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, 2010



| ̈ | 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.



Total revenues for Fiscal Year 2010 were $0.





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, 2010, was $30,795,322.



As of December 11, 2013 there were 5,973,827,673 shares
of issuer’s common stock outstanding.
















SAVICORP

FORM 10-K



For the Fiscal Year Ended December 31, 2010





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|Part I                                                                                                                  
|                                                                                                                        
|Item 1. Description of Business.                                                                                        
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|Item 2. Description of Property.                                                                                        
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|Item 3. Legal Proceedings.                                                                                              
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|Item 4. Submission of Matters to a Vote of Security Holders.                                                            
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|Part II                                                                                                                 
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|Item 5. Market for Common Equity and Related Stockholder Matters.                                                       
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|Item 6. Management's Discussion and Analysis or Plan of Operation.                                                      
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|Item 7. Financial Statements                                                                                            
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|Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.                           
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|Item 8A. Controls and Procedures.                                                                                       
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|Item 8B. Other Information.                                                                                             
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|Part III                                                                                                                
|                                                                                                                        
|Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
|                                                                                                                        
|Item 10. Executive Compensation.                                                                                        
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|Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                 
|                                                                                                                        
|Item 12. Certain Relationships and Related Transactions.                                                                
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|Item 13. Exhibits.                                                                                                      
|                                                                                                                        
|Item 14. Principal Accountant Fees and Services.                                                                        
|                                                                                                                        
|Signatures.                                                                                                             





i







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 2010, we were considered a development stage
enterprise because we then 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 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. As of 2011, the Company began
selling its products.



History



We were originally incorporated as Energy Resource
Management, Inc. on August 13, 2002 and subsequently adopted name changes to Redwood Energy Group, Inc. and Redwood Entertainment
Group, Inc., upon completion of a recapitalization on August 26, 2002. The re-capitalization occurred when we acquired the non-operating
public shell of Gene-Cell, Inc., a public company. Gene-Cell had no significant assets or operations at the date of acquisition
and we assumed all liabilities that remained from its prior discontinued operation as a biopharmaceutical research company. The
historical financial statements presented herein are those of Redwood Entertainment Group, Inc. and its predecessors, Redwood Energy
Group, Inc. and Energy Resource Management, Inc.



The public entity used to recapitalize the
Company was originally incorporated as Becniel and subsequently adopted name changes to Tzaar Corporation, Gene-Cell, Inc., Redwood
Energy Group, Inc., Redwood Entertainment Group, Inc., and finally its current name, Savi Media Group, Inc. In 2012, Savi Media
Group, Inc. changed its name to SaviCorp.



Automotive Ventilation Systems



During a normal compression in an automotive
engine, a small amount of gases in the combustion chamber escape past the pistons. Approximately 70% of these gases, known as blow-by
gases, are unburned fuel that can dilute and contaminate the engine oil, causing corrosion to critical engine parts, and cause
a build-up on sludge. As the engine speed increases, the pressure in the crankcase increases as a result of the blow-by gases.
When the pressure gets too great in the crankcase, it can cause oil to leak past seals and gaskets, causing oil leaks. If the pressure
is not relieved, it would cause all of the oil to blow out of the engine. Prior to 1963, cars used road draft tubes that just let
the hydrocarbon emissions from the crankcase out into the open air. In 1963, automobiles created a positive crankcase ventilation,
which consists of a valve, called the PCV valve, which creates a metered opening, and a hose that runs to the car’s intake
manifold. The intake manifold has a vacuum effect that sucks the blow-by gases from the crankcase into the intake manifold, where
the gases are burned. This process reduces the emissions produced by the engine as only the results of the burned gases are emitted.



Our Product





SaviCorp’s primary business is the sale
of two inventions: the DynoValve & DynoValve Pro. The DynoValve is an OEM replacement for the present Positive Crankcase Ventilation
(“PCV”) valve installed on most gasoline engines in the United States and in most other countries of the world. After
exhaustive research and patent pending applications, on September 10, 2010, the Air Resources Board of the California Environmental
Protection Agency issued Executive Order D-677, permitting the advertisement, sales and installation of the DynoValve on certain
gas-powered vehicles in California. The savings, in both fuel economy and emissions, have surpassed the Company's expectation
and our products are available now on the market. The Company believes this is "Green Technology" and substantially
reduces automobiles’ "carbon footprint".







1







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:
| | - | ---------------



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



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



| | o | The expense of fitting DynoValve is recaptured with short use and dependant on mileage use (within 6 to 12 months for passenger cars but 2 months with a taxi);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | Useable with marine engines as well;
| | - | ------------------------------------



| | o | The Company hopes to have the DynoValve Pro (diesel) available in 2013, 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.





2







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’sDynoValve® 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.



In 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 DynoValvePro®, 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.



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’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.



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 has 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.



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.





3







Car dealerships sell used and new vehicles
and are also a viable market for SaviCorp. 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 is targeted to the used car market.



As the year 2012 progressed, our customer base
expanded. A major key to our longer-term success is our ability to arrange for sales and installations with customers operating
large numbers of vehicles, commonly referred to as “fleets.” For our purposes, fleets can vary in size from 25 to 15,000
vehicles. Fleets can be located in specific geographical areas, such as within a city, within a county or two, part of a state,
within a state or multiple states in a region of the US, or nationwide. For now, the Company is focused on fleets within the US.
There are few product sales in Canada. We have patents pending in many “industrial” countries, including Mexico and
Canada.



Typically, in the early stage, our relationship
with a fleet size customer involves “proving” our technology on a test basis with a few vehicles operating as part
of the customer’s fleet. We guarantee a 10% improvement in fuel efficiency. Once a customer has experienced “real time”
results out in the field, our products gain acceptance and the rate of sales and installations take off at a faster pace. In almost
all cases to date, we have exceeded the 10% guarantee. Generally, the longer vehicles are driven with our product in place, the
more performance improves with the passage of time. Our results to date have varied from an 8% to 100% improvement. Currently,
we have no fleets with less than a 15% rate of improvement. Fleets with Ford F-150s (4.6 litre engines) and Chevy light trucks
(4.7 litres) are getting between 30% and 49% fuel savings.



In 2013, we have made major inroads in the
Middle Eastern country of Dubai and others. We have a 5 year licensing agreement with them that we entered into this quarter. Regarding
our progress, our original commitment for 2,000 DynoValves (sold at $250 each) equate to $500,000. In order for them to fulfill
and maintain this 5 year licensing agreement, they are required to purchase 500 additional DynoValves per quarter (an additional
2,000 DynoValves / $500,000 per year) for a total of $2,500,000 over a 5 year span. With the initial investment of $500,000, this
totals $3,000,000 for their 5 year licensing agreement. We have already delivered 2,000 of those DynoValves. The areas that are
included in this agreement are UAE, Dubai, Malaysia, India, and Africa.



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 theDynoValve or it simply does not fit. In order to resolve this compatibility
issue, we’ve created a new product called the “DynoCap.” The DynoCap is an oil cap that has a fitting which fits
directly on top of the oil cap allowing the DynoValve to sit either horizontally or vertically thus making it adaptable to virtually
any gas driven engine that has a place to add oil, not limited to automobiles.



The new cap is now being tested at our corporate
headquarters in Santa Ana, CA. We have vehicles travelling all over California to ensure performance is as effective as our standard
DynoValve, when connected directly to the vehicle’s crankcase ventilation system. We have provided a few DynoCaps to Dubai
to demonstrate how the compatibility issue has been resolved, and provided samples for their own testing with the device in their
own countries. A provisionary patent and trademarks for the name have been filed with the US Trade and Patent Office and a PCT
will be filed for the whole world.



The second issue is the wiring harness,
which was originally created for the USA and met compliance regulations according to American standards. The Department of
Standardization and the UAE affiliates did not approve of the exposed colored wires. As a result, we modified the wiring
harness and completely molded all the connectors, improving the appearance which is actually beneficial for us. This brand
new wiring harness was delivered to Dubai for their approval. The group loved it and guaranteed 100% that SavvyGreen (our
associate company in Dubai) would be given confirmation and status on the mandate (Preferred Vendor Status).





4







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.





In near future, we are set to demonstrate
in New Mexico. We will be training Ford dealerships in Albuquerque, which we believe is home to one of the biggest Ford dealers
in the US. We will be training their mechanics for installation and their sales team for distribution and sales of the DynoValve.
During training, there will be radio commercials airing on their local radio stations.





We have a 60 second spot on a local Los Angeles
area television network, KABC, for 16 weeks beginning late August until November 23rd, hopefully generating more business.



Additionally, there are two other AM radio
stations and another FM station that will be playing one minute commercials for DynoValve in the local areas where we will be training
at these Ford dealerships. Most of these trainings will be in New Mexico, Lake Tahoe, and, perhaps, in Reno, Nevada. These will
be the test beds, so if our campaigning is successful, we will then mimic this endeavor and move forward in other cities within
the United States.



Besides Ford training, we are also bringing
in two vehicles from the Los Angeles Police Department (“LAPD”). An appointment has already been scheduled with the
City of Los Angeles. To our knowledge, they have around 150,000 vehicles. We believe they will introduce their Class 1 and 2 trucks
which are their pickups and vans, to begin a pilot program.



There is also a police event in Fontana, CA
where they test drive vehicles. Some police departments have actually chosen the Ford Interceptor which is going to be their brand
new Ford Explorer, which the DynoValve does quite well on. We will receive two of these vehicles in the lab for DynoValve conversion.
They will run these at the Fontana event track to see what the results are in comparison to their stock models. We are hoping this
generates enough business to begin working with municipalities, and targeting the west coast police departments.



We are still currently doing installations
for Con Edison in New York and New Jersey, as well as working with the EMTA. As a result of Hurricane Sandra, our efforts since
the beginning of this year have declined due to damage and recovery efforts. However, it appears we are increasing speed and hopefully
we’ll be back on track with Con Edison, which is a huge fleet as well as other large fleets on the east coast.



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 Dyno Green Tech, LLC (“DGT“) as well as SavvyGreen 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.





5







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. The United States has been the biggest producer of CO2 emissions on the planet; producing
22% of the World’s emissions in 1995, expecting to total 15% by 2035, topped at that point by China’s 17% and Eastern
Europe/former Soviet Unions’ 19%.



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 1⁄2 hours.





6







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 to-date have been very encouraging and 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". Additional testing has been done by KLD Environmental Consultations also with similar positive results.



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:



| | 1. | 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.



| | 2. | 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.



| | 3. | 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.





7







| | 4. | 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.



Suppliers



We currently have all of the production completed
by His Divine Vehicle, a related entity owned by our CEO Serge Monros as determined by our licensing agreement with HDV.



Intellectual Property



We also own certain trademarks associated with
the marketing of our products. DynoValve and DynoValve Pro have been registered with the US Patent and Trademark Office. We also
claim copyright to certain white papers and marketing pieces. Due to our inability to generate commercial sales of our products,
all patent costs were fully impaired in 2006.





The DynoValve products are the subject of
several pending U.S. patent applications (US-2010/0076664-A1 and US-2010/0180872-A1) held by Serge V. Monros, Chief Executive
Officer and Chairman of the Board of the Company. There are corresponding applications that have been filed in a number of foreign
countries. HDV, an affiliate of Mr. Monros, manufactures the “DynoValve” and “DynoValve Pro” products
based on these patent applications and then sells them to the Company for resale pursuant to the Product Licensing Agreement dated
November 15, 2008, as amended on December 16, 2009. Under the Product Licensing Agreement, the price at which HDV sells the products
to the Company is subject to change at any time upon written notice. The Company may determine the prices that it charges to its
customers. The Product Licensing Agreement is non-exclusive and automatically renews on an annual basis provided certain sales
volumes are achieved and the Company is otherwise not in breach. HDV may, after an applicable cure period, terminate the Product
Licensing Agreement earlier if it believes that the Company is deficient in meeting its responsibilities. HDV may amend the Product
Licensing Agreement at any time by giving notice to the Company, unless the Company objects within ten days of such notice.





As consideration for HDV entering into the
Product Licensing Agreement, the Company agreed to issue to Mr. Monros and HDV, if and when available, an aggregate of 500 Million
shares of Common Stock, 5 Million shares of Series A Preferred Stock and 5 Million shares of Series C Preferred Stock. In July,
2011, HDV and Mr. Monros entered into a revised licensing agreement which modified the prior consideration paid to an aggregate
of 600 Million shares of Common Stock, 6.5 Million shares of Series A Preferred Stock and 2.5 Million shares of Series C Preferred
Stock. In connection with this transaction, Mr. Monros waived $350,000 in accrued salary owed to him by the Company, and HDV waived
$372,000 owed to it by the Company.



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 Dyno Green Tech, LLC ("DGT")
to sell the DynoValve products in the licensed territories. DGT had ordered 2,000 DynoValves as of 6/30/13. The DynoValves were
shipped in the third quarter of 2013.



Competition



The industry is marked by competition in two
industry segments: emission reduction and fuel efficiency. Our product 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. Competition
in these areas is further complicated by possible shifts in market share due to technological innovation, changes in product emphasis
and applications and new entrants with greater capabilities or better prospects.





8







Passive crankcase ventilation systems have
been available for many years and have been, in fact, a required emission-control system on certain vehicles. In addition, 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, resulting in all car manufacturers developing technology to lower emissions and raise
fuel efficiency.



In addition to car manufacturers, we compete
against other companies that develop after-market products that lower emissions and/or increase fuel efficiency. Some of these
competitors’ products include Racor’s CCV, Majestic SAFE-T-PRODUCTS RefilterTM, Save the World Air, Inc’s
Mark I ZEFS device and Indigo Electronics CVS for boats. We are aware of no direct competition with our DynoValve. There is competition
indirectly with fuel saving products, from fuel additives to cigarette lighter plug devices. Here are some examples of competitors’
products:



| | 1. | Racor Crankcase Ventilation Device: list price: $368.00; Parker Hannifin Corporation, Racor Division, Cleveland, Ohio 44124. Racor states: Racor CCV systems offer superior protection against contaminated crankcase blow-by and provide engine operators a highly effective solution. SaviCorp comment: no test results to compare with the DynoValve and our patented system provide superior oil coalescence and crankcase pressure control under the most severe conditions.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | RefiltersTM device: Majestic Companies, Ltd. incorporated in Maryland. No data on the device exists online. According to EDGAR online, RefiltersTM could be retrofitted to existing heavy-duty diesel engines. http://sec.edgar-online.com/majestic-safe-t-products-ltd/sb-2-securities-registration-small-business/2002/11 /12/section21.aspx
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Mark I ZEFS device: Save the World Air, Inc. Price: unknown. According to its manufacturer, the ZEFS devices create magnetic fields to reduce the size of the fuel molecules passing from the carburetor or center point fuel injector of the vehicle to the inlet manifold prior to combustion. 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. SaviCorp comment: Save the World Air Inc. makes Zero Emission Fuel Saver (ZEFS) technology that is intended to reduce tailpipe pollutants and increase fuel efficiency in gasoline and diesel-powered vehicles.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | RAND Corporation has conducted independent tests and 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.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. | Atomic 4 AT-4CVS Crankcase Ventilation system device: Listed Price: Complete Retrofit Kit is $240.00 to $265.00 (Indigo Electronics, Williamsburg, VA 23185). The product (according to Indigo Electronics): eliminates Crankcase smoke completely with the system that Universal forgot!; easy one hour, "bolt on" installation, all necessary components included; eliminates fouling of carburetor air passages; and improves performance. SaviCorp comment: no test data to compare with DynoValve.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.





9







Employees



During 2010, we had consulting
agreements with all management and staff members. We regularly utilize the services of consultants on an as-needed basis. As
of December 1, 2013, the Company had 6 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 $1,593,097 for the year ended December 31, 2010 and $995,283 for the year ended December 31, 2009. 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, 2010, 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.





10







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 December 16, 2013,
our independent auditors stated that our financial statements for the year ended December 31, 2010 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 incurring net losses
of $342,019,164 during the period from inception, August 13, 2002, to December 31, 2010. In addition, at December 31, 2010, we
were in a negative working capital position of $86,475,390 and had a stockholders' deficit of $86,475,390. 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 affect 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 Diving 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.





11







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.





12







Risks Relating to the Cornell Financing
Arrangement:



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, 2010, we had 2,313,878,188
shares of common stock issued and outstanding, secured convertible debentures issued in July, August and September 2006 outstanding
that may be converted into a maximum of 7,705,650,793 shares of common stock and outstanding warrants to purchase 66,000,000,000
shares of common stock. All of the shares, including all of the shares issuable upon conversion of the secured convertible debentures
and upon exercise of our warrants, may be sold without restriction, upon the effectiveness of a registration statement that the
Company has contractual obligations to complete. The sale of these shares may adversely affect the market price of our common
stock.



The Issuance of Shares Upon Conversion of
the Secured 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
since Cornell Capital Partners LP may ultimately convert and sell the full amount issuable on conversion. Although Cornell Capital
Partners LP may not convert their secured convertible notes if such conversion would cause them to own more than 4.99% of our outstanding
common stock, this restriction does not prevent Cornell Capital Partners LP from converting and/or exercising some of their holdings
and then converting the rest of their holdings. In this way, Cornell Capital Partners LP could sell more than their limit while
never holding more than this limit.



If Our Stock Price Falls Below $.003 Per
Share We Will Be Required To Make Monthly Payments In Cash And If We Are Required for Any Other Reason to Repay Our Outstanding
Secured Convertible Debentures, We Would Be Required to Deplete Our Working Capital, If Available, Or Raise Additional Funds. Our
Failure to Repay the Secured Convertible Debentures, If Required, Could Result in Legal Action Against Us, Which Could Require
the Sale of Substantial Assets.



In July 2006, we entered into a securities
purchase agreement for the sale of an aggregate of $2,970,000 principal amount of secured convertible debentures. Beginning the
earlier of (i) the first business day of the month immediately following the month in which a registration statement is first declared
effective or (ii) November 1, 2006, and continuing on the first business day of each calendar month thereafter, we are required
to make a mandatory redemption payment of $225,000 and accrued and unpaid interest, which payment can be made in cash or in restricted
shares of our common stock. We anticipate that we will make the monthly payments in shares of common stock, whenever possible.
However, in the event that our stock price should fall below $0.003, we will be required to make such monthly payments in cash.
In addition, any event of default such as our failure to repay the principal or interest when due, our failure to issue shares
of common stock upon conversion by the holder, our failure to timely file a registration statement or have such registration statement
declared effective, breach of any covenant, representation or warranty in the securities purchase agreement or related secured
convertible debentures, the assignment or appointment of a receiver to control a substantial part of our property or business,
the filing of a money judgment, writ or similar process against our company in excess of $50,000, the commencement of a bankruptcy,
insolvency, reorganization or liquidation proceeding against our company and the delisting of our common stock could require the
early repayment of the secured convertible debentures, including default interest rate on the outstanding principal balance of
the debentures if the default is not cured within the specified grace period. If we were required to repay the secured convertible
debentures, we would be required to use our limited working capital and raise additional funds. If we were unable to repay the
secured convertible debentures when required, the debenture holders could commence legal action against us and foreclose on all
of our assets to recover the amounts due. Any such action would require us to curtail or cease operations. As of December 31, 2010
our stock price was above $.003.





