UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

   (Mark One)
      [x]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the three-month period ended March 31, 2006
                                       OR
                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        Commission file number 000-22515


                       SPEAKING ROSES INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

            Utah                                               20-0612376
  (State or other jurisdiction of                            (I.R.S. Employer
   incorporation or organization)                         Identification Number)

                  404 Ironwood Drive                                   84115
                 Salt Lake City, Utah                               (Zip Code)
       (Address of principal executive offices)

       Registrant's telephone number, including area code: (801) 433-3900

          Securities registered pursuant to Section 12 (b) of the Act:
    Title of each class              Name of each exchange on which registered
    -------------------              -----------------------------------------
            None                                      None

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock (par value, $.001 per share)
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [x] No [ ]

As of May 3, 2006, there were 29,510,273 common shares outstanding.


                                       1
<PAGE>
                                TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION
Item 1.       Financial Statements
Item 2.       Management's Discussion and Analysis or Plan of Operations
Item 3.       Controls and Procedures

PART II
OTHER INFORMATION
Item 1.       Legal Proceedings
Item 2.       Unregistered Sales 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 and Reports on Form 8-K

SIGNATURES
EX 31.1       (Certifications required under Section 302 of the Sarbanes-Oxley
               Act of 2002)
EX 31.2       (Certifications required under Section 302 of the Sarbanes-Oxley
               Act of 2002)
EX 32.1       (Certifications required under Section 906 of the Sarbanes-Oxley
               Act of 2002)
EX 32.2       (Certifications required under Section 906 of the Sarbanes-Oxley
               Act of 2002)



                                       2
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY

PART I.  FINANCIAL INFORMATION.


Item 1.  Financial Statements

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
Speaking Roses  International,  Inc. and Subsidiary ("SRII" or the "Company") as
of March 31, 2006 and December 31, 2005 and for the three months ended March 31,
2006 and 2005,  have been prepared in accordance  with U.S.  generally  accepted
accounting  principles for interim financial reporting and pursuant to the rules
and  regulations  of the  Securities  and  Exchange  Commission.  The  condensed
consolidated  financial  statements  do not include all of the  information  and
footnotes required by U.S. generally accepted accounting principles for complete
financial statements.  These condensed  consolidated financial statements should
be read in conjunction  with the notes hereto,  and the  consolidated  financial
statements  and notes  thereto  included in our annual report on Form 10-KSB for
the year ended December 31, 2005.

All adjustments  (consisting only of normal recurring adjustments) necessary for
the fair  presentation of our  consolidated  financial  position as of March 31,
2006 and December 31, 2005 and our  consolidated  results of operations and cash
flows for the three months ended March 31, 2006 and 2005 have been included. The
consolidated results of operations for the three months ended March 31, 2006 may
not be indicative of the results for the year ending December 31, 2006.

In Management's Discussion and Analysis or Plan of Operations in Item 2, we have
compared  the  operating  results and  financial  position of SRII for the three
months ended March 31, 2006 and for the three  months  ended March 31, 2005.  We
believe these  comparisons may not be meaningful and caution should be exercised
by readers in utilizing these comparisons.




                                       3
<PAGE>
                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                       March 31,        December 31,
                                                                          2006              2005
                                                                     ---------------   ---------------
                        ASSETS
                        ------
<S>                                                                  <C>               <C>
CURRENT ASSETS
     Cash                                                            $      110,476    $       36,814
     Accounts receivable, less allowance for doubtful accounts
        of $7,366 and $25,222, respectively                                 336,727            98,786
     Inventories                                                            110,790            85,196
     Prepaid expenses                                                        28,520            24,506
     Other current assets                                                   262,169             8,500
                                                                     ---------------   ---------------

            TOTAL CURRENT ASSETS                                            848,682           253,802
                                                                     ---------------   ---------------

PROPERTY AND EQUIPMENT, at cost, net of
     accumulated depreciation and amortization
     of $158,687 and $132,640, respectively                                 257,805           307,015
                                                                     ---------------   ---------------

OTHER ASSETS
     Deposits                                                                 9,137            17,004
     Net investment in sales type leases                                     25,615                 -
     Patents and trademarks, net of accumulated amortization
        of $36,370 and $30,778, respectively                                420,313           390,623
                                                                     ---------------   ---------------

            TOTAL OTHER ASSETS                                              455,065           407,627
                                                                     ---------------   ---------------


            TOTAL ASSETS                                             $    1,561,552    $      968,444
                                                                     ===============   ===============
</TABLE>

                                   Continued

      See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                       March 31,        December 31,
                                                                          2006              2005
                                                                     ---------------   ---------------
               LIABILITIES AND STOCKHOLDERS' DEFICIT
               -------------------------------------
<S>                                                                  <C>               <C>
CURRENT LIABILITIES
     Accounts payable, trade                                         $      489,785    $      443,769
     Accrued expenses                                                        85,182           114,161
     Area development rights deposits                                       106,790           856,790
     Accrued interest                                                        63,039            21,003
     Current portion of deferred revenue                                    505,815           140,172
     Current portion of capital lease obligations                             3,458             3,377
     Notes payable to stockholders                                        1,363,978           620,526
     Convertible notes payable to stockholder, net
        of debt discount of $277,068 and $219,174, respectively           1,022,247           280,826
                                                                     ---------------   ---------------

            TOTAL CURRENT LIABILITIES                                     3,640,294         2,480,624
                                                                     ---------------   ---------------

DEFERRED REVENUE, less current portion                                      605,555           304,575
                                                                     ---------------   ---------------

CAPITAL LEASE OBLIGATIONS, less current portion                              10,329            11,225
                                                                     ---------------   ---------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
     Preferred Stock, par value $.001; authorized 30,000,000 shares,
        no shares issued                                                          -                 -
     Common Stock, par value $.001; authorized 70,000,000 shares,
        29,510,273 and 29,260,273 shares issued and outstanding,
        respectively                                                         29,510            29,260
     Additional paid-in capital                                           8,144,218         6,797,476
     Deferred compensation                                                 (729,330)                -
     Accumulated deficit                                                (10,139,024)       (8,654,716)
                                                                       -------------     -------------

            TOTAL STOCKHOLDERS' DEFICIT                                  (2,694,626)       (1,827,980)
                                                                       -------------     -------------

            TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT              $    1,561,552    $      968,444
                                                                     ===============   ===============

</TABLE>

                                   Concluded






      See accompanying notes to condensed consolidated financial statements

                                       5
<PAGE>
                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      For the Three Months Ended March 31,
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                 2006                2005
                                                            ----------------   -----------------
<S>                                                         <C>                <C>
SALES
     Product sales                                          $       369,882    $        385,449
     License fees and other revenue                                  75,473              43,814
     Royalties                                                       15,553              10,500
                                                            ----------------   -----------------
         NET SALES                                                  460,908             439,763

OPERATING EXPENSES
     Cost of goods sold                                             354,200             382,694
     General and adminstrative                                      715,058             364,931
     Sales and marketing                                            241,852             595,040
     Research and development                                        36,642               6,163
                                                            ----------------   -----------------

         TOTAL OPERATING EXPENSES                                 1,347,752           1,348,828
                                                            ----------------   -----------------

         OPERATING LOSS                                            (886,844)           (909,065)
                                                            ----------------   -----------------

OTHER INCOME (EXPENSE)
     Other income                                                     9,682                   -
     Interest income                                                      5                 163
     Other expense                                                     (768)                  -
     Loss on extinguishment of debt                                 (98,457)                  -
     Interest expense                                              (507,926)             (2,847)
                                                            ----------------   -----------------

         TOTAL OTHER (EXPENSE), NET                                (597,464)             (2,684)
                                                            ----------------   -----------------

         LOSS BEFORE PROVISION FOR INCOME TAXES                  (1,484,308)           (911,749)

         Provision for income taxes                                       -                (800)
                                                            ----------------   -----------------

         NET LOSS                                           $    (1,484,308)   $       (912,549)
                                                            ================   =================


         NET LOSS PER COMMON SHARE, BASIC AND DILUTED       $         (0.05)   $          (0.03)
                                                            ================   =================

         WEIGHTED AVERAGE NUMBER OF COMMON
             SHARES OUTSTANDING,
                 BASIC AND DILUTED                               29,363,051          27,362,967
                                                            ================   =================


</TABLE>
      See accompanying notes to condensed consolidated financial statements


                                       6
<PAGE>
                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
                      For the Three Months Ended March 31,
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                             2006                2005
                                                                        ----------------   -----------------
<S>                                                                     <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                           $    (1,484,308)   $       (912,549)
     Adjustments to reconcile net loss to net cash
         used in operating activities:
         Depreciation and amortization                                           36,989              21,685
         Loss on sale of assets                                                     568                   -
         Interest expense from beneficial debt converstion feature              412,783                   -
         Interest expense on conversion of area development rights
             deposits to convertible notes payable                               38,959                   -
         Loss on extinguishment of debt                                          98,457
         Amortization of deferred compensation                                   48,527                   -
         Gain on forgiveness of liability                                        (9,656)                  -
     (Increase) decrease in operating assets:
         Accounts receivable                                                   (237,941)            (58,377)
         Inventories                                                             10,320               2,648
         Prepaid expenses                                                        (4,014)             14,262
         Other current assets                                                  (279,283)                  -
         Deposits                                                                 7,867                   -
     Increase (decrease) in operating liabilities:
         Accounts payable, trade                                                 46,016             210,401
         Accrued expenses                                                       (19,323)            163,985
         Accrued interest                                                        55,843               1,129
         Deferred revenue                                                       666,623              (8,375)
                                                                        ----------------   -----------------

