**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 June 30, 2007**

| PART                I. FINANCIAL INFORMATION                                                                                               |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                       |   |
| Item                1. Unaudited Condensed Financial Statements                                                                            |   |
|                                                                                                                                       |   |
| Consolidated                Balance Sheets:                                                                                                |   |
| June                30, 2007 and December 31, 2006                                                                                         | 2      |
|                                                                                                                                       |   |
| Consolidated                Statements of Operations:                                                                                      |   |
| For                the three and six months ended June 30, 2007 and 2006 and                                                               |   |
| for                the period from inception, August 13, 2002, to June 30,                2007                                             | 3      |
|                                                                                                                                       |   |
| Consolidated                Statement of Stockholders’ Deficit                                                                       |   |
| For                the six months ended June 30, 2007                                                                                      | 4      |
|                                                                                                                                       |   |
| Consolidated                Statements of Cash Flows:                                                                                      |   |
| For                the six months ended June 30, 2007 and 2006 and                                                                         |   |
| for                the period from inception, August 13, 2002, to June 30,                2007                                             | 7      |
|                                                                                                                                       |   |
| Notes                to Unaudited Consolidated Financial Statements                                                                        | 8      |
|                                                                                                                                       |   |
| Item                2. Management's Discussion and Analysis of Financial Condition and                Results                of Operations | 16     |
|                                                                                                                                       |   |
| Item                3. Controls and Procedures                                                                                             | 20     |
|                                                                                                                                       |   |
| PART                II. OTHER INFORMATION                                                                                                  |   |
|                                                                                                                                       |   |
| Item                1. Legal Proceedings                                                                                                   | 20     |
|                                                                                                                                       |   |
| Item                2. Changes in Securities                                                                                               | 20     |
|                                                                                                                                       |   |
| 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     |

----

PART      I. FINANCIAL INFORMATION

|                                                                     | **SAVI                MEDIA GROUP, INC.**                                                                                                                |
|--------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                     | **A                Corporation in the Development Stage**                                                                                                |
|                                                                     | **UNAUDITED                CONSOLIDATED CONDENSED BALANCE SHEET**                                                                                        |
|                                                                     | ***June                30, 2007 and December 31, 2006***                                                                                                 |
|                                                                     |                                                                                                                                                     |
|                                                                     |                                                                                                                                                     |   |   |
|                                                                     |                                                                                                                                                     |   |   |
|                                                                     | **June                30,**                                                                                                                              | **December                31,** |   |
|                                                                     | **2007**                                                                                                                                                 | **2006** |   |
| **ASSETS**                                                               |                                                                                                                                                     |   |   |
|                                                                     |                                                                                                                                                     |   |   |
| Current                assets:                                           |                                                                                                                                                     |   |   |
| Cash                and cash equivalents                                 |  $                        - |  $                  1,088 |   |
|                                                                     |                                                                                                                                                     |   |   |
| Total                current assets                                      |                   -                                            | 1,088 |   |
|                                                                     |                                                                                                                                                     |   |   |
| Equipment,                net                                            |                   -                                            | 202,401 |   |
| Deferred                Financing Costs                                  | 58,640                                                                                                                                                   | 86,371 |   |
|                                                                     |                                                                                                                                                     |   |   |
| Total                assets                                              |  $              58,640                                                        |  $              289,860 |   |
|                                                                     |                                                                                                                                                     |   |   |
| **LIABILITIES                AND STOCKHOLDERS' DEFICIT**                 |                                                                                                                                                     |   |   |
|                                                                     |                                                                                                                                                     |   |   |
| Current                liabilities:                                      |                                                                                                                                                     |   |   |
| Bank                Overdraft                                            |  $                        - |  $                  3,631 |   |
| Convertible                debt                                          | 1,050,302                                                                                                                                                | 705,864 |   |
| Accounts                payable and accrued liabilities                  | 2,151,561                                                                                                                                                | 882,215 |   |
| Accounts                payable assumed in recapitalization              | 159,295                                                                                                                                                  | 159,295 |   |
| Accrued                Registration Rights Penalties Payable             | 296,400                                                                                                                                                  |                    - |   |
| Contingent                Registration Rights Penalties Payable          | 343,455                                                                                                                                                  |                    - |   |
| Derivative                Liabilities - Embedded Derivatives             | 388,468                                                                                                                                                  | 3,459,980 |   |
| Derivative                Liabilities – Warrants                   | 4,147,705                                                                                                                                                | 16,101,795 |   |
|                                                                     |                                                                                                                                                     |   |   |
| Total                current liabilities                                 | 8,537,186                                                                                                                                                | 21,312,780 |   |
|                                                                     |                                                                                                                                                     |   |   |
| 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, 4,915,000 issued and        |                                                                                                                                                     |   |   |
| outstanding                at June 30, 2007 and December 31, 2006        | 4,915                                                                                                                                                    | 4,915 |   |
| Common                stock: $0.001 par value, 6,000,000,000 shares      |                                                                                                                                                     |   |   |
| authorized,                995,456,564 and 602,106,564 shares issued and |                                                                                                                                                     |   |   |
| at                June 30, 2007 and December 31, 2006, respectively      | 995,457                                                                                                                                                  | 602,107 |   |
| Additional                paid-in capital                                | 250,653,090                                                                                                                                              | 249,630,380 |   |
| Losses                accumulated during the development stage           | (260,142,008)                                                                                                                                            | (271,270,324) |   |
|                                                                     |                                                                                                                                                     |   |   |
| Total                stockholders' deficit                               | (8,478,546)                                                                                                                                              | (21,022,922) |   |
|                                                                     |                                                                                                                                                     |   |   |
| Total                liabilities and stockholders' deficit               |  $              58,640                                                        |  $              289,858 |   |

