Savi Media Group (GREY:SVMI)

SaviCorp

STATEMENTS OF OPERATIONS

For the 3 Months Ended March 31, 2015 and 2014

(unaudited)

Management Discussion and Analysis

During the period from inception, August 13, 2002, to December 31, 2010, we had not generated any revenue from operations. During the period ending March 31, 2014, we generated revenues of $3,541. Costs of Goods Sold was $3,255 yielding a gross profit of $286. Loss from operations for the period ending March 31, 2014 was $827,845. Other Income and Expense, net was $797,691 primarily due to the change in fair value of our derivative liabilities. During the period ending March 31, 2015, we generated revenues of $5,047. Costs of Goods Sold was $8,691 yielding a gross loss of $3,644. Revenues increased in 2015 by 43% for the same period in 2014. However, the Company incurred a gross loss since sales were made below cost. Loss from operations for the period ending March 31, 2015 was $714,750. The decrease in the loss was primarily due to a reduction in stock based compensation paid in 2015. Other Income and Expense, net was $2,172,683 primarily due to the change in the fair value of our derivative liabilities and the issuance of tainted warrants with several private placements. Net loss was $2,887,433 which was an increase over the same period in 2014 primarily due to the expensing the tainted warrants.

As of March 31, 2015, we have accumulated net losses of $303,188,457. Additionally, at March 31, 2015, we are in a negative working capital position of $16,588,779 and a stockholders' deficit position $16,570,262. 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. For the remainder of fiscal 2015, 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 paid-in capital is assigned will generate revenues at all.

SaviCorp

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2014 and 2013

Management Discussion and Analysis

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.

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.

Section 3 - Securities and Trading Markets

3.02 Unregistered Sales of Equity Securities

On June 10, 2015, the Company issued 330 million common shares without restrictive legend to Arnold LaMarr Weese (“Weese”) and 210 million common shares without restrictive legend to David Kent Moss (“Moss”) (“shares”). The shares were issued to meet a deadline of June 11, 2015 as part of a settlement of Arnold LaMarr Weese and David Kent Moss, Plaintiffs v. SaviCorp, Inc., Serge V. Monros and Craig Waldrop, Defendants in The United States District Court For The Northern District Of West Virginia, Civil Action No.; 2;13-cv-41-JPB. A copy of the ORDER APPROVING SETTLEMENT AND DISMISSING CASE dated April 7, 2015 (“Order”) is attached hereto as an exhibit. As part of the settlement, Weese returned 55 million restricted SaviCorp common shares to the Company and Moss returned 35 million restricted SaviCorp common shares to the Company. Defendant Craig Waldrop returned 163,949,579 restricted SaviCorp common shares to the Company as part of the settlement.

SaviCorp

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2013 and 2012

Management Discussion and Analysis

Results of Operations

During the period from inception, August 13, 2002, to December 31, 2010, we had not generated any revenue from operations. During the year ended December 31, 2013, we generated $764,000 in gross revenues. This represented a growth of 654% over 2012 revenues of $101,362. The majority of the sales were with DynoGreen Tech (“DGT”), a distributor in the Middle East. In addition to acquiring in excess of $700,000 of DynoValve products in 2013, DGT acquired Company stock and were issued short term stock options under their licensing agreement. Under GAAP guidance, the stock options were considered a sales incentive and were netted against DGT sales with the excess value expensed as stock based compensation. DGT is considered a related party. Excluding related party revenue, sales decreased from $101,362 in 2012 to $41,475 in 2013. This was primarily because the company focused on growing international markets. Sales in 2012 mostly consisted of small fleets in the US. Despite the growth in revenue, expenses far exceed revenue as loss from operations for 2013 was $4,907,773, an increase of 11.1% over 2012 loss from operations of $4,416,000. This increase was primarily a function of expensing the options issued to DGT.

