SaviCorp - FORM 10-K - June 19, 2015

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2014

¨	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.)

2530 S. Birch Street

Santa Ana, California

92707

(877) 611-7284

(Address of principal executive office)

(Postal Code)

(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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

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.

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, 2014, was $13,873,791.

As of June 16, 2015 there were 6,280,561,383 shares of issuer’s common stock outstanding.

SAVICORP

FORM 10-K

For the Fiscal Year Ended December 31, 2014


	Page

Part I

Item 1. Description of Business.	1

Item 2. Description of Property.	15

Item 3. Legal Proceedings.	15

Item 4. Submission of Matters to a Vote of Security Holders.	16

Part II

Item 5. Market for Common Equity and Related Stockholder Matters.	17

Item 6. Management's Discussion and Analysis or Plan of Operation.	18

Item 7. Financial Statements	22

Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	22

Item 8A. Controls and Procedures.	22

Item 8B. Other Information.	22

Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.	22

Item 10. Executive Compensation.	23

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	24

Item 12. Certain Relationships and Related Transactions.	28

Item 13. Exhibits.	29

Item 14. Principal Accountant Fees and Services.	30

Signatures.	31

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 2014, SaviCorp continued 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 in 1986 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:

Addresses carbon footprint (substantially reduces carbon monoxide emissions through smog emission tacking);

Improves fuel use and mileage;

Increases engine performance (Dynamometer readings show a dramatic increase in overall engine performance);

Fuel use and oil consumption is substantially reduced;

Cost effective:

The savings in over-all fuel, oil and engine service requirements are significant;

Carbon Credits are generated by the use of the DynoValve & DynoValve Pro;

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);

Useable with marine engines as well;

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.

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.

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 United Arab Emirates 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, 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 DGT 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 DGT 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:

OEM/Private Label.

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.

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.

Direct Mail.

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.

Internet.

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 the United Arab Emirates and others. The Company executed a 5-year licensing agreement with Dubai-based DynoGreen Tech, LLC (“DGT”) in Q2. 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, 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 DGT 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).

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. 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:

Western Regional Ford Dealerships

Eastern Region GM Dealerships

Consolidated Edison Fleet Testing

United States Postal Service Tests

LAPD Ford Interceptor Tests

City of Los Angeles Fleet Tests

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 agreements.

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, China, the Middle East and South Korea and a non-exclusive license worldwide 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:

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.

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

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.

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 2014, we had consulting agreements with all management and staff members. We regularly utilize the services of consultants on an as-needed basis. As of June 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 $9,494,263 for the year ended December 31, 2014 and $6,961,318 for the year ended December 31, 2013. 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, 2014, 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 June 3, 2015, our independent auditors stated that our financial statements for the year ended December 31, 2014 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 $300,301,024 at December 31, 2014. In addition, at December 31, 2014, we were in a negative working capital position of $14,242,023 and had a stockholders' deficit of $14,220,829. 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 that are issued to us 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, 2014, we had 5,982,260,958 shares of common stock issued and outstanding, convertible debentures outstanding that may be converted into a maximum of 3,387,656,900 shares of common stock and outstanding warrants to purchase 130,000,000 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, B and C Convertible Preferred Stock Would Cause Immediate and Substantial Dilution to Our Existing Stockholders.

As of December 31, 2014, we had 5,982,260,958 shares of common stock issued and outstanding and series A, B and C convertible preferred stock that may be converted into 6,379,603,967 shares of our common stock. The issuance of shares upon conversion of the series A, B and C convertible preferred stock would result in substantial dilution to the interests of other stockholders.

Our Directors can re-elect the Board And Investors Did Not Have Any Voice in Our Management.

On May 26, 2015, SaviCorp filed a Certificate of Designation with the Nevada Secretary of State establishing a Series D Preferred Stock ("Series D Preferred"); par value $0.001 per share.. Series D Preferred allows for the issuance of up to ten shares of super voting stock, one share to each member of the Company's Board of Directors. Series D Preferred shares constitute 50.1% of the outstanding voting shares of the Company at any time they are voted in a Shareholder meeting or as part of a Shareholder consent without a meeting. They can be voted to increase the authorized common shares of the Company, to re-elect the Board of Directors and for other purposes as reasonably determined by the Board of Directors. Series D Preferred shares are automatically revoked when the Shareholder meeting is concluded.