----

|                                                         | **SAVI                MEDIA GROUP,                INC.**                                                                                                 |
|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                         | **A                Corporation in the Development Stage**                                                                                                |
|                                                         | **UNAUDITED                CONSOLIDATED STATEMENT OF OPERATIONS**                                                                                        |
|                                                         | ***For                the Three and Six Months Ended June 30, 2007 and June 30, 2006 and                For the                Period from Inception,*** |
|                                                         |  ***August                13, 2002 to June 30, 2007***                                                                                              |
|                                                         | **For                the Three months Ended**                                                                                                            | **For                the Six months Ended** |   |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
|                                                         | **June                30,**                                                                                                                              | **June                30,** | **June                30,** | **June                30,** | **Inception                to** |   |
|                                                         | **2007**                                                                                                                                                 | **2006** | **2007** | **2006** | **June                30, 2007** |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Operating                costs and expenses:                 |                                                                                                                                                     |   |   |   |   |   |
| General                and administrative expenses,          |                                                                                                                                                     |   |   |   |   |   |
| except                stock based compensation               |  $           397,824                                                                         |  $           644,851 |  $           731,760 |  $          951,085 |  $         4,021,461 |   |
| Depreciation                expense                          |                          -  |                25,315 |                      625 |                26,357 |             50,819 |   |
| Research                and development                      |               118,428                                                              |              505,155 |              418,114 |              624,875 |         1,871,877 |   |
| Stock-based                compensation                      |                         -        |                89,500 |            1,416,060 |              587,638 |     247,430,637 |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Loss                from operations                          | (516,252)                                                                                                                                                | (1,264,821) | (2,566,559) | (2,189,955) | (253,374,794) |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Other                income and (expenses)                   |                                                                                                                                                     |   |   |   |   |   |
| Interest                Income                               |                         -        |                        11 |                       - |                       11 |                  175 |   |
| Gain                on settlement                            |                         -        |                          - |                       - |                       - |           197,033 |   |
| Cost                of rescission                            |                         -        |                          - |                       - |                       - |            (43,074) |   |
| Cost                of recapitalization                      |                         -        |                          - |                       - |                       - |          (273,987) |   |
| Goodwill                impairment                           |                         -        |                          - |                       - |                       - |          (541,101) |   |
| Change                in fair value of financial instruments |            1,158,827                                                                              |               163,027 |          14,334,058 |              389,735 |       42,102,977 |   |
| Loss                on debt extinguishment                   |                         -        |            (360,000) |                       - |           (360,000) |          (492,464) |   |
| Impairment                of property and equipment          |                         -        |                          - |            (185,657) |                       - |          (420,956) |   |
| Impairment                of patent rights                   |                         -        |                          - |                       - |                       - |            (38,500) |   |
| Registration                rights penalties                 |            (150,067)                                                                              |                          - |            (639,855) |                       - |          (639,855) |   |
| Interest                expense                              |            (253,459)                                                                              |                (9,343) |            (471,800) |             (17,522) |      (47,275,591) |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Total                other income and (expenses), net        | 755,301                                                                                                                                                  | (206,305) | 13,036,746 | 12,224 | (7,425,343) |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Net                income (loss) before cumulative effect of |                                                                                                                                                     |   |   |   |   |   |
| change                in accounting principle                |  $           239,049                                                                         |  $     (1,471,126) |  $      10,470,187 |  $    (2,177,731) |  $(260,800,137) |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Cumulative                effect of change in accounting     |                                                                                                                                                     |   |   |   |   |   |
| principle                                                    | -                                                                                                                                                        | -    - |              658,129 |                          - |                658,129 |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Net                income (loss)                             |  $           239,049                                                                         |  $     (1,471,126) |  $      11,128,316 |  $    (2,177,731) |  $  (260,142,008) |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Weighted                average shares outstanding           | 995,456,564                                                                                                                                              | 332,278,786 | 901,489,620 | 331,619,924 |   |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Fully                diluted weighted average shares         |                                                                                                                                                     |   |   |   |   |   |
| outstanding                                                  | 2,695,317,397                                                                                                                                            |   | 2,601,350,453 |   |   |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Net                income (loss) per common share - basic    |  $                 0.00                                        |  $              (0.00) |  $                0.01 |  $             (0.01) |   |   |
|                                                         |                                                                                                                                                     |   |   |   |   |   |
| Net                income (loss) per common share - diluted  |                     0.00                             |              (0.00) |                    0.00 |              (0.01) |   |   |

