**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10QSB**

**SAVI      MEDIA GROUP, INC.**

| Nevada                                  | 91-1766174                                       |
|-----------------------------------------|--------------------------------------------------|
| (State                of Incorporation) | (IRS                Employer Identification No.) |

----

**SAVI      MEDIA GROUP, INC.**

**(A      Development Stage Company)**

**Quarterly      Report on Form 10-QSB for the**

**Quarterly      Period Ending March 31, 2006**

| PART                I. FINANCIAL INFORMATION                                                                                               |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                       |   |
| Item                1. Unaudited Condensed Financial Statements                                                                            |   |
|                                                                                                                                       |   |
| Consolidated                Balance Sheets:                                                                                                |   |
| March                31, 2006 and December 31, 2005                                                                                        | 3      |
|                                                                                                                                       |   |
| Consolidated                Statements of Operations:                                                                                      |   |
| For                the three months ended March 31, 2006 and 2005 and                                                                      |   |
| for                the period from inception, August 13, 2002, to March 31,                2006                                            | 5      |
|                                                                                                                                       |   |
| Consolidated                Statement of Stockholders’ Deficit                                                                       |   |
| For                the three months ended March 31, 2006                                                                                   | 6      |
|                                                                                                                                       |   |
| Consolidated                Statements of Cash Flows:                                                                                      |   |
| For                the three months ended March 31, 2006 and 2005 and                                                                      |   |
| for                the period from inception, August 13, 2002, to March 31,                2006                                            | 9      |
|                                                                                                                                       |   |
| Notes                to Unaudited Consolidated Financial Statements                                                                        | 10     |
|                                                                                                                                       |   |
| Item                2. Management's Discussion and Analysis of Financial Condition and                Results                of Operations | 17     |
|                                                                                                                                       |   |
| Item                3. Controls and Procedures                                                                                             | 20     |
|                                                                                                                                       |   |
| PART                II. OTHER INFORMATION                                                                                                  |   |
|                                                                                                                                       |   |
| Item                1. Legal Proceedings                                                                                                   | 21     |
|                                                                                                                                       |   |
| Item                2. Changes in Securities                                                                                               | 21     |
|                                                                                                                                       |   |
| Item                3. Defaults Upon Senior Securities                                                                                     | 21     |
|                                                                                                                                       |   |
| Item                4. Submission of Matters to a Vote of Security Holders                                                                 | 21     |
|                                                                                                                                       |   |
| Item                5. Other Information                                                                                                   | 21     |
|                                                                                                                                       |   |
| Item                6. Exhibits                                                                                                            | 21     |
|                                                                                                                                       |   |
| SIGNATURES                                                                                                                                 | 22     |

----

| **SAVI                MEDIA GROUP, INC.**                         |
|-------------------------------------------------------------------|
| **A                Corporation in the Development Stage**         |
| **UNAUDITED                CONSOLIDATED CONDENSED BALANCE SHEET** |
| ***March                31, 2006 and December 31, 2005***         |
|                                                              |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                       |   | **March                31,** |    | **December                31,** |   |
|--------------------------------------------|--------|------------------------------|---------|---------------------------------|--------|
|                                       |   | **2006**                     |    | **2005**                        |   |
|                                       |   |                         |    | **(Restated)**                  |   |
| **ASSETS**                                 |   |                    |    |                       |   |
|                                       |   |                    |    |                       |   |
| Current                assets:             |   |                    |    |                       |   |
| Cash                and cash equivalents   |   | $                            | 145,118 |                            | $      | 336 |   |
|                                       |   |                         |    |                            |   |   |   |
| Total                current assets        |   |                         | 145,118 |                            |   | 336 |   |
|                                       |   |                         |    |                            |   |   |   |
| Property                and equipment, net |   |                         | 4,687   |                            |   | 5,208 |   |
| Intangible                assets - patents |   |                         | 38,500  |                            |   | 38,500 |   |
|                                       |   |                         |    |                            |   |   |   |
| Total                assets                |   | $                            | 188,305 |                            | $      | 44,044 |   |