13







If an Event of Default Occurs under the
Securities Purchase Agreement dated July 10, 2006, as Amended, Secured Convertible Debentures or Security Agreement, the Investors
Could Take Possession of all Our Goods, Inventory, Contractual Rights and General Intangibles, Receivables, Documents, Instruments,
Chattel Paper, and Intellectual Property.





In connection with the Securities Purchase
Agreement dated July 10, 2006, as amended, we executed a security agreement in favor of the investor granting it a first priority
security interest in all of our goods, inventory, contractual rights and general intangibles, receivables, documents, instruments,
chattel paper, and intellectual property. The Security Agreements state that if an event of default occurs under the securities
purchase agreement, secured convertible debentures or security agreement, the investor has the right to take possession of the
collateral, to operate our business using the collateral, and has the right to assign, sell, lease or otherwise dispose of and
deliver all or any part of the collateral, at public or private sale or otherwise to satisfy our obligations under these agreements.
As of December 31, 2010, the Company was in a state of default.





Risks Relating to Our Common Stock:



There Are a Large Number of Shares Underlying
Our Series A and C Convertible Preferred Stock and the Issuance of Shares Upon Conversion of the Series A and C Convertible Preferred
Stock Would Cause Immediate and Substantial Dilution to Our Existing Stockholders.



As of December 31, 2010, we had 2,313,878,188
shares of common stock issued and outstanding and series A and C convertible preferred stock that may be converted into 1,784,375,800
shares of our common stock. The issuance of shares upon conversion of the series A and C convertible preferred stock would result
in substantial dilution to the interests of other stockholders.



Our Officers And Directors Owned a Significant
Interest in Our Voting Stock And Investors Did Not Have Any Voice in Our Management.



As a result of ownership of stock options and
convertible preferred stock, our officers and directors, in the aggregate, beneficially own approximately 34.0% of our outstanding
common stock as of December 31, 2010. As a result, these stockholders, acting together, had the ability to control substantially
all matters submitted to our stockholders for approval, including:



| | · | election of our board of directors;
| | - | -----------------------------------



| | · | removal of any of our directors;
| | - | --------------------------------



| | · | amendment of our certificate of incorporation or bylaws; and
| | - | ------------------------------------------------------------



| | · | adoption of measures that could delay or prevent a change in control
or impede a merger, takeover or other business combination involving us.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



As a result of their ownership and positions,
our directors and executive officers collectively are able to influence all matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held
by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common
stock. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain
control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.



If We Fail to Remain Current in Our Reporting
Requirements, We Could be Removed From the OTC Bulletin Board 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 Bulletin Board,
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 Bulletin Board. If we fail to remain
current on our reporting requirements, we could be removed from the OTC Bulletin Board. 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.





14







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.





15







ITEM 2. DESCRIPTION OF PROPERTY.



We do not own any real property. We currently
lease our 40,000 square foot corporate headquarters located at 2530 South Birch Street, Santa Ana, CA 92707. Our telephone number
at that office is (877) 611-7284 and our facsimile number is (714) 641-7113. The lease is for a one-year period with an annual
lease payment of $110,000 and an annual extension option. We believe that these properties 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.



In January 2007, Herrera Partners filed an
arbitration claim against the Company in Harris County, Texas. Herrera Partners claim was for $63,700 for non-payment for services
rendered. The suit was settled in January, 2009 and a payment schedule was agreed upon and paid.



On or about July 28, 2011, SaviCorp, a Nevada
corporation, formerly known as Savi Media Group, Inc. (the “Company”) entered into a Repayment Agreement (the “Repayment
Agreement”) with YA Global Investments, L.P., a Cayman Islands exempt limited partnership formerly known as Cornell Capital
Partners, L.P. (“YA Global”).



On or about July 10, 2006, the Company and
YA Global, then known as Cornell Capital Partners, L.P., entered into a Securities Purchase Agreement which was subsequently amended
and restated on August 17, 2006 (collectively the “SPA”) wherein the Company issued and sold to YA Global secured convertible
debentures in the aggregate amount of approximately US$2,485,000 (collectively, the “Debentures”) and certain warrants
(collectively the “Prior Warrants” and with the Debentures, the “Securities”) to purchase an aggregate
of 2,900,000,000 shares of the Company’s common stock, par value $0.001 (the “Common Stock”).



In connection with the SPA, the Company and
YA Global entered into ancillary agreements, including a Security Agreement, an Insider Pledge and Escrow Agreement, a Registration
Rights Agreement, and other related documents (the SPA and such ancillary agreements are collectively referred to hereinafter as
“Financing Documents”). Copies of the Financing Documents have been attached to the Company’s prior filings with
the United States Securities and Exchange Commission (the “SEC”) and are hereby incorporated in their entirety by reference.





16







Pursuant to the terms of the Repayment Agreement,
all of the Company’s obligations under the Financing Documents have been terminated in full.  Without limitation, all
amounts otherwise due under the Debentures are deemed satisfied in full, the Prior Warrants are deemed cancelled, and any and all
security interests granted by the Company in favor of YA Global pursuant to the Financing Documents have been extinguished, including
the release of 4,000,000 shares of Series A Preferred Stock held in escrow.  In exchange for the foregoing, the Company delivered
to YA Global: (i) a one-time cash payment of US$550,000; and (ii) new warrants to purchase up to 25,000,000 shares of Common Stock
at an exercise price of $0.0119 (the “Current Warrants”). The Current Warrants expire on or about July 28, 2014. A
copy of the Repayment Agreement and Current Warrants have been attached as exhibits to the Form 8-K filed August 2, 2011 and are
hereby incorporated in their entirety by reference.



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 Duces Tecum,” meaning the Company was given a prescribed period of time to produce all requested
documents and information contained in the subpoena. An index of the source of all such produced information and an
authentication declaration were also to be supplied. The stated purpose of the investigation is a fact-finding inquiry to
assist the SEC staff in determining if the Company has violated federal securities laws. The SEC states there is no
implication of negativity or guilt at this stage of the investigation.



We  hired the Los Angeles law firm
of Troy Gould to represent us in the matter of this investigation. As of the
date of this filing, we believe we have provided all requested material to the SEC. Updates on the investigation will be supplied
by supplemental filings hereto.



Status of prior private investment; $0 in
2007 (although HDV sold $13,000 of its shares), $1,000 in 2008 (although HDV sold $453,750 of its shares), $442,000 in 2009,
$879,550 in 2010, $1,930,828 in 2011, $342,000 in the first calendar quarter of 2012 and $100,000 in the 2nd quarter 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 $7,875 in
2008 and shares for services valued at $74,400 in 2009. 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 2011 rescission offer, in terms of rescission offers accepted by shareholders, were very encouraging.
We had  three rescission offers accepted and refunded $8,000 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.



The Company received a letter dated June
7, 2013 with a Civil Complaint titled Arnold Lamarr Weese, et al v. SaviCorp filed in the Northern District of West Virginia.
In addition to SaviCorp, Serge Monros and Craig Waldrop are being sued individually. Settlement discussions failed and
Plaintiff's counsel began service of Process. The Company and Mr. Monros have hired Shustak and Partners to defend the claim.
The defendants have sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The
lawsuit attempts to hold the Company and Mr. Monros responsible for alleged improprieties of Waldrop. The Company intends on vigorously defending its rights or reaching a settlement to release the Company and Mr. Monros
of any alleged liability.



We may become involved in material legal proceedings
in the future.





17







ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS.



Pursuant to a written consent of a majority
of stockholders dated August 19, 2005, in lieu of a special meeting of the stockholders, the majority of stockholders approved
the following actions:



|1. |  | To elect five directors to the Company's Board of Directors, to hold office until their successors are elected and qualified or until their earlier resignation or removal;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. |  | To ratify certain financing transactions requiring potential stock issuances in excess of currently authorized capital stock;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------



|3. |  | To amend the Company's Articles of Incorporation, as amended, to:
|-- |  | -----------------------------------------------------------------



|(a) |  | increase the number of authorized shares of common stock, par value $.001 per share (the “Common Stock”), of the Company from 1,000,000,000 shares to 6,000,000,000 shares;
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | increase the number of authorized shares of preferred stock, par value $.001 per share (the “Preferred Stock”), of the Company from 30,000,000 shares to 40,000,000 shares;
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | To ratify the selection of Ham, Langston &Brezina, L.L.P. as independent registered public accounting firm of the Company for the year ending December 31, 2005; and
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | To adopt the Company’s 2005 Incentive Stock Plan.
|-- |  | -------------------------------------------------



There have been no stockholders meeting since
August 19, 2005.















18









PART II



ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.



MARKET INFORMATION



Our common stock is quoted on the OTC Bulletin
Board under the symbol “SVMI”.



For the periods indicated, the following table
sets forth the high and low bid prices per share of common stock. These prices represent inter-dealer quotations without retail
markup, markdown, or commission and may not necessarily represent actual transactions.



|               | Fiscal Year 2009
|-------------- | ----------------
|               | High            
|First Quarter  | $0.0008         
|Second Quarter | $0.0005         
|Third Quarter  | $0.0012         
|Fourth Quarter | $0.0023         



|               | Fiscal Year 2010
|-------------- | ----------------
|               | High            
|First Quarter  | $0.0685         
|Second Quarter | $0.0745         
|Third Quarter  | $0.0285         
|Fourth Quarter | $0.0290         



HOLDERS



As of December 1, 2013, we
had approximately 872 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, 2010, the
Company issued the following:



In January 2010, the Board of Directors
authorized the issuance of 1,000,000 common shares, 45,000 Preferred A shares and 156,000 Preferred C shares to accredited and
non-accredited investors for total proceeds of $21,500. The Board of Directors also authorized the issuance of 1,055,000 Preferred
A shares and 336,000 Preferred C shares for services rendered by independent contractors.



In February 2010, the Board of Directors
authorized the issuance of 1,500,000 common shares, 1,000,000 Preferred C shares to accredited and non-accredited investors for
total proceeds of $101,500.



In March 2010, the Board of Directors authorized
the issuance of 400,000 common shares and 200,000 Preferred C shares to accredited and non-accredited investors for total proceeds
of $32,000. The Board of Directors also authorized the issuance of 100,000 Preferred C shares for services rendered by independent
contractors.



In May 2010, the Board of Directors authorized
the issuance of 375,000 common shares to accredited and non-accredited investors for total proceeds of $3,000.



In June 2010, the Board of Directors authorized
the issuance of 52,858,334 common shares to accredited and non-accredited investors for total proceeds of $94,200.



In July 2010, the Board of Directors authorized
the issuance of 8,706,862 common shares to accredited and non-accredited investors for total proceeds of $110,000.



19









In August 2010, the Board of Directors
authorized the issuance of 26,499,999 common shares and 25,000 Preferred C shares to accredited and non-accredited investors for
total proceeds of $21,500.



In September 2010, the Board of Directors
authorized the issuance of 36,483,333 common shares to accredited and non-accredited investors for total proceeds of $132,250.
The Board of Directors also authorized the issuance of 1,000,000 common shares for services rendered by independent contractors.



In October 2010, the Board of Directors
authorized the issuance of 14,740,000 common shares to accredited and non-accredited investors for total proceeds of $118,600.



In November 2010, the Board of Directors
authorized the issuance of 11,050,000 common shares to accredited and non-accredited investors for total proceeds of $64,000.



In December 2010, the Board of Directors
authorized the issuance of 60,308,696 common shares to accredited and non-accredited investors for total proceeds of $203,192.



Since 2010, the Board of Directors authorized
the issuance of an aggregate of 1,551,604,744 shares of its common stock, 1,000,000 shares of its Preferred A shares and 4,608,500
of its Preferred C shares to accredited and non-accredited investors for total proceeds of $3,437,293. In addition, the Board
of Directors has authorized the issuance of an aggregate of 1,375,409,691 shares of its common stock, 1,351,667 shares of its
Preferred A shares and 60,000 of its Preferred C shares to accredited and non-accredited investors for services rendered valued
at an aggregate of $5,837824. No sales commissions were paid in connection with these issuances and all investors reviewed or
had access to all of the Company’s filing pursuant to the Securities Exchange Act of 1934, as amended.









ITEM 6. MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION



The following information should be read in
conjunction with the financial statements and the notes thereto contained elsewhere in this report. The Private Securities Litigation
Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Information in this Item 6, "Management's
Discussion and Analysis or Plan of Operation," and elsewhere in this 10-K that does not consist of historical facts, are
"forward-looking statements." Statements accompanied or qualified by, or containing words such as "may," "will,"
"should," "believes," "expects," "intends," "plans," "projects," "estimates,"
"predicts," "potential," "outlook," "forecast," "anticipates," "presume,"
and "assume" constitute forward-looking statements, and as such, are not a guarantee of future performance. The statements
involve factors, risks and uncertainties including those discussed in the “Risk Factors” section contained elsewhere
in this report, the impact or occurrence of which can cause actual results to differ materially from the expected results described
in such statements. Risks and uncertainties can include, among others, fluctuations in general business cycles and changing economic
conditions; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology
that can reduce the demand for the Company's products, as well as other factors, many or all of which may be beyond the Company's
control. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results.
The Company disclaims any obligation to update the forward-looking statements in this report.



Business History



We were originally incorporated as Energy Resource
Management, Inc. on August 13, 2002 and subsequently adopted name changes to Redwood Energy Group, Inc. and Redwood Entertainment
Group, Inc., upon completion of a recapitalization on August 26, 2002. The re-capitalization occurred when we acquired the non-operating
entity of Gene-Cell, Inc. Gene-Cell had no significant assets or operations at the date of acquisition and we assumed all liabilities
that remained from its prior discontinued operation as a biopharmaceutical research company. The historical financial statements
presented herein are those of SaVi Media Group, Inc. and its predecessors, Redwood Entertainment Group, Inc., Redwood Energy Group,
Inc. and Energy Resource Management, Inc.



The public entity we used to recapitalize was
originally incorporated as Becniel and subsequently adopted name changes to Tzaar Corporation, Gene-Cell, Inc., Redwood Energy
Group, Inc., Redwood Entertainment Group, Inc., SaVi Media Group, Inc., and finally to SaviCorp.





20









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. We have no immediate plans
to develop additional products at this time.



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.



21









Convertible Notes - Derivative Financial Instruments



The convertible notes issued to Cornell
Capital in 2006 and to His Divine Vehicle, Inc. and DS Enterprises, Inc. in 2009 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 six critical elements
for the building of a successful research & development company that has the capacity to manufacture technology 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, shop personnel, Q.C., project managers, journeymen, welders, machinists,
        CNC operators, cad cam, shop planners, senior engineers, tool & design, maintenance personnel, calibrators & inspectors,
        sheet metal fabricators, deburring& finishing personnel, purchasers, transporters, CNC trainers 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
        fundings;                                                                                                                                                                                                                                            
| | 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. | Manufacturing capability and equipment- 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, technology, research, and the creation of numerous patents as well as to expedite mass production.                                                                                                                              





22







People:



In August 2004 Savi Media Group was founded
by Serge Monros and Mario Procopio. Serge Monros sold the Crankcase Ventilation technologies to Savi Media that he personally developed
over the last 17 years. Mario Procopio was hired as the President, Chief Executive Officer and director with a mandate to acquire
the initial funding for the planned projects and to assist in aggressively transforming us into an emerging research and development
company in the field of automotive and diesel retrofitting and pollution control. In August 2004, enough capital was obtained to
acquire a bulletin board company, pay off many of its existing debts, and begin to launch the varied projects of which the DynoValve
is one of several projects.



We have established a Strategic Advisory Board
and recruited qualified individuals to develop marketing strategies, feasibility studies, and update our business plan. Among those
are Retired U.S. General Alexander M. Haig, Jr., Alexander P. Haig, John Hewitt, Marketing Specialist, and John Dunlap, former
Executive Director of CalTrans.



Projects:



During 2006, we further refined our strategic
plan and have determined that the maximum value to all of our shareholders is best served by targeting three focused project areas
that provide for long-term growth from our invested capital. The three major project areas are as follows:



An R & D lab and adjacent offices



We have established an R & D lab with its
adjacent offices located at 2530 S. Birch St. Santa Ana, CA. 92707. We have also negotiated with G & K Auto in acquiring a
270,000 square foot R & D lab and office in Tian Jin, China in the Auto Trade - Free Trade Zone in order to test and retrofit
internal combustion engines both stationary and in automotive applications.





Implement the initial testing phases
in order to secure revenues, licensing agreements, and contracts.



We hope to continue to test our emission control
device on select diesel engines in order to obtain certification and validation of our technology. However, we currently lack the
financial resources to continue testing. We hope to obtain an Executive Order from the California Air Resource Board which allows
us to legally sell our product in California. This will assist in obtaining contracts and purchase orders. The monthly cost for
each product testing is approximately $60,000 and completion of testing should be accomplished in six to nine months assuming there
are no delays. Phase one testing on a new diesel engine 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%.



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. At this time we have not engaged
in formal agreements with any company or initiated any actions or plans and have not committed any funds.





During the years ended December 31, 2010 and
2009, we had limited operations 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 in the development stage. Additional financing
will need to be obtained. Due to our still being in the development stage, 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 have not generated any revenue from operations. As of December 31, 2010, we have accumulated
net losses in the development stage of $342,019,164 for the period from inception, August 13, 2002, to December 31, 2010. Additionally,
at December 31, 2010, we are in a negative working capital position of $86,475,390 and had a stockholders' deficit of $86,475,390.
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.



Plan of Operation



During the year ended December 31, 2010, we
had limited operations and we expect to require additional cash of approximately $2,000,000 over the next twelve months.
Those funds will be used to continue operation in the development stage.



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.





23









Liquidity and Capital Resources







As of December 31, 2010, the Company had
$6,381 in cash and $8,333 in pre-paid assets.



Total current liabilities were $86,490,104
as of December 31, 2010, consisting of convertible debt, net, of $3,286,742, derivative liabilities of $77,426,191, accounts payable
and accrued liabilities of $5,592,098, notes payable of $25,778 and accounts payable assumed in recapitalization of $159,295.



We had a negative working capital of $86,475,390
as of December 31, 2010.



We incurred net losses of $342,019,164
during the period from inception, August 13, 2002, to December 31, 2010. In addition, at December 31, 2010, we were in a negative
working capital position and had a stockholders' deficit of $86,475,390. As a result, our independent registered public accounting
firm, in its report dated December 16, 2013, has expressed substantial doubt about our ability to continue as a going concern.



Our average monthly operational expenses
have been $132,758 per month for the year ended December 31, 2010.





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 generate 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.



On July 10, 2006, we entered into
a Securities Purchase Agreement with Cornell Capital Partners L.P. providing for the sale by us to Cornell of our 10%
secured convertible debentures in the aggregate principal amount of $2,970,000 of which $1,670,000 was advanced immediately.
We entered into an amended and restated securities purchase agreement with Cornell on August 17, 2006. The second installment
of $200,000 was advanced on August 17, 2006. The third installment of $600,000 was advanced on September 1, 2006. The
last installment of $500,000 was to be advanced two business days prior to a registration statement being declared
effective by the SEC. A portion of the funds advanced were used to pay off the existing convertible debenture and other
advances made by Golden Gate Investors.



In connection with the securities purchase
agreement, we agreed to issue Cornell warrants to purchase an aggregate 2,900,000,000 shares of common stock, exercisable for a
period of five years as follows:



|Number of Warrants |  | Exercise Price
|------------------ |  | --------------
|                   |  |               
|1,000,000,000      |  |               
|1,000,000,000      |  |               
|300,000,000        |  |               
|200,000,000        |  |               
|150,000,000        |  |               
|100,000,000        |  |               
|60,000,000         |  |               
|40,000,000         |  |               
|30,000,000         |  |               
|20,000,000         |  |               



All of the warrants were issued upon closing. 
We also issued to the investor 30 million shares of restricted common stock as a commitment fee.