As a result of the Board’s ability to issue Series D Preferred stock, our directors collectively are able to influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.

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:

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. 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.

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 five rescissions offers accepted and refunded $14,000 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, 2014 is $444,833.

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 sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempted 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 lawsuit has been settled and dismissed.

The Company received an Order of Suspension of Trading on June 17, 2015 from the Security and Exchange Commission. The SEC indicated that there is a lack of current and accurate information concerning the securities of the Company and therefore ordered that trading in the securities of the Company be suspended from June 17, 2015 through June 30, 2015.

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 May 28, 2015, in lieu of a special meeting of the stockholders, the majority of stockholders approved the following actions:

To elect three 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;

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 6,000,000,000 shares to 8,000,000,000 shares;

There have been no stockholders meeting since May 28, 2015.

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 2014
	High	Low
First Quarter	$0.0035	$0.0025
Second Quarter	$0.0029	$0.0020
Third Quarter	$0.0070	$0.0018
Fourth Quarter	$0.0063	$0.0033

	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

HOLDERS

As of June 1, 2015, we had approximately 858 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, 2014, the Company issued the following:

In January 2014, the Board of Directors authorized the issuance of 1,703,333 Preferred A shares to accredited and non-accredited investors for total proceeds of $95,000.

In February 2014, the Board of Directors authorized the issuance of 2,850,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $150,000.

In March 2014, the Board of Directors authorized the issuance of 200,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $10,000.

In April 2014, the Board of Directors authorized the issuance of 4,916,666 Preferred A shares to accredited and non-accredited investors for total proceeds of $187,500.

In May 2014, the Board of Directors authorized the issuance of 300,000 Preferred A shares and 6,250 Preferred B shares to accredited and non-accredited investors for total proceeds of $40,000.

In June 2014, the Board of Directors authorized the issuance of 6,667 Preferred A shares to accredited and non-accredited investors for total proceeds of $1,000.

In July 2014, the Board of Directors authorized the issuance of 250,000 Preferred A shares to accredited and non-accredited investors for total proceeds of $25,000.

In August 2014, the Board of Directors authorized the issuance of 25,000 Preferred B shares to accredited and non-accredited investors for total proceeds of $100,000.

In September 2014, the Board of Directors authorized the issuance of 1,975,000 Preferred A shares and 45,056 Preferred B shares to accredited and non-accredited investors for total proceeds of $305,000.

In October 2014, the Board of Directors authorized the issuance of 100,000 Preferred A shares and 36,500 Preferred B shares to accredited and non-accredited investors for total proceeds of $175,000.

In November 2014, the Board of Directors authorized the issuance of 25,000 Preferred B shares to accredited and non-accredited investors for total proceeds of $100,000.

In December 2014, the Board of Directors authorized the issuance of 22,040 Preferred B shares to accredited and non-accredited investors for total proceeds of $81,000.

Throughout the year, the Board of Directors also authorized the issuance of 500,000 common shares, 1,700,000 Preferred A shares and 94,950 Preferred B shares for services rendered by independent contractors. These issuances were valued based on the market value of the stock totaling $3,496,150.

Since 2014, the Board of Directors authorized the issuance of an aggregate of 172,214 shares of its Preferred B shares to accredited and non-accredited investors for total proceeds of $695,000. In addition, the Board of Directors has authorized the issuance of an aggregate of 47,500 shares of its Preferred B shares to accredited and non-accredited investors for services rendered valued at an aggregate of $1,710,000. 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 in 1986 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, 2014 and 2013, 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. 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. Due to this discount to sales, the gross profit for 2013 was negative as the costs of goods related to the sales were expensed. Excluding related party revenue, sales decreased from $41,475 in 2013 to $26,164 in 2014. This was primarily because the company focused on growing international markets, specifically focus was shifted to implementing the China license agreement with Beijing FlyingGlob. In addition, during 2014, expenses far exceed revenue as loss from operations for 2014 was $5,199,107, an increase of 5.9% over 2013 loss from operations of $4,907,773.

During the year ended December 31, 2014, we incurred $4,295,156 in Other Expense. During the year ended December 31, 2013, we incurred $2,053,545 in Other Expense. Other 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 increase in Other Expense from 2013 to 2014 was due to the loss on debt settlement and a reduction in the change in the fair value of the rescission liability compared to 2013.

