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EX-32.1 - CERTIFICATION - SavWatt USA, Inc.savw_ex321.htm
EX-31.2 - CERTIFICATION - SavWatt USA, Inc.savw_ex312.htm
EX-10.2 - EMPLOYMENT AGREEMENT - SavWatt USA, Inc.savw_ex102.htm
EX-31.1 - CERTIFICATION - SavWatt USA, Inc.savw_ex311.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-K
(Mark One)
 
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2011
 
OR
 
o 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 000-52402
 
SAVWATT  USA,  INC
(Exact  name  of  registrant  as  specified  in  its  charter)
 
Delaware   27-2478133
(State or other jurisdiction of 
Incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
1100  Wicomico  Street,  Suite  700,  Baltimore,  Maryland  21224
(Address  of  principal  executive  offices)
 
(646)  545-6870
(Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of  the Act:  None
 
Securities registered pursuant to Section 12(g) of the  Act:
 
Title of Each Class
Common Stock, $.0001 par value
 
Indicate by check mark if the  registrant  is a  well-known   seasoned   issuer as defined in Rule 405 of the Securities Act. Yes o No x
 
Indicate  by  check  mark if the  registrant  is not  required  to file   reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
 
Indicate by check mark whether the registrant: (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the  preceding 12 months (or for such shorter period that he registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
 
Indicate by check mark whether the registrant electronically and posted on its corporate Web site, if any, every Interactive Data File required to submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S- K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
 
Indicate by check mark whether the registrant is a large accelerated  filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated  filer," "accelerated  filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o Accelerated filer o
Non- accelerated filer o Smaller reporting company x
  
Indicate by check mark whether the  registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
 
 
The aggregate marker value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant's second fiscal quarter (June 30, 2011) was approximately $2,344,588.

On April 10, 2012, 9,795,217,291 shares of the Registrant's common stock were outstanding.
 


 
 

 
 
TABLE  OF  CONTENTS
 
ITEMS     PAGE  
         
PART I
         
Item 1.    Business     4  
Item 1A.  Risk Factors     7  
Item 2.    Properties     15  
Item 3.    Legal Proceedings     15  
Item 4.    Mine Safely Disclosure     15  
           
PART II
           
Item 5.    Market For Common Equity and Related Stockholder Matters and Issuer  Purchases  of  Equity  Securities     16  
Item 6.   Selected Financial Data     19  
Item 7.   Management's Discussion and Analysis of Financial Condition and  Results  of  Operations     19  
Item 7A.  Quantitative and Qualitative Disclosure About Market Risk     20  
Item 8.   Financial Statements     20  
Item 9.   Changes in and Disagreements with Accountants on Accounting and  Financial  Disclosure     20  
Item 9A.  Controls and Procedures     21  
Item 9B.  Other Information     21  
           
PART III
           
Item 10.  Directors, Executive Officers and Corporate Governance     22  
Item 11.  Executive Compensation     24  
Item 12.  Security Ownership of Certain Beneficial Owners and Management and  Related  Stockholder  Matters     25  
Item 13.  Certain Relationships and Related Transactions, and Director Independence     26  
Item 14.  Principal Accounting Fees and Services     26  
           
PART IV
           
Item 15.  Exhibits, Financial Statement Schedules     27  
 
 
2

 
 
CAUTIONARY  STATEMENT
 
This Form 10-K contains "forward-looking statements". Some of the statements contained in this Form 10-K for SavWatt USA, Inc., formerly known as Ludvik Capital, Inc. ("Company"), discuss future expectations, contain projections of results of operation or financial condition or state other "forward-looking" information. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated  by the  statements. The  forward-looking information is based on various factors and is derived using numerous assumptions.
 
Management expresses its expectations, beliefs and projections in good faith and  believes the expectations reflected in these forward-looking statements are based on reasonable assumptions; however, Management cannot assure current stockholders or prospective stockholders that these expectations, eliefs and  projections will prove to be correct. Such forward-looking statements reflect the current views of Management with respect to the Company and anticipated future events.
 
Management cautions current stockholders and  prospective stockholders that such forward-looking statements, including, without limitation, those relating to the Company's future business prospects, demand for its products, revenues, capital needs, expenses, development and operation costs, wherever they occur in this Form 10-K, as well as in the documents incorporated by reference herein, are not guarantees of future  performance or results, but are simply estimates reflecting the best judgment of Management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by such forward-looking statements.
 
Important  factors that  may cause actual results to differ  from  projections include, for example:
 
*        the success or failure of management's efforts to implement their business strategy;
*        the ability of  the Company to raise sufficient capital to meet operating requirements;
*        the uncertainty of consumer demand for our products, services and technologies;
*        the ability of the Company to protect its intellectual property rights;
*        the ability of  the Company to compete with major established companies;
*        the effect of changing economic conditions;
*        the ability of the Company to attract and retain quality employees;
*        the current global recession and financial uncertainty;  and
*        other risks which may be described in future filings with the SEC.
 
Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
 
FOREWORD
 
The  Company  was  incorporated  on  October  20, 2006, under the  name  of Ludvik Capital,  Inc. We changed  our name to SavWatt  USA, Inc. on April 5, 2010. On January 12, 2007, we filed a Form 10 registration  statement under section 12(g) of the  Securities  Exchange  Act of 1934,  as amended  ("Exchange  Act").  As a consequence of filing our Form 10, we became  subject to the periodic  reporting requirements  of the  Exchange Act and were  required to file Annual  Reports on Form 10-K,  Quarterly  Reports on Form 10-Q,  Current Reports on Form 8-K, Proxy Statements  pursuant to Regulation 14A and Schedule 14C  Information  Statements pursuant to the Exchange Act.

 
 
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PART  I
 
ITEM 1. BUSINESS.
 
HISTORY
 
SavWatt  USA,  Inc.     ("Company")     was     incorporated     in  the  State  of  Delaware under the name of "Ludvik  Capital,  Inc." on  October  20,  2006.  Our name was changed to SavWatt USA, Inc. on April 5, 2010. The Company was originally formed for the purpose of becoming a successor and survivor  corporation by merger with Patriot  Advisors,   Inc.  and  Templar  Corporation   pursuant  to  a  plan  of reorganization  and merger  approved  by the  United  States  Bankruptcy  Court, District of Maine,  Case No. 04-20328.  The Company's prior business plan was to make investments in public and private companies by providing long-term debt and equity investment capital to fund the growth, acquisitions and recapitalizations of small and  middle-market  companies  in a variety  of  industries,  primarily located  in the  Untied  States.  The prior  management of Ludvik Captial was not successful in carrying out its business plan
 
Overview of Our Industry and  Markets We Serve
 
Emitting  more  light  per  watt  than  incandescent  bulbs  and  capable  to  lasting up to 100,000 hours, LED lights are revolutionizing  the lighting industry.  LED lights  contain no harmful  ultraviolet  rays, do not flicker,  or contain toxic substances. Additionally, by using LED lighting, energy consumption can decrease up to 80%. SavWatt USA, Inc (also referred to as "the Company")  distributes LED technology through a network of independent distributors.  Operating nationwide, the  Company  has created  partnerships  with  manufacturers  to secure the best selection of LED street  lights,  tubes,  spot,  and  floodlights.  SavWatt supplies commercial businesses and retailers,  as well as municipalities and state governments, with warranty-guaranteed lighting technology. The Company works closely with each of client find the best solution to its lighting needs.
 
In  the  past  year,  the  market  for  LED  technology  in  the  United  States  has grown from $7 billion to $10.7 billion.  This tremendous growth is reflective of inherent  benefits of LED  technology:  a longer  product  lifetime  and greatly improved  energy  efficiency.  To spur  adoption of energy  efficient  products, federal  law  mandates  that all  light  bulbs are 30% more  efficient  by 2012. Federal tax deductions of up to $.60 per square foot are additionally  available if a lighting  system reduces power usage by 25 to 40% of the standard  lighting power values specified by AHSRAE standard 90.1-2001. By the end of 2012, the LED market in the United States is expected to be valued at $20.4 billion.
 
The  lighting  industry  is  intensely     competitive  and  many  of  our  competitors are  large,  well  funded  companies  that  have  substantially  larger  staffs, manufacturing and distribution  facilities and financial  resources than we have at the  present  time.  In the  LED  market,  we  compete  with  companies  that manufacture  or sell  nitride-based  LED  chips as well as those  that  sell LED components.  Competitors  are  offering  new blue,  green  and  white  LEDs with aggressive prices and improved performance. These competitors may reduce average sales prices faster than we are able to reduce costs,  and  competitive  pricing pressures may accelerate the rate of decline of our average sales prices.
 
The  Company  will  compete  with  major  lighting  manufacturers, including General  Electric, Philips, and  Sylvania. Although  these  companies  have established  reputations in  the  marketplace,  each  lacks  the  mobility  and creativity  to meet the new market  demand  for LED  lighting  in a  competitive manner. SavWatt additionally faces competition from smaller U.S.-based lighting companies, but a majority of these lack the branding or marketing expertise that the Company possesses.
 
 
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PRODUCTION:
 
SavWatt  will  be  sourcing  LED  products and parts from  factories  in  the  Far East and  US Partners. These factories  assemble  LED bulbs,  fixtures  and  apparatuses  based on  SavWatt's specifications  and bill of material  requirements.  UL or ETL certification for these  products and factories are  supervised  by SavWatt  technicians.  SavWatt opened an office in Shenzhen,  China to supervise production schedules,  shipment arrangements,  samples and quality control inspections. All factories contracted by  SavWatt  will go  through a quality  control  and  performance  test  before becoming  a master  supplier  for  SavWatt  products.  An  agreement  which each supplier will protect the SavWatt  brand,  intellectual property and proprietary information to extent that is enforceable in China.
 
During 2012, the Company will increase its focus on the solar markets. In addition to the Company’s EcoPole it will be selling solar panel solutions through its SavWatt Depot and Savwatt EPC.
 
SavWatt EPC specializes in offering all types of photovoltaic solutions adapted to the client’s individual needs. In simpler terms: we transform solar radiation into electricity, and deliver an end product investment to our client with a guaranteed future and profitability. The integral undertaking of these projects involves the engineering service, the actual installation of modules and the complete installation, maintenance and, where appropriate, a financing study. Our work not only integrates products and services, we also provide added value for our clients so that they entrust us with their investment with total security: cutting-edge technology, advanced technical qualifications, experience and internationalization.
 
In  addition,  the  Company  will  begin  assembling  certain  LED  tubes  in  its  new Baltimore Facility in the 3rd quarter of 2012.
 
Our  fiscal  year  end  is  December  31.
 
HOW TO CONTACT US
 
The Company's   principal executive offices  are  located  at  1100 Wicomico Street,  Suite 700,   Baltimore,  Maryland 21224.  Our telephone  number is (646) 545-6870.
 
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS
 
We purchase our products from overseas sources. As a result, our international  sales and purchases are subject to numerous U.S. and foreign laws and  regulations,   including,  without  limitation,  tariffs,  trade  barriers, regulations relating to import-export control, technology transfer restrictions, the International  Traffic in Arms Regulation  promulgated under the Arms Export Control Act, the Foreign Corrupt  Practices Act and the anti-boycott  provisions of the U.S. Export  Administration Act. If we fail to comply with these laws and regulations,   we  could  be  liable  for  administrative,   civil  or  criminal liabilities,  and in the extreme  case,  we could be suspended or debarred  from government  contracts or our export  privileges could be suspended,  which could have a material adverse effect on our business.
 