24







The debentures matured on the second anniversary
of the date of issuance and bore interest at the annual rate of 10%. Holders may convert, at any time, any amount outstanding under
the debentures into shares of our common stock at a conversion price per share equal to $0.013. Beginning the earlier of (i) the
first business day of the month immediately following the month in which a registration statement is first declared effective or
(ii) November 1, 2006, and continuing on the first business day of each calendar month thereafter, we are required to make a mandatory
redemption payment of $225,000 and accrued and unpaid interest, which payment can be made in cash or in restricted common stock.



We had the option, in our sole discretion,
to settle the monthly mandatory redemption amount by (i) paying the investor cash in an amount equal to 115% of the monthly mandatory
redemption amount, or (ii) issuing to the investor the number of shares of common stock equal to the monthly mandatory redemption
amount divided by $0.007, provided, however, that in order for us to issue shares upon payment of the monthly mandatory redemption
amount (A) a registration statement is effective, (B) no event of default shall have occurred, and (C) the closing bid price for
our common stock shall be greater than the redemption conversion price (currently $0.007) as of the trading day immediately prior
to the redemption date.  However, in the event that (A) a registration statement is effective, (B) no event of default
shall have occurred, and (C) the closing bid price for our common stock is less than the redemption conversion price (currently
$0.007) but is greater than $0.003, we shall have the option to settle mandatory redemptions by issuing to the investor the number
of shares of common stock equal to the mandatory redemption amount divided by the default conversion price ($0.003).





In the event that certain events of default,
such as failure to pay principal or interest when due, failure to issue common stock upon conversion or the delisting or lack of
quotation of our common stock, the redemption conversion price will be reduced to the default conversion price.



Cornell had agreed to restrict its ability
to convert the debenture and exercise the warrants and receive shares of our common stock such that the number of shares of common
stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued
and outstanding shares of our common stock.



We, at our option, had the right with three
business days advance written notice, to redeem a portion or all amounts outstanding under this debenture prior to the maturity
date provided that the closing bid price of our common stock, is less than $0.013 at the time of the redemption. In the event of
a redemption, we are obligated to pay an amount equal to the principal amount being redeemed plus a 15% redemption premium, and
accrued interest.



In connection with the Purchase Agreement,
we also entered into a registration rights agreement, as amended, providing for the filing, within 60 days of closing, of a registration
statement with the Securities and Exchange Commission registering the common stock issuable upon conversion of the debentures.
We are obligated to use our best efforts to cause the registration statement to be declared effective no later than 90 days after
filing the registration statement and to insure that the registration statement remains in effect until the earlier of (i) all
of the shares of common stock issuable upon conversion of the debentures have been sold or (ii) July 10, 2008. In the event of
a default of our obligations under the registration rights agreement, including our agreement to file the Registration Statement
with the Securities and Exchange Commission no later than September 8, 2006, or if the registration statement is not declared effective
by November 22, 2006, we are required to pay to Cornell, as liquidated damages, for each month that the registration statement
has not been filed or declared effective, as the case may be, either a cash amount or shares of our common stock equal to 2% of
the liquidated value of the debentures.





In connection with the securities purchase
agreement, we executed a security agreement in favor of the investor granting them a first priority security interest in all of
our goods, inventory, contractual rights and general intangibles, receivables, documents, instruments, chattel paper, and intellectual
property. The security agreement states that if an event of default occurs under the secured convertible debentures or security
agreements, the investor has the right to take possession of the collateral, to operate our business using the collateral, and
has the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the collateral, at public or private
sale or otherwise to satisfy our obligations under these agreements. As of December 31, 2009, the Company was in default on this
debt.





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.





25







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.



On November 14, 2011, SaviCorp (the
"Company") dismissed Ham, Langston and Brezinam LLP ("HLB") as its independent public accounting firm and appointed
M&K CPAS, PLLC ("M&K") as the Company's independent registered public accounting firm for the fiscal year ending
December 31, 2007.



HLB's reports on the Company's financial
statements as of and for the fiscal years ended December 31, 2006 and December 31, 2005 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to audit scope or accounting principles. However, HLB did include an
explanatory paragraph in its audit report relative to a going concern uncertainty for the years ended December 31, 2006 and 2005.



During the fiscal years ended December
31, 2005 and December 31, 2006 there were (i) no "disagreements" as that term is defined in Item 304(a)(1)(iv) of Regulation
S-K, between the Company and HLB on any matter of accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of HLB would have caused HLB to make reference to
the subject matter of the disagreement in their reports on the financial statements for such years, and (ii) no "reportable
events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K.



During
the fiscal years ended December 31, 2010, December 31, 2009,  December 31, 2008, and December 31, 2007 and the subsequent
interim and annual periods through December 13, 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



|a) | Evaluation of Disclosure Controls and Procedures. As of December 31, 2010, 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.





26







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   | 62   | Chief Executive Officer, Chief Financial Officer, Chief Technology Officer | Director          
|Phil Pisanelli | 65   |                                                                            | Director          
|Rudy Rodriguez | 61   | 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 Palm Dale, 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.





27







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, 2010, 2009, and 2008 exceeded $100,000. Some of the salaries shown during 2008, 2009, and
2010 were accrued and were unpaid or waived as of December 31, 2010:



|SUMMARY COMPENSATION TABLE |      |            |           |            |            |        
|-------------------------- | ---- | ---------- | --------- | ---------- | ---------- | -------
|ANNUAL COMPENSATION        |      |            |           |            |            |        
|                           |      |            |           |            |            |        
|                           |      |            |           | Annual     | Restricted | Options
|Name & Principal           |      |            |           | Compen-    | Stock      | SARs   
|Position                   | Year | Salary ($) | Bonus
($) | sation ($) | Awards($)  | (#)    
|Greg Sweeney               | 2010 | –          | –         | –          | –          | –      
|Former CEO                 | 2009 | –          | –         | –          | –          | –      
|                           | 2008 | 10,000     | –         | 100,000    | –          | –      
|                           |      |            |           |            |            |        
|Serge Monros               | 2010 | 144,000    | –         | 144,000    | –          | –      
|CEO, CFO                   | 2009 | 144,000    | –         | 144,000    | –          | –      
|                           | 2008 | 144,000    | –         | 144,000    | –          | –      



Employment/Consultant Agreements



Greg Sweeney



Effective August 30, 2006, we entered into
a consulting agreement with Greg Sweeney to serve as our Chief Executive Officer and President. Pursuant to the agreement, Mr.
Sweeney receives a monthly salary of $10,000. In addition, Mr. Sweeney was entitled to receive bonuses and commissions based upon
financing raised and operating targets. Additionally, Mr. Sweeney received 5 million shares of common stock upon execution of the
agreement. Mr. Sweeney resigned as the CEO and President and Director as of February 18, 2008.



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.





28









Option/Stock Appreciation Right Grants in
2010





None.



Aggregate Option/SAR Exercises in 2010 and December 31, 2010
Option Values



None.



Equity Compensation Plan Information



|                                                               |                   |                  | Number of           
|-------------------------------------------------------------- | ----------------- | ---------------- | --------------------
|                                                               |                   |                  | securities          
|                                                               |                   |                  | remaining           
|                                                               | Number of         | Weighted-        | available for future
|                                                               | securities to be  | average exercise | issuance under      
|                                                               | issued upon       | price of         | equity              
|                                                               | exercise of       | outstanding      | compensation        
|                                                               | outstanding       | options,         | plans (excluding    
|                                                               | options, warrants | warrants and     | securities reflected
|                                                               | and rights        | rights           | in column (a))      
|                                                               | (a)               | (b)              | (c)                 
|                                                               |                   |                  |                     
|Equity compensation plans approved by holders                  | 25,000,000        | –                | 25,000,000          
|                                                               |                   |                  |                     
|Equity compensation plans not approved by security
    holders | –                 | –                | –                   
|Total                                                          | 25,000,000        | –                | 25,000,000          







29









ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.



The following tables sets forth, as of
December 31, 2010, the number of and percent of our common stock beneficially owned by



| | · | by each person who is known by us to beneficially own more than 5% of our common stock;
| | - | ---------------------------------------------------------------------------------------



| | · | by each of our officers and directors; and
| | - | ------------------------------------------



| | · | by all of our officers and directors as a group.
| | - | ------------------------------------------------



We believe that all persons named in the
table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.



A person is deemed to be the beneficial
owner of securities that can be acquired by him within 60 days from December 31, 2010 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,
2010 have been exercised and converted.





|Savi Media Group, Inc.            |              |               |             |                                
|--------------------------------- | ------------ | ------------- | ----------- | -------------------------------
|Related Parties                   |              |               |             |                                
|December 31, 2010                 |              |               |             |                                
|                                  |              |               |             |                                
|                                  |              | Beneficially  | Percent of  |                                
|Name                              | Class        | Owned(1)      | Class(2)    | Title or Nature of Relationship
|                                  |              |               |             |                                
|Greg Sweeney                      | Common Stock | -             | *           | Former CEO/Director            
|2530 S. Birch Street              |              |               |             |                                
|Santa Ana, California 92707       |              |               |             |                                
|                                  |              |               |             |                                
|Phillip C. Scott   (3)            | Common Stock | 104,396,003   | 4.75%       | Former CFO                     
|12707 High Bluff Drive, Suite 200 |              |               |             |                                
|San Diego, CA  92130              |              |               |             |                                
|                                  |              |               |             |                                
|Serge Monros   (4)                | Common Stock | 1,068,652,239 | 35.12%      | CEO/Director                   
|2530 S. Birch Street              |              |               |             |                                
|Santa Ana, California 92707       |              |               |             |                                
|                                  |              |               |             |                                
|Phil Pisanell                     | Common Stock | 11,000,000    | *           | Director                       
|2530 S. Birch Street              |              |               |             |                                
|Santa Ana, California 92707       |              |               |             |                                
|                                  |              |               |             |                                
|Steve Botkin                      | Common Stock | -             | *           | Former CIO/Director            
|2530 S. Birch Street              |              |               |             |                                
|Santa Ana, California 92707       |              |               |             |                                
|                                  |              |               |             |                                
|Rudy Rodriguez   (5)              |              | Common Stock  | 152,000,000 | 7.10%                          
|2530 S. Birch Street              |              |               |             |                                
|Santa Ana, California 92707       |              |               |             |                                
|                                  |              |               |             |                                
|All Officers and Directors        | Common Stock | 1,336,048,242 | 41.26%      |                                
|As a Group (6 persons)            |              |               |             |                                
|                                  |              |               |             |                                
|                                  |              |               |             |                                
|                                  |              |               |             |                                







30









|Savi Media Group, Inc.        |              |              |                |                                
|----------------------------- | ------------ | ------------ | -------------- | -------------------------------
|Related Parties (continued)   |              |              |                |                                
|December 31, 2010             |              |              |                |                                
|                              |              |              |                |                                
|                              |              | Beneficially | Percent of     |                                
|Name                          | Class        | Owned(1)     | Class(2)       | Title or Nature of Relationship
|                              |              |              |                |                                
|His Divine Vehicle   (6)      |              | Common Stock | 384,846,022    | 14.26%                         
|2530 S. Birch Street          |              |              |                |                                
|Santa Ana, California 92707   |              |              |                |                                
|                              |              |              |                |                                
|Cornell Capital   (7)         |              | Common Stock | 72,130,413,096 | 96.89%                         
|101 Hudson Street, Suite 3700 |              |              |                |                                
|Jersey City, NJ  07302        |              |              |                |                                
|                              |              |              |                |                                
|Carol Ann Klove   (8)         | Common Stock | 140,000,000  | 5.95%          |                                
|                              |              |              |                |                                
|His Divine Vehicle            | Preferred A  | 1,991,423    | 20.00%         | Entity Related to Serge Monros 
|                              |              |              |                |                                
|His Divine Vehicle            | Preferred C  | 702,412      | 8.91%          | Entity Related to Serge Monros 
|                              |              |              |                |                                
|Alexander M. Haig Jr.         | Preferred C  | 500,000      | 6.34%          | Advisory Board Member          
|                              |              |              |                |                                
|Alexander P. Haig             | Preferred C  | 500,000      | 6.34%          | Advisory Board Member          
|                              |              |              |                |                                
|Rudy Rodriguez                | Preferred C  | 500,000      | 6.34%          | COO/Director                   
|                              |              |              |                |                                
|John Orrock                   | Preferred C  | 1,000,000    | 12.68%         |                                
|                              |              |              |                |                                
|Jeffrey Sia                   | Preferred C  | 1,100,000    | 13.95%         |                                
|                              |              |              |                |                                
|Ismael Silva                  | Preferred C  | 773,333      | 9.80%          |                                

______________



* 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, 2010 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 2,313,878,188 common
shares; 9,956,483 Preferred "A" Shares and 7,887,275 Preferred "C" Shares outstanding as of December 31, 2010.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Includes the conversion of
the principal amount of 597,440 plus accrued interest through 12/31/10 of $49,890 converting into common shares at the conversion
rate of $0.0012 owned by DS Enterprises, Inc., of which Mr. Scott is the Chief Executive Officer.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Includes 28,514,606 shares
of common stock, 199,142,300 shares of common stock underlying series A convertible preferred stock, 70,241,200 shares of common
stock underlying series C convertible preferred stock, and includes the conversion of the principal amount of 204,302 plus accrued
interest through 12/31/09 of $17,061 converting into common shares at the conversion rate of $0.0012 owned by His Divine Vehicle,
Inc., of which Mr. Monros is the Chief Executive Officer.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Includes 102,000,000 shares
of common stock, 50,000,000 shares of common stock underlying series C convertible preferred stock.
| | --- | -------------------------------------------------------------------------------------------------------------------------------



| | (6) | Includes 199,142,300 shares
of common stock underlying series A convertible preferred stock, 70,241,200 shares of common stock underlying series C convertible
preferred stock, and includes the conversion of the principal amount of 204,302 plus accrued interest through 12/31/09 of $17,061
converting into common shares at the conversion rate of $0.0012.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Includes the conversion of
the principal amount of $2,485,000 plus accrued interest through 12/31/10 of $1,362,111 converting into common shares at the reset
conversion rate of $0.0005. Includes the conversion of the principal amount of $15,000 plus accrued interest of $2,252 through
12/31/10 converting into common shares at the conversion rate of 90% of $0.0215.  Includes cashless exercise of 66,000,000,000
warrants at $0.0005 as of 12/31/10.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | Includes 100,000,000 shares
of common stock, 40,000,000 shares of common stock underlying series A convertible preferred stock.
| | --- | -------------------------------------------------------------------------------------------------------------------------------







31









Series A and C Voting Rights



Each share of Series A and C convertible
preferred stock shall be entitled to cast that number of votes per share as is equal to the number of votes that holder would be
entitled to cast had such holder converted his shares into shares of Common Stock on the record date for such vote. Each share
of Series A and Series C convertible preferred stock is convertible into 100 shares of common stock.



DESCRIPTION OF SECURITIES



COMMON STOCK



We are authorized to issue up to 6,000,000,000
shares of Common Stock, $0.01 par value. As of December 31, 2010, there were 2,313,878,188 shares of common stock issued and outstanding.
Holders of the common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Holders of
common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefor. Upon the liquidation, dissolution, or winding up of our company, the holders of common stock are entitled
to share ratably in all of our assets which are legally available for distribution after payment of all debts and other liabilities
and liquidation preference of any outstanding common stock. Holders of common stock have no preemptive, subscription, redemption
or conversion rights.



We have engaged WorldWide Stock Transfer,
LLC as independent transfer agent or registrar.



PREFERRED STOCK



We are authorized to issue 40,000,000 shares
of preferred stock, $0.01 par value per share. As of December 31, 2010, there were 9,956,483 shares of series A preferred stock
issued and outstanding and 7,887,275 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 preferred
stock vote their shares on an as-converted basis. Holders of the series A preferred stock participates on distribution and liquidation
paripassu with the holders of the common stock. We have also filed certificates of Designation for series B preferred stock but
no stock of this class has been issued.



WARRANTS



In connection with a securities purchase
agreement dated July 10, 2006, as amended, we issued Cornell warrants to purchase an aggregate of 2,900,000,000 shares of common
stock, exercisable for a period of five years as follows:



|Number of Warrants |  | Exercise Price
|------------------ |  | --------------
|                   |  |               
|1,000,000,000      |  | $0.003        
|1,000,000,000      |  | $0.006        
|300,000,000        |  | $0.01         
|200,000,000        |  | $0.015        
|150,000,000        |  | $0.02         
|100,000,000        |  | $0.03         
|60,000,000         |  | $0.05         
|40,000,000         |  | $0.075        
|30,000,000         |  | $0.10         
|20,000,000         |  | $0.15         



32







The warrants issued to Cornell 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, (iii) we declare a dividend
payment to the holders of our common stock or (iv) we take any other actions which would affect the amount of shares issuable to
Cornell upon exercise of its warrants. The exercise price was reset on December 2, 2008 to $0.0005.





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.



OPTIONS



We currently have 2,000,000 options outstanding,
issued to Herrera Partners. They were issued on August 28, 2006, and expired on August 28, 2011 and had an exercise price of $0.01.





In addition, Gene-Cell, Inc. and
Redwood Entertainment Group, Inc. periodically issued incentive stock options to key employees, officers, and directors to
provide additional incentives to promote the success of the Company's business and to enhance the ability to attract and
retain the services of qualified persons. The Board of Directors approved the issuance of all stock options. The exercise
price of an option granted was determined by the fair market value of the stock on the date of grant. Reverse stock splits by
the Company resulted in the reduction of outstanding options to less than 115 shares with exercise prices that are so high
that the exercise of the options will never be practical. Expiration dates range from April, 2011 through
July, 2012.



CONVERTIBLE SECURITIES



To obtain funding for our ongoing operations,
we entered into a Securities Purchase Agreement with Cornell Capital Partners L.P., an accredited investor, on July 10, 2006, and
amended on August 17, 2006, for the sale of $2,970,000 in secured convertible debentures and 2,900,000,000 warrants. This prospectus
relates to the resale of the common stock underlying the secured convertible debentures and warrants. The investors are obligated
to provide us with an aggregate of $2,970,000 as follows:



| | ● | $1,670,000 was disbursed on July 10, 2006;                                                          
| | - | ----------------------------------------------------------------------------------------------------
| |   |                                                                                                     
| | ● | $200,000 was disbursed on August 17, 2006;                                                          
| |   |                                                                                                     
| | ● | $600,000 was disbursed on September 1, 2006; and                                                    
| |   |                                                                                                     
| | ● | $500,000 will be disbursed two business days prior to the effectiveness of a registration statement.



Accordingly, we received
a total of $2,470,000 pursuant to the Securities Purchase Agreement.



The secured convertible
debentures bear interest at 10% and mature two years from the date of issuance. Holders may convert, at any time, any amount
outstanding under the secured convertible debentures into shares of our common stock at a conversion price per share equal to
$0.013, subject to anti-dilution protection. Beginning the earlier of (i) the first business day of the month immediately following the
month in which this registration statement is first declared effective or (ii) November 1, 2006, and continuing on the first
business day of each calendar month thereafter, we are required to make a mandatory redemption payment of $225,000 and
accrued and unpaid interest, which payment can be made in cash or in restricted shares of our common stock.