----

|                                                      | **SAVI                MEDIA GROUP,                INC.**                                                            |
|-----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|
|                                                      | **A                Corporation in the Development Stage**                                                           |
|                                                      | **UNAUDITED                CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLERS’                DEFICIT**          |
|                                                      | ***For                the Six Months Ended June 30, 2007***                                                         |
|                                                      |                                                                                                                |
|                                                      |                                                                                                                |   |
|                                                      | **Series                A Preferred Stock**                                                                         | **Series                B Preferred Stock** |
|                                                      | **Shares**                                                                                                          | **Amount** | **Shares** | **Amount** |
|                                                      |                                                                                                                |   |   |   |
| Balance                at December 31, 2006               | 10,000,000                                                                                                          |  $              10,000 |               - |  $                       - |
|                                                      |                                                                                                                |   |   |   |
| Cumulative                effect of change in             |                                                                                                                |   |   |   |
| accounting                principle                       |                    - |                - |               - |                 - |
|                                                      |                                                                                                                |   |   |   |
| Common                and preferred stock issued          |                                                                                                                |   |   |   |
| in                exchange for consulting services        |                                                                                                                |   |   |   |
| and                employee compensation                  |                    - |                - |               - |                 - |
|                                                      |                                                                                                                |   |   |   |
| Net                income (loss) before cumulative effect |                                                                                                                |   |   |   |
| of                change in accounting principle          |                    - |                - |               - |                 - |
|                                                      |                                                                                                                |   |   |   |
| Balance                at June 30, 2007                   | 10,000,000                                                                                                          |  $              10,000 |               - |  $                       - |

----

|                                                      | **SAVI                MEDIA GROUP,                INC.**                                             |
|-----------------------------------------------------------|------------------------------------------------------------------------------------------------------|
|                                                      | **A                Corporation in the Development Stage**                                            |
|                                                      | **UNAUDITED                CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLERS'                DEFICIT** |
|                                                      | ***For                the Six Months Ended June 30, 2007***                                          |
|                                                      |                                                                                                 |
|                                                      |                                                                                                 |   |   |
|                                                      |                                                                                                 |   |   |
|                                                      | **Series                C Preferred Stock**                                                          | **Common                Stock** |   |
|                                                      | **Shares**                                                                                           | **Amount** | **Shares** | **Amount** |   |
|                                                      |                                                                                                 |   |   |   |   |
| Balance                at December 31, 2006               | 4,915,275                                                                                            | $                  4,915 | 602,106,564 | $             602,107 |   |
|                                                      |                                                                                                 |   |   |   |   |
| Cumulative                effect of change in             |                                                                                                 |   |   |   |   |
| accounting                principle                       | -                                                                                                    | - | - | - |   |
|                                                      |                                                                                                 |   |   |   |   |
| Common                and preferred stock issued          |                                                                                                 |   |   |   |   |
| in                exchange for consulting services        |                                                                                                 |   |   |   |   |
| and                employee compensation                  | -                                                                                                    | - | 393,350,000 | 393,350 |   |
|                                                      |                                                                                                 |   |   |   |   |
| Net                income (loss) before cumulative effect |                                                                                                 |   |   |   |   |
| of                change in accounting principle          | -                                                                                                    | - | - | - |   |
|                                                      |                                                                                                 |   |   |   |   |
| Balance                at June 30, 2007                   | 4,915,275                                                                                            |  $                  4,915 | 995,456,564 |  $            995,457 |   |

----

|                                                      | **SAVI                MEDIA GROUP, INC.**                                                            |
|-----------------------------------------------------------|------------------------------------------------------------------------------------------------------|
|                                                      | **A                Corporation in the Development Stage**                                            |
|                                                      | **UNAUDITED                CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLERS'                DEFICIT** |
|                                                      | ***For                the Six Months Ended June 30, 2007***                                          |
|                                                      |                                                                                                 |
|                                                      |                                                                                                 |   |   |   |   |
|                                                      |                                                                                                 |   | **Losses** |   |   |
|                                                      |                                                                                                 |   | **Accumulated** |   |   |
|                                                      | **Additional**                                                                                       |   | **During                the** |   |   |
|                                                      | **Paid-In**                                                                                          | **Deferred** | **Development** |   |   |
|                                                      | **Capital**                                                                                          | **Compensation** | **Stage** | **Total** |   |
|                                                      |                                                                                                 |   |   |   |   |
| Balance                at December 31, 2006               | $   249,630,380                                                                       | $                          - | $   (271,270,324) | $   (21,022,922) |   |
|                                                      |                                                                                                 |   |   |   |   |
| Cumulative                effect of change in             |                                                                                                 |   |   |   |   |
| accounting                principle                       |                -          |                  - |        658,129 | 658,129 |   |
|                                                      |                                                                                                 |   |   |   |   |
| Common                and preferred stock issued          |                                                                                                 |   |   |   |   |
| in                exchange for consulting services        |                                                                                                 |   |   |   |   |
| and                employee compensation                  | 1,022,710                                                                                            |                  - |                 - | 1,416,060 |   |
|                                                      |                                                                                                 |   |   |   |   |
| Net                income (loss) before cumulative effect |                                                                                                 |   |   |   |   |
| of                change in accounting principle          |                -          |                  - |    10,470,187 | 10,470,187 |   |
|                                                      |                                                                                                 |   |   |   |   |
| Balance                at June 30, 2007                   | $   250,653,090                                                                       |  $                         - | $   (260,142,008) | $     (8,478,546) |   |

----

|                                                               | **SAVI                MEDIA GROUP,                INC.**                                                                                                             |
|--------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                               | **A                Corporation in the Development Stage**                                                                                                            |
|                                                               | **UNAUDITED                CONSOLIDATED CONDENSED STATEMENTS OF CASH                FLOWS**                                                                          |
|                                                               | ***For                the Six Months Ended June 30, 2007 and 2006, and for the                Period***                                                              |
|                                                               | ***From                Inception, August 13, 2002, to June 30,                2007***                                                                                |
|                                                               |                                                                                                                                                                 |   |   |   |
|                                                               |                                                                                                                                                                 |   |   |   |
|                                                               |                                                                                                                                                                 |   | **Inception                to** |   |
|                                                               | **2007**                                                                                                                                                             | **2006** | **June                30, 2007** |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| **Cash                flows from operating activities:**           |                                                                                                                                                                 |   |   |   |
| Net                income (loss)                                   |  $              10,470,187                                                                |  $           (2,177,731) |  $       (260,142,008) |   |
| Adjustments                to reconcile net income (loss) to net   |                                                                                                                                                                 |   |   |   |
| cash                used by operating activities:                  |                                                                                                                                                                 |   |                    - |   |
| Depreciation                expense                                | 625                                                                                                                                                                  |             26,357 |             50,819 |   |
| Gain                on settlement                                  |                  -                                                              |                    - |          (197,033) |   |
| Impairment                of property and equipment                |         185,657                                                                                                              |                    - |           420,956 |   |
| Impairment                of patent rights                         |                  -                                                              |                    - |             38,500 |   |
| Impairment                of goodwill                              |                  -                                                              |                    - |           541,101 |   |
| Loss                on extinguishment of debt                      |                  -                                                              |                    - |           492,464 |   |
| Cost                of recapitalization                            |                  -                                                              |                    - |           273,987 |   |
| Amortization                of deferred compensation               |                  -                                                              |                    - |         2,233,150 |   |
| Compensatory                common and preferred stock issuances   | 1,416,060                                                                                                                                                            |           611,768 |     213,971,617 |   |
| Compensatory                option issuances                       |                  -                                                              |                    - |       31,250,000 |   |
| Interest                imputed on non-interest bearing note       |                                                                                                                                                                 |   |   |   |
| from                a stockholder                                  |                  -                                                              |                    - |               7,254 |   |
| Interest                expense recognized on issuance and         |                                                                                                                                                                 |   |   |   |
| through                accretion of discount on long-term debt     |         338,752                                                                                                              |               8,545 |       47,041,559 |   |
| Cumulative                effect if change in accounting principle |                                                                                                                                                                 |   |          (658,129) |   |
| Change                in fair value of derivatives                 |    (14,334,058)                                                                                                                                       |          (389,735) |      (42,102,977) |   |
| Common                stock issued for rescission agreement        |                  -                                                              |                    - |             43,074 |   |
| Common                stock issued to pay of accounts payable      |                  -                                                              |                    - |             50,000 |   |
| Common                stock issued for debt extinguishment         |                                                                                                                                                                 |           360,000 |   |   |
| Changes                in accounts payable and accrued liabilities | 1,909,201                                                                                                                                                            |             14,971 |         2,837,234 |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| Net                cash used by operating activities               |          (13,576)                                                                                                       |        (1,545,825) |        (3,848,432) |   |
|                                                               |                                                                                                                                                                 |   |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| **Cash                flows from investing activities:**           |                                                                                                                                                                 |   |   |   |
| Acquisition                of equipment                            |                  -                                                              |          (258,357) |          (487,894) |   |
| Sale                of furniture to vendor                         |           16,119                                                                                                   | - | 16,119 |   |
| Acquisition                of patents                              |                  -                                                              |                    - |            (38,500) |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| Net                cash provided by (used in) investing activities |           16,119                                                                                                   |          (258,357) |          (510,275) |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| **Cash                flows from financing activities:**           |                                                                                                                                                                 |   |   |   |
| Bank                overdraft                                      |            (3,631)                                                                                            |                    - |                    - |   |
| Proceeds                from stockholder advances                  |                  -                                                              |         1,048,370 |             49,672 |   |
| Net                proceeds from convertible debt                  |                  -                                                              |                    - |         2,154,040 |   |
| Proceeds                from note payable                          |                  -                                                              |                    - |           142,500 |   |
| Proceeds                from warrant exercise and deposit          |                                                                                                                                                                 |   |   |   |
| for                warrant exercise                                |                  -                                                              |           402,161 |           692,558 |   |
| Payments                on notes payable                           |                  -                                                              |                    - |            (63,000) |   |
| Proceeds                from sale of preferred stock               |                                                                                                                                                                 |           381,730 |   |   |
| Proceeds                from sale of common stock                  |                  -                                                              |               1,000 |         1,382,937 |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| Net                cash provided by (used in) financing activities |            (3,631)                                                                                            |         1,833,261 |         4,358,707 |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| Net                increase (decrease) in cash and equivalents     |            (1,088)                                                                                            |             29,079 |                    - |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| Cash                and cash equivalents at beginning of year      |             1,088                                                                                        | 336 |                    - |   |
|                                                               |                                                                                                                                                                 |   |   |   |
| Cash                and cash equivalents at end of year            | $                           - |  $                 29,415 |     $                         - |   |

----

**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** |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

**Cash      and Cash Equivalents**

**Concentration      of Credit Risk**

**Furniture      and Equipment**

**Impairment      Of Long-Lived Assets**

**Intangible      Assets**

**Income      Taxes**

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS**

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

**Stock-Based      Compensation**

*Share-Based Payment*

*Accounting for Stock Issued to Employees *
*Accounting for Stock-Based Compensation*
*Accounting for Stock-Based      Compensation—Transition and Disclosure*

**Valuation      of Derivatives**

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS**

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

**Profit/(Loss)      Per Share**

|                                | **Dilutive                Common**                    |
|-------------------------------------|-------------------------------------------------------|
| **Security**                        | **Shares**                                            |
| Common                Shares        |        995,456,564 |
| Options                             |        208,333,333 |
| Preferred                A          |     1,000,000,000                 |
| Preferred                C          |        491,527,500 |
| Total                Diluted Shares |     2,695,317,397                 |

|   | **Fair                Value of Financial                Instruments** |
|--------|-----------------------------------------------------------------------|

**New      Accounting Pronouncements**

*The Fair Value Option for      Financial Assets and Financial Liabilities, Including an amendment of FASB      Statements No. 115*

*Fair Value      Measurements*
*Disclosures about Fair      Value of Financial Instruments*

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS**

|  **1.** | **Organization                and Significant Accounting Policies, continued; New Accounting                Pronouncements,                continued** |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                              | **As                of**                                                                                                                                                                                                        | **As                of**                                                                                                                                                                                                                    |
|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                              | **December                31, 2006**                                                                                                                                                                                            | **June                30,****2007**                                                                                                                                                                                                         |
| ** Under                EITF 00-19**         |                                                                                                                                                                                                                            |                                                                                                                                                                                                                                        |
| ** Income                Statement Impacts** |                                                                                                                                                                                                                            |                                                                                                                                                                                                                                        |
|  Change                in value of CED       |                                  2,871,934                 |                                     (331,561)           |
|  Amortization                of Discount     |                                     117,504 |                                       176,371 |
|  **Balance                Sheet Impacts**    |                                                                                                                                                                                                                            |                                                                                                                                                                                                                                        |
|  Discount                on Note             |                                  1,764,136                 |    1,447,279                                                                                                                                                                                                                 |
|  Derivative                Liability         |     3,459,979                                                                                                                                                                                               |       685,322                                                                                                                                                                                                 |
| ** Under                EITF 00-19-02**      |                                                                                                                                                                                                                            |                                                                                                                                                                                                                                        |
|  **Income                Statement Impacts** |                                                                                                                                                                                                                            |                                                                                                                                                                                                                                        |
|  Change                in value of CED       |     2,302,219                                                                                                                                                                                               |         10,270                                                                                                                                                                                      |
|  Amortization                of Discount     |        112,211                                                                                                                                                                               |       170,536                                                                                                                                                                                                 |
|  **Balance                Sheet Impacts**    |                                                                                                                                                                                                                            |                                                                                                                                                                                                                                        |
|  Discount                on Note             |     1,730,720                                                                                                                                                                                               |    1,425,210                                                                                                                                                                                                                 |
|  Derivative                Liability         |     2,768,435                                                                                                                                                                                               |       388,467                                                                                                                                                                                                 |

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS**

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

| ·   | The                Company is delinquent on critical liabilities such as lease payments                for                its facilities and payments to key                consultants |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company will, in all likelihood, fail to comply with the terms of                the                agreement under which it obtained the rights to certain technology                that                was expected to become the basis for the Company’s future success and is                subject to losing rights to such                technology |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company is in default of its registration rights agreement with the                investor in its long-term debt. Such default and the Company’s inability                to fund its ongoing operations increase the likelihood that the investor                could seize its assets to partially satisfy the debt or find another                operator of those assets. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The                Company's ability to obtain adequate sources of funding to sustain                it                during the development stage. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS**

| **3.** | **Agreement                for Acquisition of Patent                Rights** |
|--------|------------------------------------------------------------------------------|