             NET CASH USED IN OPERATING ACTIVITIES                             (611,573)           (565,191)
                                                                        ----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment                                         (19,176)            (19,787)
     Proceeds from sale of assets                                                   508                   -
     Increase in patents, trademarks and other intangibles                      (35,282)            (31,528)
                                                                        ----------------   -----------------

             NET CASH USED IN INVESTING ACTIVITIES                              (53,950)            (51,315)
                                                                        ----------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from notes payable to stockholders                                740,000             500,000
     Principal payments on notes payable                                              -              (6,986)
     Principal payments on capital lease obligations                               (815)                  -
     Proceeds from sale of common stock                                               -             240,571
                                                                        ----------------   -----------------

             NET CASH PROVIDED BY FINANCING ACTIVITIES                          739,185             733,585
                                                                        ----------------   -----------------

             INCREASE IN CASH                                                    73,662             117,079

             CASH AT BEGINNING OF PERIOD                                         36,814             523,072
                                                                        ----------------   -----------------

             CASH AT END OF PERIOD                                      $       110,476    $        640,151
                                                                        ================   =================

------------------------------------------------------------------------------------------------------------
CASH PAID DURING THE PERIOD FOR
     Interest                                                           $           340    $          2,847
     Income taxes                                                       $             -    $            800
</TABLE>

                                   Continued

      See accompanying notes to condensed consolidated financial statements

                                       7
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



Supplemental  schedule of non-cash investing and financing activities during the
three months ended March 31, 2006:

On January 10, 2006, the Company exchanged $750,000 recorded as area development
deposits for an unsecured convertible note payable ("the Development Loan") to a
significant stockholder ("the Significant Stockholder"). As part of the exchange
agreement  and as required  by the  agreement,  the  Company  added an amount of
$38,959 to the principal  amount of the Development  Loan which  represented the
interest  that would have been  earned on the  deposit  had it been an  interest
bearing  note when the deposit was  received by the  Company.  The Company  also
recorded a  beneficial  conversion  feature of  $362,921  which was  immediately
expensed because the convertible note payable is due on demand (see Note 4).

Effective as of February 6, 2006, the Company entered into an Exchange Agreement
with the Significant  Stockholder  (see Note 7). The Company  recorded  non-cash
interest  expense of $10,356  that was included in the  principal  amount of the
replacement notes as of February 6, 2006.

In  connection  with the  Exchange  Agreement,  the  Company  recorded a loss on
extinguishment  of  debt  of  $98,457  which  included  the  allocation  of  the
extinguishment   proceeds  between  the  beneficial   conversion  feature,   the
extinguishment of the convertible  security,  and the value of the common shares
issued to effect the  exchange.  The Company  recorded a  beneficial  conversion
feature of $306,213  related to the  replacement  notes which will be  amortized
over the life of the replacement notes.

On February 28, 2006,  the Company  issued a promissory  note to a member of the
Board of Directors who is also a significant stockholder ("the Director") in the
principal  amount of $178,452 in settlement of a promissory  note dated November
30, 2005 payable to the Director  maturing on February 28, 2006 in the principal
amount of $175,000 with $3,452 of non-cash accrued interest.  The new note bears
interest at an annual rate of 10%, and matures on December 31, 2006.


Supplemental  schedule of non-cash investing and financing activities during the
three months ended March 31, 2005:

None

                                       8
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(1)      Summary of significant accounting policies
         ------------------------------------------

         Nature  of  operations  -  Speaking  Roses   International,   Inc.  and
         subsidiary  (collectively,  the  "Company"  or "SRII") own patented and
         other proprietary technology used to emboss flowers and other products.
         The  technology  allows  end  users  to  request   personalized  floral
         arrangements using standardized or unique messages,  logos, trademarks,
         and  pictures.  In  addition  to its own  production,  the  Company has
         licensed that technology to large  wholesale  flower concerns and other
         parties  to perform  the actual  embossing  of  flowers.  In the United
         States,  the Company  sells  embossed  flowers and bouquets  containing
         embossed flowers directly to individuals,  businesses,  florists, chain
         stores,  funeral homes and large wedding and corporate  event  planners
         with production and fulfillment  primarily  provided by the Company and
         by licensed  wholesale  flower  providers.  The  Company  has  recently
         developed  a retail  distribution  model  and has  begun to offer  area
         development and franchise  rights in those  jurisdictions  which do not
         require  regulatory  approval.   The  Company  formed  a  wholly  owned
         subsidiary,  Speaking Roses Development  Corporation  ("SRDC"),  during
         August 2005 through which to conduct its franchise  activities.  SRII's
         condensed  consolidated  financial  statements  include the accounts of
         SRDC from the date of  inception.  The  Company has also  licensed  the
         technology  and  equipment  to  exclusive  licensees  in  international
         markets and is beginning to offer area development and franchise rights
         internationally.

         Basis  of   presentation  -  The   accompanying   unaudited   condensed
         consolidated  financial  statements  have been  prepared on the accrual
         basis of accounting  and in accordance  with the  instructions  to Form
         10-QSB but do not include all of the  information and notes required by
         U.S. generally accepted accounting principles and should, therefore, be
         read in  conjunction  with  the  notes  hereto,  and  the  consolidated
         financial statements and notes thereto included in our annual report on
         Form 10-KSB for the year ended  December  31,  2005.  In the opinion of
         management,   all   adjustments   (consisting   of   normal   recurring
         adjustments)  necessary  for the  fair  presentation  of the  Company's
         consolidated  financial position and consolidated results of operations
         have been included.  Certain amounts in the prior year are reclassified
         for   comparability   to  the  current   year's   presentation.   These
         reclassifications  have no effect on net loss or stockholders' deficit.
         The interim  operating  results are not  necessarily  indicative of the
         results  for  a  full  year.   Certain   amounts  in  prior  years  are
         reclassified  for  comparability  to the current  year's  presentation.
         These reclassifications have no effect on net loss.

         Principles  of  consolidation  - The unaudited  condensed  consolidated
         financial statements include the accounts of the Company and its wholly
         owned  subsidiary,   SRDC.  All  material   intercompany  balances  and
         transactions have been eliminated in consolidation.


                                       9
<PAGE>


                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(1)      Summary of significant accounting policies (continued)
         ------------------------------------------------------

         Use of  estimates  in the  preparation  of  financial  statements - The
         preparation of financial  statements in conformity with U.S.  generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and disclosure of contingent  assets and liabilities at the
         date of the financial  statements and the reported  amounts of revenues
         and expenses during the reporting periods.  Actual results could differ
         from those  estimates.  Key  estimates  in the  accompanying  condensed
         consolidated   financial  statements  include,  among  others,  revenue
         recognition,  allowances for doubtful accounts  receivable,  impairment
         and useful lives of long-lived assets,  impairment of inventories,  and
         valuation allowances against deferred income tax assets.

         Long-lived assets - The Company assesses its property and equipment and
         other  long-lived  assets in  accordance  with  Statement  of Financial
         Accounting  Standards (SFAS) No. 144, "Accounting for the Impairment or
         Disposal of  Long-Lived  Assets." The Company  reviews its property and
         equipment and other  definite-lived  tangible and intangible assets for
         impairment on an annual basis or when events or circumstances  indicate
         the existence of a possible impairment in accordance with SFAS No. 144.
         In  determining  whether an asset is  impaired,  the Company  must make
         assumptions  regarding  recoverability  of costs,  estimated future net
         cash flows from the asset,  intended use of the asset and other related
         factors.  If these estimates or their related  assumptions  change, the
         Company may be required to record impairment  charges for these assets.
         The Company did not record any impairment  charges for the three months
         ended March 31, 2006 and 2005.

         Advertising  costs - Advertising  costs are charged to operations  when
         incurred.  Advertising  expense  was $8,125 and  $19,255  for the three
         months ended March 31, 2006 and 2005, respectively.

         Net loss per common share - The Company applies SFAS No. 128, "Earnings
         Per Share,"  which  requires the  calculation  of basic and diluted net
         loss per common share. Basic net loss per common share ("basic EPS") is
         computed by dividing net loss available to common  stockholders  by the
         weighted average number of common shares outstanding during the period.
         Diluted  net loss per  common  share  ("diluted  EPS") is  computed  by
         dividing net loss by the sum of the  weighted-average  number of common
         shares  outstanding  and the  weighted-average  dilutive  common  share
         equivalents then  outstanding.  The computation of diluted EPS does not
         assume  exercise  or  conversion  of  securities  that  would  have  an
         anti-dilutive  effect.  The  Company  had a net  loss  for all  periods
         presented herein;  therefore, none of the stock options and convertible
         debt instruments outstanding during the periods presented, as discussed
         in Notes 7 and 9, were included in the  computation of diluted net loss
         per common share as they were anti-dilutive.