We had the option, in our sole
discretion, to settle the monthly mandatory redemption amount by (i) paying the investor cash in an amount equal to 115% of
the monthly mandatory redemption amount, or (ii) issuing to the investor the number of shares of our common stock equal to
the monthly mandatory redemption amount divided by $0.007, which is known as the redemption conversion price, provided,
however, that in order for us to issue shares upon payment of the monthly mandatory redemption amount (A) this registration
statement is effective, (B) no event of default shall have occurred, and (C) the closing bid price for our common stock shall
be greater than the redemption conversion price as of the trading day immediately prior to the redemption date. However, in
the event that (A) this registration statement is effective, (B) no event of default shall have occurred, and (C) the closing
bid price for our common stock is less than the redemption conversion price but is greater than $0.003, which is known as the
default conversion price, we shall have the option to settle the monthly mandatory redemption amount by issuing to the
investor the number of shares of common stock equal to the monthly mandatory redemption amount divided by the default
conversion price. Accordingly, the secured convertible debentures may be converted into a maximum of 990,000,000 shares of
our common stock. On August 29, 2006, the closing bid price for our common stock as quoted by Bloomberg, LP was $0.0065 and,
therefore, the conversion price for the secured convertible notes would be $0.003 if we elected to convert the monthly
mandatory redemption amount into shares of common stock. The conversion price was reset in 2008 to $0.0005 and based
on the $2,470,000 in secured convertible debentures, excluding interest, were convertible into 4,940,000,000 shares of our
common stock.



33







In the event that certain events of default,
such as failure to pay principal or interest when due, failure to issue common stock upon conversion or the delisting or lack of
quotation of our common stock, the redemption conversion price will be reduced to the default conversion price.



The investor
hadcontractually agreed to restrict its ability to convert the debentures and receive shares of our common stock such that
the number of shares of common stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued
and outstanding shares of common stock.



We had the right, at our option, with
three business days advance written notice, to redeem a portion or all amounts outstanding under the secured convertible debentures
prior to the maturity date provided that the closing bid price of our common stock, is less than $0.013 at the time of the redemption.
In the event of a redemption, we are obligated to pay an amount equal to the principal amount being redeemed plus a 15% redemption
premium, and accrued interest.



In connection with the securities purchase
agreement dated July 10, 2006, as amended, we granted the investor registration rights. We are obligated to use our best efforts
to cause the registration statement to be declared effective no later than December 7, 2006 and to insure that the registration
statement remains in effect until the earlier of (i) all of the shares of common stock issuable upon conversion of the Debentures
have been sold or (ii) July 10, 2008. In the event of a default of our obligations under the registration rights agreement, including
our agreement to file the Registration Statement with the Securities and Exchange Commission no later than September 8, 2006, or
if the Registration Statement is not declared effective by December 7, 2006, we are required pay to Cornell, as liquidated damages,
for each month that the registration statement has not been filed or declared effective, as the case may be, either a cash amount
or shares of our common stock equal to 2% of the liquidated value of the secured convertible debentures.



In connection with the securities purchase
agreement dated July 10, 2006, we executed a security agreement in favor of the investor granting them a first priority security
interest in all of our goods, inventory, contractual rights and general intangibles, receivables, documents, instruments, chattel
paper, and intellectual property. The security agreement states that if an event of default occurs under the secured convertible
debentures or security agreement, the investors have the right to take possession of the collateral, to operate our business using
the collateral, and have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the collateral,
at public or private sale or otherwise to satisfy our obligations under these agreements.



YA Global Investments L.P. issued a 5.0%
Promissory Note (convertible upon default) on April 2, 2007 to the Company. The Note is due in 120 days on July 31, 2007. The aggregate
principal amount of the Promissory Note is $15,000 with an interest rate of 5.0% per annum. The Promissory Note is convertible
at any time after default at the lesser of the variable market price or the fixed conversion price .The shares of Common Stock
are based on lesser of (a) the Conversion Price of $0.013 per share or (b) 92% of the average low bid VWAPs for the 30 Trading
Days prior to the conversion date. At the Company’s election, it may, at any time after the issuance date, redeem the outstanding
principal of the Debentures for cash or Common Stock at 100%.





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 January, 2010, the conversion rate was reset to $0.0012.



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.



34







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
connection with this transaction, Mr. Monros waived $350,000 in accrued salary owed to him by the Company, and HDV waived $372,000
owed to it by the Company.



Mr. Monros has continued the process of
preparing patent applications for the other versions of the DynoValve products & related IP. In March, 2013, the Company entered
into a five (5) year Master Distribution Agreement with His Divine Vehicle to sell the DynoValve and DynoValve Pro in various internationally
territories. The consideration for the agreement was a guaranteeing a minimum annual volume, payment for the DynoValves acquired
and a three percent (3%) royalty payment.



We subsequently issued 5,100,000 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 Mario Procopio, our former Chief Executive Officer, for compensation and for his efforts
in arranging the acquisition of the rights to the patents owned by Serge Monros.



We have no policy regarding entering into
transactions with affiliated parties.



ITEM 13. EXHIBITS.



|Exhibit No. |  | Description                                                                                                                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                    
|3.1         |  | Amended and Restated Articles of Incorporation, filed March 1, 2005, filed as an exhibit to the registration statement on Form SB-2 filed with the Securities and Exchange Commission (the “Commission”) on June 27, 2005 and incorporated herein by reference.    
|            |  |                                                                                                                                                                                                                                                                    
|3.2         |  | Amendment to the Articles of Incorporation, as amended and restated, filed April 22, 2005, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference                          
|            |  |                                                                                                                                                                                                                                                                    
|3.3         |  | Certificate of Designation of Series A Preferred Stock, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference.                                                            
|            |  |                                                                                                                                                                                                                                                                    
|3.4         |  | Certificate of Designation of Series B Preferred Stock, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference.                                                            
|            |  |                                                                                                                                                                                                                                                                    
|3.5         |  | Certificate of Designation of Series C Preferred Stock, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference.                                                            
|            |  |                                                                                                                                                                                                                                                                    
|3.6         |  | By-laws, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on June 27, 2005 and incorporated herein by reference.                                                                                                           
|            |  |                                                                                                                                                                                                                                                                    
|4.1         |  | Securities Purchase Agreement, dated July 10, 2006, by and between Savi Media Group, Inc. and Cornell Capital Partners L.P., filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference.
|            |  |                                                                                                                                                                                                                                                                    
|4.2         |  | Secured Convertible Debenture issued to Cornell Capital Partners, L.P., dated July 10, 2006, filed as an exhibit to the current report on Form 8-K filed with the Commission on July 14, 2006 and incorporated herein by reference.                                



35











|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.                                                       







36







|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,
2010 and 2009, and for the reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q during
the fiscal years were $14,000 and $14,000, respectively.



Audit Related



Our auditors billed us $0 and $0
for audited related work during fiscal years 2010 and 2009, respectively.



Tax Fees



Our auditors billed us $0 and $0 for tax
related work during fiscal years 2010 and 2009, respectively.



All Other Fees



Our auditors did not bill us for any other
services during fiscal years 2010 or 2009.



The Board of Directors has considered whether
the provision of non-audit services is compatible with maintaining the principal accountant's independence.







37







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: December 17, 2013 | 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 | December 17, 2013
|                                          |                                                                                         |                  
|/s/ PHIL PISANELLI
        Phil Pisanelli | Director                                                                                | December 17, 2013
|                                          |                                                                                         |                  
|/s/ RUDY RODRIGUEZ
        Rudy Rodriguez | Chief Operating Officer and Director                                                    | December 17, 2013
|                                          |                                                                                         |                  







38









SAVICORP

A Corporation in the Development Stage

TABLE OF CONTENTS



|                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                 
|                                                                                                                                                 
|                                                                                                                                                 
|Report of Independent Registered Public Accounting Firm                                                                                          
|                                                                                                                                                 
|Balance Sheets at December 31, 2010 and 2009                                                                                                     
|                                                                                                                                                 
|Statements of Operations
for the years ended December 31, 2010 and 2009, and for the period from inception, August 13, 2002, to December 31, 2010
|                                                                                                                                                 
|Statement of Stockholders' Deficit for the period from inception, August 13, 2002, to December 31, 2010                                          
|                                                                                                                                                 
|Statements of Cash
Flows for the years ended December 31, 2010 and 2009, and for the period from inception, August 13, 2002, to December 31, 2010
|                                                                                                                                                 
|Notes to Financial Statements                                                                                                                    
|                                                                                                                                                 







F-1









REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and Directors

SaviCorp

(A Corporation in the Development Stage)



We have audited the
accompanying balance sheets of SaviCorp (A Corporation in the Development Stage) (the “Company”) as of December 31,
2010 and December 31, 2009 and the related statements of operations, stockholders' deficit and cash flows for the twelve month
periods then ended. The financial statements for the period from August 13, 2002 (inception) to December 31, 2010, insofar as it
relates to amounts for prior periods through December 31, 2006, is based solely on the report of the other auditors. 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, 2010 and 2009 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 accumulated net losses in the development stage, 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

December 16, 2013









F-2









SaviCorp

A Corporation in the Development Stage

BALANCE SHEETS

December 31,
2009 and 2010







|                                                                                                                                                                                     |  | December 31, 2010 |              |   | December 31, 2009 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------------ | - | ----------------- | -
|ASSETS                                                                                                                                                                               |  |                   |              |   |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Current assets:                                                                                                                                                                      |  |                   |              |   |                   |  
|Cash and cash equivalents                                                                                                                                                            |  | $                 | 6,381        |   |                   | $
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Prepaid expenses                                                                                                                                                                     |  |                   | 8,333        |   |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Total assets                                                                                                                                                                         |  | $                 | 14,714       |   |                   | $
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                |  |                   |              |   |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Current liabilities:                                                                                                                                                                 |  |                   |              |   |                   |  
|Convertible debt, net of unamortized discount of $0 and $517,781, in default in 2010, $2,485,000 in default in 2009                                                                  |  | $                 | 3,082,440    |   |                   | $
|Related party convertible debt, net of unamortized discount of $0 and $177,062, in default in 2010                                                                                   |  |                   | 204,302      |   |                   |  
|Notes payable, in default in 2010                                                                                                                                                    |  |                   | 10,778       |   |                   |  
|Notes payable, related party, in default in 2010                                                                                                                                     |  |                   | 15,000       |   |                   |  
|Accounts payable and accrued liabilities                                                                                                                                             |  |                   | 5,424,269    |   |                   |  
|Related party accounts payable                                                                                                                                                       |  |                   | 167,829      |   |                   |  
|Accounts payable assumed in recapitalization                                                                                                                                         |  |                   | 159,295      |   |                   |  
|Derivative liabilities - embedded derivatives                                                                                                                                        |  |                   | 21,196,771   |   |                   |  
|Derivative liabilities - warrants                                                                                                                                                    |  |                   | 56,229,420   |   |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Total current liabilities                                                                                                                                                            |  |                   | 86,490,104   |   |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Commitments and contingencies                                                                                                                                                        |  |                   | –            |   |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Stockholders' deficit:                                                                                                                                                               |  |                   |              |   |                   |  
|Series A convertible preferred stock; $0.001 par value, 10,000,000 shares authorized, 9,956,483
    and 9,347,500 issued and outstanding at December 31, 2010 and 2009, respectively |  |                   | 9,956        |   |                   |  
|Series B convertible preferred stock; $0.001 par value, 10,000,000 shares authorized, none
    issued and outstanding                                                                |  |                   | –            |   |                   |  
|Series C convertible preferred stock; $0.001 par value, 10,000,000 shares authorized, 7,887,275
    and 8,647,500 issued and outstanding at December 31, 2010 and 2009, respectively |  |                   | 7,887        |   |                   |  
|Common stock: $0.001 par value, 6,000,000,000 shares authorized, 2,313,878,188 and 2,092,104,264 shares issued and
    outstanding at December 31, 2010 and 2009, respectively       |  |                   | 2,313,878    |   |                   |  
|Change in accounting principle                                                                                                                                                       |  |                   | 658,128      |   |                   |  
|Stock payable                                                                                                                                                                        |  |                   | 705,000      |   |                   |  
|Additional paid-in capital                                                                                                                                                           |  |                   | 251,848,925  |   |                   |  
|Losses accumulated during the development stage                                                                                                                                      |  |                   | (342,019,164 | ) |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Total stockholders' deficit                                                                                                                                                          |  |                   | (86,475,390  | ) |                   |  
|                                                                                                                                                                                     |  |                   |              |   |                   |  
|Total liabilities and stockholders' deficit                                                                                                                                          |  | $                 | 14,714       |   |                   | $







The accompanying notes are an integral part
of the financial statements





F-3







SaviCorp

A Corporation in the Development Stage

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2010 and
2009 and for the Period

From Inception, August 13, 2002, to December
31, 2010







|                                              |  |                   |               |   |                   |   |               | Inception to      | 
|--------------------------------------------- |  | ----------------- | ------------- | - | ----------------- | - | ------------- | ----------------- | 
|                                              |  | December 31, 2010 |               |   | December 31, 2009 |   |               | December 31, 2010 | 
|                                              |  |                   |               |   |                   |   |               |                   | 
|Operating costs and expenses:                 |  |                   |               |   |                   |   |               |                   | 
|General and administrative expenses           |  | $                 | 1,457,561     |   |                   | $ | 947,189       |                   | 
|Research and development                      |  |                   | 135,536       |   |                   |   | 48,094        |                   | 
|                                              |  |                   |               |   |                   |   |               |                   | 
|Loss from operations                          |  | $                 | (1,593,097    | ) |                   | $ | (995,283      | )                 | 
|                                              |  |                   |               |   |                   |   |               |                   | 
|Other income and (expenses):                  |  |                   |               |   |                   |   |               |                   | 
|Interest income                               |  |                   | –             |   |                   |   | –             |                   | 
|Gain on settlement                            |  |                   | –             |   |                   |   | –             |                   | 
|Cost of rescission                            |  |                   | –             |   |                   |   | –             |                   | 
|Cost of recapitalization                      |  |                   | –             |   |                   |   | –             |                   | 
|Goodwill impairment                           |  |                   | –             |   |                   |   | –             |                   | 
|Impairment of property and equipment          |  |                   | –             |   |                   |   | –             |                   | 
|Impairment of patent rights                   |  |                   | –             |   |                   |   | –             |                   | 
|Change in fair value of financial instruments |  |                   | (73,641,661   | ) |                   |   | (1,745,845    | )                 | 
|Loss on debt extinguishment                   |  |                   | –             |   |                   |   | –             |                   | 
|Interest expense                              |  |                   | (1,138,277    | ) |                   |   | (991,899      | )                 | 
|Registration rights expense                   |  |                   | (592,800      | ) |                   |   | (592,800      | )                 | 
|                                              |  |                   |               |   |                   |   |               |                   | 
|Total other income and (expenses), net        |  |                   | (75,372,738   | ) |                   |   | (3,330,544    | )                 | 
|                                              |  |                   |               |   |                   |   |               |                   | 
|Net profit (loss)                             |  | $                 | (76,965,835   | ) |                   | $ | (4,325,827    | )                 | 
|                                              |  |                   |               |   |                   |   |               |                   | 
|Weighted average shares outstanding           |  |                   | 2,123,835,660 |   |                   |   | 2,071,901,524 |                   | 
|Weighted average shares outstanding-diluted   |  |                   | 2,123,835,660 |   |                   |   | 2,071,901,524 |                   | 
|                                              |  |                   |               |   |                   |   |               |                   | 
|Net profit (loss) per common share - basic    |  | $                 | (0.04         | ) |                   | $ | (0.00         | )                 | 
|Net profit (loss) per common share - diluted  |  | $                 | (0.04         | ) |                   | $ | (0.00         | )                 | 







The accompanying notes are an integral part
of the financial statements





F-4







SaviCorp

A Corporation in the Development Stage

STATEMENT OF STOCKHOLDERS' DEFICIT

For the Period From Inception, August 13,
2002, to December 31, 2010



|                                                                                      | Preferred Stock A |   | Preferred Stock B |   | Preferred Stock C |  | Common Stock |   | Change in Accounting |   | Additional Paid-In |  | Deferred |   | Stock  |   | Losses Accumulated During the Development |  |         |       
|------------------------------------------------------------------------------------- | ----------------- | - | ----------------- | - | ----------------- |  | ------------ | - | -------------------- | - | ------------------ |  | -------- | - | ------ | - | ----------------------------------------- |  | ------- | ------
|                                                                                      | Shares            |   | Amount            |   | Shares            |  | Amount       |   | Shares               |   | Amount             |  | Shares   |   | Amount |   | Principle                                 |  | Capital |       
|Balance at inception, August 13,
    2002                                             |                   | – |                   | $ | –                 |  |              | – |                      | $ | –                  |  |          | – |        | $ | –                                         |  |         | –     
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Initial contribution to establish Energy Resource
    Management, Inc.                |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | –     
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Recapitalization on August 26, 2002                                                   |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | 5,335 
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Common stock issued in exchange for consulting
    services                           |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | 1,086 
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Net Loss                                                                              |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | –     
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Balance at December 31, 2002                                                          |                   | – |                   | $ | –                 |  |              | – |                      | $ | –                  |  |          | – |        | $ | –                                         |  |         | 6,421 
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Recognition of deferred compensation under
    consulting agreements                  |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | –     
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Common stock issued for cash under Regulation
    D offering                          |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | 4,180 
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Common stock issued in exchange for consulting
    services and employee compensation |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | 1,200 
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Common stock issued in exchange for extension
    of acquisition agreement            |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | 110   
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Common stock issued as a contribution to a
    related charitable organization        |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | 2,280 
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Common stock issued to escrow for acquisition
    of DreamCity                        |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | 8,000 
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Interest recognition on loan from stockholder                                         |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | –     
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Net loss                                                                              |                   | – |                   |   | –                 |  |              | – |                      |   | –                  |  |          | – |        |   | –                                         |  |         | –     
|                                                                                      |                   |   |                   |   |                   |  |              |   |                      |   |                    |  |          |   |        |   |                                           |  |         |       
|Balance at December 31, 2003                                                          |                   | – |                   | $ | –                 |  |              | – |                      | $ | –                  |  |          | – |        | $ | –                                         |  |         | 22,191







The accompanying
notes are an integral part of the unaudited financial statements

