, 2010. The Company used the proceeds for working capital. On January 12, 2011, the Company amended this note to create a conversion feature and increased the face amount to $41,500. The convertible promissory note bears interest at 5% per annum and matures April 10, 2011, at which date the $41,500 and any accrued interest is payable or convertible at a price of $0.01 per share. On January 12, 2011, the holder elected to convert $10,000 to 1,000,000 shares of common stock valued at $14,000, based on fair market value using quoted market prices on the date of grant and the Company recorded a realized loss of $4,000 on settlement of debt. The outstanding balance of the convertible promissory note at March 31, 2011 was $31,500, which is classified as current debt. The Company evaluated the terms of the amendment to the note and concluded that the amended note did not result in a derivative; however, the Company concluded that there was a beneficial conversion feature since the amended note was convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature was valued at $12,000 at based on the intrinsic value of the discount. The discount was fully amortized at March 31, 2011 due to the short-term nature of the Note. For the period ended March 31, 2011, $12,000 was charged to interest expense associated with the amortization of the debt discount.

On April 21, 2010, the Company borrowed $40,000 from non-related third parties bearing interest at 5% per annum. The loans are unsecured and the principal and accrued and unpaid interest is payable at maturity on December 31, 2010. The Company used the proceeds for working capital. On January 12, 2011, the Company amended this note to create a conversion feature. The convertible promissory note bears interest at 5% per annum and matures April 10, 2011, at which date the $40,000 and any accrued interest is payable or convertible at a price of $0.01 per share. On January 12, 2011, the holder elected to convert $10,000 to 1,000,000 shares of common stock valued at $14,000, based on fair market value using quoted market prices on the date of grant and the Company recorded a realized loss of $4,000 on settlement of debt. The outstanding balance of the convertible promissory note at March 31, 2011 was $30,000, which is classified as current debt. The Company evaluated the terms of the amendment to the note and concluded that the amended note did not result in a derivative; however, the Company concluded that there was a beneficial conversion feature since the amended note was convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature was valued at $12,000 at based on the intrinsic value of the discount. The discount was fully amortized at March 31, 2011 due to the short-term nature of the Note. For the period ended March 31, 2011, $12,000 was charged to interest expense associated with the amortization of the debt discount.

On October 25, 2010, an unrelated third party advanced $63,000 to the Company under the terms of a convertible promissory note (the “October Note”). On December 21, 2010, the same party advanced $32,500 to the Company under the terms of a convertible promissory note (the December Note”). The October Note and the December Note together are referred to as the 2010 Notes. The 2010 Notes bear interest at 10% per annum and mature on their nine month anniversary at which date the principal amounts and any accrued interest is payable. The 2010 Notes have a conversion price equal to the greater of either (i) a fixed conversion price of $0.00009 or (ii) 60% of the quoted market price for the Company’s common stock using the average of the lowest three (3) trading prices for the Company’s common stock during the ten (10) trading days prior to the conversion date. The Company is required at all times to have authorized and reserved three times the number of shares that are actually issuable upon full conversion of the 2010 Notes. So long as the Company is not in default, the lender cannot exercise its conversion right for 180 days following the issuance date of the 2010 Notes. The Company has the right to prepay the 2010 Notes under certain specified terms and conditions. The terms and conditions to prepay the 2010 Notes are as follows: (i) the Company has not received a notice of conversion from the lender; (ii) from the date of issuance of the 2010 Notes up to one hundred twenty (120) days following the issuance date, the Company has the right, after giving the lender three days prior written notice, to prepay the outstanding principal and accrued interest, in full, in cash equal to 140% of the sum of the outstanding principal plus accrued and unpaid interest; (iii) from one hundred twenty one (121) days following the issuance date up to one hundred eighty (180) days following the issuance date, the Company has the right, after giving the lender three days prior written notice, to prepay the outstanding principal and accrued interest, in full, in cash equal to 150% of the sum of the outstanding principal amount plus accrued and unpaid interest; (iv) after one hundred eighty (180) days following issuance date, the Company does not have right of prepayment. At March 31, 2011, assuming no adjustment to the conversion price, if the lender converted the entire principal balance of the 2010 Notes using the greater of the fixed or variable conversion price at March 31, 2011, after taking into consideration the aforementioned limitation on the amount of the 2010 Notes that can be converted, then they would have received approximately 30,804,464 shares of the Company’s common stock. Subsequent to December 31, 2010, the company sold its working interest in the Zavadil well and 50% of its working interest in the Rozella Kiefer well. This constituted a significant sale of assets and as such rendered the 2010 Notes in default. As a result of the default, no demand for repayment has been made; however, the lender can exercise its conversion rights.