----

| **SAVI                MEDIA GROUP, INC.**                         |
|-------------------------------------------------------------------|
| **A                Corporation in the Development Stage**         |
| **UNAUDITED                CONSOLIDATED CONDENSED BALANCE SHEET** |
| ***March                31, 2006 and December 31, 2005***         |
|                                                              |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                     |   | **March                31,** |         | **December                31,** |   |
|--------------------------------------------------------------------------|--------|------------------------------|--------------|---------------------------------|--------|
|                                                                     |   | **2006**                     |         | **2005**                        |   |
|                                                                     |   |                         |         | **(Restated)**                  |   |
| **LIABILITIES                AND STOCKHOLDERS' DEFICIT**                 |   |                    |         |                       |   |
|                                                                     |   |                    |         |                       |   |
| Current                liabilities:                                      |   |                    |         |                       |   |
| Note                payable                                              |   | $                            | 147,000      |                            | $      | 142,500 |   |
| Convertible                debt                                          |   |                         | 7,897        |                            |   | 4,684 |   |
| Accounts                payable and accrued liabilities                  |   |                         | 25,000       |                            |   | 31,448 |   |
| Deposit                for warrant exercise                              |   |                         | -            |                            |   | 23,805 |   |
| Accounts                payable assumed in re-capitalization             |   |                         | 159,295      |                            |   | 159,295 |   |
| Derivative                financial instrument liabilities               |   |                         | 1,813,415    |                            |   | 2,176,292 |   |
|                                                                     |   |                         |         |                            |   |   |   |
| Total                current liabilities                                 |   |                         | 2,152,607    |                            |   | 2,538,024 |   |
|                                                                     |   |                         |         |                            |   |   |   |
| Commitments                and contingencies                             |   |                         |         |                            |   |   |   |
|                                                                     |   |                         |         |                            |   |   |   |
| Stockholders'                deficit:                                    |   |                         |         |                            |   |   |   |
| Series                A convertible preferred stock; $0.001 par value,   |   |                         |         |                            |   |   |   |
| 10,000,000                shares authorized, issued and outstanding      |   |                         | 10,000       |                            |   | 10,000 |   |
| Series                B convertible preferred stock; $0.001 par value,   |   |                         |         |                            |   |   |   |
| 10,000,000                shares authorized, none issued and outstanding |   |                         | -            |                            |   | - |   |
| Series                C convertible preferred stock; $0.001 par value,   |   |                         |         |                            |   |   |   |
| 10,000,000                shares authorized, 6,455,275 and 6,060,000     |   |                         |         |                            |   |   |   |
| shares                issued and outstanding at March 31, 2006 and       |   |                         |         |                            |   |   |   |
| December                31, 2005, respectively                           |   |                         | 6,455        |                            |   | 6,060 |   |
| Common                stock: $0.001 par value, 990,000,000 shares        |   |                         |         |                            |   |   |   |
| authorized,                268,306,564 and 209,109,976 shares issued and |   |                         |         |                            |   |   |   |
| outstanding                at March 31, 2006 and December 31, 2005,      |   |                         |         |                            |   |   |   |
| respectively                                                             |   |                         | 268,306      |                            |   | 209,110 |   |
| Additional                paid-in capital                                |   |                         | 248,091,193  |                            |   | 247,077,923 |   |
| Losses                accumulated during the development stage           |   |                         | (250,340,256 | )                               |   | (249,797,073 | ) |
|                                                                     |   |                         |         |                            |   |   |   |
| Total                stockholders' deficit                               |   |                         | (1,964,302   | )                               |   | (2,493,980 | ) |
|                                                                     |   |                         |         |                            |   |   |   |
| Total                liabilities and stockholders' deficit               |   | $                            | 188,305      |                            | $      | 44,044 |   |