         Common share  equivalents  consist of shares issuable upon the exercise
         of  common  stock  options  and  shares  issuable  upon  conversion  of
         convertible  debt. As of March 31, 2006 and 2005,  there were 4,857,916
         and 890,000  outstanding common share equivalents,  respectively,  that
         were not  included  in the  computation  of diluted net loss per common
         share as their effect would be anti-dilutive.


                                       10
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1)      Summary of significant accounting policies (continued)
         ------------------------------------------------------

         Revenue  recognition - The Company recognizes revenue from direct sales
         of floral  products and supplies,  the sale of license  agreements  and
         related equipment,  royalties related to licensing agreements, the sale
         of area development rights, and the sale of franchises.

         Direct Product Sales
         Revenue from direct product sales is recognized when the following four
         revenue   criteria   (as  defined  by  the   Securities   and  Exchange
         Commission's  (SEC's) Staff Accounting Bulletin (SAB) No. 104) are met:
         (1)  persuasive  evidence of an  arrangement  exists;  (2) products are
         shipped and the customer takes  ownership and assumes the risk of loss;
         (3) the selling price is fixed or determinable;  and (4) collectibility
         is reasonably assured.  The Company uses domestic floral wholesalers to
         emboss,   fulfill  and  distribute   its  direct  product  sales.   The
         wholesalers  emboss and fulfill orders using the Company's  proprietary
         technology and equipment.  Under these  fulfillment  arrangements,  the
         Company is the primary  obligor,  assumes  inventory risk upon customer
         return,   establishes  price,  provides  embossing  specifications  and
         techniques and assumes credit risk. As a result, and in accordance with
         Emerging Issues Task Force (EITF) No. 99-19,  "Reporting  Revenue Gross
         as a Principal versus Net as an Agent," the Company  recognizes revenue
         on a gross basis for direct product  sales.  Gross sales are reduced by
         returns, charge backs and other discounts.

         The Company  also has  agreements  with some  wholesalers  in which the
         Company  does not act as the  primary  obligor  and does not assume the
         inventory risk or establish pricing for the product. In accordance with
         EITF  99-19,   revenue  from  these  wholesaler   originated  sales  is
         recognized as commission revenue when the revenue recognition  criteria
         as  defined  in  SAB  104  are  met.  Under  these  arrangements,   the
         wholesalers  initiate sales to their  customers,  are  responsible  for
         collections and have a risk of loss of inventory.  Commission  revenues
         are reduced accordingly for returns, charge backs and discounts.

         License Agreements and Related Equipment and Support
         The Company  enters into  license  agreements  in which it licenses its
         patented technology, leases or sells the equipment necessary to utilize
         the technology, and provides customer support related to the equipment.
         The  sale  of  the  licensed  technology,  together  with  the  related
         equipment and support is considered a revenue arrangement with multiple
         deliverables  under EITF Issue No. 00-21,  "Revenue  Arrangements  with
         Multiple  Deliverables."  In accordance with EITF 00-21,  fees from the
         sale of licensing  agreements  including customer support and the lease
         or  sale  of  the  related   equipment,   are  initially  deferred  and
         subsequently  recognized as revenue on a  straight-line  basis over the
         life of the agreement beginning on the commencement date of the license
         agreement.  The terms of these  non-cancelable  license  agreements are
         generally 2 to 4 years, although some terms are as long as 10 years.

                                       11
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1)      Summary of significant accounting policies (continued)
         ------------------------------------------------------

         In certain  circumstances,  mainly with  international  licensees,  the
         Company  enters into  non-cancelable  license  agreements  that grant a
         license to the  technology,  provide the  equipment  and  support,  and
         provide exclusive rights to distribute imprinted floral products within
         a geographical  region.  Fees from these licensing  agreements are also
         recognized in accordance with EITF 00-21 and are recorded  initially as
         deferred  revenue and  recognized as revenue on a  straight-line  basis
         over the lives of the agreements.

         Royalty Fees
         In connection  with the license  agreements,  the Company also receives
         royalties  on  the  sales  of  all  imprinted  flowers.  Royalties  are
         recognized as earned in accordance with SAB 104 and EITF 99-19.

         Franchise Fees
         The Company recognizes  franchise fee revenue when earned in accordance
         with SFAS No. 45, "Accounting for Franchise Fee Revenue." Franchise fee
         revenue is recognized when all material services or conditions relating
         to the  sale  of a  franchise  have  been  substantially  performed  or
         satisfied by the Company,  which generally occurs upon the commencement
         of  franchise  operations.  The  Company's  agreements  with  the  area
         developers  generally require a portion of the franchise fee to be paid
         to the area  developer.  Any portion of the  franchise  fee paid to the
         area developer is recorded as a reduction to the franchise fee revenue.

         Sale of Area Development Rights
         Revenues  from the sale of area  development  rights are  deferred  and
         recognized  proportionately  based on the  number  of  franchises  sold
         compared  to the total  franchises  expected to be sold as set forth in
         each area developer's agreement with the Company.  Franchise royalties,
         which  are based on a  percentage  of  franchised  stores'  sales,  are
         recognized  as earned.  As of March 31,  2006,  the Company  recognized
         $3,372 from  international  franchise area development  rights, but had
         not yet recognized any revenue associated with domestic franchise fees,
         area  development  rights  or  franchise  royalties.

         Sales-Type Lease Revenue
         Represents revenue  attributable to sales-type leases and is recognized
         over the term of the lease  agreement in  accordance  with SFAS No. 13,
         Accounting for Leases, as amended.

                                       12
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1)      Summary of significant accounting policies (continued)
         ------------------------------------------------------

         Accounting for stock based  compensation  - Effective  January 1, 2006,
         the Company adopted SFAS No. 123R (revised 2004), "Share-Based Payment"
         which amends SFAS 123,  Accounting  for  Stock-Based  Compensation  and
         supersedes   Accounting   Principles  Board  ("APB")  Opinion  No.  25,
         Accounting for Stock Issued to Employees.  The Company adopted SFAS No.
         123R using the modified  prospective  method. The modified  prospective
         method requires that compensation cost be recognized beginning with the
         effective  date 1) based on the  requirements  of SFAS No. 123R for all
         share-based  payments  granted after the effective date and 2) based on
         the  requirements  of SFAS No. 123 for all awards  granted to employees
         prior to the effective date of SFAS No. 123R that were not fully vested
         as of January 1, 2006.  See Note 9 for a more detailed  description  of
         the Company's adoption of SFAS No. 123R.

(2)      Going concern
         -------------

         The accompanying  condensed consolidated financial statements have been
         prepared  assuming the Company will continue as a going concern,  which
         contemplates   the  realization  of  assets  and  the  satisfaction  of
         liabilities in the normal course of business.  The Company has incurred
         cumulative net losses of $10,139,024  through March 31, 2006 and a loss
         of  $1,484,308  for the three months ended March 31, 2006.  As of March
         31,  2006,  the Company  had total cash  available  of  $110,476  and a
         working capital deficit of $2,791,612.

         The above factors raise substantial doubt that the Company will be able
         to continue as a going concern.

         The Company is attempting to raise additional funds through the sale of
         its equity  securities  or through the  issuance  of debt  instruments;
         however,  no  assurance  can be given that the Company  will be able to
         obtain such financing on terms  favorable to the Company or at all. Any
         sale of additional  equity or the  conversion of any  convertible  debt
         securities  would  result  in  additional  dilution  to  the  Company's
         stockholders. If the Company is unable to obtain additional funding, it
         may be required to reduce or cease operations.

         Management's plans to improve the Company's  liquidity position include
         raising additional capital through the sale of common stock or issuance
         of debt.  During the three months ended March 31, 2006, the Company did
         not issue  any of its  shares of  common  stock for cash.  The  Company
         received  $740,000 cash in exchange for notes  payable to  shareholders
         and  received  $272,000  in cash  for  international  area  development
         rights.

         The accompanying  condensed  consolidated  financial  statements do not
         include   any   adjustments   relating   to  the   recoverability   and
         classification   of  asset   carrying   amounts   or  the   amount  and
         classification  of  liabilities  that  might be  necessary  should  the
         Company be unable to continue as a going concern.

                                       13
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(3)      Inventories
         -----------

         As of March 31, 2006 total inventories consist of the following:

                                                   March 31,
                                                     2006
                                                 --------------

         Floral products                         $      20,805
         Non-floral products                            49,806
         Embossing supplies                             29,487
         Shipping materials                             10,692
                                                 --------------

               Total inventories                 $     110,790
                                                 ==============

(4)      Area development rights deposits
         --------------------------------

         As of March 31, 2006, the Company has area development  rights deposits
         totaling  $106,790 which  represent funds collected from potential area
         developers of retail distribution  outlets in territories that are both
         determined and yet to be determined.