The Company evaluated the conversion options of the 2010 Notes under FASB ASC 815-40 for derivative treatment and determined that the conversion options are required to be accounted for as a derivative.

As of October 25, 2010 (date of October Note issuance), the fair value of the derivative related to the October Note was $65,625. As a result, a discount of $63,000 on the October Note, a derivative liability of $65,625, and a resulting loss on the fair value of the derivative liability were recorded on October 25, 2010. As of December 31, 2010, the fair value of the derivative related to the October Note was $61,675. As of March 31, 2011, the fair value was $60,964 which resulted in a recorded net gain on the fair value of derivative liability of $801 in the accompanying consolidated statements of operations. For the period from December 31, 2010, to March 31, 2011 the Company also amortized the discount on the October Note for $21,000; accordingly, the balance of the unamortized discount on the October Note is $26,833 as of March 31, 2011.

As of December 21, 2010 (date of December Note issuance), the fair value of the derivative related to the December Note was $34,656. As a result, a discount of $32,500 on the December Note, a derivative liability of $34,656, and a resulting loss on the fair value of the derivative liability were recorded on December 21, 2010. As of December 31, 2010, the fair value of the derivative related to the December Note was $31,863. As of March 31, 2011 the fair value was $41,450 which resulted in a recorded net gain on the fair value of derivative liability of $413 in the accompanying consolidated statements of operations. For the period from December 31, 2010 to March 31, 2011 the Company also amortized the discount on the December Note for $10,833; accordingly, the balance of the unamortized discount on the December Note is $20,463 as of March 31, 2011.

The fair value of the derivative on the 2010 Notes on their date of their respective issuances and combined as of December 31, 2010 and March 31, 2011 was determined using the Black-Scholes option pricing model with the following assumptions:


	October 25, 2010			December 21, 2010				December 31, 2010		March 31, 2011
Common stock issuable upon conversion		13,125,000			3,465,558			13,375,350		30,804,464
Estimated market value of common stock on measurement date	$	0.008		$	0.015		$	0.012	$	0.005
Exercise price	$	0.0048		$	0.00937		$	0.0071	$	0.0031
Risk free interest rate (1)		0.18	%		0.19	%		0.19%		0.09%
Term in years	0.75 years			0.75 years				0.75 years		.75 years
Expected volatility		165	%		197	%		195%		200%
Expected dividends (2)		0	%		0	%		0%		0%

On March 7, 2011, (the “2011 Note”) the Company borrowed $30,000 from the same unaffiliated party under the same terms and conditions as the 2010 Notes. As of March 7, 2011 (date of the 2011 Note issuance), the fair value of the derivative related to the 2011 Note was $37,634. As a result, a discount of $30,000 on the 2011 Note, a derivative liability of $37,634, and a resulting loss of $7,634 on the fair value of the derivative liability were recorded on March 7, 2011. As of March 31, 2011, the fair value of the derivative related to the 2011 Note was $29,030, which resulted in a recorded net gain on the fair value of derivative liability of $8,604 in the accompanying consolidated statements of operations. For the period from March 7, 2011 to March 31, 2011 the Company also amortized the discount on the 2011 Note for $2,556; accordingly, the balance of the unamortized discount on the 2011 Note is $27,444 as of March 31, 2011. At March 31, 2011, assuming no adjustment to the conversion price, if the lender converted the entire principal balance of the 2011 Note using the greater of the fixed or variable conversion price at March 31, 2011, after taking into consideration the aforementioned limitation on the amount of the 2011 Note that can be converted, then they would have received approximately 9,676,795 shares of the Company’s common stock.