International sales and purchases are also subject  to  a  variety  of other risks, including risks arising from currency fluctuations, collection issues and taxes. Our international  sales are subject to variability as our selling prices become less competitive in countries with currencies that are declining in value against the U.S.  Dollar and more  competitive in countries with currencies that are increasing in value against the U.S. Dollar. In addition, our international purchases  can become more  expensive  if the U.S.  Dollar  weakens  against the foreign  currencies in which we are billed. We have not entered into any foreign currency derivative  financial  instruments; however, we may choose to do so in the future in an effort to manage or hedge our foreign exchange rate risk.
 
The  Company's common stock is registered  pursuant  to  Section  12(g)  of  the Securities  Exchange Act of 1934, as amended  ("Exchange  Act").  As a result of such registration, the Company is subject to Regulation 14A of the Exchange Act, which regulates proxy  solicitations.  Section 14(a) requires all companies with securities registered pursuant to Section 12(g) thereof to comply with the rules and regulations of the Commission regarding proxy solicitations,  as outlined in Regulation 14A. Matters submitted to stockholders of the Company at a special or annual meeting thereof or pursuant to a written consent will require the Company to provide its  stockholders  with the information  outlined in Schedules 14A or 14C of Regulation 14;  preliminary  copies of this information must be submitted to the Commission at least 10 days prior to the date that  definitive  copies of this information are forwarded to stockholders.
 
 
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The Company is  also  required to  file annual reports on  Form  10-K  and quarterly  reports on Form 10-Q with the Commission on a regular basis, and will be required to disclose  certain  events in a timely  manner, (e.g.  changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and  bankruptcy) in a Current Report on Form 8-K.
 
WE ARE  SUBJECT TO THE REQUIREMENTS OF SECTION 404 OF  THE SARBANES-OXLEY CT. IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION 404 OR IF THE COSTS RELATED TO COMPLIANCE ARE SIGNIFICANT, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.
 
The  Company  is  required  to  comply  with  the  provisions  of  Section  404  of  the Sarbanes-Oxley  Act of  2002,  which  requires  that we  document  and  test our internal  controls  and  certify  that we are  responsible  for  maintaining  an adequate  system of internal  control  procedures for the 2011 fiscal year. This section also requires that our  independent  registered  public  accounting firm opine on those internal controls and management's  assessment of those controls. We are currently  evaluating our existing controls against the standards adopted by the Committee of Sponsoring  Organizations of the Treadway Commission (COSO). During the course of our ongoing  evaluation and integration  of the  internal controls of our business,  we may identify areas requiring  improvement,  and we may have to design enhanced  processes and controls to address issues identified through this review (see Item 9A, below for a discussion  our internal  controls and procedures).
 
We  believe that  the out-of-pocket costs, the diversion of management's attention from running the day-to-day  operations and operational changes caused by the need to comply with the requirement of Section 404 of the  Sarbanes-Oxley Act could be significant.  If the time and costs associated with such compliance exceed  our  current  expectations,  our  results of  operations  and the future Exchange Act filings of our Company could be materially adversely affected.
 
Aside  from required compliance with federal and  state securities laws, regulations and rules, and federal, state and local tax laws,  regulations and rules, the Company is not aware of any other  governmental  regulations  now in existence  or that may arise in the future that would have a material  effect on the business of the Company.
 
INTELLECTUAL PROPERTY RIGHTS
 
The  Company presently  has filed for four trademarks. The  Company intends  to seek  copyright  and  trademark  protection  of its trade  names and products. The Company's success and ability to compete are dependent to a degree on the Company's  name and product  recognition.  Accordingly,  the Company will primarily  rely on  copyright,  trade  secret and  trademark  law to protect its product and brand names of our  products or the name(s)  under which the Company conducts its business.  Effective trademark  protection may not be available for the Company's trademarks.
 
The Company's competitors or  others  may  adopt product  or  service  names similar to the Company's,  thereby impeding the Company's ability to build brand identity and possibly leading to customer confusion.  The Company's inability to adequately  protect its product,  brand, trade names and trademarks would have a material  adverse  effect on the  Company's  business,  financial  condition and operating results.  Despite any precautions the Company takes, a third party may be able to copy or otherwise  obtain and use the  Company's  technology or other proprietary  information without  authorization or to develop similar technology independently.
 
Policing unauthorized use  of  the  Company's products  is  made especially difficult by the global nature of the Internet and the difficulty in controlling the  ultimate  destination  or security  of products or other data. The laws of other countries may afford the Company little or no effective protection for the Company's intellectual property.
 
 
6

 
 
EMPLOYEES
 
We currently have 20 full-time employees.  We believe that our relations  with our employees are good. Our employees are not  represented by a union or covered by a collective bargaining agreement.
 
REPORTS TO SECURITY HOLDERS
 
The  public  may  view  and  obtain  copies  of  the  Company's reports, as filed with the Securities and Exchange Commission, at the SEC's Public Reference Room at 100 F Street,  NE, Room 1580, Washington,  D.C.  20549.  Information  on the Public  Reference  Room is  available  by  calling  the  SEC at  1-800-SEC-0330. Additionally,  copies of the Company's reports are available and can be accessed and downloaded via the internet on  the   SEC's internet   site at http://www.sec.gov.
 
ITEM 1A. RISK FACTORS.
 
Investing in the Company, involves  a  number  of  significant risks relating to our business and investment objective. As a result, there can be no assurance that we will achieve our investment objective.
 
BUSINESS RISKS
 
Business risks are risks that are associated with general business conditions, the economy, and the operations of the Company. Business risks are not  risks  associated  with our  specific  investments  or an  offering  of our securities.
 
OUR RESULTS OF OPERATIONS, FINANCIAL CONDITION AND BUSINESS COULD BE HARMED IF WE WERE UNABLE TO BALANCE CUSTOMER DEMAND AND CAPACITY.

As customer demand  for  our  products changes, the Company  must  be  able  to ramp up or adjust our  production  capacity to meet demand.  We are  continually taking steps to address our manufacturing capacity needs for our products. If we are not able to  increase  our  capacity  or if we  increase  our  capacity  too quickly, our business and results of operations could be adversely impacted.  If we experience  delays or unforeseen costs associated with adjusting our capacity levels, we may not be able to achieve our financial targets.
 
OUR BUSINESS  MAY BE ADVERSELY  AFFECTED BY THE GLOBAL  ECONOMIC  DOWNTURN,  THE CONTINUING  UNCERTAINTIES IN THE FINANCIAL MARKETS AND OUR, OR OUR USTOMERS' OR SUPPLIERS' ABILITY TO ACCESS THE CAPITAL MARKETS.
 
The global economy is currently in a pronounced economic downturn. Global financial markets are continuing to experience  disruptions,  including severely diminished liquidity and credit  availability,  declines in consumer confidence, declines in economic  growth,  increases in unemployment  rates, and uncertainty about economic stability. Given these uncertainties,  there is no assurance that there  will not be  further  deterioration in the  global  economy,  the global financial markets and consumer  confidence. We are unable to predict the likely duration and severity of the current global economic  downturn or disruptions in the financial markets. If economic conditions  deteriorate further, our business and results of operations could be materially and adversely affected.
 
 
7

 
 
IF WE FAIL TO  EVALUATE, IMPLEMENT AND INTEGRATE STRATEGIC OPPORTUNITIES SUCCESSFULLY, OUR BUSINESS MAY SUFFER.
 
From  time  to  time,  we  evaluate  strategic     opportunities  available  to  us  for product, technology or business acquisitions. If we choose to make acquisitions, we face  certain  risks,  such as failure of the  acquired  business to meet our performance  expectations,  diversion  of management attention,  retention  of existing  customers of our current and acquired  businesses,  and  difficulty in integrating  the acquired  business's  operations,  personnel  and financial and operating systems into our current business.
 
We  may  not  be  able  to  adequately address  these  risks  or  any  other  problems that arise from any future  acquisitions.  Any failure to successfully  evaluate strategic  opportunities  and address risks or other problems that arise related to any acquisition could adversely affect our business, results of operations or financial condition.
 
WE FACE SIGNIFICANT CHALLENGES MANAGING OUR GROWTH.
 
We  will transform our business  to  support  a  global components and  LED lighting  product customer base. In order to manage our growth and change in our strategy  effectively,  we must continue to:
 
*        maintain or contract for adequate manufacturing facilities and equipment  to  meet  customer  demand;
*        maintain  a  sufficient  supply  of  raw  materials  to  support  our  growth;
*        expand     research     and     development,     sales     and     marketing,     technical support,  distribution  capabilities  and  administrative  functions;
*        expand  the  skills  and  capabilities  of  our  current  management  team;
*        add  experienced  senior  level  managers;  and
*        attract  and  retain  qualified  employees.
 
While  we  intend  to  focus  on managing our  costs  and expenses during the extremely  challenging  economic  environment,  over the long term, we expect to invest  substantially  to support our growth and may have additional  unexpected costs. We may not be able to expand quickly enough to exploit  potential  market opportunities.
 
In  connection  with  our  efforts  to cost-effectively manage our growth, we will initially produce our products overseas and will rely on subcontractors for production  capacity,  logistics support and certain  administrative  functions, such  as  payroll  processing.   If  these  service  providers  do  not  perform effectively,  we may not be able to achieve the  expected  cost  savings and may incur additional  costs to correct errors or fulfill customer demand.  Depending on the  function  involved,  such errors may also lead to  business  disruption, processing  inefficiencies  or the loss of or  damage to  intellectual  property through security breach,  or impact employee morale.  Our operations may also be negatively  impacted if any of these service providers do not have the financial capability to withstand the continuing financial downturn.
 
 
8

 
 
LITIGATION COULD ADVERSELY AFFECT OUR OPERATING RESULTS AND FINANCIAL CONDITION.
 
We may be involved in patent or trademark infringement litigation. Defending against potential litigation will likely require significant attention and  resources  and,  regardless  of the outcome,  result in  significant  legal expenses,  which could adversely  affect our results unless covered by insurance or recovered from third parties. If our defenses are ultimately unsuccessful, or if we are  unable to  achieve a  favorable  resolution,  we could be liable  for damage awards that could  materially  adversely affect our results of operations and financial condition.
 
OUR  BUSINESS  MAY BE  IMPAIRED BY CLAIMS   THAT WE, OR OUR   CUSTOMERS,   INFRINGE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
 
Vigorous protection and  pursuit of intellectual propertyrights characterize  our industry.  These traits have resulted in significant and often protracted  and  expensive  litigation.  Litigation to determine the validity of patents  or  claims  by  third  parties  of  infringement  of  patents  or other intellectual  property  rights could  result in  significant  legal  expense and divert the  efforts  of our  technical  personnel  and  management,  even if the litigation  results  in a  determination  favorable  to us.  In the  event of an adverse result in such litigation, we could be required to:
 
*        pay  substantial  damages;
*        indemnify  our  customers;
*        stop  the  manufacture,  use  and  sale  of  products  found  to  be  infringing;
*        incur  asset  impairment  charges;
*        discontinue  the  use  of  processes  found  to  be  infringing;
*        expend  significant resources to  develop non-infringing  products  and processes;  and/or
*        obtain  a  license  to  use  third  party  technology.
 
There  can  be  no assurance that third parties will  not  attempt  to  assert infringement claims against us, or our customers,  with respect to our products. In  addition,  our  customers  may  face  infringement  claims  directed  to the customer's  products that incorporate our products,  and an adverse result could impair the customer's  demand for our products.  We may also promise  certain of our  customers  that we will  indemnify  them in the event  they are sued by our competitors for  infringement  claims directed to the products we supply. Under these indemnification  obligations,  we could be responsible for future payments to  resolve  infringement  claims  against  them.  From time to time we  receive correspondence asserting that our products or processes are or may be infringing patents  or other  intellectual  property  rights of others.  If we believe  the assertions may have merit or in other  appropriate  circumstances,  we will take appropriate  steps to seek to  obtain a license  or to avoid  the  infringement. However,  we cannot predict  whether a license will be available;  that we would find the terms of any license  offered  acceptable;  or that we would be able to develop  an  alternative  solution.  Failure  to obtain a  necessary  license or develop an alternative solution could cause us to incur substantial  liabilities and costs and to suspend the manufacture of affected products.
 