         The area developers have a right to receive a refund of their deposits,
         plus  interest,  if the Company does not timely provide them with forms
         of area  development  agreements.  One of the potential area developers
         ("the Significant Stockholder"), who owns more than 5% of the Company's
         common stock and meets the definition of a related party, paid $750,000
         during the twelve  months  ended  December  31,  2005 for the right to,
         within  sixty days of being  provided  with a form of area  development
         agreement,  choose to either enter into the area development  agreement
         or be issued a convertible note payable by the Company. The convertible
         note would have a six-month term, accrue interest at 12% per annum, and
         be  convertible  into common stock at $.50 per share.  By January 2006,
         the  Company was unable to  formulate  the area  development  agreement
         contemplated  by  the  terms  of  the  Significant  Stockholder's  area
         development  rights  deposit  within  the  timeframes  specified.  As a
         result,  the  Significant  Stockholder  has  elected  to have the funds
         deposited  with the Company  converted  into loans to the Company  (the
         "Development  Loan").  As of December 31, 2005,  the $750,000  received
         from the Significant  Stockholder  was recorded as an area  development
         rights deposit. Effective January 10, 2006, the deposit was recorded as
         a convertible note payable to the Significant  Stockholder  pursuant to
         the terms of the area development agreement.  The terms of the original
         area  development  agreement  required that the Company accrue interest
         from the dates of the  original  deposits  should the  Company  fail to
         timely  formulate  the area  development  agreement.  Accordingly,  the
         Company recorded interest expense (accrued but not yet paid) of $38,959
         that was included in the principal amount of the Development Loan as of
         January 10, 2006.

         The  Development  Loan bears  interest  at an annual rate of 12% and is
         payable  upon  the  request  of  the  holder  thereof.   The  Company's
         obligations  under the  Development  Loan are not secured by any of the
         assets or properties of the Company. The principal and accrued interest
         of the Development  Loan are convertible at the option of the holder of
         the  Development  Loan at any time into common shares of the Company at

                                       14
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(4)      Area development rights deposits - continued
         --------------------------------------------

         the conversion rate of $0.50 per common share.  Therefore, a beneficial
         conversion  feature of $362,921 was recorded as of January 10, 2006 and
         immediately  expensed  due to the fact that the  principal  and accrued
         interest of the Development Loan are due on demand and convertible into
         common  shares of the Company at any time.  (See Note 7). No  placement
         agent fee or  commissions  are payable  with respect to the purchase or
         issuance of the Development Loan.

(5)      Deferred revenue
         ----------------

         As of March 31, 2006,  the Company has deferred  revenue of  $1,111,370
         which  consists of $195,960 of deferred  revenue  associated  with area
         development  rights,   $15,000  associated  with  franchise  fees,  and
         $900,410 associated with international licensing agreements.

         The Company has entered into non-cancelable  licensing  agreements with
         international  wholesalers  and  other  entities  with  terms of 2 to 4
         years.  Under these contracts the wholesalers  acquire exclusive rights
         to distribute  imprinted  floral products  within a geographic  region.
         License  fees  under  these  agreements  are  paid  to the  Company  at
         inception and are recognized  over the lives of the contracts using the
         straight-line  method.  Some of these  contacts  have included up front
         payments for equipment.

         For the three  months  ended March 31,  2006,  the  Company  recognized
         $3,372 of revenue from international franchise area development rights,
         but has not yet  recognized any revenue  associated  with domestic area
         development rights, franchise fees, or franchise royalties. The Company
         recognized $56,716 and $28,375 of international license fee revenue for
         the three months ended March 31, 2006 and 2005, respectively.

(6)      Notes payable to stockholders
         -----------------------------

         During the three  months  ended  March 31,  2006,  the  Company  issued
         promissory  notes to a member of the Board of  Directors  who is also a
         significant stockholder ("the Director") totaling $743,452.

         As of March 31, 2006,  total notes payable to  stockholders  consist of
         the following:

         Unsecured  note  payable  to a member of the
         Board of  Directors  and a stockholder.  This
         note bears simple interest at 8% and matured
         on August 5, 2005. This note was subsequently
         extended until September 5, 2005 and is
         currently in default.                                  $       250,000

         Unsecured  notes  payable to the Chairman of
         the Board of Directors who is also a significant
         stockholder.  These notes bear simple interest at
         8% and are due upon demand.                                    195,526

         Unsecured  notes  payable to the  Director.
         These  notes  bear  simple interest at 10%
         and mature on December 31, 2006.                               478,452

         Unsecured note payable to the Director.
         This note bears simple interest at 8% and
         matures on January 10, 2007.                                   300,000

         Unsecured note payable to the Director. This
         note bears simple interest at 10% and matures
         on February 10, 2007.                                          140,000
                                                                ----------------

                                                                $      1,363,978
                                                                ================



                                       15
<PAGE>


                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(7)      Convertible notes payable to stockholder
         ----------------------------------------

         Effective as of February 6, 2006, the Company  entered into an exchange
         agreement   with   a   significant    stockholder   ("the   Significant
         Stockholder'),  pursuant  to which the Company  issued the  Significant
         Stockholder  two promissory  notes in exchange for and in  cancellation
         of,  the  promissory  notes  the  Company  issued  to  the  Significant
         Stockholder  on November 14,  November 29 and  December  30, 2005.  The
         principal  amount of these  replacement  notes  totals  $510,356 in the
         aggregate,  and each  replacement  note is in the  principal  amount of
         $255,178.  The replacement notes bear interest at an annual rate of 12%
         and mature on December 30, 2006. The principal and accrued  interest of
         the  replacement  notes are  convertible at the option of the holder at
         any time into common  shares of the Company at the  conversion  rate of
         $0.50   per   common   share,   subject   to  any   share   splits   or
         reclassifications.  As additional  consideration  in accepting  each of
         these  notes,  the  Company  agreed  to  issue  to  the  holder  of the
         replacement notes a total of 250,000  unregistered common shares of the
         Company,  equally  apportioned between each replacement note. The value
         of the common shares was $200,000  based on the closing market price of
         the Company's common shares as of February 6, 2006 ($.80 per share).

         In accordance  with Emerging  Issues Task Force  ("EITF")  Issue 96-19,
         Debtor's Accounting for a Modification or Exchange of Debt Instruments,
         the exchange of the notes discussed above was considered to result in a
         substantially different debt instrument.  Accordingly,  the transaction
         was accounted for as a debt  extinguishment  of the original  notes and
         the new notes were recorded at fair value.

         As of the  date  of  extinguishment,  the  Company  recorded  a loss on
         extinguishment  of debt of $98,457 which included the allocation of the
         extinguishment proceeds between the beneficial conversion feature which
         was  valued  at the  extinguishment  date,  the  extinguishment  of the
         convertible  security,  and the value of the  common  shares  issued to
         effect  the  exchange  transaction  as  required  by EITF  Issue  98-5,
         Accounting  for  Convertible   Securities  with  Beneficial  Conversion
         Features or Contingently Adjustable Conversion Ratios.

         The  Company  recorded a  beneficial  conversion  feature  of  $306,213
         related to the replacement notes which will be amortized and recognized
         as interest expense over the life of the replacement notes.

         As described  in Note 4, an area rights  development  deposit  totaling
         $788,960  representing  $750,000  in  principal  and $38,960 in accrued
         interest was recorded  effective January 10, 2006 as a convertible note
         payable to stockholder pursuant to the terms of the Development Loan as
         described in Note 4.

                                       16
<PAGE>

(7)      Convertible notes payable to stockholder (continued)
         ----------------------------------------------------

         As of March 31, 2006,  convertible notes payable to stockholder consist
         of the following:

         Unsecured convertible note payable to the
         Significant  Stockholder with interest at 12%
         and due upon demand. The holder of the note
         may convert any portion of the principal and
         accrued  interest for shares of common stock
         at $0.50 per share. A beneficial  conversion
         feature of $362,921 was recorded and
         immediately expensed.                                  $       788,959

         Unsecured convertible note payable to the
         Significant Stockholder with interest  at 12%
         (effective  interest  rate  of  116%),  and
         maturing December  31,  2006.  The holder of
         the note may convert any portion of the
         principal and accrued  interest for shares
         of common stock at $0.50 per share. A
         beneficial conversion feature of $153,107
         was recorded. As of March 31,  2006,  the
         remaining  debt discount was  $138,534. The
         principal amount of the note is $255,178.              $       116,644

         Unsecured convertible note payable to the
         Significant  Stockholder with interest  at 12%
         (effective  interest  rate  of  116%),  and
         maturing December  31,  2006.  The holder of
         the note may convert any portion of the
         principal and accrued  interest for shares
         of common stock at $0.50 per share. A
         beneficial conversion feature of $153,107
         was recorded. As of March 31,  2006,  the
         remaining debt discount was $138,534.  The
         principal amount of the note is $255,178.              $       116,644
                                                                ----------------

                                                                $     1,022,247
                                                                ================


                                       17
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(8)      Stockholders equity
         -------------------

         As  described  in Note 7, during the three months ended March 31, 2006,
         the Company issued a total of 250,000  unregistered shares of its $.001
         par  value  common  stock  valued  at  $200,000  to the  holder  of two
         convertible  notes  issued  in  exchange  for  replacement  notes.  The
         exchange  was  accounted  for as a debt  extinguishment  resulting in a
         reduction  in  additional  paid-in  capital of $300,000  related to the
         value of the unamortized  beneficial conversion feature revalued at the
         extinguishment  date. A beneficial  conversion  feature of $306,213 was
         recorded related to the new notes issued.