The fair value of the derivative on the 2011 Note on the date of issuance and as of March 31, 2011 was determined using the Black-Scholes option pricing model with the following assumptions:


		March 7, 2011		March 31, 2011
Common stock issuable upon conversion		5,376,344		9,676,795
Estimated market value of common stock on measurement date	$	0.01	$	0.005
Exercise price	$	0.0056	$	0.0031
Risk free interest rate (1)		0.11%		0.09%
Term in years		0.75 years		0 .75 years
Expected volatility		191%		200%
Expected dividends (2)		0%		0%

(1) The risk-free interest rate was estimated by management using the U.S. Treasury zero-coupon yield over the contractual term of the note.

(2) Management estimated the dividend yield at 0% based upon its expectation that there will not be earnings available to pay dividends in the near term.

NOTE 7 – RELATED PARTY TRANSACTIONS

From time to time, the Company receives cash advances from related parties, including stockholders and their affiliates, to cover operating expenses. The advances do not bear interest and are due upon demand. During the three months ended March 31, 2011, the Company received no cash advances.

NOTE 8 – STOCK OPTIONS AND WARRANTS

Summary information regarding stock option activity is as follows:


	Number of Shares		Weighted Average Exercise Price
Outstanding at 12/31/10		8,000,000	$	1.00
Granted		-		-
Exercised		-		-
Cancelled/Expired		-		-
Outstanding at 03/31/11		8,000,000	$	1.00

Options outstanding and their relative exercise price at March 31, 2011 are as follows:


Exercise Price	Number of shares		Remaining life	Aggregate Intrinsic Value (In-the-money) Options
1.00		8,000,000	2.75 years	$	-
		8,000,000		$	-

NOTE 9 - COMMON STOCK

On January 12, 2011, the holder of a promissory note in the original face amount of $40,000 elected to convert $10,000 of the face amount to 1,000,000 shares of common stock valued at $14,000, based on fair market value using quoted market prices on the date of grant and the Company recorded a realized loss of $4,000 on settlement of debt.

On January 12, 2011, the holder of two promissory notes, each in the original face amount of $40,000, elected to convert an aggregate of $20,000 to 2,000,000 shares of common stock valued at $28,000, based on fair market value using quoted market prices on the date of grant and the Company recorded a realized loss of $8,000 on settlement of debt.

On February 2, 2011, the Company issued 100,000 common shares valued at $1,500, based on fair market value using quoted market prices on the date of grant for consulting services rendered.

NOTE 10 – COMMITMENTS, CONTINGENCIES AND LITIGATION

During January 2010, the Company entered into a consulting agreement with an unrelated third party and paid the consultant a commitment fee of $5,000 and issued the consultant 1,000,000 fully vested shares of common stock (see Note 9). The Company amended the consulting agreement in March 2010 that extended the term for twelve months from the date of the amendment and issued the consultant 5,000,000 fully vested shares of common stock (2,000,000 shares on March 4, 2010 valued at $66,000 and 3,000,000 shares on March 4, 2010 valued at $99,000 – See Note 9). As amended, the consulting agreement includes the following commitments:


i.		The consultant will receive $5,000 per month for twelve months;
ii.		The consultant will receive a referral fee of 10% cash and 10% equity of the aggregate amount of each successful equity financing;


iii.		The consultant will receive a referral fee of 5% cash and 5% equity of the aggregate amount of each successful debt financing.

The Company’s Employment Agreement with Arthur Bertagnolli provides for certain compensation and benefits based on the Company’s achievement of specified milestones. As of March 31, 2011, none of those milestones have been achieved. Under certain circumstances, Mr. Bertagnolli is also entitled to an additional payment upon sale of the Company.

Panos Industries, LLC v. Savoy Energy Corporation, et. al., District Court, Clark County, Nevada Case # A-10-612340-C.