Net loss for the year ended December 31, 2014 was 9,494,263. This is a drop from the net loss for the year ended December 31, 2013 of $6,961,318. The drop in net profit is primarily due to an increase in the Other Expense as discussed above.

At December 31, 2014, we are in a negative working capital position of $14,242,023 and had a stockholders' deficit of $14,220,829. 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, 2014, 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, 2014, the Company had $32,373 in cash, no accounts receivable, $249,593 in inventory, $21,194 in net fixed assets and $27,833 in pre-paid assets.

Total current liabilities were $14,551,822 as of December 31, 2014, consisting of convertible debt, net, of $715,742, derivative liabilities of $9,039,061, accounts payable and accrued liabilities of $2,976,798, notes payable of $25,778, settlement payable of $1,101,179, rescission liability of $444,833 and accounts payable assumed in recapitalization of $159,295.

We had a negative working capital of $14,242,023 as of December 31, 2014.

As a result, our independent registered public accounting firm, in its report dated June 3, 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, 2014.

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;
	·	and increase revenues.

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, 2014 and December 31, 2013, 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

Evaluation of Disclosure Controls and Procedures. As of December 31, 2014, 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, 2014, 2013, and 2012 exceeded $100,000. Of the salaries shown during 2014, 2013, and 2012, $51,954, $19,300, and $10,800 were paid. The remaining was accrued as of December 31, 2014:

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION

Name &
Principal
Position

Year

Salary ($)

Bonus ($)

Annual
Compensation ($)

Restricted
Stock
Awards($)

Options
SARs
(#)

Other
LTIP
Payouts($)

All Other
Compensation

Serge Monros

2014

240,000

–

240,000

–

CEO, CFO

2013

216,000

–

216,000

–

2012

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 2014

None.

Aggregate Option/SAR Exercises in 2013 and December 31, 2014 Option Values

None.

Equity Compensation Plan Information

Number of
securities to be issued upon
exercise of outstanding options, warrants and rights
(a)

Weighted-
average exercise
price of outstanding
options, warrants and
rights
(b)

Number of
securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)

Equity compensation plans approved by holders

–

25,000,000

Equity compensation plans not approved by security holders

–

Total

–

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, 2014, 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.

by each person who is known by us to beneficially own more than 5% of each of our preferred stock classes;

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, 2014 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, 2014 have been exercised and converted.

Name		Class	Beneficially Owned(1)		Percent of Class(2)		Title or Nature of Relationship

Serge Monros	(3)	Common Stock		298,514,822		4.80%	CEO/CFO/Director
2530 S. Birch Street
Santa Ana, California 92707

Phil Pisanell	(4)	Common Stock		31,000,000		*	Director
2530 S. Birch Street
Santa Ana, California 92707

Rudy Rodriguez	(5)	Common Stock		202,000,000		3.35%	COO/Director
2530 S. Birch Street
Santa Ana, California 92707

All Officers and Directors As a Group (3 persons)		Common Stock		531,514,822		8.42%

Lucius Blanchard	(6)	Common Stock		1,450,000,000		19.51%

Clarke Family Trust	(7)	Common Stock		964,000,000		14.27%

Joseph Gimbel	(8)	Common Stock		676,900,000		10.26%

Saheed Kottoth	(9)	Common Stock		528,666,667		8.55%

Neal Shindel & Joan Dengrove	(10)	Common Stock		315,000,000		5.00%

Saheed Kottoth		Common Stock		328,666,667		5.49%

Lucius Blanchard		Preferred A		4,500,000		16.14%

Joseph Gimbel		Preferred A		3,490,000		12.52%

Neal Shindel & Joan Dengrove		Preferred A		2,625,000		9.42%

Ira Gaines		Preferred A		1,666,666		5.98%

Lucius Blanchard		Preferred B		100,000		36.42%

Clarke Family Trust		Preferred B		77,500		28.22%

Joseph Gimbel		Preferred B		14,290		5.20%

Saheed Kottoth		Preferred C		2,000,000		23.65%

Chul Chung		Preferred C		1,088,500		12.87%

John Orrock		Preferred C		750,000		8.87%

Alexander M. Haig Jr.		Preferred C		500,000		5.91%	Advisory Board Member

Rudy Rodriguez		Preferred C		500,000		5.91%	COO/Director

Alexander P. Haig		Preferred C		433,000		5.12%	Advisory Board Member

* 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, 2014 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 5,982,260,958 common shares; 27,880,143 Preferred A Shares; 274,602 Preferred B Shares and 8,455,697 Preferred C Shares outstanding as of December 31, 2014.