         As  described  in Note 4, during the three months ended March 31, 2006,
         the Company recorded a beneficial  conversion  feature  associated with
         the Development Loan in the amount of $362,921.

 (9)     Stock-based compensation
         ------------------------

         Prior to January 1, 2006,  as  permitted  under  Statement of Financial
         Accounting  Standards  ("SFAS") No. 123, the Company  accounted for its
         stock option plans following the recognition and measurement principles
         of Accounting  Principles  Board ("APB") No. 25,  Accounting  for Stock
         Issued to  Employees,  and  related  interpretations.  Accordingly,  no
         stock-based  compensation  expense had been  reflected in the Company's
         statements of operations as all options  granted had an exercise  price
         equal to or greater  than the  market  value of the  underlying  common
         stock on the date of grant and the related number of shares granted was
         fixed at that point in time.

         The Company  adopted  SFAS No.  123R  effective  January 1, 2006.  This
         pronouncement  requires  companies  to  measure  the  cost of  employee
         services  received  in  exchange  for an  award of  equity  instruments
         (typically  stock options)  based on the  grant-date  fair value of the
         award.  The fair value is estimated using  option-pricing  models.  The
         resulting  cost is recognized  over the period during which an employee
         is required to provide  service in exchange for the award,  usually the
         vesting  period.  The  Company  adopted  SFAS 123R  using the  modified
         prospective transition method, which is explained below.

         SFAS  123R is  effective  for all  stock  options  the  Company  grants
         beginning  January 1, 2006. For those stock option awards granted prior
         to January 1, 2006,  but for which the vesting  period is not complete,
         the Company used the modified  prospective  transition method permitted
         by SFAS 123R.  Under this method,  the Company accounts for such awards
         on a prospective  basis, with expense being recognized in its statement
         of  operations  beginning  in the  first  quarter  of  2006  using  the
         grant-date  fair  values  previously   calculated  for  its  pro  forma
         disclosures.  The Company will recognize the related  compensation cost
         not  previously  recognized  in the  pro  forma  disclosures  over  the
         remaining vesting period. The Company's stock options typically vest in
         equal annual  installments  over a service  period.  Expense related to
         each portion of an option grant is recognized over the specific vesting
         period for those stock options.


                                       18
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(9)      Stock-based compensation (continued)
         ------------------------------------

         The fair value of stock options is determined at the grant date using a
         Black-Scholes  option pricing model, which requires the Company to make
         several  assumptions.  The  risk-free  interest  rate is  based on U.S.
         Treasury  interest  rates.  The dividend yield on the Company's  common
         stock is assumed to be zero since the  Company  does not pay  dividends
         and has no  current  plans to do so in the  future.  The  market  price
         volatility  of the  Company's  common stock is based on the  historical
         volatility  of the stock.  The expected life of the options is based on
         the  Company's  historical  experience  of stock  option  exercise  and
         employee  termination  within the valuation  model;  separate groups of
         employees that have similar historical exercise behavior are considered
         separately  for  valuation  purposes.  The Company also  estimates  the
         expected rate of stock option  forfeitures  separately for officers and
         directors  and for  employees  based on the  historical  experience  of
         options forfeiture in each class of employee and the difference between
         the Company's stock price as of March 31, 2006 and the weighted average
         exercise price of outstanding options as of that date.

         The table  below  summarizes  stock  option  activity  pursuant  to the
         Company's  2004 Speaking  Roses Equity  Incentive Plan (the "Plan") for
         the three months ended March 31, 2006. Under the Plan, 5,000,000 shares
         of the  Company's  Common Stock are  available  for  issuance.  Options
         outstanding and exercisable  were granted at a stock option price which
         was not less than the fair market value of the  Company's  Common Stock
         on the date the option was  granted  and no option has a term in excess
         of ten years.  Additionally,  options  vested  and  became  exercisable
         either on the date of grant or commencing  either six or 12 months from
         the option grant date.
<TABLE>
<CAPTION>

                                                                     Weighted Average
                                                 Weighted Average    Contractual Life     Aggregate
                                     Options      Exercise Price        in Years        Intrinsic Value*
--------------------------------------------------------------------------------------------------------
<S>                                <C>                     <C>              <C>                 <C>
Outstanding, December 31, 2005     1,450,000           $   1.32

    Granted                        1,030,000               0.70
    Exercised                              -                  -
    Canceled                        (280,000)              1.52
                                   ---------

Outstanding, March 31, 2006        2,200,000               1.00             9.39                -

Exercisable, March 31, 2006          350,000               1.61             8.64                -


</TABLE>


         * The  intrinsic  value of a stock  option  is the  amount by which the
         market value of the underlying  stock exceeds the exercise price of the
         option.  The market value of the Company's stock was $0.52 per share as
         of March 31, 2006. The  weighted-average  fair value of options granted
         during the first quarter of 2006 was  determined to be $0.66,  based on
         the following weighted-average assumptions:

                Dividend yield                       --
                Expected volatility                 151%
                Risk-free interest rate             4.6%
                Expected life of option (years)     6.0

                                       19
<PAGE>

                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(9)      Stock-based compensation (continued)
         ------------------------------------

         The following  tables  summarize  the range of exercise  prices and the
         weighted average remaining  contractual life of the options outstanding
         and the range of  exercise  prices for the  options  exercisable  as of
         March 31, 2006:

<TABLE>
<CAPTION>

                            Options Outstanding                         Options Exercisable
                 ----------------------------------------------   ------------------------------
                                                       Weighted
 Range of                           Remaining          Average                         Average
 Exercise          Options          Contractual        Exercise      Options            Exercise
 Prices          Outstanding        Life (Years)       Price      Exercisable          Price
------------------------------------------------------------------------------------------------
<C>               <C>                   <C>              <C>      <C>                <C>
$  0.70           1,030,000             9.91             $0.70          -            $
   0.71             300,000             9.06              0.71          -                     -
   1.00             200,000             9.18              1.00          -                     -
   1.50             170,000             9.35              1.50          -                     -
   1.60             300,000             8.65              1.60    300,000                  1.60
   1.70             200,000             8.56              1.70     50,000                  1.70
                  ---------                                       -------

                  2,200,000                                       350,000
                  =========                                       =======

Weighted Average                       9.39               1.00                             1.61

</TABLE>

         Stock  based  compensation  expense  recognized  under SFAS 123R in the
         three  months  ended  March 31,  2006  increased  wages,  salaries  and
         benefits  expense and our net loss by $48,527,  or $0.002 per basic and
         diluted  share.   There  was  no  stock  based   compensation   expense
         capitalized  as of March 31, 2006.  As of March 31,  2006,  $729,330 of
         compensation  expense related to unvested stock options attributable to
         future  performance  had not yet been  recognized.  This amount will be
         recognized in expense over a weighted-average period of 1.6 years.

         SFAS  123R  requires  the  benefits  of tax  deductions  in  excess  of
         recognized compensation expense to be reported as financing cash flows,
         rather than as an  operating  cash flow as  prescribed  under the prior
         accounting rules. This requirement reduces net operating cash flows and
         increases net financing  cash flows in periods  after  adoption.  Total
         cash flow remains  unchanged  from what would have been reported  under
         prior accounting rules.

         Prior to the  adoption  of SFAS No.  123R,  the  Company  followed  the
         intrinsic value method in accordance with APB No. 25 to account for its
         employee  stock  options.  Accordingly,  no  compensation  expense  was
         recognized  for employee stock options  granted in connection  with the
         issuance of stock  options  under the Plan for  periods  ended prior to
         January 1, 2006. The adoption of SFAS No. 123R primarily  resulted in a
         change  in the  Company's  method  of  recognizing  the  fair  value of
         share-based compensation.  Specifically,  the adoption of SFAS No. 123R
         will result in the recording of compensation expense for employee stock
         option rights.


                                       20
<PAGE>
                SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(9)      Stock-based compensation (continued)
         ------------------------------------

         The following  table  illustrates  the pro forma effect on net loss and
         net loss per share for the three  months  ended  March 31, 2005 had the
         Company applied the fair value recognition provisions of SFAS No. 123:

                                                                  Three Months
                                                                 Ended March 31,
                                                                     2005
                                                                ---------------
         Net loss as reported                                   $     (912,549)
         Deduct total stock-based employee
           compensation expense determined under
           SFAS 123, net of tax in 2005                                (62,688)
                                                                ---------------

         Pro forma net loss                                     $     (975,237)
                                                                ===============

         Net loss per common share (basic and diluted):
           As reported                                          $        (0.03)
                                                                ===============
           Pro forma                                            $        (0.04)
                                                                ===============

(10)     Related party transactions
         --------------------------

         For the three  months  ended March 31, 2006 and 2005,  the Company paid
         management and consulting fees and other expenses  totaling $70,835 and
         $22,560, respectively, to companies controlled by affiliates of certain
         principal  stockholders  of the  Company.  As of March  31,  2006,  the
         Company  had  amounts  payable  to  those  companies  totaling  $34,524
         recorded in accounts  payable,  trade.  Also as of March 31, 2006,  the
         Company has an account  receivable  from T.A.  Lassetter,  Jr. totaling
         $15,000 pursuant to a franchise agreement as described below.