On March 19, 2010, this action was filed in the above-entitled Court seeking damages “…in excess of $50,000” based upon monies which the Plaintiff claims were advanced by Plaintiff on behalf of the Company. This action is in its very early stages and as of this date the Company has not been served with the Summons and Complaint and has therefore not filed any Answer to the Complaint. While the outcome of this matter cannot be predicted, the Company specifically denies that it is indebted to Plaintiff and believes that any claims purportedly asserted in the lawsuit are without merit. The Company further believes that it has meritorious claims against Plaintiff which arose in connection with the merger of the Company’s predecessor (Arthur Kaplan Cosmetics, Inc.) with Plantation Exploration, Inc. and in connection with the aftermath of the merger. The Company intends to vigorously defend any claims asserted by the Plaintiff and to aggressively prosecute its claims against the Plaintiff. Even if the Company is ultimately successful in defending this action, it will incur legal fees and other expenses in connection with such defense, the amount of which cannot be predicted at this time. Such expenses could have a material impact on the Company’s future operating results and have an adverse impact on the Company’s funds available for its operations.

NOTE 11 – SUBSEQUENT EVENTS

In accordance with ASC 855, the Company evaluated subsequent events through the date these financial statements were available to be issued. With the exception of those matters discussed below, there were no material subsequent events that required recognition or additional disclosure in these financial statements.

In April 2011, the Company sold a 12.875% working and revenue interest and the support equipment on the Rozella Kifer No. 1 well in Gonzales County, Texas to Lucas Energy, Inc. for cash proceeds of $18,550. The proceeds associated with the support equipment totaling $6,905 and will be recorded as a gain on sale of assets. The proceeds associated with working and revenue interest totaling $11,646 will be accounted for as a reduction of capitalized costs, with no gain or loss recognized.

In May 2011, the Company sold its remaining 12.875% working and revenue interest and the support equipment on the Rozella Kifer No. 1 well in Gonzales County, Texas to Lucas Energy, Inc. for cash proceeds of $18,550. The proceeds associated with the support equipment totaling $6,905 and will be recorded as a gain on sale of assets. The proceeds associated with working and revenue interest totaling $11,646 will be accounted for as a reduction of capitalized costs, with no gain or loss recognized.

On April 14, 2011, the holder of a promissory note dated March 22, 2010 in the original face amount of $40,000 converted $9,409 face amount of the note into 3,360,565 shares of the company’s common stock.

On April 28, 2011, the holder of a promissory note originally dated October 25, 2010 in the original face amount of $63,000 converted $6,000 face amount of the note into 3,333,333 shares of the company’s common stock.

On May 20, 2011, the holder of a promissory note dated March 22, 2010 in the original face amount of $40,000 converted $7,500 face amount of the note into 3,000,000 shares of the company’s common stock.

On May 20, 2011, the holder of a promissory note dated March 22, 2010 in the original face amount of $40,000 converted $9,409 face amount of the note into 3,360,565 shares of the company’s common stock.

On April 10, 2011, the two promissory notes dated March 22, 2011, each in the original face amount of $40,000 and the promissory note dated April 21, 2010 in the original face amount of $40,000 went into default as a result of the Company’s non-payment.

On June 22, 2011, the Company agreed to amend its prior notes dated October 25, 2010 (in the original face amount of $63,000), December 21, 2010 (in the original face amount of $32,500) and March 7, 2011 (in the original face amount of $30,000) to amend the conversion price to the greater of either (i) a fixed conversion price of $0.00009 or (ii) 50% of the quoted market price for the Company’s common stock using the average of the lowest three (3) trading prices for the Company’s common stock during the ten (10) trading days prior to the conversion date. The Company evaluated the modification and concluded that the modification was not an extinguishment of the original debt; as a result, no gain or loss will be recognized upon modification and there is not a significant difference between the carrying value of the debt prior to modification and the fair value of the debt after modification.

Also on June 22, 2011 (the “2011 June Note”), the Company agreed to borrow $11,000 from the same unaffiliated party under the same terms and conditions (as amended) as the March 2011 Note.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

We were incorporated as “Arthur Kaplan Cosmetics, Inc.” on June 25, 2007, in the State of Nevada. We subsequently changed our name to Savoy Energy Corporation.