In addition to  patent protection, we  also  rely  on  trade  secrets and  other non-patented  proprietary  information  relating to our product  development and manufacturing activities. We try to protect this information through appropriate efforts to maintain its secrecy, including requiring employees and third parties to sign confidentiality agreements. We cannot be sure that these efforts will be successful or that the confidentiality  agreements will not be breached. We also cannot be sure  that we would  have  adequate  remedies  for any  breach of such agreements or other  misappropriation  of our trade  secrets,  or that our trade secrets  and  proprietary  know-how  will  not  otherwise  become  known  or  be independently discovered by others.
 
 
9

 
 
IF WE ARE UNABLE TO EFFECTIVELY DEVELOP, MANAGE AND EXPAND OUR DISTRIBUTION CHANNELS FOR OUR PRODUCTS, OUR OPERATING RESULTS MAY SUFFER.
 
We  have  expanded  into  new  business channels  that  are  different from  those that we have  historically  operated  in as we grow  our  business  and sell LED lighting  products.  If  we  are  unable  to  effectively  penetrate  these  new distribution  channels  to ensure our  products  are  reaching  the  appropriate customer base, our financial results may be adversely impacted.  In addition, if we successfully  penetrate these new distribution  channels, we cannot guarantee that  customers  will accept our products or that we will be able to manufacture and deliver them in the time line established by our customers.
 
IF OUR  PRODUCTS  FAIL TO  PERFORM  OR FAIL TO  MEET CUSTOMER REQUIREMENTS OR EXPECTATIONS,  WE COULD INCUR  SIGNIFICANT  ADDITIONAL  COSTS, INCLUDING COSTS ASSOCIATED WITH THE RECALL OF THOSE ITEMS.
 
The manufacture of our products involves highly complex processes. Our customers specify quality, performance and reliability standards that we must meet. If our products do not meet these standards, we may be required to replace or rework the products. In some cases, our products may contain undetected defects or flaws that only become evident after shipment. Even if our products meet standard specifications, our customers may attempt to use our products in applications they were not designed for or in products that were not designed or manufactured properly, resulting in product failures and creating customer satisfaction issues.
 
If we experience product quality, performance or reliability problems and defects or failures, we may need to recall our products.  These recalls could result  in significant  losses due to:  o costs associated  with the  removal, collection and destruction of the product recalled;
 
*  payments made to replace recalled product;
*  a rise in warranty expense and costs associated with customer support;
*      the write down or   destruction   of existing   inventory   subject to the recall;
*  lost sales due to the unavailability of product for a period of time;
*  delays, cancellations or rescheduling of orders for our products; or
*  increased product returns.
 
We also may be the target of product liability lawsuits and could suffer losses from a significant product liability judgment against us if the use of our products at issue is determined to have caused injury. A significant product recall or product liability case could also result in adverse publicity, damage to our reputation, and a loss of customer confidence in our products.
 
THE MARKETS IN WHICH WE OPERATE ARE  HIGHLY COMPETITIVE AND HAVE EVOLVING TECHNICAL REQUIREMENTS.
 
The markets for our products are highly competitive. In the LED market, we compete with companies that manufacture or sell nitride-based LED chips as well as those that sell LED components. Competitors are offering new blue, green and white LEDs with aggressive prices and improved performance. These competitors may reduce average sales prices faster than we are able to reduce costs, and competitive pricing pressures may accelerate the rate of decline of our average sales prices.
 
 
10

 
 
AS A RESULT OF OUR CONTINUED EXPANSION  IN LED COMPONENTS AND LED LIGHTING PRODUCTS,  OUR CUSTOMERS MAY REDUCE ORDERS.
 
Through acquisitions and organic growth, we intend to continue to expand in new markets for LED lighting products. In these new markets, some of our customers may perceive us as a competitor. In response, our customers may reduce their orders for our products. This reduction in orders could occur faster than our sales growth in these new markets, which could adversely affect our business,  results of operations or financial condition.
 
OUR  OPERATING RESULTS ARE SUBSTANTIALLY DEPENDENT ON THE DEVELOPMENT AND ACCEPTANCE OF NEW PRODUCTS.
 
Our future    success may depend on our ability to develop new and lower cost solutions  for existing and new markets and for customers  to accept those solutions. We must introduce new products in a timely and cost-effective manner, and we must secure production orders for those products from our customers. The development of new products is a highly complex process, and we historically have experienced delays in completing the development and introduction of new products. The successful development and introduction of these products depends on a number of factors,  including the following:
 
*      achievement of technology   breakthroughs required to make commercially viable devices;
*      the accuracy of our predictions for market    requirements    and evolving standards;
*  acceptance of our new product designs;
*  acceptance of new technology in certain markets;
*  the availability of qualified research and development personnel;
*  our timely completion of product designs and development;
*      our ability to expand sales and   influence    key customers to adopt our products;
*      our ability to develop repeatable processes to manufacture new products in sufficient quantities and at low enough costs for commercial sales;
 
WE ARE SUBJECT TO RISKS RELATED TO INTERNATIONAL PURCHASES AND SALES.
 
We purchase our products from overseas sources. As a result, our international sales and purchases are subject to numerous U.S. and foreign laws and regulations, including, without limitation, tariffs, trade barriers, regulations relating to import-export control, technology transfer restrictions, the International Traffic in Arms Regulation promulgated under the Arms Export Control Act, the Foreign Corrupt Practices Act and the anti-boycott provisions of the U.S. Export Administration Act. If we fail to comply with these laws and regulations, we could be liable for administrative, civil or criminal liabilities, and in the extreme case, we could be suspended or debarred from government contracts or our export privileges could be suspended, which could have a material adverse effect on our business.

 
11

 
 
International sales and purchases are also subject to a variety of other risks, including risks arising from currency fluctuations, collection issues and taxes. Our international sales are subject to variability as our selling prices become less competitive in countries with currencies that are declining in value against the U.S. Dollar and more competitive in countries with currencies that are increasing in value against the U.S. Dollar. In addition, our international purchases can become more expensive if the U.S. Dollar weakens against the foreign currencies in which we are billed. We have not entered into any foreign currency derivative financial instruments; however, we may choose to do so in the future in an effort to manage or hedge our foreign exchange rate risk.
 
CHANGES IN OUR EFFECTIVE  TAX RATE MAY HAVE AN ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.
 
Our future effective tax rates may be adversely affected by a number of factors including:
 
* changes in  government administrations,  such as the  Presidency and Congress of the U.S. as well as in the states and  countries  in which we operate, including the highly predicted expiration of the so-called "Bush Tax Cuts;"
* changes in tax laws or   interpretation of such tax laws and changes in generally accepted accounting principles;
* the jurisdiction   in which   profits are    determined   to be earned and taxed;
* the resolution of issues arising from tax audits with various authorities;
* changes in the valuation of our deferred tax assets and liabilities;
* adjustments to estimated taxes upon finalization of various tax returns;
* increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and development and impairment of goodwill in connection with acquisitions;
* changes in available tax credits;
* the recognition and measurement of uncertain tax positions;
*
the lack of sufficient excess tax benefits (credits) in our additional paid in capital ("APIC") pool in situations where our realized tax deductions for certain stock-based compensation awards (such as non-qualified stock options and restricted stock) are less than those originally anticipated; and
*
the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes, or any changes in legislation that may result in these earnings being taxed within the U.S., regardless of our decision regarding repatriation of funds.
 
For example, current proposals have been made by various U.S. governmental bodies to change the U.S. tax laws that include, among other things, limiting U.S. tax deductions for expenses related to un-repatriated foreign-source income and modifying the U.S. foreign tax credit rules. Although the scope of the proposed changes is unclear, it is possible that these or other changes in U.S. tax laws could increase our U.S. income tax liability and adversely affect our profitability. At this time, we cannot determine the timing that the proposed changes,  if enacted,  are to become effective.
 
Any significant increase in our future effective tax rates could adversely impact net income for future periods. In addition, the determination of our income tax provision requires complex estimations, significant judgments and significant knowledge and experience concerning the applicable tax laws. To the extent our income tax liability materially differs from our income tax provisions and accruals due to factors, including the above, which were not anticipated at the time we estimated our tax provision, our net income or cash flows could be adversely affected.

 
12

 
 
IN ORDER TO COMPETE, WE MUST ATTRACT, MOTIVATE AND RETAIN KEY EMPLOYEES, AND OUR FAILURE TO DO SO COULD HARM OUR RESULTS OF OPERATIONS.
 
In order to compete, we must attract, motivate and retain executives and other key employees, including those in managerial, technical, sales, marketing and support positions. Hiring and retaining qualified executives, scientists, engineers, technical staff and sales personnel are critical to our business, and competition for experienced employees in our industry can be intense. To help attract, motivate and retain key employees, we may use stock-based compensation awards such as non-qualified stock options and restricted stock. If the value of such stock awards does not appreciate, as measured by the performance of the price of our common stock, or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate employees could be weakened, which could harm our business and results of operations.
 
OUR OPERATIONS IN FOREIGN COUNTRIES, INCLUDING CHINA AND OTHER ASIAN COUNTRIES, EXPOSE US TO CERTAIN RISKS INHERENT IN DOING BUSINESS INTERNATIONALLY, WHICH MAY ADVERSELY AFFECT OUR BUSINESS,  RESULTS OF OPERATIONS OR FINANCIAL CONDITION.
 
As a result of our operations, manufacturing facilities and subcontract arrangements in foreign countries that expose us to certain risks. For example, fluctuations in exchange rates may affect our revenues, expenses and results of operations as well as the value of our assets and liabilities as reflected in our financial statements. We are also subject to other types of risks, including the following:
 
*  protection of intellectual property and trade secrets;
*  tariffs and other barriers;
*  timing and availability of export licenses;
*  rising labor costs;
*      disruptions in the    infrastructure    of the foreign   countries where we operate;
*  difficulties in accounts receivable collections;
*  difficulties in staffing and managing international operations;
*      the    burden of   complying   with   foreign   and   international    laws and treaties; and
*      the burden of   complying   with and changes in   international    taxation policies.
 
In addition, abrupt political change, terrorist activity and armed conflict pose a risk of general economic    disruption in affected    countries,    which could result in an adverse effect on our business and results of operations.
 
CATASTROPHIC EVENTS MAY DISRUPT OUR BUSINESS.
 
A disruption or failure of our systems or operations in the event of a natural disaster or man-made catastrophic event could cause delays in completing sales, continuing production or performing other critical functions of our business, especially in the case of a single site for our operations and assembly. A catastrophic event that results in the destruction or disruption to our supply    chain or any of our critical business  or information technology systems could severely affect our ability to conduct normal business operations and,  as a result,  our operating results could be adversely affected.
 
 
13

 
 
OUR RESULTS OF OPERATIONS COULD VARY AS A RESULT OF THE METHODS, ESTIMATES AND JUDGMENTS THAT WE USE IN APPLYING OUR ACCOUNTING POLICIES, INCLUDING CHANGES IN THE ACCOUNTING REGULATIONS TO BE APPLIED.
 
The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results of operations. Such methods, estimates and judgments are,  by their nature, subject to substantial  risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments. Changes in those methods, estimates and judgments could significantly affect our results of operations.
 
Likewise, our results of operations may be impacted due to changes in the accounting rules to be applied, such as the increased use of fair value measurement rules and the potential requirement that U.S. registrants prepare financial statements in accordance with International Financial Reporting Standards.
 