         Debt Arrangements.  As of March 31, 2006, the Company has a demand note
         payable to Mr. Bob Warfield,  who is a member of the Company's Board of
         Directors,  with a principal amount of $250,000.  The note bears simple
         interest at an annual rate of 8%. (See Note 6 for further details.)

         As of March 31,  2006,  the  Company  has demand  notes  payable to Mr.
         Blaine Harris, who is the Company's Chairman of the Board of Directors,
         with  principal  amounts  totaling  $195,526.  The  notes  bear  simple
         interest at an annual rate of 8%. (See Note 6 for further details.)

         As of March 31, 2006,  the Company has notes  payable to Mr.  Roland N.
         Walker,  who is a member  of the  Company's  Board of  Directors,  with
         principal amounts totaling $918,452.  The notes bear simple interest at
         annual rates ranging from 8 - 10%. (See Note 6 for further details.)

         As of March 31, 2006, the Company has convertible  notes payable to Mr.
         Steven F.  Hanson  ("Hanson"),  who owns more than 5% of the  Company's
         common  stock  and  meets  the  definition  of a  related  party,  with
         principal amounts totaling  $1,299,315.  The notes bear simple interest
         at an annual  rate of 12%.  The  holder of the  notes may  convert  any
         portion  of the  principal  and  accrued  interest  for  shares  of the
         Company's  common  stock  at  $0.50  per  share  at any  time  prior to
         acceptance for payment. (See Note 7 for further details.)

         For the three months ended March 31, 2006, the total amount of interest
         expense paid to or accrued for loans from stockholders is $55,843.

                                       21
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(10)     Related party transactions (continued)
         --------------------------------------

         Franchise  Agreement.  The Company  entered into a franchise  agreement
         with T. A. Lassetter,  Jr. who is the son of Ted Lassetter, a member of
         our Board of Directors and the chairman of the  Compensation  Committee
         of the Board.  The franchise  agreement allows the franchisee to open a
         retail  store  under  the  Speaking  Roses  name  using  the  Company's
         technology.  The Company will  receive  continuing  royalties  from the
         store and will act as the  wholesaler  of floral and other  products to
         the store.  The retail store is  currently  under  construction  and is
         scheduled to open sometime during the three months ended June 30, 2006.
         The franchise  agreement  requires the franchisee to pay the Company an
         initial  franchise  fee of $15,000  which has been recorded as deferred
         revenue to be  recognized  as revenue when the retail  store  commences
         operations.

         Area  Development  Agreement.  The  Company  has  an  Area  Development
         Agreement with Business Retail Group, LLC ("the Retail Group") owned by
         Mike Glauser,  the Company's Vice President of Retail  Operations,  and
         his wife. The Agreement  permits the area developer to refer  potential
         franchisees  to the Company and to share in any franchise  fees paid by
         franchisees  in Utah and Clark  County,  Nevada.  The  Company  granted
         Business  Retail  Group,  LLC these rights in exchange for research and
         development  consulting services provided to the Company for its retail
         expansion.  The Company also has a franchise  agreement with the Retail
         Group.  The franchise  agreement  allows the  franchisee to open stores
         under the  Speaking  Roses name  using the  Company's  technology.  The
         Company will receive continuing  royalties from the stores and will act
         as the  wholesaler  of floral and other  products to the stores.  As of
         March 31, 2006,  the Retail Group had opened one store  pursuant to the
         franchise agreement.

         Development Loan. On January 10, 2006, the Company  exchanged  $750,000
         recorded as area development deposits for an unsecured convertible note
         payable  ("the  Development  Loan") to Hanson.  As part of the exchange
         agreement and as required by the agreement, the Company added an amount
         of  $38,959  to the  principal  amount of the  Development  Loan  which
         represented the interest that would have been earned on the deposit had
         it been an interest  bearing  note when the deposit was received by the
         Company.  The Company also recorded a beneficial  conversion feature of
         $362,921 which was immediately  expensed  because the convertible  note
         payable is due on demand (see Note 4).


                                       22
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(11)     Subsequent events
         -----------------

         Promissory  Notes.  On April 26, 2006,  the Company issued a promissory
         note to Roland N.  Walker  ("Walker"),  a director  of the  Company and
         significant shareholder,  representing proceeds the Company received as
         a loan from Walker in the principal amount of $150,000.  The note bears
         interest at an annual rate of 10%, and matures on December 31, 2006.

         On May 10,  2006,  the  Company  issued  a  promissory  note to  Walker
         representing proceeds the Company received as a loan from Walker in the
         principal amount of $200,000. The note bears interest at an annual rate
         of 10%, and matures on December 31, 2006.

         Line of Credit  Agreement.  On May 11, 2006, the Company entered into a
         Line of Credit Agreement ("the Credit  Agreement") with Dos Lagos, LLC,
         a Utah  limited  liability  company  ("Lender"),  pursuant to which the
         Company  issued  Lender  a  promissory  note  in  exchange  for  and in
         cancellation  of, the promissory  notes the Company issued to Walker on
         January 10,  February 10, February 28, March 20, March 29, April 26 and
         May 10,  2006 (See  Exhibit  10.2).  Walker  is the sole  member of the
         Lender.  The principal amount of the replacement note totals $1,287,832
         as of May 11, 2006,  which includes  $19,380 in accrued interest on the
         original  promissory notes. The Credit Agreement  establishes a line of
         credit for a period  extending  to  December  31,  2006 (the  "Maturity
         Date"),  for and on behalf of the Company equal to two million dollars.
         All sums advanced by the Lender to the Company on the line of credit or
         pursuant to the terms of the Credit  Agreement shall become part of the
         principal of the replacement note and shall bear interest from the date
         each  advance  is made until  paid in full at an  interest  rate of ten
         percent  (10%) per annum.  The  principal  and accrued  interest of the
         replacement  note are  convertible  at the  option of the Lender on the
         Maturity Date into common shares of the Company at the conversion  rate
         of  $0.50  per  common   share,   subject   to  any  share   splits  or
         reclassifications.  As additional  consideration in accepting the terms
         of the Credit  Agreement,  the Company  agreed to issue to the Lender a
         total of 1,000,000 unregistered common shares of the Company. The value
         of the common shares was $500,000  based on the closing market price of
         the Company's common shares as of May 11, 2006 ($0.50 per share).

         In  accordance  with  EITF  Issue  96-19,  Debtor's  Accounting  for  a
         Modification or Exchange of Debt Instruments, the exchange of the notes
         discussed above was considered to result in a  substantially  different
         debt instrument.  Accordingly, the transaction will be accounted for as
         a debt  extinguishment  of the original  notes and the new note will be
         recorded at fair value. As of the date of  extinguishment,  the Company
         will  record  a loss  on  extinguishment  of  debt  of  $500,000  which
         represents  the fair  value of the common  shares  issued to effect the
         exchange transaction.

                                       23
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               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



Item 2.  Management's Discussion and Analysis or Plan of Operations

This Management's  Discussion and Analysis or Plan of Operations ("MD&A") should
be read  in  conjunction  with  our  interim  condensed  consolidated  financial
statements and notes thereto which appear elsewhere in this Quarterly Report and
the MD&A contained in our Annual Report on Form 10-KSB filed with the Securities
and Exchange  Commission (the "SEC") on April 3, 2006. The following  discussion
contains forward-looking  statements and should also be read in conjunction with
"Forward-looking  statements"  below.  All  amounts  presented  in the  MD&A are
rounded to the nearest thousand dollars.

Overview

We own  patented and other  proprietary  technology  used to emboss  flowers and
other products.  The technology allows end users to request  personalized floral
arrangements  using  standardized or unique  messages,  logos,  trademarks,  and
pictures. In addition to our own production, we have licensed that technology to
large  wholesale  flower  concerns  and other  parties  to  perform  the  actual
embossing  of  flowers.  In the United  States,  we sell  embossed  flowers  and
bouquets  containing  embossed  flowers  directly  to  individuals,  businesses,
florists,  chain stores,  funeral  homes and large  wedding and corporate  event
planners  with  production  and  fulfillment  primarily  provided  by us  and by
licensed  wholesale  flower  providers.  We have  recently  developed  a  retail
distribution model and have begun to offer area development and franchise rights
for sale in those  jurisdictions  which do not require regulatory  approval.  We
have also  licensed the  technology  and  equipment  to  exclusive  licensees in
international  markets  and we are  beginning  to  offer  area  development  and
franchise rights for sale internationally.