On March 31, 2009, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Plantation Exploration, Inc., a privately held Texas corporation (“Plantation Exploration”), and Plantation Exploration Acquisition, Inc. (“Acquisition Sub”), our newly formed wholly-owned Nevada subsidiary. In connection with the closing of this merger transaction, Acquisition Sub merged with and into Plantation Exploration (the “Merger”) on April 2, 2009, with the filing of articles of merger with the Texas secretary of state. As a result of the Merger, Plantation Acquisition no longer exists and Plantation Exploration became our wholly-owned subsidiary.

Subsequently, on April 3, 2009, we merged with another wholly-owned subsidiary of our company, known as Savoy Energy Corporation, in a short-form merger transaction under Nevada law and, in connection with this short form merger, changed our name to Savoy Energy Corporation.

Our Business

We are in the business of re-entering, re-completing, extracting oil, and selling oil from previously undeveloped and drilled wells in the United States. Our plan of operations is to economically extract a significant amount of the “left-behind” oil from previously drilled sites.

We currently hold leases on or are producing oil from the following unproven and proven developed and undeveloped wells: (a) a 49.25% undivided interest in certain lease acreage comprising 144 acres which was previously producing located in Gonzales County, Texas, (b) a 5.0% overriding royalty interest in W.L. Barnett ET AL #1 & #2 and (c) a 2.75% working interest in the Glass 59 #2 well. We will continue our workover efforts on these wells, and seek to duplicate our successful efforts with other wells.

Once we have determined which wells have the greatest production potential and are most likely to respond to our workover efforts, we will then pursue acquiring interests in those wells. We will then engage in workover operations as with our previous wells, primarily through horizontal drilling and acidization. We intend to extract and sell crude oil through a third party purchaser.

Our strategy is to concentrate on existing low maintenance production, exploit low risk sidetrack drilling opportunities as and when identified, and use the accumulated information and results to advance operations.

Large oil companies with high overhead costs require high production rates for wells to be economically viable. Our small size and lower overhead allows profitably extraction of oil at low production rates. Our goal is to turn wells rendered uneconomical and abandoned by large companies into profitable ones.

Developments in Expansion of Wells

On March 31, 2010, the Company secured a 2.75% working interest in the Glass 59 #2 well in Sterling County, Texas that is operated by Bright & Company.

In June 2010, the Company acquired the Davis-Cornell oil and gas lease for $28,900. The lease acreage is located in Gonzales County, Texas, and is comprised of 144 acres. The Company acquired a 75% undivided working interest in the previously-producing reserves, and the sellers retained a 25% undivided working interest.

During June 2010, the Company entered into an option agreement with a shareholder and working interest participant in certain oil and gas properties located in Gonzales County, Texas to allow the shareholder to put their interest in the properties to the Company. Pursuant to the option agreement, Savoy agreed to issue 2,640,000 shares of common stock to the shareholder (which as of the date of this report has not been issued), together with future monthly payments of $5,000 per month to the shareholder until the holding period lapses and the restrictive legend can be removed from the face of the share certificate. Upon the restriction removal, the monthly payment will cease and the shareholder has the option to assign their interest in the oil and gas properties to Savoy. During the three months ended March 31, 2011, the Company paid $10,000 to the shareholder under the agreement which is included in general and administrative expenses for the three months ended March 31, 2011.

In May 2010, the Company sold certain overriding royalty interests to Lucas Energy, Inc. for $92,568. The overriding royalty interests are associated with the Company’s producing wells in the Austin Chalk formation. The Company retained its existing working interests in the Austin Chalk producing formation. During the three months ended June 30, 2010, the proceeds of $92,568 were recognized as a gain on sale of assets. During the three months ended September 30, 2010, management re-assessed its initial accounting for the gain of $92,558 recognized in the three months ended June 30, 2010 and determined that a gain of $68,902 was the gain on sale of assets. Management evaluated the impact of recording the adjustment to the gain during the three months ended September 30, 2010 as opposed to the three months ended June 30, 2010 and concluded that it did not have a material impact on the financial statements.