F-5









SaviCorp

A Corporation in the Development Stage

STATEMENT OF STOCKHOLDERS' DEFICIT

For the Period From Inception, August 13,
2002, to December 31, 2010



|                                                                                                    | Preferred Stock A |            | Preferred Stock B |   | Preferred Stock C |  | Common Stock |   | Change in Accounting |   | Additional Paid-In |  | Deferred |           | Stock  |   | Losses Accumulated During the Development |  |         |            
|--------------------------------------------------------------------------------------------------- | ----------------- | ---------- | ----------------- | - | ----------------- |  | ------------ | - | -------------------- | - | ------------------ |  | -------- | --------- | ------ | - | ----------------------------------------- |  | ------- | -----------
|                                                                                                    | Shares            |            | Amount            |   | Shares            |  | Amount       |   | Shares               |   | Amount             |  | Shares   |           | Amount |   | Principle                                 |  | Capital |            
|Balance at December 31, 2003                                                                        |                   | –          |                   | $ | –                 |  |              | – |                      | $ | –                  |  |          | –         |        | $ | –                                         |  |         | 22,191     
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common Stock issued for acquisition of patent
    rights                                            |                   | 5,000,000  |                   |   | 5,000             |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 5,100,000  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued for cash under Regulation
    D offering                                        |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 39,600,000 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued in payment of legal fees                                                        |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 252,000    
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Special dividend to certain major stockholders
    in Gene-Cell, Inc.                               |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 5,000,000  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued in exchange for consulting
    services and employee compensation               |                   | 5,000,000  |                   |   | 5,000             |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 31,926,240 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued to repay debt                                                                   |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 5,002,000  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued to round stock splits                                                           |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 45,336     
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Net loss                                                                                            |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | –          
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Balance at December 31, 2004                                                                        |                   | 10,000,000 |                   | $ | 10,000            |  |              | – |                      | $ | –                  |  |          | –         |        | $ | –                                         |  |         | 86,947,767 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued for cash under Regulation
    D offering                                        |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 22,150,950 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common and preferred stock issued in exchange
    for consulting services and employee compensation |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | 6,060,000 |        |   | 6,060                                     |  |         | 42,828,835 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued upon exercise of stock
    warrants                                             |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 244,763    
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued for conversion of notes
    payable                                             |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 42,215,361 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Return and cancellation of shares                                                                   |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | (6,466,700 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Common stock issued to escrow for debt conversions
    and warrant exercises                        |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | 21,190,000 
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Issuance of compensatory stock options to
    Chief Executive Officer                               |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | –          
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Net Loss                                                                                            |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –         |        |   | –                                         |  |         | –          
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |           |        |   |                                           |  |         |            
|Balance at December 31, 2005                                                                        |                   | 10,000,000 |                   | $ | 10,000            |  |              | – |                      | $ | –                  |  |          | 6,060,000 |        | $ | 6,060                                     |  |         | 209,109,976







The accompanying
notes are an integral part of the unaudited financial statements

F-6









SaviCorp

A Corporation in the Development Stage

STATEMENT OF STOCKHOLDERS' DEFICIT

For the Period From Inception, August 13,
2002, to December 31, 2010



|                                                                                                    | Preferred Stock A |            | Preferred Stock B |   | Preferred Stock C |  | Common Stock |   | Change in Accounting |   | Additional Paid-In |  | Deferred |            | Stock  |   | Losses Accumulated During the Development |   |         |              
|--------------------------------------------------------------------------------------------------- | ----------------- | ---------- | ----------------- | - | ----------------- |  | ------------ | - | -------------------- | - | ------------------ |  | -------- | ---------- | ------ | - | ----------------------------------------- | - | ------- | -------------
|                                                                                                    | Shares            |            | Amount            |   | Shares            |  | Amount       |   | Shares               |   | Amount             |  | Shares   |            | Amount |   | Principle                                 |   | Capital |              
|Balance at December 31, 2005                                                                        |                   | 10,000,000 |                   | $ | 10,000            |  |              | – |                      | $ | –                  |  |          | 6,060,000  |        | $ | 6,060                                     |   |         | 209,109,976  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common stock issued for cash under Regulation
    D offering                                        |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | 395,275    |        |   | 395                                       |   |         | 600,000      
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common and preferred stock issued in exchange
    for consulting services and employee compensation |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | 1,000,000  |        |   | 1,000                                     |   |         | 7,125,000    
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common stock issued upon exercise of stock
    options/warrants                                     |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | 389,540      
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common stock issued for conversion
    of notes payable                                             |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | 162,049,548  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Return and cancellation of shares                                                                   |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | (1,000,000 | )      |   | (1,000                                    | ) |         | –            
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common stock issued/(returned) to/(from) escrow
    for debt conversions and warrant exercises      |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | (21,167,500  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Shares Issued for Debt Extinguishment                                                               |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | 60,000,000   
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Shares issued for Debt Commitment                                                                   |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | 30,000,000   
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Conversion of Preferred C for Common                                                                |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | (1,540,000 | )      |   | (1,540                                    | ) |         | 154,000,000  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Net Loss                                                                                            |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Balance at December 31, 2006                                                                        |                   | 10,000,000 |                   | $ | 10,000            |  |              | – |                      | $ | –                  |  |          | 4,915,275  |        | $ | 4,915                                     |   |         | 602,106,564  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Change in Accounting Principle                                                                      |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common and preferred stock issued in exchange
    for consulting services and employee compensation |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | 393,350,000  
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common stock issued upon exercise of stock
    options/warrants                                     |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | 50,000,000   
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Imputed interest on related party debt                                                              |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Net Profit                                                                                          |                   | –          |                   |   | –                 |  |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |  |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Balance at December 31, 2007                                                                        |                   | 10,000,000 |                   | $ | 10,000            |  |              | – |                      | $ | –                  |  |          | 4,915,275  |        | $ | 4,915                                     |   |         | 1,045,456,564







The accompanying
notes are an integral part of the unaudited financial statements



7







SaviCorp

A Corporation in the Development Stage

STATEMENT OF STOCKHOLDERS' DEFICIT

For the Period From Inception, August 13,
2002, to December 31, 2010



|                                                                                                    | Preferred Stock A |            | Preferred Stock B |   | Preferred Stock C |   | Common Stock |   | Change in Accounting |   | Additional Paid-In |  | Deferred |            | Stock  |   | Losses Accumulated During the Development |   |         |              
|--------------------------------------------------------------------------------------------------- | ----------------- | ---------- | ----------------- | - | ----------------- | - | ------------ | - | -------------------- | - | ------------------ |  | -------- | ---------- | ------ | - | ----------------------------------------- | - | ------- | -------------
|                                                                                                    | Shares            |            | Amount            |   | Shares            |   | Amount       |   | Shares               |   | Amount             |  | Shares   |            | Amount |   | Principle                                 |   | Capital |              
|Balance at December 31, 2007                                                                        |                   | 10,000,000 |                   | $ | 10,000            |   |              | – |                      | $ | –                  |  |          | 4,915,275  |        | $ | 4,915                                     |   |         | 1,045,456,564
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common and preferred stock issued in exchange
    for consulting services and employee compensation |                   | –          |                   |   | –                 |   |              | – |                      |   | –                  |  |          | 112,500    |        |   | 113                                       |   |         | 13,500,000   
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common and preferred stock forfeited in settlement agreement                                        |                   | (1,000,000 | )                 |   | (1,000            | ) |              | – |                      |   | –                  |  |          | (1,500,000 | )      |   | (1,500                                    | ) |         | (7,102,300   
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Common and preferred stock issued for licensing
    agreement                                       |                   | 5,000,000  |                   |   | 5,000             |   |              | – |                      |   | –                  |  |          | 5,000,000  |        |   | 5,000                                     |   |         | 500,000,000  
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Conversion of Preferred A for Common                                                                |                   | (3,652,500 | )                 |   | (3,653            | ) |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | 365,250,000  
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Imputed interest on related party debt                                                              |                   | –          |                   |   | –                 |   |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Preferred A stock loaned to Company                                                                 |                   | (1,000,000 | )                 |   | (1,000            | ) |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Wages Payable forfeited from related party                                                          |                   | –          |                   |   | –                 |   |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Expenses incurred by related party for no
    consideration                                         |                   | –          |                   |   | –                 |   |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Net Loss                                                                                            |                   | –          |                   |   | –                 |   |              | – |                      |   | –                  |  |          | –          |        |   | –                                         |   |         | –            
|                                                                                                    |                   |            |                   |   |                   |   |              |   |                      |   |                    |  |          |            |        |   |                                           |   |         |              
|Balance at December 31, 2008                                                                        |                   | 9,347,500  |                   | $ | 9,348             |   |              | - |                      | $ | –                  |  |          | 8,527,775  |        | $ | 8,528                                     |   |         | 1,917,104,264











The
accompanying notes are an integral part of the unaudited financial statements



8









SaviCorp

A Corporation in the Development Stage

STATEMENT OF STOCKHOLDERS' DEFICIT

For the Period From Inception, August 13,
2002, to December 31, 2010





|                                                                                                    |  | Preferred Stock A |   |   | Preferred
                                         Stock B |   |  | Preferred
                                         Stock C |  |   | Common
                                         Stock |  |  | Change
                                         in Accounting |   |   | Additional
                                         Paid-In |   |  | Deferred      |   |   | Stock     |   |  | Losses
                                         Accumulated During the Development |  |  |             |  
|--------------------------------------------------------------------------------------------------- |  | ----------------- | - | - | ---------------------------------------------------------- | - |  | ---------------------------------------------------------- |  | - | ----------------------------------------------------- |  |  | ------------------------------------------------------------- | - | - | ----------------------------------------------------------- | - |  | ------------- | - | - | --------- | - |  | ---------------------------------------------------------------------------------- |  |  | ----------- | -
|                                                                                                    |  | Shares            |   |   | Amount                                                     |   |  | Shares                                                     |  |   | Amount                                                |  |  | Shares                                                        |   |   | Amount                                                      |   |  | Shares        |   |   | Amount    |   |  | Principle                                                                          |  |  | Capital     |  
|Balance at December 31, 2008                                                                        |  | 9,347,500         |   | $ | 9,348                                                      |   |  | –                                                          |  | $ | –                                                     |  |  | 8,527,775                                                     |   | $ | 8,528                                                       |   |  | 1,917,104,264 |   | $ | 1,917,104 |   |  | 658,128                                                                            |  |  | 251,119,009 |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Common and preferred stock issued
    in exchange for consulting services and employee compensation |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | 2,620,000                                                     |   |   | 2,620                                                       |   |  | 475,000,000   |   |   | 475,000   |   |  | –                                                                                  |  |  | (97,120     | )
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Imputed interest on related party debt                                                              |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | –                                                             |   |   | –                                                           |   |  | –             |   |   | –         |   |  | –                                                                                  |  |  | 7,646       |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Common and Preferred C stock loaned to Company                                                      |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | (2,500,000                                                    | ) |   | (2,500                                                      | ) |  | (300,000,000  | ) |   | (300,000  | ) |  | –                                                                                  |  |  | 27,500      |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Expenses incurred by related party for no consideration                                             |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | –                                                             |   |   | –                                                           |   |  | –             |   |   | –         |   |  | –                                                                                  |  |  | 73,806      |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Net
    Loss                                                                                        |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | –                                                             |   |   | –                                                           |   |  | –             |   |   | –         |   |  | –                                                                                  |  |  | –           |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Balance at December
    31, 2009                                                                    |  | 9,347,500         |   | $ | 9,348                                                      |   |  | –                                                          |  | $ | –                                                     |  |  | 8,647,775                                                     |   | $ | 8,648                                                       |   |  | 2,092,104,264 |   | $ | 2,092,104 |   |  | 658,128                                                                            |  |  | 251,130,841 |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Common and preferred stock issued in exchange
    for consulting services and employee compensation |  | 1,055,000         |   |   | 1,055                                                      |   |  | –                                                          |  |   | –                                                     |  |  | 436,000                                                       |   |   | 436                                                         |   |  | 1,000,000     |   |   | 1,000     |   |  | –                                                                                  |  |  | 234,429     |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Common and preferred stock issued for cash under
    Regulation D offering                          |  | 45,000            |   |   | 45                                                         |   |  | –                                                          |  |   | –                                                     |  |  | 1,381,000                                                     |   |   | 1,381                                                       |   |  | 213,922,220   |   |   | 213,922   |   |  | –                                                                                  |  |  | 695,393     |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Conversion of common to Preferred A                                                                 |  | 1,508,983         |   |   | 1,508                                                      |   |  | –                                                          |  |   | –                                                     |  |  | –                                                             |   |   | –                                                           |   |  | (150,898,300  | ) |   | (150,898  | ) |  | –                                                                                  |  |  | 149,390     |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Conversion of Preferred C to common                                                                 |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | (1,577,500                                                    | ) |   | (1,578                                                      | ) |  | 157,750,000   |   |   | 157,750   |   |  | –                                                                                  |  |  | (156,172    | )
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Warrants issued for consulting services                                                             |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | –                                                             |   |   | –                                                           |   |  | –             |   |   | –         |   |  | –                                                                                  |  |  | 137,000     |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Imputed interest on related party debt                                                              |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | –                                                             |   |   | –                                                           |   |  | –             |   |   | –         |   |  | –                                                                                  |  |  | 15,044      |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Preferred A and Preferred C stock loaned to
    Company                                             |  | (2,000,000        | ) |   | (2,000                                                     | ) |  | –                                                          |  |   | –                                                     |  |  | (1,000,000                                                    | ) |   | (1,000                                                      | ) |  | –             |   |   | –         |   |  | –                                                                                  |  |  | (357,000    | )
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Net loss                                                                                            |  | –                 |   |   | –                                                          |   |  | –                                                          |  |   | –                                                     |  |  | –                                                             |   |   | –                                                           |   |  | –             |   |   | –         |   |  | –                                                                                  |  |  | –           |  
|                                                                                                    |  |                   |   |   |                                                            |   |  |                                                            |  |   |                                                       |  |  |                                                               |   |   |                                                             |   |  |               |   |   |           |   |  |                                                                                    |  |  |             |  
|Balance at December
    31, 2010                                                                    |  | 9,956,483         |   | $ | 9,956                                                      |   |  | –                                                          |  | $ | –                                                     |  |  | 7,887,275                                                     |   | $ | 7,887                                                       |   |  | 2,313,878,184 |   | $ | 2,313,878 |   |  | 658,128                                                                            |  |  | 251,848,925 |  











The
accompanying notes are an integral part of the financial statements



F-9









SaviCorp

A Corporation in the Development Stage

STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2010 and 2009 and for the Period

From Inception, August 13, 2002, to December 31, 2010



|                                                                                  |  |                   |             |   |                   |  |            |                                                                                                                            | 
|--------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ----------------- |  | ---------- | -------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                  |  |                   |             |   |                   |  |            | Inception
                                              (August 13, 2002)
                                              to | 
|                                                                                  |  | December 31, 2010 |             |   | December 31, 2009 |  |            | December 31, 2010                                                                                                          | 
|Cash flows from operating activities:                                             |  |                   |             |   |                   |  |            |                                                                                                                            | 
|Net loss                                                                          |  |                   | (76,965,835 | ) |                   |  | (4,325,827 | )                                                                                                                          | 
|Adjustments to reconcile net income to net cash used by operating activities:     |  |                   |             |   |                   |  |            |                                                                                                                            | 
|Gain on settlement                                                                |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Impairment of goodwill                                                            |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Impairment of property and equipment                                              |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Cost of recapitalization                                                          |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Amortization of deferred compensation                                             |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Loss due to interest on conversion of accounts payable to notes payable           |  |                   | –           |   |                   |  | 79,945     |                                                                                                                            | 
|Compensatory common and preferred stock issuances                                 |  |                   | 373,920     |   |                   |  | 380,500    |                                                                                                                            | 
|Interest imputed on non-interest bearing note from a stockholder                  |  |                   | 15,044      |   |                   |  | 7,646      |                                                                                                                            | 
|Interest expense recognized on issuance and through accretion of discount on debt |  |                   | 694,843     |   |                   |  | 106,899    |                                                                                                                            | 
|Change in fair value of derivatives                                               |  |                   | 73,641,661  |   |                   |  | 2,221,969  |                                                                                                                            | 
|Loss on extinguishment of debt                                                    |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Impairment of patent rights                                                       |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Common stock issued for rescission agreement                                      |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Contributed capital                                                               |  |                   | –           |   |                   |  | 73,806     |                                                                                                                            | 
|License agreement expense                                                         |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Common stock issued to pay accounts payable                                       |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Depreciation expense                                                              |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Changes in operating assets and liabilities:                                      |  |                   |             |   |                   |  |            |                                                                                                                            | 
|Changes in pre-paid assets                                                        |  |                   | (8,333      | ) |                   |  | –          |                                                                                                                            | 
|Accrued registration rights expense                                               |  |                   | 592,800     |   |                   |  | 592,800    |                                                                                                                            | 
|Changes in related party accounts payable                                         |  |                   | 167,829     |   |                   |  | –          |                                                                                                                            | 
|Changes in accounts payable and accrued liabilities                               |  |                   | 583,711     |   |                   |  | 862,262    |                                                                                                                            | 
|Net cash used by operating activities                                             |  |                   | (904,360    | ) |                   |  | –          |                                                                                                                            | 
|Cash flows from investing activities:                                             |  |                   |             |   |                   |  |            |                                                                                                                            | 
|Acquisition of equipment                                                          |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Acquisition of patents                                                            |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Net cash used in investing activities                                             |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Cash flows from financing activities:                                             |  |                   |             |   |                   |  |            |                                                                                                                            | 
|Proceeds from stockholder advances                                                |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Net Proceeds from convertible debt                                                |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Proceeds from note payable                                                        |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Proceeds from warrant exercise and deposit                                        |  |                   |             |   |                   |  |            |                                                                                                                            | 
|for warrant exercise                                                              |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Payments on notes payable                                                         |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Proceeds from sale of common stock                                                |  |                   | 910,741     |   |                   |  | –          |                                                                                                                            | 
|Net cash provided by financing activities                                         |  |                   | 910,741     |   |                   |  | –          |                                                                                                                            | 
|Net increase (decrease) in cash and cash equivalents                              |  |                   | 6,381       |   |                   |  | –          |                                                                                                                            | 
|Cash and cash equivalents at beginning of year                                    |  |                   | –           |   |                   |  | –          |                                                                                                                            | 
|Cash and cash equivalents at end of year                                          |  |                   | 6,381       |   |                   |  | –          |                                                                                                                            | 





The accompanying notes are an integral part
of the financial statements

F-10







SAVI CORP

A Corporation in the Development Stage

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 and 2009 and for the
Period

From Inception, August 13, 2002 to December 31, 2010



|1. | Organization and Significant Accounting Policies
|-- | ------------------------------------------------



SaviCorp (the "Company")
is a Nevada Corporation that has acquired rights to "blow-by gas and crankcase engine emission reduction technology"
which it intends to develop and market on a commercial basis. The technology is a relatively simple gasoline and diesel engine
emission reduction device that the Company intends to sell to its customers for effective and efficient emission reduction and
engine efficiency for implementation in both new and presently operating automobiles. The Company is considered a development stage
enterprise because it currently has no significant operations, has not yet generated revenue from new business activities and is
devoting substantially all of its efforts to business planning and the search for sources of capital to fund its efforts.



The Company was originally incorporated
as Energy Resource Management, Inc. on August 13, 2002 and subsequently adopted name changes to Redwood Energy Group, Inc. and
SaVi Media Group, Inc., upon completion of a recapitalization on August 26, 2002. The re-capitalization occurred when the Company
acquired the non-operating public shell of Gene-Cell, Inc. Gene-Cell Inc. had no significant assets or operations at the date of
acquisition and the Company assumed all liabilities that remained from its prior discontinued operation as a biopharmaceutical
research company. The historical financial statements presented herein are those of SaVi Media Group, Inc. and its predecessors,
Redwood Energy Group, Inc. and Energy Resource Management, Inc.



The non-operating public shell used
to recapitalize the Company was originally incorporated as Becniel and subsequently adopted name changes to Tzaar Corporation,
Gene-Cell, Inc., Redwood Energy Group, Inc., Redwood Entertainment Group, Inc., SaVi Media Group, Inc., and finally its current
name SaviCorp.