(3)

Includes 28,514,606 shares of common stock and includes the conversion of the principal amount of $204,302 plus accrued interest through 12/31/14 of $82,486 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 21,000,000 shares of common stock and 10,000,000 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 450,000,000 shares of common stock underlying series A convertible preferred stock and 1,000,000,000 shares of common stock underlying series B convertible preferred stock.

(7)

Includes 189,000,000 shares of common stock and 775,000,000 shares of common stock underlying series B convertible preferred stock.

(8)

Includes 60,000,000 shares of common stock and 349,000,000 shares of common stock underlying series A convertible preferred stock and 142,900,000 shares of common stock underlying series B convertible preferred stock and 125,000,000 warrants to acquire common stock at an exercise price of $0.0004.

(9)

Includes 328,666,667 shares of common stock and 200,000,000 shares of common stock underlying series C convertible preferred stock.

(10)

Includes 262,500,000 shares of common stock and 52,500,000 shares of common stock underlying series B convertible preferred stock.

Series A, B, C and D Voting Rights

Each share of Series A, B 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. Each share of Series B convertible preferred stock is convertible into 10,000 shares of common stock.

Series D Preferred Shares are authorized to vote on matters such as an increase in the authorized common shares and re-election of Board members. The Series D Preferred Shares, when cast at a Shareholder meeting or included within a Shareholder Consent constitute 50.1% of the outstanding voting shares of the Company.

DESCRIPTION OF SECURITIES

COMMON STOCK

As of December 31, 2014, we were authorized to issue up to 6,000,000,000 shares of Common Stock, $0.001 par value. As of December 31, 2014, there were 5,982,260,962 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, $0.001 par value per share. As of December 31, 2014, there were 27,880,143 shares of series A preferred stock issued and outstanding, 274,602 shares of series B preferred stock issued and outstanding, and 8,455,697 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. 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 A, series B and series C 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. The holder exercised 80,362,450 warrants on a cashless basis and were issued 71,433,289 shares of common stock. The remaining warrants expired on July 24, 2014.

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. These warrants expire on May 1, 2015.

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. These warrants expired on October 4, 2014.

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.

In December 2014, as part of a private placement, the company issued 125,000,000 warrants at an exercise price of $0.0004 for a period of one year.

OPTIONS

There are no stock options outstanding as of December 31, 2013 or December 31, 2014.

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.

On July 20, 2014, the Company issued a convertible promissory note in the amount of $15,000 to Lamar Pierce. The note bears interest of $2,500 for the first thirty days and 12% per thirty days thereafter. The note was converted in Series B convertible preferred stock on December 20, 2014 based on a common share conversion rate of $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.

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, South 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.

3.7		Certificate of Designation of Series D Preferred Stock, filed as an exhibit to the Form 8-K filed with the Commission on June 5, 2015 and incorporated herein by reference.

3.8		Certificate of Amendment to the Articles of Incorporation, filed as an exhibit to the Form 8-K filed with the Commission on June 5, 2015 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)

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, 2014 and 2013, and for the reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q during the fiscal years were $20,000 and $44,000, respectively.

Audit Related

Our auditors billed us $20,000 and $44,000 for audited related work during fiscal years 2014 and 2013, respectively.

Tax Fees

Our auditors billed us $0 and $0 for tax related work during fiscal years 2014 and 2013, respectively.

All Other Fees

Our auditors did not bill us for any other services during fiscal years 2014 or 2013.