In June 2010, the Company sold a 92.5% undivided interest in its Eagle Ford formation “deep rights” located in Gonzales County, Texas to Lucas Energy, Inc. for $140,752. The “deep rights” sold are unevaluated oil and gas properties associated with the Company’s producing wells in the Austin Chalk formation. The Company retained its existing working interests in the Austin Chalk producing formation. During the three months ended June 30, 2010, the proceeds of $140,752 were recognized as a gain on sale of assets. During the three months ended September 30, 2010, management re-assessed its initial accounting for the gain of $140,752 recognized in the three months ended June 30, 2010 and determined that a gain of $104,104 was the gain on sale of assets. Management evaluated the impact of recording the adjustment to the gain during the three months ended September 30, 2010 as opposed to the three months ended June 30, 2010 and concluded that it did not have a material impact on the financial statements.

In July 2010, the Company sold a 92.5% undivided interest in its Eagle Ford formation “deep rights” located in Gonzales County, Texas to Lucas Energy, Inc. for $123,228. The “deep rights” sold are unevaluated oil and gas properties. The Company retained its existing working interests in the Austin Chalk producing formation. During the three months ended September 30, 2010, the Company recognized a gain of $94,381 on sale of assets.

In September 2010, the Company sold its 51.5% working and revenue interest and the support equipment on the Ali-O No. 1 well in Gonzales County, Texas to Lucas Energy, Inc. for cash proceeds of $52,500 and forgiveness of payables in the amount of $10,327. The proceeds associated with the support equipment and forgiveness of payable totaling $42,877 was recorded as a gain on sale of assets. The proceeds associated with working and revenue interest totaling $19,950 were accounted for as a reduction of capitalized costs, with no gain or loss recognized.

In February 2011, the Company sold its 52.5% working and revenue interest and the support equipment on the Zavadil No. 1 well in Gonzales County, Texas to Lucas Energy, Inc. for cash proceeds of $65,000 and forgiveness of payables in the amount of $25,080. The proceeds associated with the support equipment and forgiveness of payable totaling $79,219 was recorded as a gain on sale of assets. The proceeds associated with working and revenue interest totaling $10,861 were accounted for as a reduction of capitalized costs, with no gain or loss recognized.

In March 2011, the Company sold a 25,75% working and revenue interest and the support equipment on the Rozella Kifer No. 1 well in Gonzales County, Texas to Lucas Energy, Inc. for cash proceeds of $37,100. The proceeds associated with the support equipment totaling $13,809 was recorded as a gain on sale of assets. The proceeds associated with working and revenue interest totaling $23,291 were accounted for as a reduction of capitalized costs, with no gain or loss recognized.

Notes Payable

On October 25, 2010, an unrelated third party advanced $63,000 to the Company under the terms of a convertible promissory note (the “October Note”). On December 21, 2010, the same party advanced $32,500 to the Company under the terms of a convertible promissory note (the “December Note”). The October Note and the December Note together are referred to as the 2010 Notes. The 2010 Notes (as amended) bear interest at 10% per annum and mature on their nine month anniversary at which date the principal amounts and any accrued interest is payable. The 2010 Notes have a conversion price equal to the greater of either (i) a fixed conversion price of $0.00009 or (ii) 50% of the quoted market price for the Company’s common stock using the average of the lowest three (3) trading prices for the Company’s common stock during the ten (10) trading days prior to the conversion date. The Company is required at all times to have authorized and reserved three times the number of shares that are actually issuable upon full conversion of the 2010 Notes. So long as the Company is not in default, the lender cannot exercise its conversion right for 180 days following the issuance date of the 2010 Notes. The Company has the right to prepay the 2010 Notes under certain specified terms and conditions. The terms and conditions to prepay the 2010 Notes are as follows: (i) the Company has not received a notice of conversion from the lender; (ii) from the date of issuance of the 2010 Notes up to one hundred twenty (120) days following the issuance date, the Company has the right, after giving the lender three days prior written notice, to prepay the outstanding principal and accrued interest, in full, in cash equal to 140% of the sum of the outstanding principal plus accrued and unpaid interest; (iii) from one hundred twenty one (121) days following the issuance date up to one hundred eighty (180) days following the issuance date, the Company has the right, after giving the lender three days prior written notice, to prepay the outstanding principal and accrued interest, in full, in cash equal to 150% of the sum of the outstanding principal amount plus accrued and unpaid interest; (iv) after one hundred eighty (180) days following issuance date, the Company does not have right of prepayment. At March 31, 2011, assuming no adjustment to the conversion price, if the lender converted the entire principal balance of the 2010 Notes using the greater of the fixed or variable conversion price at March 31, 2011, after taking into consideration the aforementioned limitation on the amount of the 2010 Notes that can be converted, then they would have received approximately 30,804,464 shares of the Company’s common stock. Subsequent to year end, the company sold its working interest in the Zavadil well and 50% of its working interest in the Rozella Kiefer well. This constituted a significant sale of assets and as such rendered the 2010 Notes in default. As a result of the default, no demand for repayment has been made; however, the lender can exercise its conversion rights.