RISK FACTORS RELATED TO OUR COMMON STOCK THERE IS NO LIQUID MARKET FOR OUR COMMON STOCK.
 
Our shares are traded Over the Counter and the trading volume has historically been very low. An active trading market for our shares may not develop or be sustained. We cannot predict at this time how actively our shares will trade in the public market or whether the price of our shares in the public market will reflect our actual financial performance.
 
OUR COMMON STOCK PRICE HAS FLUCTUATED CONSIDERABLY AND STOCKHOLDERS MAY NOT BE ABLE RESELL THEIR SHARES AT OR ABOVE THE PRICE AT WHICH SHARES WERE PURCHASED.
 
The market price of our common stock may fluctuate significantly. From July 2 007,  the day we began trading   publicly as LDVK,  until our share prices per share have fluctuated in dramatic fashion. Our share price has fluctuated in response to various factors. Speculation in the press or investment community about our strategic position, financial condition, results of operations, or significant transactions can also cause changes in our stock price. In particular, speculation around our market opportunities for energy efficient lighting may have dramatic effects on our stock price, especially as various government agencies announce their planned investments in energy efficient technology,  including lighting.
 
OUR COMMON STOCK MAY BE CONSIDERED A "PENNY STOCK" AND MAY BE DIFFICULT TO SELL.
 
The SEC has adopted regulations which generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock has been for much of its trading history since July 2007, and may continue to be less than $5.00 per share, and, therefore, may be designated as a "penny stock" according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares.
 
COMPLIANCE AND CHANGING REGULATIONS AND PUBLIC DISCLOSURE MAY RESULT  IN ADDITIONAL EXPENSE.
 
Changing laws, regulations and standards relating to corporate governance and public disclosure may create uncertainty regarding compliance matters. New or changed laws, regulations and standards are subject to varying interpretations in many cases. As a result, their application in practice may evolve over time. We are committed to maintaining high standards of corporate governance and public disclosure. Complying with evolving interpretations of new or changed legal requirements may cause us to incur higher costs as we revise current practices, policies and procedures, and may divert management time and attention from the achievement of revenue generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to uncertainties related to practice, our reputation might be harmed which would could have a significant impact on our stock price and our business. In addition, the ongoing maintenance of these procedures to be in compliance with these laws, regulations and standards could result in significant increase in costs.
 
 
14

 
 
OUR PRINCIPAL STOCKHOLDER HAS SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS THAT MAY NOT BE IN THE BEST INTERESTS OF ALL OTHER STOCKHOLDERS.
 
The Company's principal shareholder   is Sutton Global   Associates,  Inc. ("Sutton   Global"), which own common and preferred stock which collectively give Sutton Global approximately 49.7% of the voting power of our shareholders. Sutton Global is beneficially owned and controlled by Isaac H. Sutton our Chairman and President. Mr. Sutton has voting and dispositive control of the shares held by Sutton Global. He may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may expedite approvals of Company decisions, or have the effect of delaying or preventing a change in control, adversely affect the market price of our common stock, or be in the best interests of all our stockholders.
 
YOU COULD BE DILUTED FROM THE ISSUANCE OF ADDITIONAL COMMON STOCK.
 
As of   April 10,  2012 there were 9,795,217,291 shares of common stock issued and outstanding and 25,000,000 shares of preferred stock    outstanding. We are authorized to issue up to 9,800,000,000 shares of  common stock and 200,000,000 shares of preferred stock.  To the extent of such authorization, our Board of Directors will have the ability, without seeking stockholder approval, to issue additional shares of common stock or preferred stock in the future for such consideration as the Board of Directors may consider sufficient. The issuance of additional common stock or preferred stock in the future may reduce your proportionate ownership and voting power.
 
ITEM 2.   PROPERTIES.
 
The Company does not own any real estate.
 
On February 11, 2011, the Company entered into a lease for approximately 24,561 square feet at 1100 Wicomico Street, Suite 700, Baltimore, Maryland, under a written lease for a term of ten years. This new facility will be the Company's new principal executive offices, as well as a manufacturing and assembly facility. We will not have to pay rent on this facility until February 1,  2012.  Thereaftter, we will pay rent as follows:
 
February 1, 2012 - January 31, 2013 $ 9,926.74 per month
February 1, 2013 - January 31, 2016 $11,564.14 per month
February 1, 2016 - January 31, 2019 $12,526.11 per month
February 1, 2019 - January 31, 2021 $13,549.49 per month
 
In June 2011, the Company entered   into a lease for approximately 1,000 square feet at 152 Maidison Avenue,  New York,  NY,  under a written lease for a term of 2 years. Under the terms of the lease the annual base rent is approximately $74,000. This new facility  will be the used as executive and sales offices.
 
In December 2011,  the Company entered into a  lease    for approximately 2,886 square feet at 7927 Jones Branch Drive,  Suite 3300, McClean, VA, under a written    lease for a term of 2 years.    Under the terms of the lese the annual base rent is approximately $58,000.  This new    facility   will be the used by the company for sales.

ITEM 3. LEGAL PROCEEDINGS.
 
The Company is currently involved in three lawsuits.  The first lawsuit involves a former employee of the Company and is being resolved by the Company's insurance carrier and the other two involve breach of contract.  The Company intends to defend itself vigoursly in these matters. At this time,  the company is unable to ascertain the outcomes of these suits and has not made any provisons other than the amounts due and under dispute.
 
ITEM 4.   MINE SAFETY DISCLOSURES.

Note applicable.
 
 
15

 
 
PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
 
As of the date of this Annual Report,the Company's Common Stock is quoted on the Pink Sheets under the symbol "SAVW.OB." The market for the Company's Common Stock is limited, volatile and sporadic and the price of the Company's Common    Stock could be subject to wide fluctuations in response to quarterly variations in operating results, news announcements, trading volume, sales of Common Stock by officers, directors and principal shareholders of the Company, general market trends, changes in the supply and demand for the Company's shares,  and other factors.
 
The following table sets forth the high and low sales prices for each quarter relating to the Company's Common Stock for the last two fiscal years. These quotations reflect inter-dealer prices without retail mark-up, markdown, or commissions, and may not reflect actual transactions.
 
    High     Low  
             
Fiscal 2010            
First  Quarter  (2)
  $ .012     $ .0035  
Second  Quarter  (1)
  $ .04     $ .0035  
Third  Quarter  (1)
  $ .089     $ .0036  
Fourth  Quarter  (1)
  $ .095     $ .0125  
                 
Fiscal  2011
               
First  Quarter  (2)
  $ 0.01     $ .0033  
Second  Quarter  (1)
  $ .0069     $ .0011  
Third  Quarter  (1)
  $ 0.01     $ .0011  
Fourth  Quarter  (1)
  $ 0.00     $ .0005  
___________
(1)
This represents the closing bid information for the stock on the Pink Sheets. The bid and ask quotations represent prices between dealers and do not include retail markup, markdown or commission. They do not represent actual transactions and have not been adjusted for stock dividends or splits.
(2)
This represents the closing price for the stock on the Pink Sheets.
 
Our common stock is considered a "penny stock." The application of the "penny stock" rules to our common stock could limit the trading and liquidity of the common stock, adversely affect the market price of our common stock and increase your transaction costs to sell those shares. The Commission has adopted regulations which generally define a "penny stock" to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share,   subject to certain exceptions.
 
Shareholders should be aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the volatility of our share price.
 
Our   management is aware of the abuses that have occurred historically in the penny stock market.

 
16

 
 
HOLDERS
 
As of April 10,  2012 there were approximately 179 shareholders of record of the Company's Common Stock.
 
DIVIDENDS
 
The Company has not declared any cash   dividends with respect to its common stock or preferred stock during the last two fiscal years and does not intend to declare dividends in the foreseeable future.  There are no material    restrictions limiting or that are likely to limit the    Company's    ability to pay dividends on its outstanding securities.
 
RECENT ISSUANCE OF UNREGISTERED SECURITIES
 
The Following table lists the shares issued for the year ended December 31,  2010 and 2011
 
The issuance of common stock from inception, October 20, 2006 through the year ended December 31,   2010 is summarized in the table below:
 
   
Number of shares of common stock
   
Fair Value at Issuance
   
Per Share Value at Issuance
 
Stock issued upon merger in accordance with Court Order
   
40,000,000
   
$
20,000
   
$
0.0005
 
Stock issued in connection with acquisition
   
24,196
     
-
     
-
 
Stock issued for services
   
38,905,710
     
13,061,326
     
.0395 - 5.52
 
Stock issued to retire debt - Shareholder loans
   
32,394,269
     
23,494,294
     
.040 - 1.01
 
Common stock issued for cash
   
37,333,333
     
315,000
     
.003 - .01
 
Fair value of common stock issued for interest
   
500,000
     
21,249
     
0.0425
 
Common stock issued pursuant to note holder debt conversion
   
18,374,278
     
173,469
     
.009 - .01
 
     
167,531,786
     
37,085,338
         
 
The issuance of common stock from January 1, 2011 through December 31, 2011 is summarized in the table below:
 
   
Number of shares of common stock
   
Fair Value at Issuance
   
Per Share Value at Issuance
 
 Stock issued for related party debt settlement
   
2,500,000
    $
35,000
    $
0.014
 
Stock issued for services
   
203,238,683
     
306,871
     
0.0005 -0.014
 
 Fair value of common stock issued for interest
   
1,000,000
     
14,000
     
0.014
 
Common stock issued pursuant to note holder debt conversion – principal
   
2,718,112,504
     
2,462,792
     
0.0001 - 0.01
 
Common stock issued pursuant to note holder debt conversion - interest
   
18,695,505
     
13,647
     
.00001-0.01
 
     
2,943,546,692
     
39,658,097
         

 
17

 
 
The Company did not utilize or engage a principal underwriter in connection with any of the above securities    transactions.

Management believes that all of above shares of common stock were issued pursuant to the exemption from registration under Section 4(2)   of the Securities Act of 1933,  as amended.

In May and December 2011,  the Company filed two S-8 registrations for its Equity Plans, registering 18,000,000 and 250,000,000 shares of its Common Stock.

The purpose of the Plans is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and  (c)  linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Stock Units, Options (which may constitute ISOs or NSOs) or stock appreciation rights.

The following table sets forth the issuances under these plans.
 
Date of Issuance
 
Shares
   
Consideration
 
Reason for Issuance
May 13, 2011
    2,500,000     $ 7,500.00  
Consulting
May 25, 2011
    5,000,000     $ 15,000.00  
Consulting
December 12, 2011
    25,000,000.00     $ 17,500.00  
Consulting
December 12, 2011
    50,000,000.00     $ 35,000.00  
Consulting
December 27, 2011
    50,000,000.00     $ 25,000.00  
Consulitng
 
 
18

 
 
ITEM 6.   SELECTED FINANCIAL DATA.
 
Not applicable.
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
 
CAUTIONARY FORWARD - LOOKING STATEMENT
 
The following discussion should be read in conjunction with our financial statements and related notes.
 
Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such  risks and uncertainties include, but are not limited to, the following:
 
*  the volatile and competitive nature of our industry,
*      the uncertainties surrounding the rapidly evolving markets in which we compete,
*  the uncertainties surrounding technological change of the industry,
*  our dependence on its intellectual property rights,
*  the success of marketing efforts by third parties,
*  the changing demands of customers and
*  the arrangements with present and future customers and third parties.
 
Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect,  actual results of current and future operations may vary materially from those anticipated. See also the disclosures under "Cautionary Statement" following the Table of Contents in this Annual Report.
 