Significant Estimates



The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the dates of the financial statements and the reported amounts of revenues and expenses during the periods. Actual results could
differ from estimates making it reasonably possible that a change in the estimates could occur in the near term.



Cash and Cash Equivalents





The Company considers all highly
liquid short-term investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company
had no cash equivalents as of December 31, 2009 and $6,381 as of December 31, 2010.





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.



F-11







Furniture and Equipment



Furniture and equipment is recorded
at cost. The cost and related accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the respective
accounts, and any resulting gains or losses are included in the results of operations. Depreciation is computed using the straight-line
method over the estimated useful lives of the related assets. Repairs and maintenance costs are expensed as incurred.



Impairment Of Long-Lived Assets



The Company evaluates the recoverability
of long-lived assets when events and circumstances indicate that such assets might be impaired and determines impairment by comparing
the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Impairments
are charged to operations in the period to which events and circumstances indicate that such assets might be impaired.



Intangible Assets



Intangible assets are amortized
using the straight-line method over their estimated period of benefit. We evaluate the recoverability of intangible assets periodically
and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.



Income Taxes



The Company uses the liability method
of accounting for income taxes. Under this method, deferred income taxes are recorded to reflect the tax consequences on future
years of temporary differences between the tax basis of assets and liabilities and their financial amounts at year-end. The Company
provides a valuation allowance to reduce deferred tax assets to their net realizable value.



Stock-Based Compensation





The Company adopted FASB guidance
on stock based



compensation
on January 1, 2006. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options,
to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Stock and
stock options issued for services and compensation totaled $373,920 and $380,500 for the years ended December 31, 2010 and 2009,
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.





F-12









The derivative liabilities result
in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Note. 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.
Potentially dilutive options, warrants and convertible preferred stock that were outstanding during 2009 and 2010 were not considered
in the calculation of diluted earnings per share because the Company's net loss rendered their impact anti-dilutive. Accordingly,
basic and diluted loss per share is identical for the year ended December 31, 2008 and 2009. See Note 11 for a discussion of potentially
dilutive instruments.







Fair Value of Financial Instruments



The Company includes fair value
information in the notes to financial statements when the fair value of its financial instruments is different from the book value.
When the book value approximates fair value, no additional disclosure is made.



New Accounting Pronouncements





In July 2009, the FASB established
the FASB Accounting Standards CodificationTM (“Codification”) as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with
generally accepted accounting principles (“GAAP”) in the United States. This guidance was included in the Codification
under FASB Accounting Standard Codification (“ASC”) Topic 105, Generally Accepted Accounting Principle s . All prior
accounting standard documents were superseded by the Codification and any accounting literature not included in the Codification
is no longer authoritative. Rules and interpretive releases of the SEC issued under the authority of federal securities laws will
continue to be sources of authoritative GAAP for SEC registrants. The Codification became effective for the Company beginning
with the third quarter of 2009. Therefore, beginning with the third quarter of 2009, all references made by the Company in its
consolidated condensed financial statements use the new Codification numbering system. The Codification does not change or alter
existing GAAP and, therefore, did not have a material impact on the Company’s consolidated condensed financial statements.



Effective June 30, 2009, the Company
adopted guidance issued by the FASB and included in ASC 855-10, “Subsequent Events,” which establishes general standards
of accounting for and disclosures of events that occur after the balance sheet date through the date the financial statements
are issued.





In January 2010, the FASB issued
ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements.  This
ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including
a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity
in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in
the reconciliation for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2010, and
for interim periods within those fiscal years. The adoption of this ASU did not have a material impact on our financial statements.



In February 2010, the FASB issued
ASU No. 2010-09 regarding subsequent events and amendments to certain recognition and disclosure requirements. Under this ASU,
a public company that is a SEC filer, as defined, is not required to disclose the date through which subsequent events have been
evaluated. This ASU is effective upon the issuance of this ASU. The adoption of this ASU did not have a material impact on our
financial statements.



In April 2010, the FASB issued
ASU No. 2010-18 regarding improving comparability by eliminating diversity in practice about the treatment of modifications of
loans accounted for within pools under Subtopic 310-30 – Receivable – Loans and Debt Securities Acquired with Deteriorated
Credit Quality (“Subtopic 310-30”). Furthermore, the amendments clarify guidance about maintaining the integrity of
a pool as the unit of accounting for acquired loans with credit deterioration.  Loans accounted for individually under
Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40, Receivables—Troubled
Debt Restructurings by Creditors.  The amendments in this Update are effective for modifications of loans accounted
for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010.  The
amendments are to be applied prospectively. Early adoption is permitted. The adoption of this ASU did not have a material impact
on our financial statements.







F-13







|2. | Going Concern Considerations
|-- | ----------------------------





The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. In 2010, the Company had limited operations and
resources. The Company has accumulated net losses in the development stage of $342,019,164 for the period from inception, August
13, 2002, to December 31, 2010. At December 31, 2010, the Company is in a negative working capital position of $86,475,390 and
has a stockholders' deficit of $86,475,390. Additionally, as of December 31, 2010 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 was in default of its registration rights agreement with the investor in its long-term debt. Such default and the Company’s inability to fund its ongoing operations increase the likelihood that the investor could seize its assets to partially satisfy the debt or find another operator of those assets.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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 in the development stage, or that the Company can raise adequate long-term capital from private
placement of its common stock or private debt to emerge from the development stage. 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 the development stage.
| | - | -------------------------------------------------------------------------------------------------------



| | · | The ability of the Company to successfully produce and market its gasoline and diesel engine emission reduction device in a manner that will allow it to ultimately achieve adequate profitability and positive cash flows to sustain its operations.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In order to address its ability
to continue as a going concern, implement its business plan and fulfill commitments made in connection with its agreement for acquisition
of patent rights (See Note 3), the Company hopes to raise additional capital from sale of its common 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. | Agreement for Acquisition of Patent Rights
|-- | ------------------------------------------



On March 31, 2003, the Company entered
into a letter of intent to acquire 20% of SaVi Group, the name under which Serge Monros was conducting business in the ownership
of numerous patents he had developed. The acquisition of 20% of SaVi Group was completed in the second quarter of 2004 upon the
Company's payment of $38,500 in cash and the issuance of 4,000 shares of the Company's common stock to Serge Monros.



Subsequent to the acquisition, the
Company changed its name from Redwood Entertainment Group, Inc. to SaVi Media Group, Inc. Serge Monros changed the name of the
entity in which he holds the patents to His Divine Vehicle, Inc. (“HDVI”). Further discussions between the Company
and Serge Monros led to a September 1, 2004 agreement (the "Agreement") under which the Company acquired 100% of the
rights to various patents (the "Patents") owned by Serge Monros. The Agreement was amended and modified on December 30,
2004 and again on April 6, 2005. The most important patented technology, for which the Company acquired rights, was technology
to produce a relatively simple gasoline and diesel engine emission reduction device that the Company intends to sell to manufacturers
of new vehicles and owners of presently operating automobiles.



F-14









The Company does not have the records
of the amounts spent in the development of the Patents and is unaware of the amounts expended.



Under the terms of the Agreement
as amended, the Company acquired the Patents rights for the following consideration:



| | · | 5,000,000 shares of Series A preferred stock to both Serge Monros, who owned the patents, and Mario Procopio, the Company's founder and Chief Executive Officer. The Series A preferred stock is convertible to and holds voting rights of 100 to 1 of those attributable to common stock. These shares are to remain in escrow for three years, and, accordingly, they will not be converted to common stock during that period.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 5,000,000 shares of common stock to both Serge Monros and Mario Procopio.
| | - | -------------------------------------------------------------------------



| | · | Three-year stock options to acquire 125,000,000 shares of the Company's common stock at $0.00025 per share to both Serge Monros and Mario Procopio. This provision of the agreement was reached in April 2005. The options to Serge Monros are considered part of the cost of the patent rights under the Agreement. The Options to Mario Procopio will be recognized as compensation expense of $31,250,000 in the second quarter of 2005.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Agreement represents a three
year relationship that may be renegotiated or rescinded at the end of that term if the use of the Patents does not produce revenue
equal to costs associated with the Agreement or modified annual cost, whichever is less. The Agreement does not define the terms
"Costs associated with the Agreement" or "Modified Annual Costs". Regardless of performance, the Agreement
is eligible for renewal and/or modification on September 1, 2007.



In the event the Agreement is rescinded,
the Patents and related technology will be returned to Serge Monros. Further, under the terms of the Agreement, the Company is
required to build a $5,000,000 research and development lab and a manufacturing plant and Serge Monros will also own those assets,
free and clear, in the event the Agreement is rescinded or the Company dissolved.



The Agreement contains two commitments
by the Company as follows:



| | · | Serge Monros and Mario Procopio each are to receive monthly compensation of $10,000 per month, depending on revenues and the raising of capital, but not less than $3,000 per month.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Contingent consideration to Serge Monros of $75,000,000 in cash or in the form of stock options the exercise of which will provide net proceeds to Serge Monros of $75,000,000 over the next ten years. If options are issued, they will bear an exercise price of $0.00025 per share. This provision of the agreement is specifically tied to the performance of the Company and its ability to pay either in cash or stock options.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company recorded Patents at
cost to Serge Monros because the Agreement resulted in the control of the Company by Serge Monros and Mario Procopio. Further,
due to the fact that most costs incurred by Serge Monros in developing the patents represented research and development costs that
were immediately expensed, the basis of the Patents has been limited to $38,500, the actual cash paid to Serge Monros under the
initial agreement to acquire 20% of SaVi Group. In 2006, The Company recorded a $38,500 impairment allowance that reduced the patents
to a zero carrying value since it is clear the Company will not meet the requirements of the Agreement, and will likely lose any
rights it has to such patents.



The Series A convertible preferred
stock and the stock options issued under the Agreement could have a very significant future dilutive effect on stockholders.



HDV, an affiliate of Mr. Monros,
manufactures the “DynoValve” and “DynoValve Pro” products and then sells them to the Company for resale
pursuant to the Product Licensing Agreement entered into on November 15, 2008, as 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.



F-15







|4. | Accounts Payable and Accrued Liabilities
|-- | ----------------------------------------





Accounts Payable and Accrued Liabilities
at December 31, 2010 and 2009, consisted of the following:







|                                      |  | 2010 |           |  | 2009 |  
|------------------------------------- |  | ---- | --------- |  | ---- | -
|                                      |  |      |           |  |      |  
|Trade accounts payable                |  | $    | 246,697   |  |      | $
|Accrued wages payable                 |  |      | 858,920   |  |      |  
|Accrued registration rights penalties |  |      | 2,880,782 |  |      |  
|Accrued interest expense              |  |      | 1,437,870 |  |      |  
|                                      |  |      |           |  |      |  
|                                      |  | $    | 5,424,269 |  |      | $





|5. | Accounts Payable and Accrued Liabilities – Related Party
|-- | --------------------------------------------------------







The amounts due at December 31,
2010 of $15,000 is due to Serge Monros ($10,000) and Greg Sweeney ($5,000) for payments made on behalf of the Company related
to the Herrera Settlement.





|6. | 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).



|7. | Convertible Debt
|-- | ----------------



Cornell:





On July 10, 2006, we entered into
a Securities Purchase Agreement with Cornell Capital Partners L.P. providing for the sale by us to Cornell of our 10% secured
convertible debentures in the aggregate principal amount of $2,970,000 of which $1,670,000 was advanced immediately. We entered
into an amended and restated securities purchase agreement with Cornell on August 17, 2006. The second installment of $200,000
was advanced on August 17, 2006. The third installment of $600,000 was advanced on September 1, 2006. The last installment of
$500,000 would be advanced two business days prior to a registration statement being declared effective by the SEC. In addition,
Cornell issued a note payable of $15,000 on April 2, 2007 that on default became convertible. The Company was in default on all
debt to Cornell as of December 31, 2009 and December 31, 2010. A portion of the funds advanced were used to pay off the existing
convertible debenture and other advances made by Golden Gate Investors totaling $1,016,942. Following is an analysis of the proceeds
received and related fees and expenses paid with such proceeds.





F-16









|Gross amount received – contractual balance |  | $ | 2,485,000 |  
|------------------------------------------- |  | - | --------- | -
|Less commissions paid                       |  |   | (247,000  | )
|Less legal fees                             |  |   | (108,960  | )
|Less structuring fee                        |  |   | (10,000   | )
|                                            |  |   |           |  
|Net proceeds                                |  | $ | 2,119,040 |  



Following is an analysis of convertible
debt due Cornell at December 31, 2010 and December 31, 2009:







|                                |  | 2010 |           |  | 2009 |  
|------------------------------- |  | ---- | --------- |  | ---- | -
|                                |  |      |           |  |      |  
|Contractual balance, in default |  | $    | 2,485,000 |  |      | $
|Less unamortized discount       |  |      | –         |  |      |  
|                                |  |      |           |  |      |  
|Convertible debt                |  | $    | 2,485,000 |  |      | $





The secured convertible debentures
bear interest at 10% and mature two years from the date of issuance. Holders may convert, at any time, any amount outstanding under
the secured convertible debentures into shares of the Company’s common stock at a conversion price per share equal to $0.013
beginning the earlier of (i) the first business day of the month immediately following the month in which a registration statement
is first declared effective or (ii) November 1, 2006, and continuing on the first business day of each calendar month thereafter,
we are required to make a mandatory redemption payment of $225,000 and accrued and unpaid interest, which payment can be made in
cash or in restricted shares of our common stock.



The Company has the option, at its
sole discretion, to settle the monthly mandatory redemption amount by (i) paying the investor cash in an amount equal to 115% of
the monthly mandatory redemption amount, or (ii) issuing to the investor the number of shares of the Company’s common stock
equal to the monthly mandatory redemption amount divided by $0.007, which is known as the redemption conversion price, provided,
however, that in order the Company to issue shares upon payment of the monthly mandatory redemption amount (A) this registration
statement is effective, (B) no event of default shall have occurred, and (C) the closing bid price for our common stock shall be
greater than the redemption conversion price as of the trading day immediately prior to the redemption date. However, in the event
that (A) this registration statement is effective, (B) no event of default shall have occurred, and (C) the closing bid price for
our common stock is less than the redemption conversion price but is greater than $0.003, which is known as the default conversion
price, we shall have the option to settle the monthly mandatory redemption amount by issuing to the investor the number of shares
of common stock equal to the monthly mandatory redemption amount divided by the default conversion price.



In the event that certain events
of default, such as failure to pay principal or interest when due, failure to issue common stock upon conversion or the delisting
or lack of quotation of our common stock, the redemption conversion price will be reduced to the default conversion price. The
investor has contractually agreed to restrict its ability to convert the debentures and receive shares of the Company’s common
stock such that the number of shares of common stock held by it and its affiliates after such conversion does not exceed 4.9% of
the then issued and outstanding shares of common stock.



The Company has the right, at its
option, with three business days advance written notice, to redeem a portion or all amounts outstanding under the secured convertible
debentures prior to the maturity date provided that the closing bid price of the Company’s common stock, is less than $0.013
at the time of the redemption. In the event of a redemption, the Company is obligated to pay an amount equal to the principal amount
being redeemed plus a 15% redemption premium, and accrued interest.



In connection with the securities
purchase agreement dated July 10, 2006, as amended, the Company granted the investor registration rights. Under the terms of the
registration rights the Company was obligated to use its best efforts to cause the registration statement to be declared effective
no later than December 7, 2006 and to insure that the registration statement remains in effect until the earlier of (i) all of
the shares of common stock issuable upon conversion of the Debentures have been sold or (ii) July 10, 2008.





The Company defaulted on its obligations
under the registration rights agreement because the Registration Statement was not declared effective by December 7, 2006. Accordingly,
we are required to pay to Cornell, as liquidated damages, for each month that the registration statement has not been filed or
declared effective, as the case may be, either a cash amount or shares of our common stock equal to 2% of the liquidated value
of the secured convertible debentures. Under FASB EITF 00-19-02, the registration rights liability is separated from the derivative
liability and shown on the balance sheet at December 31, 2009 and December 31, 2010 at $2,287,982 and $2,880,782 respectively.





F-17







In connection with the securities
purchase agreement dated July 10, 2006, the Company executed a security agreement in favor of the investor granting them a first
priority security interest in all of the Company’s goods, inventory, contractual rights and general intangibles, receivables,
documents, instruments, chattel paper, and intellectual property. The security agreement states that if an event of default occurs
under the secured convertible debentures or security agreement, the investors have the right to take possession of the collateral,
to operate our business using the collateral, and have the right to assign, sell, lease or otherwise dispose of and deliver all
or any part of the collateral, at public or private sale or otherwise to satisfy our obligations under these agreements. Based
on the Company’s current default of the registration rights agreement, the investor could take possession of substantially
all assets of the Company.



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 $0.0012) subject to anti-dilution
protection. This note was in default as of December 31, 2010.





|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, 2010 and December 31, 2009:









|                                |  | 2010 |         |  | 2009 |  
|------------------------------- |  | ---- | ------- |  | ---- | -
|                                |  |      |         |  |      |  
|Contractual balance, in default |  | $    | 597,440 |  |      | $
|Less unamortized discount       |  |      | –       |  |      |  
|                                |  |      |         |  |      |  
|Convertible debt                |  | $    | 597,440 |  |      | $







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.



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 $0.0012) subject
to anti-dilution protection. This note was in default as of December 31, 2010.







Following is an analysis of convertible
debt - related party at December 31, 2010 and December 31, 2009:





|                                |  | 2010 |         |  | 2009 |  
|------------------------------- |  | ---- | ------- |  | ---- | -
|                                |  |      |         |  |      |  
|Contractual balance, in default |  | $    | 204,302 |  |      | $
|Less unamortized discount       |  |      | –       |  |      |  
|                                |  |      |         |  |      |  
|Convertible debt                |  | $    | 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-18







|8. | 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, 2010 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.





|9. | 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, 2010 and 2009 are
as follows:







|                                      |  | 2010 |              |  | 2009 |  
|------------------------------------- |  | ---- | ------------ |  | ---- | -
|                                      |  |      |              |  |      |  
|Net income/(loss) before income taxes |  | $    | (76,965,835) |  |      | $





The components of the Company's deferred tax assets
at December 31, 2010 and 2009 are as follows:







|                    |  | 2010 |            |   | 2009 |  
|------------------- |  | ---- | ---------- | - | ---- | -
|Deferred tax assets |  |      |            |   |      |  
|Liabilities         |  |      |            |   |      |  
|Loss carry-forwards |  | $    | 3,671,033  |   |      | $
|Valuation allowance |  |      | (3,671,033 | ) |      |  
|                    |  | $    | –          |   |      | $







At December 31, 2010, the Company
had generated US net operating loss carry-forwards of approximately $10,797,156 which will expire in various years between 2011
and 2029. 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 (See Note 3). 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, 2010 and December
31, 2009, the Company has no uncertain tax positions.





|10. | 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-19







On or about July 28, 2011, SaviCorp,
a Nevada corporation, formerly known as Savi Media Group, Inc. (the “Company”) entered into a Repayment Agreement (the
“Repayment Agreement”) with YA Global Investments, L.P., a Cayman Islands exempt limited partnership formerly known
as Cornell Capital Partners, L.P. (“YA Global”).