On March 7, 2011, (the “ March 2011 Note”) the Company borrowed $30,000 from the same unaffiliated party under the same terms and conditions (as amended) as the 2010 Notes,.

Also, on June 22, 2011, the Company agreed to amend its prior notes dated October 25, 2010 (in the original face amount of $63,000), December 21, 2010 (in the original face amount of $32,500) and March 7, 2011 (in the original face amount of $30,000) to amend the conversion price to the greater of either (i) a fixed conversion price of $0.00009 or (ii) 50% of the quoted market price for the Company’s common stock using the average of the lowest three (3) trading prices for the Company’s common stock during the ten (10) trading days prior to the conversion date.

Increase in Authorized Capital

On December 14, 2010 the Company filed an Amendment to its Articles of Incorporation increasing its authorized capital to 310,000,000 shares comprising 300,000,000 shares of Common Stock par value $.001 per share and 10,000,000 shares of Preferred Stock par value $0.001 per share.

Results of Operations for the Three Months Ended March 31, 2011 and 2010

Revenues. Our total revenue reported for the three months ended March 31, 2011 was $3,516 compared to $18,755 in the comparable period for the prior year. The decrease was due to the sale of various of the Company’s interests.

Lease Operating Expenses. The lease operating expenses for the three months ended March 31, 2011 were $3,035, compared to $12,931 in the comparable period of the prior year.

Depreciation, Depletion, Amortization and Impairment. Depreciation, depletion, amortization and impairment for the three months ended March 31, 2011 was $71,945 compared to $3,291 in the comparable period the prior year.

General and Administrative Expense. General and administrative expense for the three months ended March 31, 2011 decreased to $106,522 from $650,242 for the comparable quarter in 2010. The decrease in general and administrative expense was largely attributable to the recognition of stock compensation expense in the prior year’s comparable quarter.

Gain on Sale of Assets. During the three months ended March 31, 2011, the sale by the Company of certain oil and gas properties netted the Company an aggregate of $96,827.

Other Income (Expenses). We recorded interest expense of $82,513 for the three months ended March 31, 2011 compared to $1,630 in the comparable quarter the prior year. This increase was largely attributable to the cost of increased debt, as well as the amortization of the discount on convertible notes of $41,772

Liquidity and Capital Resources

As of March 31, 2011, we had total current assets of $6,877. Our total current liabilities as of March 31, 2011 were $901,399. Thus, we had a working capital deficit of $894,522 as of March 31, 2011.

Operating activities used $114,235 in cash for the three months ended March 31, 2011 compared to $105,824 in the comparable three months of the prior year. Cash flows provided by investing activities were $101,942 during the three months ended March 31, 2011 compared to $(16,180) in the comparable three months of the prior year. The increase was entirely attributable to the sale of certain of the Company’s oil and gas properties. Cash flows provided by financing activities during the quarter ended March 31, 2011 was $10,000 consisting of proceeds from notes payable of $30,000, less repayments of $20,000 compared to $80,000 in the comparable period the prior year comprising proceeds from the issuance of debt.

Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We have negative working capital and rely on proceeds from equity and loans to fund our operations. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Going Concern

Our financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of the date of this report, we have generated losses from operations, have an accumulated deficit and a working capital deficiency. These factors raise substantial doubt regarding our ability to continue as a going concern.

In order to continue as a going concern and achieve a profitable level of operations, we will need, among other things, additional capital resources and to develop a consistent source of revenues sufficient to meet our operating expenses. Our continuation as a going concern is dependent upon our ability to raise equity or debt financing, and the attainment of profitable operations from our planned business.

Our ability to continue as a going concern is dependent upon our ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Off Balance Sheet Arrangements

As of March 31, 2011, there were no off balance sheet arrangements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4.

Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2011. The Company's internal control over financial reporting is a process and procedures designed under the supervision of the Company's Principal Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Based upon that evaluation, our Chief Executive Officer who is also our Principal Financial Officer concluded that, as of March 31, 2011, our disclosure controls and procedures over financing reporting were not effective. This conclusion was based on the existence of the material weaknesses in our internal control over financial reporting previously disclosed and discussed below. There have been no changes in our internal controls over financial reporting during the quarter ended March 31, 2011. To address the need for more effective internal controls, management has plans to improve the existing controls and implement new controls as our financial position and capital availability improves. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We identified and continue to have the following material weakness in our internal controls over financial reporting:

There is a lack of segregation of duties and technical accounting expertise. Our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our management does not possess accounting expertise and hence our controls over the selection and application of accounting policies in accordance with generally accepted accounting principles were inadequate and constitute a material weakness in the design of internal control over financial reporting. This weakness is due to the Company’s lack of working capital to hire additional staff.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the first quarter of fiscal 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

The Company is a party to the following litigation:

Panos Industries, LLC v. Savoy Energy Corporation, et. al., District Court, Clark County, Nevada Case # A-10-612340-C.

On March 19, 2010, this action was filed in the above-entitled Court seeking damages “…in excess of $50,000” based upon monies which the Plaintiff claims were advanced by Plaintiff on behalf of the Company. As of this date, the Company has filed an Answer to the complaint and has filed a Cross-Complaint against the Plaintiff. The Plaintiff has filed a Motion to Dismiss the Cross-Complaint, which is pending. While the outcome of this matter cannot be predicted, the Company specifically denies that it is indebted to Plaintiff and believes that any claims purportedly asserted in the lawsuit are without merit. The Company further believes that it has meritorious claims against Plaintiff which arose in connection with the merger of the Company’s predecessor (Arthur Kaplan Cosmetics, Inc.) with Plantation Exploration, Inc. and in connection with the aftermath of the merger. The Company intends to vigorously defend any claims asserted by the Plaintiff and to aggressively prosecute its claims against the Plaintiff. Even if the Company is ultimately successful in defending this action, it will incur legal fees and other expenses in connection with such defense, the amount of which cannot be predicted at this time. Such expenses could have a material impact on the Company’s future operating results and have an adverse impact on the Company’s funds available for its operations.

Item 1A.

Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

On February 2, 2011, the Company issued 100,000 common shares valued at $1,500, based on fair market value using quoted market prices on the date of grant for consulting services rendered.

None of the aforementioned transactions resulted in any cash proceeds to the Company.

Item 3.

Defaults upon Senior Securities

Subsequent to December 31, 2010, the Company sold its working interest in the Zavadil well and 50% of its working interest in the Rozella Kiefer well. This constituted a significant sale of assets and as such rendered its notes dated October 25, 2010 (in the original face amount of $63,000), December 21, 2010 (in the original face amount of $32,500) and March 7, 2011 (in the original face amount of $30,000) in default. As a result of the default, no demand for repayment has been made; however, the lender can exercise its conversion rights.

Item 4.

(Removed and Reserved)

None

Item 5.

Other Information

Item 6.

Exhibits


Exhibit Number		Description of Exhibit

31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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

SIGNATURES

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


	SAVOY ENERGY CORPORATION

Date:	October 8, 2012

	By:	/s/ Arthur Bertagnolli
		Arthur Bertagnolli
	Title:	Chief Executive Officer and Chief Financial Officer

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