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,   2 011 AND 2010
 
The Company has not generated any significant revenues since its inception on October 20,2006. The Company's operations for years ended December 31, 2011 and 2010 consist of general and    administrative    expenses    incurred in the amount of $2,306,097 and $1,588,192 and other expenses amounting to $5,308,85 6 and $533,707 respectively.  The significant increase in other expenses relates to the amortization of debt discount totaling $3,199,988 as compared to $0 in 2010 as well as the debt conversion expense in 2011 totaling $1,707,573 as compared to $51,556 in 2010.
 
LIQUIDITY AND CAPITAL RESOURCES
 
We had minimal cash on hand as of December 31, 2011 and a working capital deficiency of  $ 2,750,888. We will continue to need additional cash during the following twelve months and these needs will coincide with the cash demands resulting from implementing our business plan and remaining current with our Securities and Exchange Commission filings. There is no assurance that we will be able to obtain additional capital as required, or obtain the capital on acceptable terms and conditions.
 
 
19

 
 
GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has not generatedany significant revenue, has experienced recurring net operating losses and had a net loss of $8,301,052 for the year ended December 31, 2011. These factors raise substantial doubt about the Company's ability to continue as a going concern.
 
These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of  liabilities that might result from this uncertainty. We will need to raise funds or implement our business plan to continue 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, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
 
ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
 
Not Applicable.
 
ITEM 8.      FINANCIAL STATEMENTS.
 
Our  financial  statements and supplementary data may be found beginning at Page F-1.
 
ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
 
None
 
 
20

 
 
ITEM 9A.   CONTROLS AND PROCEDURES.
 
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 
We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31,  2011.
 
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
 
1. pertain to the   maintenance of   records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
3. provide reasonable assurance regarding prevention or timely detection of  unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011, and concluded that our internal control over financial reporting was effective. In making this assessment, management used the framework set forth in the report entitled Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company's internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial    reporting.    Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management's report in this annual report.
 
CHANGES IN INTERNAL CONTROLS
 
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
ITEM 9B. OTHER INFORMATION.
 
None.
 
 
21

 
 
PART III
 
ITEM 10.   DIRECTORS,   EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 
The Company's directors and executive officers are as follow:
 
Name   Period   Age   Position(s)
             
Isaac H. Sutton   3/31/2010 to Present   58  
Chairman of the Board of Directors President, Chief Executive Officer, CFO, Secretary and Treasurer
 
Mr. Sutton is Chief Executive Officer of SavWatt USA, Inc and sole director. He has served since April 2010. Mr. Sutton has been a successful entrepreneur ever since his involvement with the Sutton family business during his college years.  Since the late 70's,  Sutton has been a founding member and served in executive roles of many ventures including: Aprica Juvenile Products, Inc. (1980 - 1982), Fusen Usagi, Inc.  (1982 -1989), IHS Inc.  (1990 - 1997), and CEO of Starinvest Group  (1997 - 2006). A world traveler for over 30 years, Mr.  Sutton has lived in and conducted business in a variety of countries including Taiwan,  Korea, the Philippines, Poland and Uzbekistan. Mr. Sutton has extensive experience in a variety of industries including import and export,  telecommunications,  information technology and capital markets.
 
Mr.  Sutton holds Bachelor's Degree in Business Administration from Pace University. Mr.  Sutton was born and raised in New York City and is 58 years old.
 
DIRECTORSHIPS
 
Mr.  Sutton ia a director of GoIP Global,   Inc.
 
EMPLOYMENT CONTRACTS
 
On July 1, 2010, the Company entered into an employment contract with Michael Haug,  the former Chief  Executive Officer, for a one year term with a base salary of $84,000 per year.  In addition, the Company agreed to issue 2,000,000 shares of common stock to Mr. Haug as a signing bonus and such shares vest at the end of the term of the agreement. Mr. Haug will also be entitled to participate in the Company's health care and bonus plans when implemented but not later than December 31,  2010. This contract was not renewed and in August 2011, Mr Haug was appointed to the position of Exeective Vice President and in March 2012 tendered his resignation.
 
 
22

 
 
In February 2012,  the Company entered into an employment agreement with the Company's CEO, Isaac H.  Sutton,  commencing on January 1,  2012 and expiring on December 31,  2012.  The employment agreement provides for an annual salary of $240,000 together with annual increases of at least 10% per annum.  In addition, Mr.  Sutton shall receive as additional compensation .75% of the Company's gross revenues in excess of $20,000,000.  The employment agreement provides that Mr.  Sutton is eligible to receive incentive bonus compensation,  at the discretion of the board of directors.  The employment agreement provides for termination based on death,  disability or other termination and for severance payments upon termination. The severance payments range from the compensation payable pursuant to the agreement or up to two times the annual compensation over sixty months in the event that Mr.  Sutton is terminated in the event of a change in control as described in the agreement.

FAMILY RELATIONSHIPS
 
There are no family relationships between or among our officers and directors.
 
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
 
During the past ten years, no present director, executive officer or person nominated to become a director or an executive officer of the Company:
 
(1)
was a general  partner or executive officer of any business againstwhich any bankruptcy petition  was filed, either at the time of the bankruptcy or two years prior to that time;
 
(2)
was convicted in a criminal proceeding or named subject to a pendingcriminal proceeding (excluding traffic violations  and other minor offenses);
 
(3)
was subject to any order, judgment or decree, not subsequentlyreversed, suspended or vacated, of any court of competent jurisdiction, permanently or emporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
 
(4)
was found by a court of competent jurisdiction (in a civil    action),the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
 
AUDIT COMMITTEE FINANCIAL EXPERT AND IDENTIFICATION OF AUDIT COMMITTEE
 
The Company has no separately designated standing audit committee or other committee performing similar functions. The Board of Directors acts as the audit committee. None of the directors qualifies as an Audit Committee Financial Expert.
 
MATERIAL CHANGES TO THE METHOD BY WHICH THE SHAREHOLDERS MAY RECOMMEND NOMINEES TO THE BOARD OF DIRECTORS
 
None.
 
SECTION 16(a)   BENEFICIAL OWNERSHIP COMPLIANCE
 
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers, directors and persons who own more than ten percent of the Company's Common Stock, to file initial reports of beneficial ownership on Form 3, changes in beneficial ownership on Form 4 and an annual statement of beneficial ownership on Form 5, with the SEC. Such executive officers, directors and greater than ten percent shareholders are required by SEC rules to furnish the Company with copies of all such forms that they have filed. No one on the Company's management team was delinquent on such filings in 2011.
 
 
23

 
 
CODE OF BUSINESS CONDUCT AND ETHICS
 
The Company has adopted a Code of Business Conduct and Ethics applicable to its officers, including its principal executive officer, principal financial officer, principal accounting officer or controller and any other persons performing similar functions. The Code will be provided free of charge by the Company to interested parties upon request. Requests should be made in writing and directed to the Company at the following address: 1100 Wicomico Street, Suite 700,  Baltimore, Maryland 21224
 
ITEM 11.   EXECUTIVE COMPENSATION.
 
The following table sets forth the aggregate compensation paid by the Company to officers or directors of the Company during the periods indicated:
 
SUMMARY COMPENSATION TABLE
 
Name and
Principal
Position
  Year  
Salary
($)
   
Bonus
($)
   
Stock
Awards
($)
   
Option
Awards
($)
   
Non-Equity
Incentive Plan
Compensation
($)
   
Nonqualified
Deferred
Compensation
($)
   
All Other
Compensation
($)
 
                                               
Isaac H. Sutton,   2011   $ 95,334       -       -       -       -       -       -  
Chairman, CEO, CFO   2010   $ 41,423       -       -       -       -       -       -  
                                                             
Michael Haug,   2011   $ 86,923       -       -       -       -       -       -  
Former CEO (1)   2010   $ 16,154       -       -       -       -       -       -  
                                                             
Former COO, CFO   2011   $ 123,311       -       -       -       -       -       -  
Adam Kolodny  (1)   2010   $ 41,423       -       -       -       -       -       -  
________
(1)   Mr. Kolodny and Mr. Haug are no longer officers of the company
 
STOCK OPTIONS AND WARRANTS
 
There were no stock options or warrants outstanding on December 31, 2011
 
OPTION/SAR GRANTS TABLE
 
There were no stock options/SARS granted under the Company's stock option plans to executive officers and directors during fiscal 2011.
 
 
24

 
 
AGGREGATE OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
 
There were no exercises of stock options/SAR by executive officers during fiscal 2011.
 
LONG-TERM INCENTIVE PLAN AWARDS
 
There were no long-term incentive plan awards made during fiscal 2011.
 
COMPENSATION OF DIRECTORS
 
The Company has no formal or standard compensation arrangement with the members of its Board of Directors or with committee members.
 
REPRICING OPTIONS
 
During the fiscal year ended December 31, 2011, the Company did not reprice any stock options.
 
ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
 
The following table sets forth certain information concerning the ownership of the Company's Common Stock and Series A Preferred Stock as of April 11, 2012 with respect to: (i) each person known to the Company to be the beneficial owner of more than five percent of the Company's Common Stock; (ii) all directors and executive officers; and (iii) directors and executive officers of the Company as a group. To the knowledge of the Company, each shareholder listed below possesses sole voting and investment power with respect to the shares indicated.
 
Title of Class
 
Name and Address of Beneficial Owner
 
Amount and Nature ofBeneficial Ownership
   
Percentof
Class
 
                 
Common Stock
 
Isaac H. Sutton
Sutton Global Associates, Inc.
152 Madison Ave, 23rd floor
New York, New York 10016
    2,350,723,310       24 %
                     
Preferred A
 
Isaac H. Sutton
Sutton Global Associates, Inc.
152 Madison Ave, 23rd floor
New York, New York 10016
    25,000,000       100 %
                     
Common Stock
 
All Executive Officers and
Directors as a Group (1 person)
    2,350,773,310       24 %
 
 
25

 
 
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
 
Ludvik Nominees, Pty, Ltd. was the exclusive adviser to Company for the period October 10, 2006 through March 31, 2010. Ludvik Nominees Pty Ltd is 100% owned by Frank Kristan, our former President and Chief Executive Officer. During the period from inception to March 31, 2010 Ludvik Nominees was an advisor to the Company, fees were charged quarterly. A total of $2,017,417 including interest was billed. $484,250 was converted to 32,394,269 shares and $0 remains owing.
 
Mr Isaac H. Sutton, the Company's President and Sole Director, was also a shareholder in the now defunct SavWatt Industries, LLC and a debtor of the Company. Mr Isaac H. Sutton the Company's President and Sole Director is a beneficial owner in Sutton Global Associates, Inc and GoIP Global, Inc both companies which have provided at certain times,   short term loans to the Company.
 
We do not have any independent directors or director committee members.
 
ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 
INDEPENDENT PUBLIC ACCOUNTANTS
 
On June 2, 2010, the Company engaged Sherb & Co. LLP, 805 Third Avenue, New York, New York as its certifying auditors to audit the Company's financial statements for the fiscal years ended December 31, 2010, 2009, 2008, 2007 and 2006. Prior to such engagement, the Company had not engaged a certifying audit firm.
 
(1) Audit Fees. For the fiscal years ended December 31, 2010 and 2011, the Company's auditors charged us $12,000 and $20,000_respectively, for  services rendered for the audit of our annual financial statements.
 
(2) Audit-Related Fees. For the fiscal year ended December 31, 2011 and 2010, our auditors charged us $9,000 and $6,000,  respectively, for audit-related services (review).
 
(3) Tax Fees. Our auditors did not provide tax compliance, tax advice, or tax planning advice for the fiscal year ended December 31, 2011.
 
(4) All Other Fees. None.
 
(5) Audit Committee's Pre-Approval Policies and Procedures. The Company had no audit committee during the fiscal year ended December 31, 2011; hence, there were no pre-approval policies or procedures in effect during such fiscal year.
 