On or about July 10, 2006, the Company
and YA Global, then known as Cornell Capital Partners, L.P., entered into a Securities Purchase Agreement which was subsequently
amended and restated on August 17, 2006 (collectively the “SPA”) wherein the Company issued and sold to YA Global secured
convertible debentures in the aggregate amount of approximately US$2,485,000 (collectively, the “Debentures”) and certain
warrants (collectively the “Prior Warrants” and with the Debentures, the “Securities”) to purchase an aggregate
of 2,900,000,000 shares of the Company’s common stock, par value $0.001 (the “Common Stock”).



In connection with the SPA, the
Company and YA Global entered into ancillary agreements, including a Security Agreement, an Insider Pledge and Escrow Agreement,
a Registration Rights Agreement, and other related documents (the SPA and such ancillary agreements are collectively referred to
hereinafter as “Financing Documents”). Copies of the Financing Documents have been attached to the Company’s
prior filings with the United States Securities and Exchange Commission (the “SEC”) and are hereby incorporated in
their entirety by reference.



Pursuant to the terms of the Repayment
Agreement, all of the Company’s obligations under the Financing Documents have been terminated in full. Without limitation,
all amounts otherwise due under the Debentures are deemed satisfied in full, the Prior Warrants are deemed cancelled, and any and
all security interests granted by the Company in favor of YA Global pursuant to the Financing Documents have been extinguished,
including the release of 4,000,000 shares of Series A Preferred Stock held in escrow. In exchange for the foregoing, the Company
delivered to YA Global: (i) a one-time cash payment of US$550,000; and (ii) new warrants to purchase up to 25,000,000 shares of
Common Stock at an exercise price of $0.0119 (the “Current Warrants”). The Current Warrants expire on or about July
28, 2014. A copy of the Repayment Agreement and Current Warrants have been attached as exhibits to the Form 8-K filed August 2,
2011 and are hereby incorporated in their entirety by reference.



The Company received a letter from
the Securities and Exchange Commission, Los Angeles Regional Office, dated May 9, 2011. The letter informed us that the SEC had
entered into a “formal order of investigation” into “Savi Media Group, Inc.” The letter included a “Subpoena
DucesTecum,” meaning the Company was given a prescribed period of time to produce all requested documents and information
contained in the subpoena. An index of the source of all such produced information and an authentication declaration were also
to be supplied. The stated purpose of the investigation is a fact-finding inquiry to assist the SEC staff in determining if the
Company has violated federal securities laws. The SEC states there is no implication of negativity or guilt at this stage of the
investigation.



The Company initially hired the
Los Angeles law firm of Troy Gould to represent us in the matter of this investigation. As of the date of this filing, the Company
believes it has provided all requested material to the SEC. Updates on the investigation will be supplied by supplemental filings
hereto.



Status of prior private investment;
$530,232 was raised privately in 2006 (cash for shares), $0 in 2007 (although HDV sold $13,000 of its shares), $1,000 in 2008 (although
HDV sold $453,750 of its shares), $442,000 in 2009, $879,550 in 2010, $1,930,828 in 2011, $342,000 in the first calendar quarter
of 2012 and $100,000 in the 2nd quarter 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). The Company is planning to offer rescission to many private placement investors shortly after the posting of this Annual
Report on OTC Markets.



F-20









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 $7,875 in 2008 and shares for services valued at $74,400 in 2009. We have no plans to offer rescission for these share issuances.





The Company 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 2011 rescission offer, in terms of rescission offers accepted by
shareholders, were very encouraging. The Company had three rescission offers accepted and refunded $8,000 plus interest.





Generally, the Company believes
it has good relationships with their shareholders. Our plan is to offer rescission to most shareholders obtaining privately offered
shares from us since January 1, 2006 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.



The Company received a letter dated
June 7, 2013 with a Civil Complaint titled Arnold Lamarr Weese, et al v. SaviCorp filed in the Northern District of West Virginia.
In addition to SaviCorp, Serge Monros and Craig Waldrop are being sued individually. Settlement discussions failed and Plaintiff's
counsel began service of Process. The Company and Mr. Monros have hired Shustak and Partners to defend the claim. The defendants
have sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempts
to hold the Company and Mr. Monros responsible for alleged improprieties of Waldrop. The Company intends on vigorously defending
its rights or reaching a settlement to release the Company and Mr. Monros of any alleged liability.



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.



|11. | Stockholders' Equity
|--- | --------------------



Common Stock



Following is a description of transactions
affecting common stock.



Inception to December 31, 2002



On August 26, 2002 the Company entered
into the recapitalization transaction under which the Company agreed to acquire all of the issued and outstanding common stock
of Energy Resource Management, Inc. ("ERM") in exchange for 4,000,000 shares of the Company's common stock.



On August 26, 2002 and September
30, 2002 the Company entered into consulting agreements with five consultants for services related to business strategy and business
development. The consulting agreements had a term of two to three months and required the Company to issue 905,000 shares of common
stock valued at $2,232,150 based on the quoted market price on the dates of the transactions. The transactions resulted in a charge
to consulting expense of $1,202,233 for the period from inception, August 13, 2002, to December 31, 2002 and deferred compensation,
presented as an increase in stockholders' deficit of $1,030,917, at December 31, 2002.



Year ended December 31, 2003



Effective March 3, 2003 the Company
adopted a 3 to 1 forward stock split. This stock split has been reflected in the accompanying financial statements on a retroactive
basis and all references to shares outstanding, weighted average shares and earnings per share have been restated to reflect the
split as if it had occurred at inception.



In April 2003, the Company demanded
return of 1,050,000 shares of common stock, issued under the consulting agreements in 2002, as a result of nonperformance of services
and failure by specific members of the Company's business development consulting team to fulfill specific contractual obligations
to the Company.



In June 2003, the Company negotiated
an extension to its DreamCity acquisition agreement in exchange for 275,000 shares of restricted common stock. This acquisition
was completed in October 2003, upon issuance of an additional 20,000,000 shares.



F-21







In September 2003 the Company issued
5,700,000 shares of common stock to New Creation Outreach, Inc., as a donation to support its ministries. New Creation Outreach
is a related party because at the time, certain members of Company management and the board of directors are also officers in New
Creation Outreach, Inc.



At various dates in 2003, the Company
sold 10,450,000 shares of its common stock at prices ranging from $0.01 to $0.02 per share and received total proceeds of $155,000.
These shares were sold under private placements exempt from registration.



Year Ended December 31, 2004



Effective September 2, 2004 and
November 19, 2004, the Company's board of directors declared a 1 for 25 reverse stock split and a 1 for 100 reverse stock split,
respectively. The reverse stock splits, with a total impact of 1 for 2500, have been reflected in the accompanying financial statements
and all references to common stock outstanding, additional paid in capital, weighted average shares outstanding and per share amounts
prior to the record dates of the reverse stock splits have been restated to reflect the stock splits on a retroactive basis. Subsequently
to the stock splits, the Company awarded a total of 5,000,000 post-split shares to certain early investors and key stockholders
in Gene-Cell, Inc. This stock issuance has been shown as a special dividend in the accompanying statement of stockholders' deficit.
During 2004, the Company amended its Articles of Incorporation to increase its authorized shares of common stock from 100,000,000
to 1,000,000,000 shares.



The Company issued 5,002,000 shares
of common stock to the owner of Energy Resource Management, Inc. to rescind a re-capitalization transaction that occurred in 2002.



The Company issued 4,000 shares
of common stock in payment of the acquisition price of 20% of SaVi Group (See Note 3). The Company 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 the Company's common stock at $0.00025 per share) to complete the acquisition of the rights to the patents. The patents came
over at Serge Monros's basis, which was zero, because the development of the patents was a research and development effort. Serge
Monros also received 100,000 shares of common stock, valued at $20,000, as compensation for his role of chief technology officer
of the Company.



The Company 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, or are
now assisting the Company. These issuances were considered compensation and a cost of the transaction and valued at $3,160,800.



The Company subsequently issued
5,100,000 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 the Company's common stock at $0.00025 per share to Mario Procopio, the Company's Chief Executive Officer, for compensation
and for his efforts in arranging the acquisition of the rights to the patents owned by Serge Monros. The stock issuances to Mario
Procopio were valued at $101,020,000.



The Company issued 252,000 shares
of common stock to its former legal counsel for approximately $50,000 of services provided.



The Company issued 2,000,000 shares
of common stock to Kathleen Procopio for services she provided as chief financial officer of the Company. These services were valued
at $460,000, based on the quoted market price of the common stock. Kathleen Procopio is the spouse of the Company's chief executive
officer, Mario Procopio.



The Company issued 7,166,240 shares
of common stock as compensation to various individuals that provided services to the Company. These shares were valued at $1,572,215.



The company sold 39,600,000 shares
of common stock to qualified investors and received cash proceeds of $442,725



Year Ended December 31, 2005



During 2005, the Company amended
its Articles of Incorporation to increase its authorized shares of common stock from 1,000,000,000 to 6,000,000,000 shares.



The Company issued 42,828,835 shares
of common stock to various individual that provided consulting and other services to the Company and recognized compensation expense
of $5,337,218 related to those issuances.



The Company issued 22,150,950 shares
of common stock to under private placements of its common stock and received cash proceeds of $396,360.



F-22







The Company cancelled 6,466,700
shares previously issued to consultants.



The Company issued 244,763 shares
of common stock to the Investor upon exercise of stock warrants.



The company issued 42,215,361 shares
of common stock to the Investor upon conversion of $2,448 of convertible debt.



The Company issued 42,828,835 shares
of common stock to various individual that provided consulting and other services to the Company and recognized compensation expense
of $5,337,218 related to those issuances.



The Company issued 22,150,950 shares
of common stock to under private placements of its common stock and received cash proceeds of $396,360.



The Company cancelled 6,466,700
shares previously issued to consultants.



The Company issued 244,763 shares
of common stock to the Investor upon exercise of stock warrants.



The company issued 42,215,361 shares
of common stock to the Investor upon conversion of $2,448 of convertible debt.



Year Ended December 31, 2006



The Company issued 7,125,000 shares
of common stock to various individual that provided consulting and other services to the Company and recognized compensation expense
of $121,768 related to those issuances.



The Company issued 600,000 shares
of common stock to under private placements of its common stock and received cash proceeds of $6,000.



The Company issued 389,540 shares
of common stock to the holder of its convertible debt upon exercise of stock warrants and received proceeds of $425,966.



The Company issued 162,048,548 shares
of common stock to the holder of its convertible debt upon conversion of $3,903 of debt.



The Company issued 60,000,000 shares
of common stock to Golden Gate Investors in connection with an agreement to retire the outstanding debt owed to Golden Gate Investors.



The Company issued 30,000,000 shares
of common stock to Cornell Capital in connection with the agreement to issue Cornell Capital a Senior Secured Convertible Debt
instrument.



The Company exchanged 1,540,000
Preferred C shares for 154,000,000 shares of common stock.



Year Ended December 31, 2007



The Company issued 393,350,000 shares
of common stock to twenty-two individuals that provided consulting and other services to the Company and recognized compensation
expense of $1,416,060 related to those issuances based on the market value of the shares on the date of grant.



Year Ended December 31, 2008



In February 2008, as part of the
settlement, Mario Procopio, Kathy Procopio, and certain private corporations controlled by the Procopio's have returned to the
Company 7,102,300 common shares.



In March 2008, 1,500,000 Preferred
A shares were converted to 150,000,000 common shares. In May 2008, 2,152,000 Preferred A shares were converted to 215,200,000 common
shares.



The Board of Directors authorized
the issuance of an aggregate of 500,000,000 common shares as partial consideration for a licensing agreement with His Divine Vehicle.
The excess value of the shares issued (common and preferred) over the debt waived was expensed to research and development.



The Board of Directors authorized
the issuance of 13,500,000 shares of its common stock to 5 accredited and unaccredited investors for services rendered valued at
an aggregate of $6,750 based on the market value at the date awarded.



Year Ended December 31, 2009



In February 2009, the Board of
Directors authorized the issuance of 165,000,000 common shares for services rendered by independent contractors and credited wages
payable of $75,000 and recognized $7,500 in consultant expense related to those issuances based on the market value of the stock.



F-23







In March 2009, the Board of Directors
authorized the issuance of 7,000,000 common shares for services rendered by independent contractors and recognized compensation
expense of $3,500 related to those issuances based on the market value of the stock.



In September 2009, the Board of
Directors authorized the issuance of 3,000,000 common shares for services rendered by independent contractors and recognized compensation
expense of $1,500 related to those issuances based on the market value of the stock.



In September, 2009 the Board of
Directors authorized the issuance of an aggregate of 300,000,000 common shares and 2,500,000 Preferred C shares in exchange for
a services rendered by His Divine Vehicle and recognized compensation expense of $275,000 related to those issuances based on the
market value of the stock. His Divine Vehicle subsequently loaned back the 300,000,000 common shares and the 2,500,000 Preferred
C shares.





Year Ended December 31, 2010



In January 2010, the Board of Directors
authorized the issuance of 1,000,000 common shares to accredited and non-accredited investors for total proceeds of $3,000.



In February 2010, the Board of
Directors authorized the issuance of 1,500,000 common shares to accredited and non-accredited investors for total proceeds of
$1,500.



In March 2010, the Board of Directors
authorized the issuance of 400,000 common shares to accredited and non-accredited investors for total proceeds of $2,000.



In May 2010, the Board of Directors
authorized the issuance of 375,000 common shares to accredited and non-accredited investors for total proceeds of $3,000.



In June 2010, the Board of Directors
authorized the issuance of 52,858,334 common shares to accredited and non-accredited investors for total proceeds of $94,200.



In July 2010, the Board of Directors
authorized the issuance of 8,706,862 common shares to accredited and non-accredited investors for total proceeds of $110,000.



In August 2010, the Board of Directors
authorized the issuance of 26,499,999 common shares to accredited and non-accredited investors for total proceeds of $100,000.



In September 2010, the Board of
Directors authorized the issuance of 36,483,333 common shares to accredited and non-accredited investors for total proceeds of
$132,250. The Board of Directors also authorized the issuance of 1,000,000 common shares for services rendered by independent
contractors issuances based on the market value of the stock.



In October 2010, the Board of Directors
authorized the issuance of 14,740,000 common shares to accredited and non-accredited investors for total proceeds of $118,600.



In November 2010, the Board of
Directors authorized the issuance of 11,050,000 common shares to accredited and non-accredited investors for total proceeds of
$64,000.



In December 2010, the Board of
Directors authorized the issuance of 60,308,696 common shares to accredited and non-accredited investors for total proceeds of
$203,192.



Throughout the year, 1,557,500
Preferred C shares were converted to 157,750,000 common shares and 150,898,300 common shares were converted to Preferred A shares.





Stock Options



Gene-Cell, Inc., the company, used
in the recapitalization (See Note 1) periodically issued incentive stock options to key employees, officers, and directors to provide
additional incentives to promote the success of the Company's business and to enhance the ability to attract and retain the services
of qualified persons. The Board of Directors approved the issuance of all stock options. The exercise price of an option granted
was determined by the fair market value of the stock on the date of grant. Reverse stock splits by the Company resulted in the
reduction of outstanding options to less than 150 shares with exercise prices that are so high that the exercise of the options
will never be practical. Expiration dates range from March, 2008 through July, 2012.



During April 2005, the Company granted
a total of 250,000,000 options to Mario Procopio and Serge Monros as additional consideration for the assignment of the patent
and services provided to us. The options were granted on April 6, 2005, are exercisable starting July 6, 2005, and expire on April
6, 2008. The options are exercisable at the rate of $250 for every one million shares of common stock ($0.00025 per share). These
options represent all outstanding options of the Company at December 31, 2006 and 2005. The options to Serge Monros were considered
as part of the acquisition of patent rights. The options issued to Mario Procopio were valued at estimated market value of $31,250,000
and charged to compensation expense. On August 24, 2007, Serge Monros exercised 50,000,000 options for total consideration of $12,500.
No proceeds were actually received as the consideration received was a credit to amounts owed to Serge Monros. In February 2008,
as part of the settlement, Mario Procopio returned 125,000,000 options. The remaining 75,000,000 options held by Serge Monros expired
unexercised.



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 at December 31, 2005.



Stock Warrants



In connection with the securities
purchase agreement (See Note 6), we agreed to issue Cornell warrants to purchase an aggregate 2,900,000,000 shares of common stock,
exercisable for a period of five years as follows:



|          |               |  |          |   |        | Remaining | 
|--------- | ------------- |  | -------- | - | ------ | --------- | 
|Number of |               |  | Exercise |   |        | Life      | 
|Warrants  |               |  | Price    |   |        | Years     | 
|          | 1,000,000,000 |  |          | $ | 0.0030 |           | 
|          | 1,000,000,000 |  |          |   | 0.0060 |           | 
|          | 300,000,000   |  |          |   | 0.0100 |           | 
|          | 200,000,000   |  |          |   | 0.0150 |           | 
|          | 150,000,000   |  |          |   | 0.0200 |           | 
|          | 100,000,000   |  |          |   | 0.0300 |           | 
|          | 60,000,000    |  |          |   | 0.0500 |           | 
|          | 40,000,000    |  |          |   | 0.0750 |           | 
|          | 30,000,000    |  |          |   | 0.1000 |           | 
|          | 20,000,000    |  |          |   | 0.1500 |           | 
|          | 2,900,000,000 |  |          | $ | 0.0114 |           | 



All warrants issued to Cornell are currently exercisable
and have a been reset to $0.0005, which has increased the number of warrants to 66,000,000,000.



F-24









Gene Cell, Inc. and Redwood Entertainment
Group, Inc. periodically issued incentive stock options to key employees, officers, and directors to provide additional incentives
to promote the success of the Company's business and to enhance the ability to attract and retain the services of qualified persons.
The Board of Directors approved the issuance of all stock options. The exercise price of an option granted was determined by the
fair market value of the stock on the date of grant. Reverse stock splits by the Company resulted in the reduction of outstanding
options to less than 115 shares with exercise prices that are so high that the exercise of the options will never be practical.
The options expire from April 2011 to July 2012.



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 $0.274, 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.





Preferred Stock





During the year ended December
31, 2005, the Company set preferences for its Series A, B and C preferred stock. The Company is authorized to issue 40,000,000
shares of preferred stock, $0.01 par value per share. At December 31, 2010 the Company had 9,956,483 shares of series A preferred
stock issued and outstanding and 7,887,275 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 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.



Inception to December 31, 2002



None



Year Ended December 31, 2003



None



Year Ended December 31, 2004



The Company issued 5,000,000 shares
of Series A Preferred Stock for the acquisition of patent rights as described in Note x.



The Company issued 5,000,000 shares
of Series A Preferred Stock for compensation to Mario Procopio, the then current CEO. The Company incurred in compensation expense
based on the market value of the equivalent common shares that the preferred shares could convert into.



Year Ended December 31, 2005



The Company issued 6,060,000 shares
of Series C Preferred Stock to various individuals for consulting services and employee compensation. The Company expensed $105,540,718
in compensation expense based on the market value of the equivalent common shares that the preferred shares could convert into.



Year Ended December 31, 2006



The Company issued 395,275 shares
of Series C Preferred Stock for cash of $381,730 and extinguishment of debt of $142,500.



The Company issued 1,000,000 shares
of Series C Preferred Stock to a vendor for lease facilities and services provided valued at $490,000.



1,000,000 shares of Series C Preferred
Stock was returned to the Company by two officers/primary stockholders of the Company.