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: June 17, 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	June 17, 2015

/s/ PHIL PISANELLI Phil Pisanelli	Director	June 17, 2015

/s/ RUDY RODRIGUEZ Rudy Rodriguez	Chief Operating Officer and Director	June 17, 2015

SAVICORP

TABLE OF CONTENTS



	Page(s)

Report of Independent Registered Public Accounting Firm	F-2

Balance Sheets at December 31, 2014 and 2013	F-3

Statements of Operations for the years ended December 31, 2014 and 2013	F-4

Statement of Stockholders' Deficit for the period from December 31, 2012 to December 31, 2014	F-5

Statements of Cash Flows for the years ended December 31, 2014 and 2013	F-6

Notes to Financial Statements	F-7

F-1

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, 2014 and December 31, 2013 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, 2014 and 2013 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

June 17, 2015

F-2

SaviCorp

BALANCE SHEETS

December 31, 2014 and 2013

	December 31, 2014			December 31, 2013
ASSETS

Current assets:
Cash and cash equivalents	$	32,373		$	60,612
Accounts Receivable		–			6,615
Inventory		249,593			51,325
Prepaid expenses		27,833			18,333
Total current assets:		309,799			136,885

Long term assets:
Net fixed assets		21,194			22,233

Total assets	$	330,993		$	159,118

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Convertible debt, net of unamortized discount of $0 and $0, in default	$	511,440		$	511,440
Related party convertible debt, net of unamortized discount of $0 and $0, in default		204,302			204,302
Notes payable, $10,778 in default		99,914			10,778
Notes payable, related party, in default		15,000			15,000
Accounts payable and accrued liabilities		2,976,798			2,388,059
Accounts payable assumed in recapitalization		159,295			159,295
Settlements payable		1,101,179			1,101,179
Rescission Liability		444,833			784,809
Derivative liabilities - embedded derivatives		8,788,254			3,848,923
Derivative liabilities - warrants		250,807			1,382,612
Total current liabilities		14,551,822			10,406,397

Long term liabilities:
Convertible debt, net of unamortized discount of $0 and $0		–			32,600

Total liabilities		14,551,822			10,438,997

Commitments and contingencies		–			–

Stockholders' deficit:
Series A convertible preferred stock; $0.001 par value, 28,000,000 shares authorized, 27,880,143 and 12,963,477 issued and outstanding at December 31, 2014 and 2013, respectively		27,880			12,963
Series B convertible preferred stock; $0.001 par value, 1,000,000 shares authorized, 274,602 and 0 issued and outstanding at December 31, 2014 and 2013, respectively		275			–
Series C convertible preferred stock; $0.001 par value, 10,000,000 shares authorized, 8,455,697 and 8,755,697 issued and outstanding at December 31, 2014 and 2013, respectively		8,456			8,756
Common stock: $0.001 par value, 6,000,000,000 shares authorized, 5,982,260,958 and 5,970,327,673 shares issued and outstanding at December 31, 2014 and 2013, respectively		5,982,261			5,970,328
Stock payable		1,420,384			1,420,384
Additional paid-in capital		278,640,939			273,114,451
Accumulated deficit		(300,301,024	)		(290,806,761	)

Total stockholders' deficit		(14,220,829	)		(10,279,879	)

Total liabilities and stockholders' deficit	$	330,993		$	159,118

The accompanying notes are an integral part of the financial statements

F-3

SaviCorp

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2014 and 2013

	December 31, 2014			December 31, 2013

Revenue	$	26,164		$	41,475

Cost of Goods Sold		25,368			464,384

Gross Profit		796			(422,909	)

Operating costs and expenses:
General and administrative expenses	$	5,199,903		$	4,484,864

Loss from operations	$	(5,199,107	)	$	(4,907,773	)

Other income and (expenses):
Gain/(loss) on debt settlement		(441,959	)		104,669
Gain on legal settlement		–			479,073
Change in fair value of financial instruments		(4,012,010	)		(3,950,096	)
Change in fair value of rescission liability		339,976			1,398,735
Interest expense		(181,163	)		(85,926	)

Total other income and (expenses), net		(4,295,156	)		(2,053,545	)

Net profit (loss)	$	(9,494,263	)	$	(6,961,318	)

Weighted average shares outstanding		5,948,153,156			5,733,919,110
Weighted average shares outstanding-diluted		5,948,153,156			5,733,919,110

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

F-4

SaviCorp

STATEMENT OF STOCKHOLDERS' DEFICIT

For the Period From December 31, 2012 to December 31, 2014

																							Additional
	Preferred Stock A						Preferred Stock B				Preferred Stock C						Common Stock						Paid-In			Stock			Accumulated
	Shares			Amount			Shares		Amount		Shares			Amount			Shares			Amount			Capital			Payable			Deficit			Total

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 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	)

Common stock issued in exchange for consulting services and employee compensation		1,700,000			1,700			94,950		95		–			–			500,000			500			3,493,855			–			–			3,496,150

Common and preferred stock issued for cash under Regulation D offering		12,301,666			12,302			159,846		160		–			–			–			–			1,257,038			–			–			1,269,500

Conversion of common to Preferred A		700,000			700			–		–		–			–			(70,000,000	)		(70,000	)		69,300			–			–			–

Shares issued with debt		215,000			215			–		–		–			–			–			–			60,135			–			–			60,350

Imputed interest on related party debt		–			–			–		–		–			–			–			–			3,409			–			–			3,409

Stock issued upon exercise of warrants		–			–			–		–		–			–			71,433,289			71,433			93,128			–			–			164,561

Stock bought back from shareholders		–			–			–		–		–			–			(20,000,000	)		(20,000	)		3,000			–			–			(17,000	)

Tainted warrants and convertible debt issued		–			–			–		–		–			–			–			–			(330,112	)		–			–			(330,112	)

Conversion of Preferred C to common		–			–			–		–		(300,000	)		(300	)		30,000,000			30,000			(29,700	)		–			–			–

Conversion of debt for Preferred B		–			–			19,806		20		–			–			–			–			906,435			–			–			906,455

Net income		–			–			–		–		–			–			–			–			–			–			(9,494,263	)		(9,494,263	)

Balance at December 31, 2014		27,880,143		$	27,880			274,602	$	275		8,455,697		$	8,456			5,982,260,958		$	5,982,261			278,640,939		$	1,420,384			(300,301,024	)	$	(14,220,829	)

The accompanying notes are an integral part of the financial statements

F-5

SaviCorp

STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2014 and 2013

	December 31, 2014			December 31, 2013
Cash flows from operating activities:
Net profit(loss)		(9,494,263	)		(6,961,318	)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Compensatory common, preferred stock and warrant issuances		3,496,150			3,441,699
Interest imputed		3,409			13,261
Interest expense recognized on issuance and through accretion of discount on debt		72,890			7,810
Change in fair value of derivatives		4,012,010			3,950,096
Change in fair value of rescission liability		(339,976	)		(1,877,808	)
(Gain) Loss on extinguishment of debt		441,959			(104,669	)
(Gain) Loss on legal settlement					–
Depreciation expense		9,032			6,359
Changes in operating assets and liabilities:
Changes in accounts receivable		6,615			(6,354	)
Changes in related party receivable		–
Changes in inventory		(198,268	)		48,822
Changes in pre-paid assets		(9,500	)		58,089
Changes in related party accounts payable		–			(244,945	)
Changes in accounts payable and accrued liabilities		603,200			479,488
Net cash used by operating activities		(1,396,742	)		(1,189,470	)
Cash flows from investing activities:
Acquisition of equipment		(7,993	)		(13,807	)
Net cash used in investing activities		(7,993	)		(13,807	)
Cash flows from financing activities:
Proceeds from note payable		263,999			–
Principal payments on debt		(140,003	)		(101,400	)
Stock purchases		(17,000	)		(14,000	)
Proceeds from sale of common stock		1,269,500			1,368,450
Net cash provided by financing activities		1,376,496			1,253,050
Net increase (decrease) in cash and cash equivalents		(28,239	)		49,773
Cash and cash equivalents at beginning of year		60,612			10,839
Cash and cash equivalents at end of year		32,373			60,612

The accompanying notes are an integral part of the financial statements

F-6

SAVI CORP

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2014 and 2013

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 in 1986 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 $60,612 as of December 31, 2013 and $32,373 as of December 31, 2014.

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.

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.

F-7

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 $3,441,699 and $3,496,150 for the years ended December 31, 2013 and 2014, 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

Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income

In February 2013, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The update requires entities to disclose additional information about reclassification adjustments, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other comprehensive income. The update was effective for the Company in the first quarter of 2013. The update primarily impacted our disclosures and did not have a material impact on our financial position, results of operations or cash flows.

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists

F-8

In July 2013, the FASB issued an accounting standards update which requires 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. The update was effective in the first quarter of 2014. The update did not have a material impact on the Company’s financial position, results of operations or cash flows.

Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

In June 2014, the FASB issued an accounting standard which provides new guidance that requires share-based compensation to meet a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations.

Pushdown Accounting

In November 2014, the FASB issued guidance to provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be a change in accounting principle. The amendments in this Update are effective on November 18, 2014. The adoption of ASU 2014-17 is not expected to have a material impact on our financial position or results of operations.

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 2014, the Company had limited resources. At December 31, 2014, the Company is in a negative working capital position of $14,242,023 and has a stockholders' deficit of $14,220,829. Additionally, as of December 31, 2014 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.

F-9

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, 2014 and 2013, consisted of the following:

	2014		2013

Trade accounts payable	$	1,110,576	$	838,701
Accrued wages payable		1,541,309		1,289,565
Accrued interest expense		324,913		259,793

	$	2,976,798	$	2,388,059

4.	Accounts Payable and Accrued Liabilities – Related Party

The $15,000 amount due at December 31, 2013 and December 31, 2014 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).

6.	Settlement Payable

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 sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempted 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. As of December 31, 2014 and 2013, 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 lawsuit has been settled and dismissed.

7.	Rescission Liability

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.

F-10

8.	Derivatives

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, 2012 to December 31, 2014:

Description	Convertible Notes			Warrant Liabilities			Total
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
Change due to Issuance		79,623			265,489			345,112
Change due to Exercise/Conversion		(385,035	)		(164,561	)		(549,596	)
Change in Fair Value		5,244,743			(1,232,733	)		4,012,010
Fair value at December 31, 2014	$	8,788,254		$	250,807		$	9,039,061

For the year ended December 31, 2014, net derivative loss was $4,012,010. For the year ended December 31, 2013, net derivative loss was $3,950,096.

The lattice methodology was used to value the convertible notes and warrants issued, with the following assumptions.

Assumptions	2014	2013
Dividend yield	0.00%	0.00%
Risk-free rate for term	0.25%-0.67%	.10%-0.38%
Volatility	151%	193%
Maturity dates	0.99-2.41 years	0.57-2.41 years
Stock Price	0.0038	0.0026

F-11

The Cornell warrants issued on July 24, 2011 (initial 25,000,000 warrants with an exercise price of $0.0119 and an expiration date of July 20, 2014 reset to 991,666,667 warrants at $0.0003) had a term remaining of 0.56 years at December 31, 2013 and expired partially exercised by December 31, 2014. The HDV and DSE convertible notes matured on April 1, 2010 and are in default as of December 31, 2013 and December 31, 2014. The Pierce convertible note converted into series B Preferred shares as of December 20, 2014.

9.	Convertible Debt

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 and December 31, 2014 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, 2014 and December 31, 2013:

	2014		2013

Contractual balance, in default	$	511,440	$	511,440
Less unamortized discount		–		–

Convertible debt	$	511,440	$	511,440

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 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 and December 31, 2014 due to lack of payment upon maturity.

Following is an analysis of convertible debt - related party at December 31, 2014 and December 31, 2013:

	2014		2013

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.

F-12

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, 2014 and December 31, 2013:

	2014		2013

Contractual balance	$	–	$	32,600
Less unamortized discount		–		–

Convertible debt	$	–	$	32,600

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.

Lamar Pierce:

On July 10, 2014, the Company entered into a $15,000 convertible promissory note with Lamar Pierce. The note bears interest of $2,500 for the first month and 12% per thirty days thereafter, matures on August 10, 2014 and converts into common shares at the rate of $0.0003.

This note is considered a tainted derivative instrument due to the fact that the company does not have sufficient authorized unissued shares to share settle the debt. The Company recorded a derivative liability upon issuance which resulted in the note discount ($15,000 at issuance). The Holder converted the note into 9,306 shares of series B preferred shares on December 20, 2014.

10.

Notes Payable

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, 2014 and December 31, 2013 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.

On March 25, 2014, the Company issued Chul Chung a promissory note in exchange for $20,000. The note matured on September 25, 2014 and bears interest at 12% per year. The Company issued 15,000 series A preferred shares as consideration for the loan. The shares were valued at $4,350 and are a debt discount amortized over the life of the note. The note is currently in default.

On April 3, 2014, the Company issued John Fromberg a promissory note in exchange for $25,000. The note accrues interest at 22.9% per year. The note was paid in full during the third quarter of 2014.

On June 12, 2014, the Company issued Carole Klove a promissory note in exchange for $20,000. The note matures on June 12, 2015 and bears interest of 12% per year.

On September 4, 2014, the Company issued David Blanchard a promissory note in exchange for $50,000. The note matures on March 4, 2015 and bears interest at 15% per year. The Company issued 200,000 series A preferred shares as consideration for the loan. The shares issued were valued at $56,000 and were considered a debt discount. The Company booked $6,000 in interest expense upon origination and a $50,000 debt discount which was amortized over the life of the note. The note was converted to series B preferred stock on November 18, 2014. The Company booked a loss on conversion of $441,959.

F-13

On July 17, 2014, the Company issued Cash Call, Inc. a promissory note in the amount of $35,000. The note matures on August 1, 2024 and bears interest at 94% per year. The note included a $3,500 origination fee. The note was paid in full on October 20, 2014.

On November 14, 2014, the Company issued Cash Call, Inc. a promissory note in the amount of $50,000. The note matures on December 1, 2024 and bears interest at 94% per year. The note included a $2,500 origination fee.

11.

Income Taxes

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, 2014 and 2013 are as follows:

	2014			2013

Net income/(loss) before income taxes	$	(9,494,263	)	$	(6,961,318	)

The components of the Company's deferred tax assets at December 31, 2014 and 2013 are as follows:

	2014			2013
Deferred tax assets
Liabilities
Loss carry-forwards	$	4,854,603		$	4,239,943
Valuation allowance		(4,854,603	)		(4,239,943	)
	$	–		$	–

At December 31, 2014, the Company had generated US net operating loss carry-forwards of approximately $4,854,603 which will expire in various years between 2015 and 2034. 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, 2014 and December 31, 2013, 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.

F-14

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 sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempted 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. At December 31, 2014 and 2013, the Company has recorded a $1,101,179 and $1,101,179 liability respectively 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 lawsuit has been settled and dismissed.

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.

13.	Stockholders' Equity

Common Stock

Following is a description of transactions affecting common stock for the years ended December 31, 2013 and 2014.

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 totaling $116,100.

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. The Company recorded a loss on settlement of $32,656.

F-15

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 and the related $166,708 derivative liability. The Company recorded no gain or loss on the transaction.

Throughout the year, the Board of Directors also authorized the issuance of 749,900,000 common shares for services rendered by independent contractors. The issuances were valued based on the market value of the stock totaling 1,231,300.

Throughout the year, 300,000 Preferred A shares were converted to 30,000,000 common shares. There was no gain or loss on this transaction.

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.

Year Ended December 31, 2014

In March 2014, 71,433,289 shares were issued upon the cashless exercise of 80,362,450 warrants.

Throughout the year, the Board of Directors also authorized the issuance of 500,000 common shares for services rendered by independent contractors. These issuances were valued based on the market value of the stock totaling $1,050.

Throughout the year, 70,000,000 common shares were converted to 700,000 Preferred A shares.

Throughout the year, 300,000 Preferred C shares were converted to 30,000,000 common shares. There was no gain or loss on this transaction.

Throughout the year, 20,000,000 common shares were bought back for $17,000.

Stock Options

There are no stock options outstanding as of December 31, 2013 or December 31, 2014.

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, 2014.

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 holder exercised 80,362,450 warrants on a cashless basis and were issued 71,433,289 shares of common stock. The remaining warrants expired on July 24, 2014.

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.

F-16

The Company issued 666,667 warrants with an exercise price of $0.015 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 expired unexercised on October 4, 2014.

In December, 2014 as part of a private placement, the Company issued 125,000,000 warrants to an investor at an exercise price of $0.0004. The warrants expire on December 29, 2015. The warrants are a tainted derivative liability and were valued using a lattice model with the following inputs (0.0% dividend yield, stock price of $0.0036, risk-free rate of 0.25%, volatility of 151%, 1 year term).

As of December 31, 2014 the following warrants remain outstanding:

				Remaining
Number of		Exercise		Life
Warrants		Price		Years
	5,000,000		0.0100	0.33
	125,000,000		0.0004	0.99

	130,000,000	$	0.0008

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, $0.001 par value per share. At December 31, 2012 the Company had 5,953,233 shares of series A preferred stock issued and outstanding and 4,409,609 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, 2013 and 2014.

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.

F-17

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. There was no gain or loss on this transaction.

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. These issuances were valued based on the market value of the stock totaling $709,717.

Throughout the year, 3,491,423 Preferred A shares and 202,412 Preferred C shares were loaned to the company.