 
26

 
 
ITEM 15.   EXHIBITS,   FINANCIAL STATEMENT SCHEDULES
 
See the Exhibits Index below for a list of exhibits attached hereto or incorporated by reference pursuant to Item 601 of Regulation S-K.
 
EXHIBIT INDEX
 
Exhibit   Description
     
3.1*****
 
Amended and Restated Certificate of Incorporation
     
3.2*****
 
Amended and Restated Bylaws
 
10.1**   Commercial Office Lease
     
10.2***   Employment Agreement for Isaac Sutton,  Chief Executive Officer and Chief Financial Officer
     
14*   Code of Business Conduct Ethics
     
21**   Subsidiaries of the Company
     
31.1***   Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
     
31.2***   Certification of Chiefl Financial Officer Pursuant to 18 U.S.C. Section 1350
     
32.1***   906 Certification of Chief Executive Officer and Chief Financial Officer
 
101.INS****
 
XBRL Instance Document
     
101.SCH****
 
XBRL Taxonomy Extension Schema Document
     
101.CAL****
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF****
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB****
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE****
 
XBRL Taxonomy Extension Presentation Linkbase Document
_________
*              Exhibits incorporated herein by reference to Company's Form 10-K for the fiscal Year Ended December 31, 2006, filed with the Commissionon August 17, 2010.
 
**           Incorporated by reference to 10-K filed April 15, 2011.
 
***         Filed herewith
 
****      Pursuant to Rule 406T of Regulation S-T,  the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933,  as amended,  are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934,  as amended,   and otherwise are not subject to liability under those sections.
 
*****    Incorporated by reference to 14C filed on April 13, 2011.
 
 
27

 
 
SIGNATURES
 
In accordance with Section 13 or 15(d) of the    Securities 1934, the Registrant has duly caused this Annual Report Exchange Act of to be signed on its behalf by the undersigned,  thereunto duly authorized.
 
  SaVWatt USA,  Inc.  
       
Dated: April 16, 2012
  /s/ Isaac H.  Sutton  
  By: Isaac H.  Sutton  
  Its: Chief Executive Officer and Chief Financial Officer  
 
 
28

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of SavWatt USA,   Inc.
 
We have audited the accompanying balance sheet of SavWatt USA,   Inc. as of December 31, 2011 and December 31, 2010, and the related statements of operations, stockholders'  deficit, and cash flows  for the years ended December 31, 2011 and 2010.  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 audit.
 
We conducted our audits in accordance with the 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 controls 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 presentation of the financial statements.    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 SavWatt USA, Inc. at December 31, 2011 and 2010,and the results of operations and cash flows  for the years ended December 31,   2011 and 2010,   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 1 to the financial statements, the Company has incurred significant losses from operations. These issues raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
/s/.Sherb & Co.,LLP
 
Sherb & Co., LLP
Certified Public Accountants
New York ,NY
April 16,2012
 
 
F-1

 
 
SavWatt USA, Inc.
  BALANCE SHEETS
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
             
ASSETS
Current assets:
           
 Cash
  $ 979     $ 2,422  
 Accounts receivable
    14,194       619  
 Inventory
    53,502       42,853  
 Other current assets
    80,830       32,200  
 Total current assets
    149,504       78,094  
                 
Computer Equipment, net
    161,207       10,803  
Leasehold Improvements, net
    432,391       -  
Intangible
    1,100,000       -  
                 
 Total assets
  $ 1,843,102     $ 88,897  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                 
Current liabilities:
               
 Accounts payable and accrued expenses
  1,066,793     112,318  
 Due to related party, net
    59,039       504,600  
 Stockholder loan payable
    -       1,129,698  
 Accrued interest - stockholder
    -       175,596  
 Derivative liability
    300,312       -  
 Related party convertible loan payable, net
    363,798       50,000  
 Convertible notes payable, net
    1,110,450       200,000  
 Total current liabilities
    2,900,392       2,172,212  
                 
 Accounts payable, long term
    800,000       -  
 Total liabilities
    3,700,392       2,172,212  
                 
                 
Stockholders' deficit:
               
 Common stock, $0.0001 par value, 4,800,000,000 shares and 100,000,000 shares authorized, 3,109,078,478 and 167,531,786 shares issued and outstanding, respectively
    310,907       16,752  
 Preferred stock, $.0001 par value, 200,000,000 authorized 10,000,000 issued and outstanding
    1,000       -  
 Additional paid-in capital
    45,335,120       37,120,142  
 Accumulated deficit
    (47,504,317 )     (39,203,264 )
      (1,857,290 )     (2,066,370 )
                 
 Non controlling interest
    -       (16,945 )
                 
 Total stockholders' deficit
    (1,857,290 )     (2,083,315 )
                 
 Total liabilities and stockholders' deficit
  $ 1,843,102     $ 88,897  
 
See accompanying notes to audited financial statements.
 
 
F-2

 
 
SavWatt USA, Inc.
 STATEMENTS OF OPERATIONS
 
   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
             
             
REVENUES
  $ 60,916     $ 4,059  
COST OF REVENUE
    26,806       -  
GROSS PROFIT
    34,111       4,059  
                 
EXPENSES
               
                 
General and administrative
    2,306,097       1,588,192  
Selling expenses
    168,476          
Professional fees
    534,790       484,606  
Bad debt expense-related party
    -       218,636  
Total Expenses
    3,009,362       2,291,434  
                 
LOSS FROM OPERATIONS
    (2,975,251 )     (2,287,375 )
                 
OTHER INCOME (EXPENSE)
               
Other income
    -       5,000  
Interest expense
    (101,501 )     (33,220 )
Interest expense - stockholder
    (219,944 )     (473,931 )
Derivative expense
    (86,400 )     -  
Gain on settlement of debt
    6,550       -  
Amortization of debt discount
    (3,199,988 )     -  
Debt Conversion Expense
    (1,707,573 )     (51,556 )
Total Other Income (Expense)
    (5,308,856 )     (553,707 )
                 
NET LOSS
    (8,284,107 )     (2,841,082 )
                 
NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
    (16,945 )     16,945  
                 
NET LOSS ATTRIBUTABLE TO SAVWATT USA, INC.
  $ (8,301,052 )   $ (2,824,137 )
                 
NET LOSS PER SHARE, BASIC AND DILUTED
  $ (0.01 )   $ (0.03 )
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED
    1,229,594,863       105,307,057  
 
See accompanying notes to financial statements.
 
 
F-3

 
 
SavWatt USA, Inc.
 STATEMENT OF STOCKHOLDERS' DEFICIT
 
                                 
Deficit
       
                                 
Accumulated
       
                           
Additional
   
During
   
Total
 
   
Common Stock
   
Preferred A
   
Paid-in
   
Development
   
Stockholders'
 
   
Shares
   
$
   
Shares
   
$
   
Capital
   
Stage
   
Deficit
 
                                           
Balance, December 31, 2009
    79,474,175     $ 7,947           $       $ 35,256,348     $ (36,379,127 )   $ (1,114,832 )
                                                       
Common stock issued for cash
    37,333,333       3,733       -       -       311,267       -       315,000  
                                                         
Fair value of common stock issued for services
    31,850,000       3,185       -       -       1,308,140       -       1,311,325  
                                                         
Fair value of common stock issued for interest
    500,000       50       -       -       21,199       -       21,249  
                                                         
Common stock issued pursuant to noteholder debt conversion
    18,374,278       1,837       -       -       171,632       -       173,469  
                                                         
Modification expense related to conversion of debt
    -       -       -       -       51,556       -       51,556  
                                                         
Net loss for the year ended December 31, 2010
    -       -       -       -       -       (2,824,137 )     (2,824,137 )
                                                         
Balance, December 31, 2010
    167,531,786       16,752       -       -       37,120,142       (39,203,264 )     (2,066,370 )
                                                         
Fair value of common stock issued for services
    201,238,683       20,124       -       -       286,547       -       306,671  
                                                         
Fair value of common stock issued for interest
    1,000,000       100       -       -       13,900       -       14,000  
                                                         
Fair value of common stock issued for related party debt
    2,500,000       250       -       -       34,750       -       35,000  
                                                         
Beneficial conversion feature related to convertible debt
    -       -       -       -       3,470,250       -       3,470,250  
                                                         
Common stock issued pursuant to noteholder debt conversion - principal
    2,718,112,504       271,811       -       -       2,190,981       -       2,462,792  
                                                         
Common stock issued pursuant to noteholder debt conversion - accrued interest
    18,695,505       1,870       -       -       11,777       -       13,647  
                                                         
Modification expense related to conversion of debt
    -       -       -       -       1,707,573       -       1,707,573  
                                                         
Conversion of debt into Preferred A shares ( par .0001)
    -       -       10,000,000       1,000       499,000       -       500,000  
                                                         
Net loss for the year ended December 31, 2011
    -       -       -       -       -       (8,301,052 )     (8,301,052 )
                                                         
Balance, December 31, 2011     3,109,078,478     $ 310,907       10,000,000     $ 1,000     $ 45,334,920     $ (47,504,317 )   $ (1,857,490 )
 
See accompanying notes to financial statements.
 
 
F-4

 
 
SavWatt USA, Inc.
 STATEMENTS OF CASH FLOWS
 
   
For the years ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (8,301,052 )   $ (2,824,137 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Net loss attributable to non controlling interest
    16,945       (16,945 )
Stock issued for services
    306,871       1,311,325  
Stock issued for interest
    14,000       21,249  
Bad debt expense - related party
    -       218,636.00  
Debt modification expense
    1,707,573       51,556.00  
Gain on settlement of related party debt
    (6,550 )     -  
Depreciation
    30,703       -  
Amortization expense
    3,199,988       -  
Loss on fair value of derivative
    86,399       -  
Increase (decrease) in cash flows as a result of changes in asset and liability account balances:
               
Accounts receivable
    (13,575 )     (621.00 )
Inventory
    (10,649 )     (42,852 )
Other current assets
    (48,630 )     (32,200 )
Accounts payable and accrued expenses
    2,020,093       112,318  
Related party payable
    979,438       285,965  
Stockholder loan payable
    -       90,000  
Accrued interest-stockholder
    -       473,931  
Total adjustments
    8,282,606       2,472,362  
                 
Net cash used in operating activities
    (18,446 )     (351,775 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of computer equipmnet
    -       (10,803 )
Purchases of machinery
    (153,775 )     -  
Purchase of leasehold improvements
    (459,722 )     -  
Purchase of intangible
    (1,100,000 )     -  
Net cash used in investing activities
    (1,713,497 )     (10,803 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from issuance of common stock
    -       315,000  
Proceeds from issuance of loan payable
    1,755,500       50,000  
Payments of convertible notes payable
    (25,000 )     -  
      -       -  
Net cash provided by financing activities
    1,730,500       365,000  
                 
NET INCREASE (DECREASE) IN CASH
    (1,443 )     2,422  
                 
CASH, BEGINNING OF YEAR
    2,422       -  
                 
CASH, END OF YEAR
  $ 979     $ 2,422  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
               
Interest paid
  $ -     $ -  
Income taxes paid
  $ -     $ -  
Preferred stock issued for repayment of shareholder loan
  $ 500,000     $ -  
Accounts payable converted to convertible debt instruments
  $ 80,445     $ -  
Beneficial conversion feature related to convertible debt
  $ 3,470,250     $ -  
Loan assignments to convertible note holders
  $ 1,994,565     $ 373,469  
Related party debt settled for common stock
  $ 25,000     $ -  
Related party debt converted to a convertible loan
  $ 600,000     $ -  
Loan payable assigned to shareholder
  $ 50,000     $ -  
Common stock issued for accrued interest
  $ 13,647     $ -  
Accrued interest assigned to convertible noteholders
  $ 171,526     $ -  
Common stock issued as a result of debt conversion
  $ 2,462,792     $ 173,469  
Initial valuation of derivative liability
  $ 213,913     $ -  
Stockholder loan and accrued interest exchanged for a short term convertible note
  $ -     $ 1,503,167  
 
See accompanying notes to financial statements.
 