F-25







Year Ended December 31, 2007



None.



Year Ended December 31, 2008



In February 2008, as part of the
settlement, Mario Procopio, Kathy Procopio, and certain private corporations controlled by the Procopio's have returned to the
Company: 1,000,000 Preferred A shares, 1,500,000 Preferred C shares.



The Board of Directors authorized
the issuance of 5,000,000 Preferred A shares and 5,000,000 Preferred C shares as partial consideration for a licensing agreement
with His Divine Vehicle. His Divine Vehicle, subsequently loaned back 1,000,000 Preferred A shares. The excess value of the shares
issued (common and preferred) over the debt waived was expensed to research and development. The market value of the Preferred
stock was based on the underlying market value of the common stock.



The Board of Directors authorized
the issuance of 112,500 shares of its Preferred C stock to 1 accredited investor for services rendered valued at an aggregate of
$7,875 based on the market value at the date awarded.



Year Ended December 31, 2009



Board of Directors authorized the
issuance of an aggregate of 300,000,000 common shares and 2,500,000 Preferred C shares in exchange for a services rendered by His
Divine Vehicle. His Divine Vehicle subsequently loaned back the 300,000,000 common shares and the 2,500,000 Preferred C shares.



In December 2009, the Board of Directors
authorized the issuance of 120,000 Preferred C shares for services rendered by independent contractors based on the market value
of the underlying common stock.





Year Ended December 31, 2010



In January 2010, the Board of Directors
authorized the issuance of 45,000 Preferred A shares and 156,000 Preferred C shares to accredited and non-accredited investors
for total proceeds of $18,500. The Board of Directors also authorized the issuance of 1,055,000 Preferred A shares and 336,000
Preferred C shares for services rendered by independent contractors valued at an aggregate of $166,920 based on the market value
of the underlying common stock.



In January, 2010 His Divine Vehicle
loaned 2,000,000 Preferred A shares and the 1,000,000 Preferred C shares to the Company. The Company booked stock payable equal
to the market value of the underlying common stock.



In February 2010, the Board of
Directors authorized the issuance of 1,000,000 Preferred C shares to accredited and non-accredited investors for total proceeds
of $100,000.



In March 2010, the Board of Directors
authorized the issuance of 200,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $30,000.
The Board of Directors also authorized the issuance of 100,000 Preferred C shares for services rendered by independent contractors
valued at an aggregate of $60,000 based on the market value of the underlying common stock.



In August 2010, the Board of Directors
authorized the issuance of 25,000 Preferred C shares to accredited and non-accredited investors for total proceeds of $10,000.



Throughout the year, 1,557,500
Preferred C shares were converted to 157,750,000 common shares and 150,898,300 common shares were converted to Preferred A shares.



Potentially Dilutive Equity
Instruments



An analysis of potentially dilutive
equity instruments at December 31, 2010





|Warrants issued in connection with Cornell financing                          |  |  | 66,000,000,000 | 
|----------------------------------------------------------------------------- |  |  | -------------- | 
|Stock options issued  for patent rights and Compensation                      |  |  | –              | 
|Series A Preferred Stock convertible to common stock on a 100
    for 1 basis |  |  | 995,648,300    | 
|Series C Preferred Stock convertible to
    common stock on a 100 for 1 basis |  |  | 788,727,500    | 
|                                                                              |  |  |                | 
|Total                                                                         |  |  | 67,784,375,800 | 





Other Equity Transactions



Year Ended December 31, 2007



Interest was imputed on non-interest
bearing related party debt in the amount of $20,503 and credited to additional paid in capital.



Year Ended December 31, 2008



Interest was imputed on non-interest
bearing related party debt in the amount of $31,185 and credited to additional paid in capital.



His Divine Vehicle, a related party
contributed $172,714 in capital by incurring expenses on behalf of the Company.



Greg Sweeney, the former CEO, waived
$45,000 in wages which was credited to additional paid in capital.



Year Ended December 31, 2009



Interest was imputed on non-interest
bearing related party debt in the amount of $7,646 and credited to additional paid in capital.



His Divine Vehicle, a related party
contributed $73,806 in capital by incurring expenses on behalf of the Company.





F-26









Year Ended December 31, 2010



Interest was imputed on non-interest
bearing related party debt in the amount of $15,044 and credited to additional paid in capital.





|12. |  | Related Party Transactions
|--- |  | --------------------------





The Company engaged in various
related party transactions involving the issuance of shares of the Company's common stock during the years ended December 31,
2010 and 2009. Those transactions included the exercise of options by Serge Monros and are described in Note 11.



During 2007, 2008, 2009 and 2010
His Divine Vehicle, Inc. ("HDV") incurred costs on behalf of the Company. At December 31, 2010, the Company owes’
HDV $167,829 and Serge Monros $312,000 in accrued wages. At December 31, 2009, the Company owed Serge Monros $168,000 in accrued
wages.



HDV, an affiliate of Mr. Monros,
manufactures the “DynoValve” and “DynoValve Pro” products and then sells them to the Company for resale
pursuant to the Product Licensing Agreement entered into on November 15, 2008. As consideration for HDV entering into the Product
Licensing Agreement, the Company agreed to issue to Mr. Monros and HDV, if and when available, an aggregate of 500 Million shares
of Common Stock, 5 Million shares of Series A Preferred Stock and 5 Million shares of Series C Preferred Stock. HDV loaned 1,000,000
Preferred A shares to the Company in 2008. As additional consideration for the Licensing Agreement, HDV waived $332,786 owed to
it by the company and Mr. Monros waived $306,000 in accrued wages. The excess value of the shares issued (common and preferred)
over the debt waived was expensed to research and development. In July, 2011, the stock consideration paid for the licensing agreement
was modified to increase the common shares by 100,000,000, increase the Series A Preferred Stock by 1,500,000 and reduce the Series
C Preferred Stock by 2,500,000.



In 2009, HDV incurred $73,806 in
expenses on behalf of the company and received no compensation. This amounts were booked to additional paid in capital.



The Board of Directors authorized
the issuance of an aggregate of 300,000,000 common shares and 2,500,000 Preferred C shares in exchange for services rendered by
His Divine Vehicle. His Divine Vehicle subsequently loaned back the 300,000,000 common shares and the 2,500,000 Preferred C shares.



On December 15, 2009, the Company
converted $204,302 of accounts payable due to His Divine Vehicle, Inc. 	into a convertible promissory note. The note bears
interest at 8%, matures on April 15, 2010, and converts into common shares at the conversion rate of $0.003 (reset to $0.0012)
subject to anti-dilution protection.



In January, 2010 His Divine Vehicle
loaned 2,000,000 Preferred A shares and the 1,000,000 Preferred C shares to the Company.





F-27









|13. |  | Non-Cash Investing and Financing Transactions and Supplemental Disclosure of Cash Flow Information
|--- |  | --------------------------------------------------------------------------------------------------



During the years ended December
31, 2010 and 2009, the Company engaged in various non-cash investing and financing activities as follows:







|                                                     |  | 2010 |         |  | 2009 |  
|---------------------------------------------------- |  | ---- | ------- |  | ---- | -
|Settlement of Accounts Payable with convertible debt |  | $    | -       |  |      | $
|Accounts Payable converted to Notes Payable          |  | $    | -       |  |      | $
|Conversion of Preferred Stock into Common Stock      |  | $    | 6,852   |  |      | $
|Preferred Stock Loaned/Common Stock Payable          |  | $    | 360,000 |  |      | $







During the years ended December
31, 2010 and 2009, the Company made no cash interest payments or income tax payments.





|14. | Change in Accounting Principle for Registration Payment Arrangements.
|--- | ---------------------------------------------------------------------



In December 2006, the Financial
Accounting Standards Board (“FASB”) issued FASB Staff Position on No. EITF 00-19-2, Accounting for Registration Payment
Arrangements (“FSP EITF 00-19-2”). FSP EITF 00-19-2 provides that the contingent obligation to make future payments
or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance
with Statement of Financial Accounting Standards (“FAS”) No. 5, Accounting for Contingencies , which provides that
loss contingencies should be recognized as liabilities if they are probable and reasonably estimable. Subsequent to the adoption
of FSP EITF 00-19-2, any changes in the carrying amount of the contingent liability will result in a gain or loss that will be
recognized in the statement of operations in the period the changes occur. The guidance in FSP EITF 00-19-2 is effective immediately
for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified
subsequent to the date of issuance of FSP EITF 00-19-2. For registration payment arrangements and financial instruments subject
to those arrangements that were entered into prior to the issuance of FSP EITF 00-19-2, this guidance is effective for our financial
statements issued for the year beginning January 1, 2007, and interim periods within that year.



On January 1, 2007, we adopted the
provisions of FSP EITF 00-19-2 to account for the registration payment arrangement associated with our July 2006 financing (the
“July 2006 Registration Payment Arrangement”). As of January 1, 2007 and December 31, 2007, management determined that
it was probable that we would have payment obligation under the July 2006 Registration Payment Arrangement; therefore, the Company
accrued a contingent obligation of $340,860 as required under the provisions of FSP EITF 00-19-2. In addition, the compound embedded
derivative liability associated with the July 2006 Financing was adjusted to eliminate the registration payment arrangement and
the comparative financial statements of prior periods and as of December 31, 2006 have been adjusted to apply the new method retrospectively.
The cumulative effect of this change in accounting principle adjusted retained earnings as of December 31, 2006 by $658,129. The
following financial statement line items for the twelve months ended December 31, 2006 were affected by the change in accounting
principle. In addition, under EITF 00-19, the Company would not book the contingent registration rights payment payable.



|                         |  | As of
 December 31,  2006 |          
|------------------------ |  | ------------------------- | ---------
|Under EITF 00-19         |  |                           |          
|Income Statement Impacts |  |                           |          
|Change in value of CED   |  |                           | 2,871,934
|Amortization of Discount |  |                           | 117,504  
|Balance Sheet Impacts    |  |                           |          
|Discount on Note         |  |                           | 1,764,136
|Derivative Liability     |  |                           | 3,459,979
|                         |  |                           |          
|Under EITF 00-19-02      |  |                           |          
|Income Statement Impacts |  |                           |          
|Change in value of CED   |  |                           | 2,302,219
|Amortization of Discount |  |                           | 112,211  
|Balance Sheet Impacts    |  |                           |          
|Discount on Note         |  |                           | 1,730,720
|Derivative Liability     |  |                           | 2,768,435



The net impact to the balance sheet
is $658,128 and shows in the equity section of the balance sheets.





F-28









|15. |  | Fair Value of Financial Instruments.
|--- |  | ------------------------------------



The Company’s financial instruments
consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible debt. The estimated fair value of cash,
accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.



The Company utilizes various types
of financing to fund its business needs, including convertible debt with warrants attached. The Company reviews its warrants and
conversion features of securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether
they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes
in fair value recognized in current earnings. At December 31, 2007, the Company had convertible debt and warrants to purchase common
stock, the fair values of which are classified as a liability. Some of these units have embedded conversion features that are treated
as a discount on the notes. Such financial instruments are initially recorded at fair value and amortized to interest expense over
the life of the debt using the effective interest method.



Inputs used in the valuation to
derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable
inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:



Level one — Quoted market
prices in active markets for identical assets or liabilities;



Level two — Inputs other than
level one inputs that are either directly or indirectly observable; and



Level three — Unobservable
inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that
a market participant would use.



Determining which category an asset
or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated
with the convertible debt and warrants to purchase common stock (discussed above). The Company classifies the fair value of these
convertible notes and warrants under level three.





Based on ASC Topic 815 and related
guidance, the Company concluded the convertible notes and common stock purchase warrants are required to be accounted for as derivatives
as of the issue date due to a reset feature on the conversion/exercise price. At the date of issuance the convertible subordinated
financing, warrant derivative liabilities were measured at fair value using either quoted market prices of financial instruments
with similar characteristics or other valuation techniques. The Company records the fair value of these derivatives on its balance
sheet at fair value with changes in the values of these derivatives reflected in the consolidated statements of operations as
“Gain (loss) on derivative liabilities.” These derivative instruments are not designated as hedging instruments under
ASC 815-10 and are disclosed on the balance sheet under Derivative Liabilities.





The following table summarizes
the convertible debt and warrant liabilities activity for the period December 31, 2009 to December 31, 2010:





|Description                     |  | Convertible Notes |            |  | Warrant Liabilities |   |            | Total | 
|------------------------------- |  | ----------------- | ---------- |  | ------------------- | - | ---------- | ----- | 
|Fair value at December 31, 2009 |  | $                 | 2,582,026  |  |                     | $ | 1,202,504  |       | 
|Change in Fair Value            |  |                   | 18,614,745 |  |                     |   | 55,027,916 |       | 
|Fair value at December 31, 2010 |  | $                 | 21,196,771 |  |                     | $ | 56,229,420 |       | 







For the year ended December 31,
2010, net derivative income(loss) was $(73,641,661).





F-29







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





|Assumptions             |  | 2010 |                |  | 2009 | 
|----------------------- |  | ---- | -------------- |  | ---- | 
|Dividend yield          |  |      | 0.00%          |  |      | 
|Risk-free rate for term |  |      | 0.05%-.61%     |  |      | 
|Volatility              |  |      | 237%           |  |      | 
|Maturity dates          |  |      | 0.0-0.47 years |  |      | 
|Stock Price             |  |      | 0.0215         |  |      | 







The
                                         Cornell 7/10/06 convertible note ($2,470,000 balance) matured on 7/10/08. The Cornell
                                         4/02/07 promissory note ($15,000 balance) became convertible upon default and is due
                                         and payable. The Cornell 7/10/06 warrants (initial 2,900,000,000 warrants with exercise
                                         prices ranging from $0.003 to $0.150 and an expiration date of 7/10/11 reset to 66,000,000,000
                                         warrants at $0.0005) had a term remaining of 1.522 years at 12/31/10. The HDV and DSE
                                         convertible notes matured on April 1, 2010 and are in default as of 12/31/10.





|16. |  | Subsequent Events.
|--- |  | ------------------



Stock Issuances:





Since 2010, the Board of Directors
authorized the issuance of an aggregate of 1,551,604,744 shares of its common stock, 1,000,000 shares of its Preferred A shares
and 4,608,500 of its Preferred C shares to accredited and non-accredited investors for total proceeds of $3,437,293. In addition,
the Board of Directors has authorized the issuance of an aggregate of 1,375,409,691 shares of its common stock, 1,351,667 shares
of its Preferred A shares and 60,000 of its Preferred C shares to accredited and non-accredited investors for services rendered
valued at an aggregate of $5,837,824. No sales commissions were paid in connection with these issuances and all investors reviewed
or had access to all of the Company’s filing pursuant to the Securities Exchange Act of 1934, as amended.





Legal Proceedings:



On or about July 10, 2006, the
Company and YA Global, then known as Cornell Capital Partners, L.P., entered into a Securities Purchase Agreement which was subsequently
amended and restated on August 17, 2006 (collectively the “SPA”) wherein the Company issued and sold to YA Global
secured convertible debentures in the aggregate amount of approximately US$2,485,000 (collectively, the “Debentures”)
and certain warrants (collectively the “Prior Warrants” and with the Debentures, the “Securities”) to
purchase an aggregate of 2,900,000,000 shares of the Company’s common stock, par value $0.001 (the “Common Stock”).



F-30







In connection with the SPA, the
Company and YA Global entered into ancillary agreements, including a Security Agreement, an Insider Pledge and Escrow Agreement,
a Registration Rights Agreement, and other related documents (the SPA and such ancillary agreements are collectively referred to
hereinafter as “Financing Documents”). Copies of the Financing Documents have been attached to the Company’s
prior filings with the United States Securities and Exchange Commission (the “SEC”) and are hereby incorporated in
their entirety by reference.



On July 28, 2011, the Company and
Cornell reached a settlement for this debt under the terms of a Repayment Agreement. Pursuant to the terms of the Repayment Agreement,
all of the Company’s obligations under the Financing Documents have been terminated in full. Without limitation, all amounts
otherwise due under the Debentures are deemed satisfied in full, the Prior Warrants are deemed cancelled, and any and all security
interests granted by the Company in favor of YA Global pursuant to the Financing Documents have been extinguished, including the
release of 4,000,000 shares of Series A Preferred Stock held in escrow. In exchange for the foregoing, the Company delivered to
YA Global: (i) a one-time cash payment of US$550,000; and (ii) new warrants to purchase up to 25,000,000 shares of Common Stock
at an exercise price of $0.0119 (the “Current Warrants”). The Current Warrants expire on or about July 28, 2014. A
copy of the Repayment Agreement and Current Warrants have been attached as exhibits to the Form 8-K filed August 2, 2011 and are
hereby incorporated in their entirety by reference.



The Company received a letter from
the Securities and Exchange Commission, Los Angeles Regional Office, dated May 9, 2011. The letter informed us that the SEC had
entered into a “formal order of investigation” into “Savi Media Group, Inc.” The letter included a “Subpoena
DucesTecum,” meaning the Company was given a prescribed period of time to produce all requested documents and information
contained in the subpoena. An index of the source of all such produced information and an authentication declaration were also
to be supplied. The stated purpose of the investigation is a fact-finding inquiry to assist the SEC staff in determining if the
Company has violated federal securities laws. The SEC states there is no implication of negativity or guilt at this stage of the
investigation.



We hired the Los Angeles
law firm of Troy Gould to represent us in the matter of this investigation. As of the date of this filing, we believe we have provided
all requested material to the SEC.



Status of prior private investment;
$0 in 2007 (although HDV sold $13,000 of its shares), $1,000 in 2008 (although HDV sold $453,750 of its shares), $442,000 in 2009,
$879,550 in 2010, $1,930,828 in 2011, $342,000 in the first calendar quarter of 2012 and $100,000 in the 2nd quarter 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).



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 $7,875 in 2008 and shares for services valued at $74,400 in 2009. 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 2011 rescission offer, in
terms of rescission offers accepted by shareholders, were very encouraging. We had one rescission offer acceptance and refunded
$1,000





The Company received a letter dated
June 7, 2013 with a Civil Complaint titled Arnold Lamarr Weese, et al v. SaviCorp filed in the Northern District of West Virginia.
In addition to SaviCorp, Serge Monros and Craig Waldrop are being sued individually. Settlement discussions failed and Plaintiff's
counsel began service of Process. The Company and Mr. Monros have hired Shustak and Partners to defend the claim. The defendants
have sued for breach of contract, fraud, vicarious liability, and unlawful sale by an unregistered broker. The lawsuit attempts
to hold the Company and Mr. Monros responsible for alleged improprieties of Waldrop. The Company intends on vigorously defending
its rights or reaching a settlement to release the Company and Mr. Monros of any alleged liability.





Licensing Events:



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 connection
with this transaction, Mr. Monros waived $350,000 in accrued salary owed to him by the Company, and HDV waived $372,000 owed to
it by the Company.



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.



Major Contracts:



In 2013, the Company has entered
into a 5 year licensing agreement with Dyno Green Tech, LLC ("DGT") to sell the DynoValve products in the licensed territories
(UAE, Dubai, Malaysia, India, and Africa). DGT has ordered 3,000 DynoValves as of 9/30/13. The DynoValves were shipped in the third
quarter of 2013. In order for them to fulfill and maintain this 5 year licensing agreement, they are required to purchase 500 additional
DynoValves per quarter for a total of $3,000,000 over a 5 year span.





F-31