Set forth below are comparisons of financial statement information for the three
month periods ended March 31, 2006 and March 31, 2005.  Interim  results are not
necessarily indicative of results for future quarters or the full fiscal year.

Results of Operations

Sales
-----

Sales for the three months ended March 31, 2006 were $461,000  compared to sales
of $440,000 for the three months ended March 31, 2005.  Product  (flower)  sales
were  $370,000  for the three  months  ended March 31, 2006 and $385,000 for the
comparable  period in 2005.  License fees and other revenue were $75,000 for the
three months ended March 31, 2006 and $44,000 for the comparable period in 2005.
Royalties were $16,000 for the three months ended March 31, 2006 and $11,000 for
the three months ended March 31, 2005. The slight decrease of $15,000 in product
sales,  the  increase  of  $31,000 in license  fees and other  revenue,  and the
increase of $5,000 in royalties are all attributable to our increasing  emphasis
on  licensing  and  franchising  while  striving to sustain and grow our product
sales even though we have allocated  proportionately fewer resources toward that
effort.

During  the  three  months   ended  March  31,  2006,   we  entered  into  three
international  license  agreements.  In  each  case,  the  licensee  paid  us  a
non-cancelable fee and was granted a license to use our technology to distribute
imprinted  floral products  within a geographical  region for initial periods of
from 2 to 4 years. The total contract value of the three agreements is $625,000.
Of that  amount,  during  the  first  three  months  ended  March 31,  2006,  we
recognized revenue of $43,000.  The balance of $582,000 was recorded as deferred
revenue.

                                       24
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



These agreements extend our presence into the following  regions:  South Africa,
Namibia, Botswana,  Swaziland,  Lesotho, Zimbabwe,  Mozambique, Spain, Portugal,
India, and Kenya.

Cost of goods sold
------------------

Cost of goods  sold for the  three  months  ended  March 31,  2006 was  $354,000
compared to $383,000 for the three  months  ended March 31, 2005.  Cost of goods
sold  consisted  primarily  of  purchases  of roses and the  labor and  supplies
necessary  to  emboss  and ship  them.  The  ratio  of cost of  goods  sold as a
percentage  of product  sales  improved  slightly  between  the two  comparative
periods,  but the ratio is still much  higher  than our  targets due to the fact
that we have invested in production  capability  anticipating higher sales which
have not materialized as projected.

General and administrative
--------------------------

General and  administrative  expenses  were  $715,000 for the three months ended
March 31, 2006 and  $365,000  for the three  months  ended March 31,  2005.  The
increase in general and  administrative  expenses when comparing the two periods
totals  $350,000.  Of this  total,  $146,000 is  attributable  to an increase in
professional fees which consists of increased consulting and legal fees incurred
in support of our increasing  focus on  franchising  and retailing and increased
accounting fees due to a change in our independent  registered public accounting
firm.  Furthermore,  $71,000 of the total  change in general and  administrative
expenses is attributable  to increased  salaries and wages due to an increase in
our executive staff including a new president,  chief financial  officer,  chief
operating officer, and information systems personnel. In addition,  compensation
expense  increased  between the two  comparative  periods due to our adoption of
SFAS No.  123R  which  requires  us to expense  the fair value of stock  options
granted to employees in exchange for employee  services,  whereas  previously we
had recognized  such expense only on a pro forma basis.  The amount of increased
compensation  expense  for the three  months  ended  March  31,  2006 due to our
adoption of SFAS No. 123R is $49.000.

Sales and marketing
-------------------

Sales and marketing  expenses were $242,000 for the three months ended March 31,
2006 and $595,000  for the three  months  ended March 31, 2005.  The decrease of
$353,000  when  comparing the two periods is due to a reduction in our sales and
marketing  personnel.  Despite  this  reduction  in staff,  we have been able to
sustain  our  revenues  for  the  first  three  months  of  2006  at the  levels
experienced  for the  comparative  period  in 2005  while  allocating  increased
managerial resources and focus on the execution of our retailing strategy.

Research and development
------------------------

Research and development  expenses were $37,000 for the three months ended March
31, 2006 and $6,000 for the three months  ended March 31, 2005.  The increase in
research and development  expenses for the two comparative periods is due to our
increasing  investment  in  our  franchising  and  retailing  strategy  and  the
associated development expenses. Comparatively fewer resources were dedicated to
research  and  development  in the three  months ended March 31, 2005 due to our
primary focus then on direct product sales in our various sales channels.

                                       25
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY


Other income (expense)
----------------------

Other  expense for the three months ended March 31, 2006 was $597,000 and $3,000
for the three months ended March 31, 2005. The increase in other expense for the
two comparative  periods of $594,000 is due almost  exclusively to a significant
increase in  interest  expense of $505,000  between  the two  periods.  Interest
expense  totaled  $3,000 for the three  months ended March 31, 2005 and $508,000
for the three months ended March 31, 2006.  The increase in interest  expense is
attributable  to higher  levels of interest  bearing debt during the first three
months of 2006, the recording of a beneficial conversion feature associated with
the restructuring of certain loans payable to shareholders,  the amortization of
beneficial conversion features recorded in earlier periods, and the recording to
interest expense of a beneficial conversion feature associated with the transfer
of area development  rights deposits to development loan status. Of the $505,000
increase  in  interest  expense  for the two  comparative  periods,  $363,000 is
attributable to the beneficial conversion feature associated with this transfer.
The beneficial  conversion  feature was immediately  expensed at the time of the
conversion  because the principal and accrued  interest of the development  loan
are due on demand and convertible into our common shares at any time.

Net loss
--------

Our net loss for the three months  ended March 31, 2006 and 2005 was  $1,484,000
or $.05 per common share and $913,000 or $.03 per common share, respectively. As
noted  previously in this MD&A, the results of operations  with respect to sales
and  operating  expenses do not differ  greatly when  comparing the two periods.
Indeed, the operating loss for the three months ended March 31, 2006 is $887,000
and $909,000  for the three  months  ended March 31, 2005, a difference  of only
$22,000.  The  increase  in our net  loss of  $571,000  for the two  comparative
periods is entirely  due to the  increase in interest  expense,  the majority of
which is non-cash in nature as explained above.

Liquidity and Capital Resources

Cash
----

We had cash of $110,000 invested in demand deposits as of March 31, 2006 to fund
operations and capital expenditures and we will require additional financing. If
we  acquire  that  funding   through  the  issuance  of  equity  or  convertible
securities,  our shareholders may experience  dilution in the value per share of
their equity securities. If we acquire the funding through the issuance of debt,
that  financing  could  result in a  substantial  portion of our cash flows from
operations  being  dedicated  to the payment of  principal  and interest on that
indebtedness,  and could render us more vulnerable to competitive  pressures and
economic  downturns.  We can give no  assurances  that we will be able to obtain
additional  financing,  either  through  debt  or  equity,  on  terms  that  are
acceptable  to us,  or at all.  Any  additional  sale of  common  stock  or debt
securities would result in additional dilution to our shareholders.

Cash Flows
----------

Cash flows used in operating  activities  were $(612,000) and $(565,000) for the
three months ended March 31, 2006 and 2005, respectively.  Because our operating
cash flows are currently insufficient to fund our operations,  we have relied on
funding from our directors and stockholders, as described below.

                                       26
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY


Capital expenditures
--------------------

Capital  expenditures totaled $54,000 for the three months ended March 31, 2006,
up from $51,000 for the three months ended March 31, 2005.  Expenditures  during
the first three months of 2006 were primarily for computer  equipment,  computer
software, furniture and fixtures, and patent and trademark applications.

Financing
---------

As of the date of this Form 10-QSB, we have been unable to obtain financing from
external sources under terms which we deem to be reasonably acceptable,  and the
revenues  generated from our operations are  insufficient for our current needs.
Consequently,  certain of our directors and shareholders  have extended debt and
convertible  debt financing to us as described in Notes 6 and 7 to our condensed
consolidated financial statements. During the three months ended March 31, 2006,
we  received  an  additional  $740,000  in loans  from a member  of the Board of
Directors who is also a significant  stockholder which materially  increased the
amount of our total debt.

The total amount of notes payable and convertible  notes payable as described in
this Form 10-QSB has significantly increased our debt and will likely negatively
affect our ability to raise additional funds.  While we are attempting to obtain
additional  commitments from our directors and certain  shareholders to continue
to fund our operations beyond those  commitments  described herein, no assurance
can be given nor relied upon that we will be able to obtain such  commitments on
terms  and  conditions  reasonably  acceptable  to us or that we will be able to
continue  to operate as a going  concern.  Our  expenses  continue to exceed our
revenues by a significant margin. Accordingly, until such time as we are able to
operate  profitably,  we can  give no  assurance  that  we  have  or  will  have
sufficient  capital  resources  or  liquidity  to satisfy  working  capital  and
operating requirements.

We have not achieved  quarterly or annual  profits as either SRII or as Speaking
Roses,  LLC. Our ability to continue as a going  concern is  dependent  upon our
ability to generate  future profits and to generate  sufficient  capital to meet
our obligations on a timely basis. During the three months ended March 31, 2006,
we  incurred  a net  loss of  $1,484,000.  Net  cash  flows  used  in  operating
activities during the three months ended March 31, 2006 were $612,000.