 
F-5

 
 
SavWatt USA, Inc.
Notes to Financial Statements
 
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

SavWatt USA, Inc. (“SavWatt”) formerly known as Ludvik Capital, Inc.  (“Ludvik Capital”) (hereinafter "the Company") was incorporated on October 20, 2006 under the laws of the State of Delaware for the purpose of becoming a successor corporation by way of merger with Patriot Advisors, Inc. (“Patriot”) and Templar Corporation (“Templar”), pursuant to a plan of reorganization and merger approved by the United States Bankruptcy Court, District of Maine in Case No. 04-20328 whereby Ludvik Capital is the continuing entity. Hereinafter, SavWatt, Ludvik Capital, Patriot and Templar are referred to as the “Company” unless specific reference is made to one of these entities.

The Company's business plan consisted of investing in public and private companies, providing long term equity and debt investment capital to fund growth and acquisitions and recapitalizations of small and middle market companies in a variety of industries primarily located in the United States.

Since inception, the Company has had minimal operations and no revenues earned. On April 5, 2010, the Company amended its articles of incorporation and changed its name to SavWatt USA, Inc.

The Company plans to capitalize on the largely unaddressed commercial and consumer market for energy-efficient LED lighting by investing in product and corporate marketing. With public relations and advertising throughout the media, a recognized, popular consumer LED brand will be cultivated, spearheading and establishing a leading market share in the growing energy-efficient bulb sector during the next three to five years. SavWatt has the exclusive marketing rights in the United States to sell LED street lighting for a number of Asian companies.

The Company's year end is December 31st.

The Company's corporate headquarters were originally located in Virginia but are currently located in Baltimore MD.

GOING CONCERN AND BASIS OF PRESENTATION

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the financial statements, the Company incurred net losses of $8,301,052 for the year ended December 31, 2011. In addition, the Company has incurred a net loss from inception (October 20, 2006) through December 31, 2011 and accumulated deficit amounting to $47,504,316 its inception, the Company has generated minimal revenues and has minimal cash resources.

These circumstances raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management's efforts have been directed towards the development and implementation of a plan to generate sufficient revenues to cover all of its present and future costs and expenses.
 
 
F-6

 
 
Management is taking steps to address this situation. The Company has determined that it cannot continue with its business operations as outlined in its original business plan because of a lack of financial resources; therefore, management has redirected their focus towards identifying and pursuing options regarding the development of a new business plan and direction. The Company intends to explore various business opportunities that have the potential to generate positive revenue, profits and cash flow in order to financially accommodate the costs of being a publicly held company. The Company is in the process of raising capital by implementing its business plan in LED lighting and expects to generate sufficient revenue by the 3rd quarter of 2012 with a positive cash flow. Until then, the Company the Company will not have the required capital resources or credit lines available that are sufficient to fund operations.

The Company has minimal operating costs and expenses at the present time due to its limited business activities. The Company, however, will be required to raise additional capital over the next twelve months to meet its current administrative expenses, and it may do so in connection with or in anticipation of possible acquisition transactions. This financing may take the form of additional sales of its equity securities and/or loans from its directors. There is no assurance that additional financing will be available, if required, or on terms favorable to the Company.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in understanding the accompanying financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

ACCOUNTING METHOD

The Company's financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
 
 
F-7

 
 
DEVELOPMENT STAGE ACTIVITIES

For all periods prior to December 31, 2011, the Company considered itself a development stage enterprise. During the year ended December 31, 2011, the Company has generated approximately $61,000 in revenue and made significant progress toward achieving its intended business plan of producing, marketing and selling Light Emitting Diode ("LED") lighting. As a result of the generation of revenue as well as a result of the Company development we no longer consider ourselves a development stage enterprise.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all short-term debt with original maturities of three months or less to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments may include cash, accounts receivable, inventory, other assets, loans payable and related accrued interest, and accounts payable. All such instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2011 and December 31, 2010.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are stated at the amount the Company expects to collect. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change.

As of December 31, 2011 accounts receivable are presented net of an allowance for doubtful accounts of $9,032.

As of December 31, 2010 the Company wrote off a related party receivable amounting to $218,636 and recorded a bad debt expense, based on management's evaluation of the balance and certainty that the balance would not be collectible in the future.
 
 
F-8

 
 
PROPERTY AND EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period.

Depreciation is provided for over the estimated useful lives of the related asset using the straight-line method. As of December 31, 2011 property and equipment consists of primarily computer equipment.

Included in leasehold improvements are costs related to the construction of the manufacturing facility in Baltimore Maryland. The leasehold improvements are being amortized using the straight-line method.

The estimated useful lives for significant equipment categories are from 3 to 5 years and for leasehold improvements the useful life is 10 years.

INVENTORY

The Company's inventory consists of entirely of finished goods, and is valued at lower of cost or market price. Cost is determined on a first-in, first-out ("FIFO") basis. To ensure inventory is carried at the lower of cost or market, the Company periodically evaluates the carrying value and also periodically performs an evaluation of inventory for excess and obsolete items. Such evaluations are based on management's judgment and use of estimates. Such estimates incorporate inventory quantities on-hand, aging of the inventory, sales forecasts for particular product groupings, planned dispositions of product lines and overall industry trends.

REVENUE RECOGNITION

Revenue is recognized when all of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller's price to the buyer is fixed and determinable; and, (4) collectability is reasonably assured. The Company has earned minimal revenue since inception.

USE OF ESTIMATES

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

PROVISION FOR TAXES

Income taxes are provided based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against the deferred tax asset if management does not believe the Company has met the "more likely than not" standard to allow recognition of such an asset.
 
 
F-9

 
 
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

The Company utilizes the guidance per FASB Codification “ASC 260 "Earnings Per Share". Basic earnings per share is calculated on the weighted effect of all common shares issued and outstanding, and is calculated by dividing net income available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share, which is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation, plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding, is not presented separately as it is anti-dilutive. Such securities, shown below, presented on a common share equivalent basis and outstanding as of December 31, 2011  has been excluded from the per share computations as their effect would be anti-dilutive:
 
     
2011
 
Convertible Preferred Stock
   
100,000,000
 
Convertible Bridge Notes and Notes Payable
   
4,300,754,667
 

The average number of common shares outstanding for the period from Inception ( October 20, 2006) through December 31, 2011 has been retroactively adjusted for the 2:1 forward stock split effective August 17, 2007.

STOCK BASED COMPENSATION

The Company accounts for stock based compensation transactions with employees under the provisions of ASC Topic No. 718, "Compensation, Stock Compensation" ("Topic No. 718"). Topic No. 718 requires the recognition of the fair value of equity-based compensation in net income. The fair value of the Company's equity instruments are estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards granted to employees is amortized over the vesting period of the award and the Company elected to use the straight-line method for awards granted after the adoption of Topic No. 718.

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, "Equity-Based Payments to Non-Employees" ("Topic No. 505-50"). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. When the equity instrument is utilized for measurement the fair value of the equity instrument is estimated using the Black- Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to receive cash for the goods or services instead of paying with or using the equity instrument.

FORWARD STOCK SPLIT

All references to the Company's outstanding shares, and options, have been adjusted to give effect to the 2 for 1 forward stock split effective August 17, 2007.
 
Derivative Liabilities

The Company assessed the classification of its derivative financial instruments as of December 31, 2011, which consist of convertible instruments and rights to shares of the Company’s common stock, and determined that such derivatives meet the criteria for liability classification under ASC 815.
 
 
F-10

 
 
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.

The Company believes that certain conversion features embedded in its convertible notes payable and rights to the Company’s common stock are not clearly and closely related to the economic characteristics of the Company’s stock price. The Company does not have a sufficient amount of authorized shares to satisfy its obligations under the convertible notes payable and rights to the shares of common stock. Accordingly, the Company has recognized derivative liabilities in connection with such instruments. The Company uses judgment in determining the fair value of derivative liabilities at the date of issuance at every balance sheet thereafter. The Company uses judgment in determining which valuation is most appropriate for the instrument (e.g., Black Scholes), the expected volatility, the implied risk free interest rate, as well as the expected dividend rate. Upon issuance the fair value was calculated using the Black-Scholes option pricing model with the following factors, assumptions, and methodologies:
 
   
2011
 
       
Fair value of Company’s common stock
 
$
0.0005
 
Volatility
   
171%-250
%
Exercise price
 
$
0.0003-0.0005
 
Estimated life    
1 year
 
Risk free interest rate (based on 1-year treasury rate)
   
.15
%

The fair value of our financial instruments at December 31, 2011 and 2010 are as follows:

   
Fair Value Measurements at Reporting Date Using
 
   
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
   
Significant Other
Observable
Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
 
December 31, 2010:
                 
Derivative Liabilty
 
$
   
$
   
$
-
 
                         
December 31, 2011:
                       
Derivative Liabilty
 
$
   
$
   
$
300,312
 
 
 
F-11

 
 
Fair Value of Financial Instruments
 
Effective January 1, 2008, the Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, or ASC 820, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.
 
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:
Observable inputs such as quoted market prices in active markets for identical assets or liabilities
 
Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data
 
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
 
The Company did not have any Level 2 or Level 3 assets or liabilities as of  December 31, 2011, with the exception of its convertible notes payable and derivative liability. The carrying amounts of these liabilities at December 31, 2011, approximate their respective fair value based on the Company’s incremental borrowing rate.

Cash is considered to be highly liquid and easily tradable as of  December 31, 2011, and therefore classified as Level 1 within our fair value hierarchy.

In addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior periods’ financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or the sum of stockholders’ deficit.
 
 
F-12

 
 
INTANGIBLE ASSETS
 
License Agreements
 
License agreements acquired by the Company are reported at acquisition value less accumulated amortization and impairments.
 
Amortization
 
Amortization is reported in the income statement straight-line over the estimated useful life of the intangible assets, unless the useful life is indefinite. Amortizable intangible assets are amortized from the date that they are available for use. The estimated useful life of the license agreement is five years which is the term of the underlying license agreement. The license is not yet in use as such the Company has not yet begun amortizing the asset.
 
Assessment of an intangible asset’s residual value and useful life is performed annually.
 
As stated in FASB 142 paragraph 11, the accounting for a recognized intangible asset is based on its useful life to the reporting entity. The Company has yet to use the license and as such has not begun amortizing the asset. When the Company does begin the amortization it will be over a 5 year period at $220,000 per year.
 
Customer Concentration

Two of the Company's customers accounted for approximately 17% and 19% respectively of its revenues during the year ending December 31, 2011.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” which is not expected to have a material impact on the financial statements upon adoption.

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income.” Under the amendments in this ASU, an entity has two options for presenting its total comprehensive income: to present total comprehensive income and its components along with the components of net income in a single continuous statement, or in two separate but consecutive statements. The amendments in this ASU are required to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The adoption of ASU No. 2011-05 will not have any material impact on the Company’s financial position and results of operations.

In September 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-08, Intangibles — Goodwill and Other (Topic 350). This Accounting Standards Update amends FASB ASC Topic 350. This amendment specifies the change in method for determining the potential impairment of goodwill. It includes examples of circumstances and events that the entity should consider in evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption does not have any material impact on the Company’s financial position and results of operations.

Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
 
 
F-13

 
 
NOTE 3 - STOCKHOLDER LOANS
 
On December 14th 2006, the Company entered into an Advisory Agreement (“Advisory Agreement”) with Ludvik Nominees Pty Ltd (“Ludvik Nominees”) (a Company 100% owned by Frank Kristan) for services to be rendered which were payable based on 3% assets under management and 20% of net profits of Ludvik Capital. The term of the agreement was for approximately 11 years, concluding on December 31, 2017.
 