During the year ended December 31, 2013, we incurred $2,053,545 in Other Expense. During the year ended December 31, 2012, we generated $9,099,776 in Other Income. Other Income/Expense consists of change in fair value of derivative instruments, interest expense, loss on debt settlement, loss on legal settlement and change in fair value of rescission liability. The primary reason for the drop in Other Income/Expense from 2012 to 2013 was due to a negative change in the fair value of derivative instruments in 2013 compared to a positive change in fair value of derivative instruments in 2012.

Net loss for the year ended December 31, 2013 was 6,961,318. This is a drop from the net profit for the year ended December 31, 2012 of $4,683,776. The drop in net profit is primarily due to a drop in the Other Income/Expense due to a drop in the change in fair value of derivative instruments which is primarily a function of the increase of our common stock price.

SaviCorp

STATEMENTS OF OPERATIONS

For the 3 and 9 Months Ended September 30, 2012 and 2011

(unaudited)

Management Discussion and Analysis

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 nine months ending September 30, 2011, we generated revenues of $52,977. Costs of Goods Sold was $47,787 yielding a gross profit of $5,190. Loss from operations for the nine months ending September 30, 2011 was $4,091,793. Other Income and Expense, net was $48,979,883 primarily due to the change in fair value of our derivative liabilities. During the nine months ending September 30, 2012, we generated revenues of $81,229. Costs of Goods Sold was $58,455 yielding a gross profit of $22,774. These are improvements over the same period in 2011. Loss from operations for the nine months ending September 30, 2012 was $4,064,846. This is comparable to the same period in 2011. Other Income and Expense, net was a gain of $6,916,434 primarily due to the change in fair value of our derivative liabilities offset by the legal settlement, loss on debt settlement, and change in fair value of the rescission liability.

During the three months ending September 30, 2011, we generated revenues of $9,710. Costs of Goods Sold was $5,536 yielding a gross profit of $4,174. Loss from operations for the three months ending September 30, 2011 was $1,327,337. Other Income and Expense, net was $6,883,401 primarily due to the change in fair value of our derivative liabilities and the gain on debt settlement of $3,477,100. During the three months ending September 30, 2012, we generated revenues of $39,183. Costs of Goods Sold was $27,823 yielding a gross profit of $11,360. These are slight improvements over the same period in 2011. Loss from operations for the three months ending September 30, 2012 was $813,920. The decrease in the loss was primarily due to additional stock based compensation paid in 2011. Other Income and Expense, net was a gain of $3,417,985 primarily due to the change in fair value of our derivative liabilities offset by the change in fair value of the rescission liability.

As of September 30, 2012, we have accumulated net losses of $285,677,632. Additionally, at September 30, 2012, we are in a negative working capital position of $10,236,310 and a stockholders' deficit position $10,256,272. 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. For the remainder of fiscal 2012, 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 paid-in capital is assigned will generate revenues at all.

SaviCorp

STATEMENTS OF OPERATIONS

For the 3 and 6 Months Ended June 30, 2012 and 2011

(unaudited)

Management Discussion and Analysis

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 six months ending June 30, 2011, we generated revenues of $43,267. Costs of Goods Sold was $42,251 yielding a gross profit of $1,016. Loss from operations for the six months ending June 30, 2011 was $2,764,456. Other Income and Expense, net was $55,813,284 primarily due to the change in fair value of our derivative liabilities. During the six months ending June 30, 2012, we generated revenues of $42,046. Costs of Goods Sold was $30,632 yielding a gross profit of $11,414. These are slight improvements over the same period in 2011. Loss from operations for the six months ending June 30, 2012 was $3,250,926. The increase in the loss was primarily due to additional stock based compensation paid in 2012. Other Income and Expense, net was a gain of $3,498,449 primarily due to the change in fair value of our derivative liabilities offset by the legal settlement, loss on debt settlement, and change in fair value of the rescission liability.