----

| **SAVI                MEDIA GROUP, INC.**                                                                  |
|------------------------------------------------------------------------------------------------------------|
| **A                Corporation in the Development Stage**                                                  |
| **UNAUDITED                CONSOLIDATED CONDENSED STATEMENTS OF CASH                FLOWS**                |
| ***For                the Three Months Ended March 31, 2006 and 2005, and for the                Period*** |
| ***From                Inception, August 13, 2002, to March 31,                2006***                     |

|                                                                   |   |                    |        |                    |   |                         |   |
|------------------------------------------------------------------------|--------|------------------------------|-------------|------------------------------|--------|-----------------------------------|--------|
|                                                                   |   | **March                31,** |        | **March                31,** |   | **Inception                to**   |   |
|                                                                   |   | **2006**                     |        | **2005**                     |   | **March                31, 2006** |   |
|                                                                   |   |                    |        |                    |   |                         |   |
| Operating                costs and expenses:                           |   |                    |        |                    |   |                         |   |
| General                and administrative expenses,                    |   |                         |             |                         |   |                              |   |   |   |   |
| except                stock based compensation                         |   | $                            | 400,199     |                         | $      | 91,954                            |   | $ | 1,928,144 |   |
| Stock-based                compensation                                |   |                         | 498,138     |                         |   | 2,154,941                         |   |   | 245,937,577 |   |
|                                                                   |   |                         |        |                         |   |                              |   |   |   |   |
| Loss                from operations                                    |   |                         | (898,337    | )                            |   | (2,246,895                        | )      |   | (247,865,721 | ) |
|                                                                   |   |                         |        |                         |   |                              |   |   |   |   |
| Other                income and (expenses)                             |   |                         |        |                         |   |                              |   |   |   |   |
| Interest                Income                                         |   |                         | -           |                         |   | 1                                 |   |   | 18 |   |
| Gain                on settlement                                      |   |                         | -           |                         |   | -                                 |   |   | 197,033 |   |
| Cost                of rescission                                      |   |                         | -           |                         |   | -                                 |   |   | (43,074 | ) |
| Cost                of re-capitalization                               |   |                         | -           |                         |   | -                                 |   |   | (273,987 | ) |
| Goodwill                impairment                                     |   |                         | -           |                         |   | -                                 |   |   | (541,101 | ) |
| Interest                expense                                        |   |                         | (7,713      | )                            |   | -                                 |   |   | (1,923,803 | ) |
| Change                in value of derivative financial instruments     |   |                         | 362,877     |                         |   | -                                 |   |   | 110,379 |   |
|                                                                   |   |                         |        |                         |   |                              |   |   |   |   |
| Total                other income and (expenses), net                  |   |                         | 355,164     |                         |   | 1                                 |   |   | (2,474,535 | ) |
|                                                                   |   |                         |        |                         |   |                              |   |   |   |   |
| Net                loss                                                |   |                         | (543,173    | )                            |   | (2,246,894                        | )      |   | (250,340,256 | ) |
|                                                                   |   |                         |        |                         |   |                              |   |   |   |   |
| Weighted                average shares outstanding - basic and diluted |   |                         | 224,790,772 |                         |   | 83,852,510                        |   |   |   |   |
|                                                                   |   |                         |        |                         |   |                              |   |   |   |   |
| Net                loss per common share - basic and diluted           |   | $                            | (0.00       | )                            | $      | (0.03                             | )      |   |   |   |

----

| **SAVI                MEDIA GROUP, INC.**                                                                  |
|------------------------------------------------------------------------------------------------------------|
| **A                Corporation in the Development Stage**                                                  |
| **UNAUDITED                CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLERS’                DEFICIT** |
| ***For                the Three Months Ended March 31, 2006***                                             |
|                                                                                                       |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                |   |                                   |       |                                   |   |    |   |    |   |
|---------------------------------------------------------------------|--------|---------------------------------------------|------------|---------------------------------------------|--------|--------------|--------|--------------|--------|
|                                                                |   | **Series                A Preferred Stock** |       | **Series                B Preferred Stock** |   |
|                                                                |   | **Shares**                                  |       | **Amount**                                  |   | **Shares**   |   | **Amount**   |   |
|                                                                |   |                                   |       |                                   |   |    |   |    |   |
| Balance                at December 31, 2005, as previously reported |   |                                        | 10,000,000 |                                        | $      | 10,000       |   |         | -      |   | $ | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Prior                period adjustment to properly account for      |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| derivative                financial instruments                     |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Balance                at December 31, 2005, as restated            |   |                                        | 10,000,000 |                                        |   | 10,000       |   |         | -      |   |   | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Common                stock issued for cash                         |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Exercise                of warrants                                 |   |                                        | -          |                                        |   | -            |   |         | -      |   |   | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Conversion                of debt to equity                         |   |                                        | -          |                                        |   | -            |   |         | -      |   |   | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Common                and Preferred stock issued in                 |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| exchange                for consulting services                     |   |                                        | -          |                                        |   | -            |   |         | -      |   |   | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Reduction                of shares in escrow                        |   |                                        | -          |                                        |   | -            |   |         | -      |   |   | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Cancellation                of shares                               |   |                                        | -          |                                        |   | -            |   |         | -      |   |   | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Net                Loss                                             |   |                                        | -          |                                        |   | -            |   |         | -      |   |   | - |   |
|                                                                |   |                                        |       |                                        |   |         |   |         |   |   |   |   |   |
| Balance                at March 31, 2006                            |   |                                        | 10,000,000 |                                        | $      | 10,000       |   |         | -      |   | $ | - |   |

----

| **SAVI                MEDIA GROUP, INC.**                                                            |
|------------------------------------------------------------------------------------------------------|
| **A                Corporation in the Development Stage**                                            |
| **UNAUDITED                CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLERS'                DEFICIT** |
| ***For                the Three Months Ended March 31, 2006***                                       |
|                                                                                                 |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                |   |                                   |       |                       |   |    |   |    |        |
|---------------------------------------------------------------------|--------|---------------------------------------------|------------|---------------------------------|--------|--------------|--------|--------------|-------------|
|                                                                |   |                                   |       |                       |   |    |   |    |        |
|                                                                |   |                                   |       |                       |   |    |   |    |        |
|                                                                |   | **Series                C Preferred Stock** |       | **Common                Stock** |   |
|                                                                |   | **Shares**                                  |       | **Amount**                      |   | **Shares**   |   | **Amount**   |        |
|                                                                |   |                                   |       |                       |   |    |   |    |        |
| Balance                at December 31, 2005, as previously reported |   |                                        | 6,060,000  |                            | $      | 6,060        |   |         | 209,109,976 |   | $ | 209,110 |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Prior                period adjustment to properly account for      |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| derivative                financial instruments                     |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Balance                at December 31, 2005, as restated            |   |                                        | 6,060,000  |                            |   | 6,060        |   |         | 209,109,976 |   |   | 209,110 |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Common                and Preferred stock issued for cash           |   |                                        | 395,275    |                            |   | 395          |   |         | 100,000     |   |   | 100 |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Exercise                of warrants                                 |   |                                        | -          |                            |   | -            |   |         | 174,540     |   |   | 175 |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Conversion                of debt to equity                         |   |                                        | -          |                            |   | -            |   |         | 67,264,548  |   |   | 67,264 |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Common                and Preferred stock issued in                 |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| exchange                for consulting services                     |   |                                        | 1,000,000  |                            |   | 1,000        |   |         | 1,625,000   |   |   | 1,625 |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Reduction                of shares in escrow                        |   |                                        | -          |                            |   | -            |   |         | (9,967,500  | ) |   | (9,968 | ) |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Cancellation                of shares                               |   |                                        | (1,000,000 | )                               |   | (1,000       | )      |         | -           |   |   | - |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Net                Loss                                             |   |                                        | -          |                            |   | -            |   |         | -           |   |   | - |   |
|                                                                |   |                                        |       |                            |   |         |   |         |        |   |   |   |   |
| Balance                at September 30, 2005                        |   |                                        | 6,455,275  |                            | $      | 6,455        |   |         | 268,306,564 |   | $ | 268,306 |   |

----

| **SAVI                MEDIA GROUP, INC.**                                                            |
|------------------------------------------------------------------------------------------------------|
| **A                Corporation in the Development Stage**                                            |
| **UNAUDITED                CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLERS'                DEFICIT** |
| ***For                the Three Months Ended March 31, 2006***                                       |
|                                                                                                 |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                           |   |      |        |        |   | **Losses**                    |   |    |         |
|----------------------------------------------------------------|--------|----------------|-------------|------------------|--------|-------------------------------|--------|--------------|--------------|
|                                                           |   |      |        |        |   | **Accumulated**               |   |    |         |
|                                                           |   | **Additional** |        |        |   | **During                the** |   |    |         |
|                                                           |   | **Paid-In**    |        | **Subscription** |   | **Development**               |   |    |         |
|                                                           |   | **Capital**    |        | **Receivable**   |   | **Stage**                     |   | **Total**    |         |
|                                                           |   |      |        |        |   |                     |   |    |         |
| Balance                at December 31, 2005                    |   | $              | 247,090,423 |             | $      | -                             |   | $            | (247,676,149 | ) | $ | (360,556 | ) |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Prior                period adjustment to properly account for |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| derivative                financial instruments                |   |           | (12,500     | )                |   | -                             |   |         | (2,120,934   | ) |   | (2,133,434 | ) |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Balance                at December 31, 2005, as restated       |   |           | 247,077,923 |             |   | -                             |   |         | (249,797,083 | ) |   | (2,493,990 | ) |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Common                and Preferred stock issued for cash      |   |           | 382,235     |             |   | -                             |   |         | -            |   |   | 382,730 |   |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Exercise                of warrants                            |   |           | 190,074     |             |   | -                             |   |         | -            |   |   | 190,249 |   |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Conversion                of debt to equity                    |   |           | (65,520     | )                |   | -                             |   |         | -            |   |   | 1,744 |   |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Common                and Preferred stock issued in            |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Exchange                for consulting services                |   |           | 495,513     |             |   | -                             |   |         | -            |   |   | 498,138 |   |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Reduction                of shares in escrow                   |   |           | 9,968       |             |   | -                             |   |         | -            |   |   | - |   |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Cancellation                of shares                          |   |           | 1,000       |             |   | -                             |   |         | -            |   |   | - |   |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Net                Loss                                        |   |           | -           |             |   | -                             |   |         | (543,173     | ) |   | (543,173 | ) |
|                                                           |   |           |        |             |   |                          |   |         |         |   |   |   |   |
| Balance                at March 31, 2006                       |   | $              | 248,091,193 |             | $      | -                             |   | $            | (250,340,256 | ) | $ | (1,964,302 | ) |

----

| **SAVI                MEDIA GROUP, INC.**                                                                  |
|------------------------------------------------------------------------------------------------------------|
| **A                Corporation in the Development Stage**                                                  |
| **UNAUDITED                CONSOLIDATED CONDENSED STATEMENTS OF CASH                FLOWS**                |
| ***For                the Three Months Ended March 31, 2006 and 2005, and for the                Period*** |
| ***From                Inception, August 13, 2002, to March 31,                2006***                     |
|                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                               |   | **March                31,** |     | **March                31,** |   | **Inception                to**   |   |
|--------------------------------------------------------------------|--------|------------------------------|----------|------------------------------|--------|-----------------------------------|--------|
|                                                               |   | **2006**                     |     | **2005**                     |   | **March                31, 2006** |   |
| Cash                flows from operating activities:               |   |                    |     |                    |   |                         |   |
| Net                loss                                            |   | $                            | (543,173 | )                            | $      | (2,246,894                        | )      | $ | (250,340,256 | ) |
| Adjustments                to reconcile net income to net          |   |                         |     |                         |   |                              |   |   |   |   |
| cash                used by operating activities:                  |   |                         |     |                         |   |                              |   |   |   |   |
| Depreciation                expense                                |   |                         | 521      |                         |   | -                                 |   |   | 1,563 |   |
| Gain                on settlement                                  |   |                         | -        |                         |   |                              |   |   | (197,053 | ) |
| Impairment                of goodwill                              |   |                         | -        |                         |   | -                                 |   |   | 541,101 |   |
| Cost                of recapitalization                            |   |                         | -        |                         |   | -                                 |   |   | 273,987 |   |
| Amortization                of deferred compensation               |   |                         | -        |                         |   | -                                 |   |   | 2,233,150 |   |
| Compensatory                common and preferred stock issuances   |   |                         | 498,138  |                         |   | 2,154,541                         |   |   | 212,441,927 |   |
| Compensatory                option issuances                       |   |                         | -        |                         |   | -                                 |   |   | 31,250,000 |   |
| Interest                imputed on note from a stockholder         |   |                         | -        |                         |   | -                                 |   |   | 7,254 |   |
| Interest                expense recognized through                 |   |                         |     |                         |   |                              |   |   |   |   |
| accretion                of discount on long-term debt             |   |                         | 7,713    |                         |   | -                                 |   |   | 28,045 |   |
| Common                stock issued for rescission agreement        |   |                         | -        |                         |   | -                                 |   |   | 43,074 |   |
| Common                stock issued to pay accounts                 |   |                         |     |                         |   |                              |   |   |   |   |
| payable                and accrued liabilities                     |   |                         | -        |                         |   | -                                 |   |   | 50,000 |   |
| Change                in value of derivative financial instruments |   |                         | (362,877 | )                            |   | -                                 |   |   | 1,770,597 |   |
| Changes                in accounts payable and accrued liabilities |   |                         | (6,448   | )                            |   | 2,495                             |   |   | 70,697 |   |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Net                cash used by operating activities               |   |                         | (406,126 | )                            |   | (89,858                           | )      |   | (1,825,914 | ) |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Cash                flows from investing activities:               |   |                         |     |                         |   |                              |   |   |   |   |
| Purchase                of equipment                               |   |                         | -        |                         |   | -                                 |   |   | (6,250 | ) |
| Acquisition                of patent rights                        |   |                         | -        |                         |   | -                                 |   |   | (38,500 | ) |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Net                cash used by investing activities               |   |                         | -        |                         |   | -                                 |   |   | (44,750 | ) |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Cash                flows from financing activities:               |   |                         |     |                         |   |                              |   |   |   |   |
| Proceeds                from stockholder advances                  |   |                         | -        |                         |   | 2,000                             |   |   | 49,672 |   |
| Proceeds                from convertible debentures                |   |                         | -        |                         |   | -                                 |   |   | 50,000 |   |
| Proceeds                from note payable                          |   |                         | -        |                         |   | -                                 |   |   | 142,500 |   |
| Payments                on notes payable                           |   |                         | -        |                         |   | -                                 |   |   | (63,000 | ) |
| Proceeds                from warrant exercise                      |   |                         | 168,178  |                         |   | -                                 |   |   | 458,775 |   |
| Proceeds                from sale of preferred stock               |   |                         | 381,730  |                         |   | -                                 |   |   | 381,730 |   |
| Proceeds                from sale of common stock                  |   |                         | 1,000    |                         |   | 149,530                           |   |   | 996,105 |   |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Net                cash provided by financing activities           |   |                         | 550,908  |                         |   | 151,530                           |   |   | 2,015,782 |   |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Net                increase in cash and cash equivalents           |   |                         | 144,782  |                         |   | 61,672                            |   |   | 145,118 |   |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Cash                and cash equivalents at beginning of period    |   |                         | 336      |                         |   | 3,835                             |   |   | - |   |
|                                                               |   |                         |     |                         |   |                              |   |   |   |   |
| Cash                and cash equivalents at end of period          |   | $                            | 145,118  |                         | $      | 65,507                            |   | $ | 145,118 |   |

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**1.             **
**Organization      and Significant Accounting Policies**

**Significant      Estimates**

**Principles      of Consolidation**

**Interim      Financial Statements**

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**1.                  **
**Organization      and Significant Accounting Policies, continued**

**Derivative      Financial Instruments**

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**Organization      and Significant Accounting Policies, continued**
** **

**Derivative      Financial Instruments, continued**

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

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**3.              **
**Derivative      Financial Instruments and Restatement **

** **

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**3.              **
**Derivative      Financial Instruments and Restatement, continued**

**Warrants      Issued**

**Debt      Features **

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**3.         **
**Derivative      Financial Instruments and Restatement, continued**

| **INCOME                STATEMENT**                                  |   | **Three**                   |         | **Three**                        |   |                       |   |
|----------------------------------------------------------------------|--------|-----------------------------|--------------|----------------------------------|--------|---------------------------------|--------|
|                                                                 |   | **Months**                  |         | **Months**                       |   | **Year**                        |   |
|                                                                 |   | **Ended**                   |         | **Ended**                        |   | **Ended**                       |   |
|                                                                 |   | **June                30,** |         | **September                30,** |   | **December                31,** |   |
|                                                                 |   | **2005**                    |         | **2005**                         |   | **2005**                        |   |
|                                                                 |   |                   |         |                        |   |                       |   |
| Net loss                as                                      |   |                   |         |                        |   |                       |   |
| previously                reported                                   |   | $                           | (132,109,029 | )                                | $      | (29,070,137                     | )      | $ | (137,702,414 | ) |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Income                (expense) from                                 |   |                        |         |                             |   |                            |   |   |   |   |
| change                in value of                                    |   |                        |         |                             |   |                            |   |   |   |   |
| derivative                financial                                  |   |                        |         |                             |   |                            |   |   |   |   |
| instruments                                                          |   |                        | (555,096     | )                                |   | 65,216                          |   |   | (252,498 | ) |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Change                in interest expense                            |   |                        |         |                             |   |                            |   |   |   |   |
| as                a result of accretion of                           |   |                        |         |                             |   |                            |   |   |   |   |
| debt                discount and initial                             |   |                        |         |                             |   |                            |   |   |   |   |
| valuation                                                            |   |                        | (1,874,549   | )                                |   | 2,300                           |   |   | (1,879,479 | ) |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Error              on pricing of Preferred Stock issued for services |   |                        | -            |                             |   | 25,704,000                      |   |   | - |   |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Net                loss as restated                                  |   | $                           | (134,538,674 | )                                | $      | (3,298,621                      | )      | $ | (139,834,391 | ) |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Net                change - income (loss)                            |   | $                           | (2,429,645   | )                                | $      | 67,516                          |   | $ | (2,131,977 | ) |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Weighted                average shares                               |   |                        |         |                             |   |                            |   |   |   |   |
| Basic                and diluted                                     |   |                        | 108,993,913  |                             |   | 121,114,740                     |   |   | 121,294,340 |   |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Net                loss per share as                                 |   |                        |         |                             |   |                            |   |   |   |   |
| previously                reported                                   |   | $                           | (1.21        | )                                | $      | (0.24                           | )      | $ | (1.14 | ) |
|                                                                 |   |                        |         |                             |   |                            |   |   |   |   |
| Net                loss per share as                                 |   |                        |         |                             |   |                            |   |   |   |   |
| restated                                                             |   | $                           | (1.23        | )                                | $      | (0.03                           | )      | $ | (1.15 | ) |

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**3.               **
**Derivative      Financial Instruments and Restatement, continued**

| **BALANCE                SHEET**             |   | **June                30,** |       | **September                30,** |   | **December                31,** |   |
|----------------------------------------------|--------|-----------------------------|------------|----------------------------------|--------|---------------------------------|--------|
|                                         |   | **2005**                    |       | **2005**                         |   | **2005**                        |   |
|                                         |   |                   |       |                        |   |                       |   |
| Total                liabilities as          |   |                   |       |                        |   |                       |   |
| previously                reported           |   | $                           | 418,821    |                             | $      | 446,148                         |   | $ | 404,600 |   |
|                                         |   |                        |       |                             |   |                            |   |   |   |   |
| Change                to properly state      |   |                        |       |                             |   |                            |   |   |   |   |
| convertible                debt              |   |                        | (37,711    | )                                |   | (36,072                         | )      |   | (42,858 | ) |
|                                         |   |                        |       |                             |   |                            |   |   |   |   |
| Increase                to properly state    |   |                        |       |                             |   |                            |   |   |   |   |
| derivitive                financial          |   |                        |       |                             |   |                            |   |   |   |   |
| instruments                                  |   |                        | 2,478,890  |                             |   | 2,413,674                       |   |   | 2,176,292 |   |
|                                         |   |                        |       |                             |   |                            |   |   |   |   |
| Total                liabilities as restated |   | $                           | 2,860,000  |                             | $      | 2,823,750                       |   | $ | 2,538,034 |   |
|                                         |   |                        |       |                             |   |                            |   |   |   |   |
|                                         |   |                        |       |                             |   |                            |   |   |   |   |
| Total                stockholders'           |   |                        |       |                             |   |                            |   |   |   |   |
| deficit                as previously         |   |                        |       |                             |   |                            |   |   |   |   |
| reported                                     |   | $                           | (322,679   | )                                | $      | (398,471                        | )      | $ | (360,556 | ) |
|                                         |   |                        |       |                             |   |                            |   |   |   |   |
| Change                                       |   |                        | (2,441,179 | )                                |   | (2,377,602                      | )      |   | (2,133,434 | ) |
|                                         |   |                        |       |                             |   |                            |   |   |   |   |
| Total                stockholders'           |   |                        |       |                             |   |                            |   |   |   |   |
| deficit                as restated           |   | $                           | (2,763,858 | )                                | $      | (2,776,073                      | )      | $ | (2,493,990 | ) |

**4.             **
**Stockholders’      Equity**

|   | - | The                Company issued 1,625,000 shares of common stock and 1,000,000 shares                of                Series C Preferred Stock to various individuals that provided consulting                and other services to the Company and recognized compensation expense                of                $498,138 related to those issuances. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | The                Company issued 100,000 shares of common stock under private placement                and                received cash proceeds of $1,000. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | The                  Company issued 395,275 shares of Series C Preferred Stock                  for cash of $381,730. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | The                Company cancelled 1,000,000 shares of Series C Preferred Stock previously                issued to officers/major stockholders of the Company. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | The                Company issued 174,540 shares of common stock to the holder of its                convertible debt upon exercise of stock warrants and received proceeds                of                $190,249. The proceeds were received as cash of $167,164 and offsets                of                short-term advances of $23,085. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | The                Company issued 67,264,548 shares of common stock to the holder of                its                convertible debt upon conversion of $1,744 of convertible debt. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*The      following discussion should be read in conjunction with the unaudited condensed      consolidated financial statements and notes thereto set forth in Item 1 of      this      Quarterly Report. In addition to historical information, this discussion and      analysis contains forward-looking statements that involve risks, uncertainties      and assumptions, which could cause actual results to differ materially from      Management’s expectations. Factors that could cause differences include, but are      not limited to, expected market demand for the Company’s services, fluctuations      in pricing for products distributed by the Company and services offered by      competitors, as well as general conditions of the entertainment      marketplace.*

**Overview      **

**Business      History **

**Business      Summary **

**Critical      Accounting Policies and Estimates **

----

**Results      of Operations **

**Plan      of Operation **

**Liquidity      and Capital Resources**

----

**Off-Balance      Sheet Arrangements**

----

|   | a) | Evaluation                of Disclosure Controls and Procedures.                As of March 31, 2006, our management carried out an evaluation, under                the                supervision of our chief executive officer and chief financial officer                of                the effectiveness of the design and operation of our system of disclosure                controls and procedures pursuant to the Securities and Exchange Act,                Rule                13a-15(e) and 15d-15(e) under the Exchange Act.  Based on that                evaluation, our chief executive officer and chief financial officer                concluded that our disclosure controls and procedures are effective                to                provide reasonable assurance that information we are required to                disclose                in reports that we file or submit under the Exchange Act is recorded,                processed, summarized and reported within the time periods specified                in                Securities and Exchange Commission rules and forms, and that such                information is accumulated and communicated to our management, including                our chief executive officer and chief financial officer, as appropriate,                to allow timely decisions regarding required                disclosure. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Changes                in internal controls.                There were no changes in internal controls over financial reporting                that                occurred during the period covered by this report that have materially                affected, or are reasonably likely to materially effect, our internal                control over financial reporting. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART      II - OTHER INFORMATION**

**ITEM      1 - LEGAL PROCEEDINGS**

**ITEM      2 - UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF      PROCEEDS**

**ITEM      3 - DEFAULTS UPON SENIOR SECURITIES**

**ITEM      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**ITEM      5 - OTHER INFORMATION**

**ITEM      6 - EXHIBITS**

----

**SIGNATURES**

|                              | **SAVI              MEDIA              GROUP, INC.**                                                                                                   |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                                                                   |
| Date:                May 22, 2006 | By:*/s/ MARIO PROCOPIO*                                                                                                                                |
|                              | Mario                Procopio                                                                                                                          |
|                              | *President,                Chief Executive Officer (Principal Executive Officer) and Chairman                of the                Board of Directors* |
|                              |                                                                                                                                                   |
| Date:                May 22, 2006 | By:*/s/ GEORGE HUKRIEDE*                                                                                                                               |
|                              | George                Hukriede                                                                                                                         |
|                              | *Chief                Financial Officer (Principal Financial Officer and Principal Accounting                Officer)*                                 |

----