Frank Kristan served as President and Chief Executive Officer of the Company from inception, October 20, 2006 through March 31, 2010 and is also the President of Ludvik Nominees. On March 31, 2010, Frank Kristan resigned as President and Director of the Company.
 
On March 31, 2010 the original 2006 agreement was terminated and a settlement agreement was created to resolve any outstanding obligations with respect to the 2006 agreement. In accordance with the settlement agreement both parties agreed that since advisory fees under the December 14th 2006 Agreement were based on assets under management that had no value, the Advisor had the option to get paid a fee of $30,000 per month starting October 2006 including interest. Furthermore, the remaining principal balance plus accrued interest as of September 30, 2010 was rolled over into a Secured Convertible Note amounting to $1,503,167.
 
From the period from the Company’s inception, October 20, 2006 through the termination of the Advisory Agreement on September 30, 2010, the Company issued its advisors 32,394,269 shares of common stock as payment for services amounting to $484,250.
 
This note was payable on September 30, 2010 and bears an interest rate of 12% per annum payable at the end of the term. Upon default, the unpaid principal balance of this note and any accrued and unpaid interest bear interest at the rate of 18%. The outstanding balance and accrued interest, all or in part, is convertible at the option of the holder into the Company's common stock at a conversion price of 50% of the stock price, with a minimum of $.01 per share. As of December 31, 2010 this note was in default. In April 2011, the Company received a waiver of the default and extended the due date of the note to December 31, 2011, at an interest rate of 18%. The note, plus accrued interest, was assignable
 
In the 3rd and 4th quarter of 2010 this stockholder assigned $373,469 of the convertible loan payable to investors (as discussed in Note 5)
 
In 2011, entities related to the Company’s current President and sole director assigned $300,000 in payables to Ludvik Nominees.
 
In 2011, this stockholder assigned $1,759,893 of the convertible loan payable to investors and converted $66,927 into 29,692,700 shares of common stock.
 
 
F-14

 
 
NOTE 4 – PROPERTY AND EQUIPMENT
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
             
Computer Equipment
 
$
12,985
   
$
10,803
 
Leasehold Improvements
   
459,722
     
-
 
Machinery
   
151,593
         
Accumulated depreciation
   
(30,703
)    
-
 
Total
 
$
593,598
   
$
13,839
 

In 2011 the Company purchased machinery for $151,593 which is not yet in use. Therefore the Company has yet to depreciate the machine.

Depreciation expense amounted to $30,703 and $0 for the years ended December 31, 2011 and 2010 respectively.

NOTE 5 - RELATED PARTY TRANSACTIONS

On September 30, 2010, Isaac H. Sutton was elected to the Board of Directors and currently serves as the Company's new President and sole director.

As of December 31, 2010, the Company recorded $30,000 expense related to consulting fees earned by the Company's President for 6 months.
 
During the Period of April 1, 2010 - December 31, 2010, the Company received short term funding from Sutton Global Associates, Inc., which is a related party since this company is controlled by Isaac H. Sutton the Company's President and Sole Director. As of December 31, 2010, the Company owes $479,600 to Sutton Global Associates, Inc.

During 2010, the Company advanced certain monies to GoIP Global, a related party controlled by Isaac H. Sutton the Company's President and Sole Director, to fund its operations. In addition, the Company entered into a one year agreement with GoIP where as GoIP provided messaging services to the Company. As of December 31, 2010, the Company's payable related to these services amounted to $25,000. In 2011, the Company issued 2,500, 000 shares of common stock pursuant to the conversion of this payable.

In December 2010, the Company wrote off $218,636 due from another affiliated company SavWatt Industries, LLC, a company later controlled by Isaac H. Sutton. The original owners are now employees of the Company. The Company determined that this amount would not be collectible and therefore recorded this amount as bad debt expense.

During the year ending December 31, 2011, the Company received approximately $1,372,507 in short term funding from Sutton Global Associates, Inc.

In 2011, Sutton Global Associates converted $600,000 of its short term funding in to into two Notes. The Notes bear interest at a rate of 6 % per annum and are convertible into common stock of the Company at the discretion of the holder. The notes are due in April and June of 2012. The Company recorded a $600,000 discount on these convertible notes, related to their beneficial conversion features, and amortized $463,798 for the year ended December 31, 2011. The net note payable, inclusive of unamortized discount was $136,202 as of December 31, 2011.  The note has accrued interest of $21,107 included in accrued expenses, at December 31, 2011.
 
 
F-15

 

In April 2011, Sutton Global Associates assigned $300,000 of amounts owed to them to stockholders associated with Ludvik Nominees a stockholder of the Company.

In January 2011 Sutton Global Associates converted $250,000 of amounts owed to them into 5,000,000 shares of Preferred A shares.
 
In July 2011, Sutton Global Associates converted $250,000 of amounts owed to them into 5,000,000 shares of Preferred A shares.

As of December 31, 2011, the Company owes to Sutton Global Associates a total of $59,039 in unsecured advances included in due to related party, which was has not been converted into a convertible note, assigned to stockholders, or have not been converted into equity
 
NOTE 6 – DEBT

Short term Convertible Debt
 
In August 2010 through December 2010 a stockholder assigned $373,469 of his loan payable to investors transferring all the rights and interests of the original note (as disclosed in Note 3). As of December 31, 2010 the assignee debt holders have converted $173,469 of their outstanding debt into 18,374,278 shares of the Company's common stock resulting in the loan payable balance of $200,000.

In 2011, entities related to the Company’s current President and sole director assigned $300,000 in payables to a shareholder in the form of convertible debt.
 
In 2011, this stockholder assigned $1,759,893 of the convertible loan payable to investors and converted $66,927 into 29,692,700 shares of common stock.
 
In 2011 the Company converted $251,971 in accrued expenses and accounts payable into debt. During this period this liability was assigned to other debt holders

With respect to some of these assigned convertible notes, some of the terms conversion were modified thereby resulting in the Company recording a beneficial conversion with respect to the modifications.

During the year ended December 31, 2011, the Company entered into several short-term convertible notes with a total face amount of $1,755,500. These notes bear interest rates ranging from 5% to 18% payable in full in twelve months or less and which were convertible into shares of Company's common stock at discounts to market on their dates of conversion ranging from 30% to 70% from the market price. These notes have a minimum conversion floors ranging from $0.01 to $0.0001 per share.

With respect to the convertibility feature of the assigned convertible notes and the convertible notes entered into during the year ended December 31, 2011 the Company recorded a total beneficial conversion of $2,784,162 (which includes $213,913 resulting from transactions that required derivative accounting). Total amortization amounted to $2,436,190, recorded as other expense during the year ended December 31, 2011.

During the year ended December 31, 2011 the Company has converted a total of $2,395,865 of debt and $13,647 in accrued interest into 2,688,419,804 shares of common stock. In addition to debt the Company has recorded $1,707,573 of modification expense with respect to the conversion.
 
 
F-16

 

As of December 31, 2011 the balance of the Company’s short term convertible notes amounted to $1,110,449. The interest on these debentures is accrued and due at the end of the notes term. As of December 31, 2011 the accrued interest amounted to approximately $95,886 and is included in accounts payable and accrued expenses.

Other Debt
 
In October 2010, the Company entered into a secured promissory note for $50,000. The note was payable within 90 days and bears an interest rate of 5%. In connection with this note the Company issued 500,000 shares of its common stock as additional consideration valued at $21,249, and accounted for as interest expense during the year ended December 31, 2010. This note was fully satisfied as of December 31, 2011.
 
NOTE 7 - EQUITY TRANSACTIONS
 
In Apri12010, the Company amended its Articles of Incorporation changing the name of the Company to SavWatt USA, Inc. and increasing their authorized capital shares from 100,000,000 shares to 2,200,000,000 shares designating 2,000,000,000  as common stock and 200,000,000 shares as preferred stock. In September 2011 the Company increased the total capital to 5,000,000,000  shares authorized designating 4,800,000,000  as common stock and 200,000,000 shares as preferred stock. In 2011 the Company designated 25,000,000 shares of the preferred shares to be Series A Cumulative Preferred Stock ("Preferred Series A"). The Preferred Series A is convertible a one share of preferred into ten shares of common stock. The Preferred Series A shares are entitled to two hundred votes for each share of Preferred Series A  shares as preferred stock. In 2011 the Company designated 25,000,000 shares of the preferred shares to be Series A Cumulative Preferred Stock ("Preferred Series A"). The Preferred Series A is convertible a one share of preferred into ten shares of common stock. The Preferred Series A shares are entitled to two hundred votes for each share of Preferred Series A.
 
In 2011 the Company designated 25,000,000 shares of the preferred shares to be Series A Cumulative Preferred Stock (“Preferred Series A”). The Preferred Series A is convertible a one share of preferred into ten shares of common stock. The Preferred Series A shares are entitled to two hundred votes for each share of Preferred Series A.

In January 2011, Sutton Global converted $250,000 of debt into 5,000,000 shares of Preferred Series A stock.

In July 2011, Sutton Global converted $250,000 of debt into 5,000,000 shares of Preferred Series A stock.
 
 
F-17

 
 
The issuance of common stock from January 1, 2010 through December 31, 2010 is summarized in the table below:

   
Number of shares of common stock
   
Fair Value
at Issuance
   
Per Share Value at Issuance
 
Stock issued for services
   
31,850,000
    $
1,311,325
   
0.04
 
Common stock issued for cash
   
37,333,333
     
315,000
     
0.008
 
Fair value of common stock issued for interest
   
500,000
     
21,249
     
0.04
 
Common stock issued pursuant to note holder debt conversion
   
18,374,278
     
173,469
     
0.009
 
     
88,057,611
     
1,872,599
         
 
The issuance of common stock from January 1, 2011 through December 31, 2011 is summarized in the table below:

   
Number of shares of common stock
   
Fair Value
at Issuance
   
Per Share Value at Issuance
 
           
$
-
   
$
-
 
Stock issued for related party debt settlement
   
2,500,000
     
35,000
     
0.014
 
Stock issued for services
   
203,238,683
     
306,871
     
0.0005 -0.014
 
Fair value of common stock issued for interest
   
1,000,000
     
14,000
     
0.014
 
Common stock issued pursuant to note holder debt conversion – principal
   
2,718,112,504
     
2,462,792
     
0.0001 - 0.01
 
Common stock issued pursuant to note holder debt conversion - interest
   
18,695,505
     
13,647
     
.00001-0.01
 
     
2,943,546,692
     
39,658,097
         
 
 
F-18

 
 
NOTE 8 - COMMITMENTS AND CONTINGENCIES

On July 1, 2010, the Company entered into an employment agreement with Michael Haug, as the Company's CEO, which responsibilities include running the daily operations of SavWatt USA, Inc. The term of the agreement is for one year at a salary of $84,000, and may be renewed upon mutual agreement by the Company and the employee.
 
The employment agreement with Michael Haug was not renewed and in October 2011, Mr. Haug was appointed Executive Vice President of Sale. Mr. Haug tendered his resignation in March 2012.
 
On February 11, 2011, the Company entered into a lease for approximately 24,561 square feet at 1100 Wicomico Street, Suite 700, Baltimore, Maryland, under a written lease for a term of ten years. This new facility will be the Company's new principal executive offices, as well as a manufacturing and assembly facility. We will not have to pay rent on this facility until February 1, 2012. In accordance with ASC 840 Leases, the Company has recorded a $74,280 liability in recognition of this rent holiday as of September 30, 2011. Thereafter, the Company will pay rent as follows: