SaviCorp (fka SVMI)

[bly03]

flsunchaser:

Actually, I believe that AnthonyBP got it right. From the SB-2:

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

It clearly states that the number of shares held by them does not exceed 4.9%.

In an earlier post, you replied that this was to limit the rate of dilution. This is not the reason for this limit. This limit is for reporting purposes. Pretty much all of these types of financing deals have limits either just below 5% or just below 10%. This is because at 5%, a form SC 13D must be filed detailing the ownership percentage, and in subsequent years a form SC 13G must be filed detailing the change in ownership percentage. At 10% ownership, a Form 4 must be filed for every buy or sell.

However, I must admit that I find several parts of the SB-2, as well as the original 8-K from July 14 to be somewhat confusing, as they appear contradictory to me. (For what it's worth, I called the company this morning with the hope of clearing up some of the things that I'm unclear about). Unfortunately, I did not reach Greg, so I left a message that I would like to speak with him. I'll let you guys know if I get a chance to talk with him and get things cleared up.)

Two of the things that I find very confusing are as follows:

1) Although the agreement clearly stated that Cornell would not allow themselves to hold over 4.9% of the O/S, they already do, and did so from the first moment the agreement came about. The 30 million "comittment shares" put them over this limit. This was confirmed shortly after when they filed a Form 13D. (AnthonyBP, I have seen you state a few times that there is no Fomr SC 13D. Yes there is. It was filed on July 17, 2006. Check the 2006-07-17 filing from the link below:)

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=1096637

2)The agreement states that convertable debentures bear interest at a rate of 10% and mature 2 years from the date of issuance, but the payment schedule appears to be at a much higher rate. The monthly payments of $225,000 begin in November 2006 and go through July 2008. A payment of $225,000 per month for 20 months (the period from Nov 06 to July 08) is much more than a 10% interest rate. And this monthly payment is only worth $225,000 if the share bid price is exactly 0.007 the day before the payment. If the bid price is less than 0.007, the the shares they would receive would be $225,000/0.003, which makes the monthly payment worth more than twice $225,000 with the price hovering just a tad below 0.007. If the share bid price goes over 0.007, then they still get $225,000/0.007 worth of shares, which will again be worth more than $225,000. Even if they pay in cash, they pay 15% more than $225,000.

On top of the above, the monthly payment of shares would again be over 4.9% of the O/S at this time (although when the O/S rises in the future, this may not be the case).


A couple other comments:

I see nothing indicating that our SB-2 registration has been declared effective by the SEC. As AnthonyBP has pointed out, yesterday, December 7 was the date that Savi begins owing Cornell "liquidation damages" of 2% of the amount of the convertable debenture for each month the registration is not effective. (and, not coincedently, this Dec 7 date is the reason for the timing of my call to the company).

Flsun, I have seen you post to the effect that if we simply don't get this share registration declared effective, that we could essentially just simply default on Cornell and that this would be a good thing. May I remind you of the following:

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

I'm fairly certain that you don't want the above to occur.

Also, if I read the financing agreement correctly, even if Greg were to find alternate financing to take out the Cornell loan (provided that the price is still below 1.3 cents), that would not take out their warrants. All of the warrants were issued to Cornell up front.

But, if the share registration is not accepted by the SEC, I'm not sure what that does to the warrants.