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

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

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

----

**SAVI      MEDIA GROUP, INC.**

**A      Corporation in the Development Stage**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS**

| **3.** | **Agreement                for Acquisition of Patent Rights**,                **continued** |
|--------|---------------------------------------------------------------------------------------------|

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

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

|   | **4.       ****Stockholders’                Equity** |
|--------|-----------------------------------------------------------------------------------------------|

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ITEM      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF      FINANCIAL CONDITION AND RESULTS OF OPERATIONS

*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 that may be distributed by the Company and services      offered by competitors, as well as general conditions of the      marketplace.*

**Overview**

**History**

**Business      History**

----

**Critical      Accounting Policies and Estimates**

**Income      Taxes**

**Results      of Operations**

**Plan      of Operations**

|   | 1. | People                - this includes a qualified board of directors, advisory board members,                management, employees, and consultants, etc.;                                                                                                                                                                                                                                                                  |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 2. | Projects                - a credible portfolio of projects that have the appropriate risk-return                ratio in order to generate potentially significant shareholder                value;                                                                                                                                                                                                                        |
|   | 3. | Capital                - based upon the reputation of the people and the quality of the                projects,                there must be sufficient capital in order to launch the company and                to                provide for additional fundings;                                                                                                                                                       |
|   | 4. | Technology                - the most advanced interpretation methods, techniques and methods                should                be utilized in order to maximize the potential for finding and developing                immediate and long term solutions to the global challenges of air,                water,                and land pollution;                                                                      |
|   | 5. | Favorable                positioning - the international influence of the oil and gas companies                along with the automotive & diesel industries requires a combination                of secured relationships with their appointed leadership in these                various                industries as well as with all the various local and international                governmental entities; and |
|   | 6. | Manufacturing                capability and equipment- the competitive nature of the automotive&                diesel industry requires a unique approach and a significant capital                commitment in order to secure the latest in hi-tech equipment, technology,                research, and the creation of numerous patents as well as to expedite                mass                production.      |

----

*People:*

*Projects:*

*An      R & D Lab and adjacent offices*

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

**Liquidity      and Capital Resources**

|   |                   further implement our business                plan; |
|--------|------------------------------------------------------------------------------------|

|   |                   obtain additional financing or refinancing as may be required;                and |
|--------|------------------------------------------------------------------------------------------------------------------|

|   |                   generate revenues. |
|--------|---------------------------------------------------|

----

**Off-Balance      Sheet Arrangements**

----

**ITEM      3 - CONTROLS AND      PROCEDURES**

| **a)  ** | **Evaluation                of Disclosure Controls and Procedures** . As of June 30, 2007, the                Company’s management carried out an evaluation, under the supervision of                the Company’s Chief Executive Officer and Chief Financial Officer of the                effectiveness of the design and operation of the Company’s system of                disclosure controls and procedures pursuant to the Securities and                Exchange                Act, Rule 13a-15(e) and 15d-15(e) under the Exchange Act).  Based                upon that evaluation, the Chief Executive Officer and Chief Financial                Officer concluded that the Company’s disclosure controls and procedures                were ineffective, as of the date of their evaluation, for the purposes                of                recording, processing, summarizing and timely reporting material                information required to be disclosed in reports filed by the Company                under                the Securities Exchange Act of 1934.  This assessment was made based                on the need to amend prior filings due to embedded derivatives within                various convertible securities and the lack of sufficient personnel                to                process transactions.  When we obtain additional financing will                hire additional personnel and implement procedures to properly account                for                and disclose all transactions. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **b)  ** | **Changes                in internal controls**. There were no changes in internal controls                over financial reporting that occurred during the period covered                by this                report that has materially affected, or is likely to materially effect,                the Company’s internal control over financial                reporting. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**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:                August 20, 2007 | By:                * * /s/ GREG SWEENEY                                                                         |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------|
|                                 | Greg                Sweeney                                                                                          |
|                                 | President,                Chief Executive Officer (Principal Executive Officer) and                Director          |
|                                 |                                                                                                                 |
| Date:                August 20, 2007 | By:                * * /s/ PHILLIP C. SCOTT                                                                     |
|                                 | Phillip                C. Scott                                                                                      |
|                                 | Chief                Financial Officer (Principal Financial Officer and Principal Accounting                Officer) |