During the three months ending June 30, 2011, we generated revenues of $33,016. Costs of Goods Sold was $32,378 yielding a gross profit of $638. Loss from operations for the three months ending June 30, 2011 was $2,316,881. Other Income and Expense, net was $23,963,192 primarily due to the change in fair value of our derivative liabilities. During the three months ending June 30, 2012, we generated revenues of $29,330. Costs of Goods Sold was $21,121 yielding a gross profit of $8,209. These are slight improvements over the same period in 2011. Loss from operations for the three months ending June 30, 2012 was $548,737. The decrease in the loss was primarily due to additional stock based compensation paid in the second quarter of 2011. Other Income and Expense, net was a gain of $3,682,426 primarily due to the change in fair value of our derivative liabilities offset by the change in fair value of the rescission liability.

As of June 30, 2012, we have accumulated net losses of $288,281,696. Additionally, at June 30, 2012, we are in a negative working capital position of $13,398,423 and a stockholders' deficit position $13,422,716. 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. For the remainder of fiscal 2012, 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 paid-in capital is assigned will generate revenues at all.

SaviCorp

STATEMENTS OF OPERATIONS

For the 3 Months Ended March 31, 2012 and 2011

(unaudited)

Management Discussion and Analysis

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 period ending March 31, 2011, we generated revenues of $10,251. Costs of Goods Sold was $9,873 yielding a gross profit of $378. Loss from operations for the period ending March 31, 2011 was $447,575. Other Income and Expense, net was $31,850,092 primarily due to the change in fair value of our derivative liabilities. During the period ending March 31, 2012, we generated revenues of $12,716. Costs of Goods Sold was $9,511 yielding a gross profit of $3,205. These are slight improvements over the same period in 2011. Loss from operations for the period ending March 31, 2012 was $2,702,189. The large increase in the loss was primarily due to stock based compensation paid in 2012. Other Income and Expense, net was a loss of $183,977.

As of March 31, 2012, we have accumulated net losses of $292,073,513. Additionally, at March 31, 2012, we are in a negative working capital position of $16,976,839 and a stockholders' deficit position $16,969,693. 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. For the remainder of fiscal 2012, 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 paid-in capital is assigned will generate revenues at all.

SaviCorp

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2012 and 2011

Management Discussion and Analysis

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, 2012, we generated $101,362 in revenues. This represented a growth of 80% over 2011 revenues of $56,240. Despite the growth in revenue, expenses far exceed revenue as loss from operations for 2012 was $4,416,000, a 9.2% improvement over 2011 loss from operations of $4,863,030.

During the year ended December 31, 2012, we generated $9,099,776 in Other Income/Expense. During the year ended December 31, 2011, we generated $57,694,847. Other Income/Expense consists of change in fair value of derivative instruments, interest expense, loss on debt settlement, loss on legal settlement, change in fair value of rescission liability, and registration rights expense. The primary reason for the drop in Other Income from 2011 to 2012 was due to a drop in the change in the fair value of derivative instruments.

Net profit for the year ended December 31, 2012 was 4,683,776. This is a drop from the net profit for the year ended December 31, 2011 of $52,831,817. The drop in net profit is primarily due to a drop in the Other Income from a drop in the change in fair value of derivative instruments.

At December 31, 2012, we are in a negative working capital position of $8,222,829 and had a stockholders' deficit of $8,244,047. 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.

SaviCorp

STATEMENTS OF OPERATIONS

For the 3 Months Ended March 31, 2011 and 2010

(unaudited)

Management Discussion and Analysis

During the period from inception, August 13, 2002, to December 31, 2010, we had not generated any revenue from operations. During the period ending March 31, 2011, we generated revenues of $10,251. Costs of Goods Sold was $9,873 yielding a gross profit of $378. Loss from operations for the period ending March 31, 2011 was $447,575. Other Income and Expense, net was $31,850,092 primarily due to the change in fair value of our derivative liabilities. As of March 31, 2011, we have accumulated net losses of $310,616,647. Additionally, at March 31, 2011, we are in a negative working capital position of $54,547,573 and a stockholders' deficit position $54,547,573. 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. For the remainder of fiscal 2011, 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 paid-in capital is assigned will generate revenues at all.

SaviCorp

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2011 and 2010

Management Discussion and Analysis

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, 2011, we generated $56,240 in revenues. At December 31, 2011, we are in a negative working capital position of $18,823,440 and had a stockholders' deficit of $18,823,440. 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 paid-in capital is assigned will generate revenues at all.

ITEM 1.01 Entry into a Material Definitive Agreement

 
Effective immediately, we have entered into a five-year Exclusive Master Distribution Agreement with Beijing FlyingGlob Environmental Technology Limited Company, a company established in the People’s Republic of China (“FlyingGlob”). According to the terms of the Agreement, FlyingGlob will promote, distribute and sell SaviCorp's signature line of DynoValve® automotive products within its exclusive territory, which is the People's Republic of China and its Special Administrative Regions of Hong Kong and Macau.

The distribution agreement establishes a minimum annual purchase volume of 500,000 DynoValve® units during the first year. In support of this requirement, FlyingGlob is to purchase an initial order of 50,000 units at a price of $8.25 million. FlyingGlob has a duty of best efforts in the distribution of the units throughout the territory.

During the final four years of the contract, FlyingGlob has agreed to a minimum purchase of 5.5 million units, for a total minimum order of 6 million units during the five-year term of the agreement. Purchases are “cumulative,” meaning that the allocation for a succeeding year does not begin until the entire allocation for the previous year as been completed (even if the allocation takes more than the applicable year to be completed). We estimate the successful distribution and sale of the 6 million units will produce revenues of approximately $679.5 million. Per the agreement, if the entire order of 6 million units is completed before the end of the 5 year term, additional sales will be in an amount and at a discounted price as negotiated by the parties at that time. In addition, the agreement provides for a $30 million licensing fee to be paid by FlyingGlob to SaviCorp that may be paid over the term of the agreement.

We have the right, under the agreement, to suspend purchase shipments if required payments become delinquent beyond 15 days. Delinquent payments are subject to a late charge consisting of interest at a varying prime rate as announced by our banker on the date of delinquency. In addition, we have retained a security interest in all units sold to FlyingGlob. FlyingGlob will be providing us with quarterly reports detailing the reported quarter’s sales and distribution results. We have agreed to provide technical support regarding the units as reasonably necessary. FlyingGlob has agreed to indemnify us from loss arising from their participation in the agreement.

SaviCorp has warranted the units, assuming proper installation, to be free of defects in material and workmanship for a 5 year period; we have a duty to repair or replace defective units (if any). There are standard limitations on our warranty such as improper installation, owner abuse or neglect, and damage due to Acts of God. We may revoke the agreement upon the happening of several events, including, but not limited to, a failure of performance by FlyingGlob with respect to payment or minimum order provisions, and/or failure to comply with applicable laws, regulations and the like.

Both parties are to do what they can reasonably to prevent piracy. FlyingGlob has a limited right to use and protect our trademarks during the term of the agreement. Disputes are to be settled by alternative dispute resolution within Orange County, CA, USA and arbitration awards can be entered in any court of competent jurisdiction for enforcement.

ITEM 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

 
On October 7, 2014, we filed, with the Nevada Secretary of State, an “Amendment to the Certificate of Designation of Series A Preferred Stock of SaviCorp.” The number of authorized shares of Series A Preferred Stock was increased to 28 million. The par value of $.001 per share and the conversion ratio of one Series A Preferred share into 100 Common Shares remain unchanged.

On October 7, 2014, we filed, with the Nevada Secretary of State, an “Amendment to the Certificate of Designation of Series B Preferred Stock of SaviCorp.” The number of authorized shares of Series B Preferred Stock is 1 million. The par value of the shares is $.001 per share and the conversion ratio is one Series B Preferred Share into 10,000 Common Shares.