Estimated  capital  expenditures for the nine months beginning April 1, 2006 are
approximately  $200,000.  We  believe we will be able to plan and  minimize  our
capital  and  operating  spending  in the  future by  varying  the extent of our
licensing activities,  hiring practices,  geographical expansion,  and marketing
activities.  If we elect to slow the speed, or narrow the focus, of our business
plan, we may be able to reduce our capital  expenditures and losses.  Our actual
ability to execute our proposed business plan will depend on a number of factors
including:

         o    the acceptance of our floral embossing process in the market place
              at profitable prices;

         o    the success of our retail business strategy;

         o    our ability to protect our intellectual property;

         o    our ability to continue to raise capital; and

                                       27
<PAGE>

         o    factors  over  which  we  have  little  or  no  control,  such  as
              regulatory  changes,  changes  in  technology,  failures  by third
              parties  to meet  their  contractual  obligations  or  significant
              changes in the competitive environment in which we will operate.

Our actual costs and revenues can vary from the amounts that we expect or budget
in our business plan,  possibly  materially,  and those variations are likely to
affect our  ability to generate a profit or our need for  additional  financing.
Accordingly,  we can give no assurance  that our actual debt and equity  capital
needs  will  not  exceed  the  anticipated  amounts  that are  available  to us,
including from our  affiliates,  directors,  and  stockholders,  and new outside
parties.

The unaudited condensed  consolidated  financial statements included herein have
been prepared assuming we will continue as a going concern,  which  contemplates
the  realization  of assets and the  satisfaction  of  liabilities in the normal
course of business.  We have incurred  cumulative net losses of $10,139,000  and
net losses of $1,484,000  and $913,000 for the three months ended March 31, 2006
and 2005, respectively.

The above factors raise  substantial doubt that we will be able to continue as a
going  concern  unless  we are  able to  generate  sufficient  cash  flows  from
operating  activities  to meet  our  obligations  as  they  come  due or  obtain
additional debt or equity financing.

The unaudited  condensed  consolidated  financial  statements do not include any
adjustments  relating to the recoverability and classification of asset carrying
amounts or the amount and  classification of liabilities that might be necessary
should we be unable to continue as a going concern.

Forward-looking statements

This report includes  forward-looking  statements  within the meaning of Section
27A of the  Securities  Act and Section 21E of the  Securities  Exchange  Act of
1934, as amended (the "34 Act"). Although we believe our expectations  regarding
future  events  are based on  reasonable  assumptions  within  the bounds of our
knowledge,   these   forward-looking   statements   are  subject  to  risks  and
uncertainties  that  could  prevent  our goals from  being  achieved.  Important
factors that could cause actual results to differ  materially  from those in the
forward-looking  statements include the effects of competition,  legislative and
regulatory  developments,  conditions of the capital  markets and equity markets
and, in general,  our ability to achieve the goals  described  in this report as
well as other factors contained in other cautionary  statements included in this
report.

Certain  statements  contained in this  report,  including  without  limitation,
statements   containing   the   words   "may,"   "will,"   "expects,"   "plans,"
"anticipates,"  "believes," "intends," "estimates,"  "projects," "potential," or
"continue" and similar types of expressions  identify such statements,  although
not  all   forward-looking   statements   contain   these   identifying   words.
Forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause our actual results,  performance or achievements to
be materially  different from any future  results,  performance or  achievements
expressed   or  implied  by  the   forward-looking   statements.   Those  risks,
uncertainties and other factors include, among others, the following:

         o    our  ability  to develop a  presence  in the  market  and  sustain
              profitable operations;

         o    the acceptance by the public of our product and retail concept;

                                       28
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



         o    the availability  and terms of the additional  capital required to
              fund our operations as needed;

         o    performance by third parties of their  contractual  obligations to
              us;

         o    our ability to manage growth and retail operations;

         o    technological changes; and

         o    competitive factors.

All  forward-looking  statements speak only as of the date of this report. We do
not undertake any  obligation to update or revise  publicly any  forward-looking
statements, whether as a result of new information,  future events or otherwise.
Although we believe that the plans,  intentions and expectations reflected in or
suggested by the forward-looking  statements made in this report are reasonable,
we can give no assurance  that such plans,  intentions or  expectations  will be
achieved. Given these uncertainties,  prospective investors are cautioned not to
place undue reliance on such forward-looking  statements.  Readers and potential
investors should  carefully  review the risk factors  described in this document
and in other  documents that Speaking Roses  International,  Inc. and subsidiary
files from time to time with the Securities and Exchange Commission,  including,
but not limited to, our annual report on Form 10-KSB for the year ended December
31, 2005.


                                       29
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



Item 3. Controls and Procedures

In accordance with the rules  promulgated under the 1934 Act, our management has
evaluated,  with the  participation of our president and chief executive officer
and our chief financial  officer,  the effectiveness of the design and operation
of our disclosure  controls and  procedures (as defined in Rule 13a-15(e)  under
the 1934 Act) as of the end of the fiscal  quarter  ended  March 31,  2006 ("the
Evaluation Date").  Based upon our evaluation of these disclosure  controls,  at
the Evaluation  date, we concluded  that our disclosure  controls and procedures
are not  effective  to ensure that  information  required to be disclosed in the
reports that we file under the 1934 Act is recorded,  processed,  summarized and
reported within the time periods  specified by the SEC's rules and  regulations.
Based  on this  evaluation,  we  concluded  that  our  disclosure  controls  and
procedures  are not  effective  due to: 1)  adjustments  required to correct the
accounting  for certain  debt and equity  transactions  which was also noted and
previously  disclosed  in our annual  report on Form 10-KSB as of  December  31,
2005;  2) failure to timely file  certain  Current  Reports on Form 8-K;  and 3)
failure to timely file certain Form 3, Initial Statement of Beneficial Ownership
of Securities; Form 4, Statement of Changes in Beneficial Ownership; and Form 5,
Annual  Statement of Changes in Beneficial  Ownership.  We are in the process of
improving our internal control and related disclosures in an effort to remediate
these deficiencies  through improved  supervision and training of our accounting
staff.  These deficiencies have been disclosed to our audit committee and to our
independent  registered public  accounting firm.  Additional effort is needed to
fully remedy these deficiencies and we are continuing our efforts to improve and
strengthen  our  control  processes  and  procedures.   Our  management,   audit
committee,  and directors will continue to work with our independent  registered
public  accounting  firm and other outside  advisors to ensure that our controls
and procedures are adequate and effective.

During the first fiscal  quarter ended March 31, 2006,  changes were made to our
inventory  tracking  procedures,  our  sales  reporting  procedures,  and to the
implementation  and use of our new accounting  software that we anticipate  will
materially improve, or are reasonably likely to materially improve, our internal
controls over financial reporting.

Our management,  including our chief  executive  officer and our chief financial
officer,  does not expect that our  disclosure  controls and  procedures  or our
internal  controls will prevent all error and all fraud.  A control  system,  no
matter how well  conceived and operated,  can provide only  reasonable,  but not
absolute,  assurance that the objectives of the control system are met. Further,
the design of a control  system must  reflect  the fact that there are  resource
constraints,  and the benefits of controls must be considered  relative to their
cause. Because of the inherent limitations in all control systems, no evaluation
of  controls  can  provide  absolute  assurance  that  all  control  issues  and
incidences of fraud, if any, within a company have been detected. These inherent
limitations  reflect the fact that judgments and  decision-making  can be faulty
and that breakdowns can occur because of simple error or mistake.  Additionally,
controls  can be  circumvented  by the  individual  acts  of  some  persons,  by
collusion of two or more people, or by management override of the controls.  The
design  of any  system  of  controls  also  is  based,  in  part,  upon  certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future conditions.  Over time, controls may become inadequate because of changes
and conditions,  or the degree of compliance with the policies or procedures may
deteriorate.  Because of the inherent  limitations in a cost  effective  control
system, errors and fraud may occur and still not be detected.


                                       30
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



PART II  OTHER INFORMATION

Item 1.   Legal Proceedings

None

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2006,  the Company issued 250,000 shares
of its $.001 par value common stock to two  accredited  investors as  additional
consideration  in accepting  the terms of an exchange  agreement to  restructure
notes  payable to  stockholders.  The  Company  believes  the  issuance of these
securities was exempt from the  registration  requirements of the Securities Act
of 1933,  as  amended  (the "33  Act"),  pursuant  to  Sections  4(2) and  other
provisions  of the  33  Act.  The  investors  were  "accredited  investors"  and
represented  that they were  accepting  the  common  shares for  investment  and
without  a view to their  distribution  in  violation  of the  federal  or state
securities  laws,  and that they  understood  that the common  shares were being
issued in reliance upon exemptions from registration under the federal and state
securities laws and that they were, therefore,  "restricted  securities" subject
to  significant  restrictions  on  transfer.  The  certificates  evidencing  the
securities bear a standard restrictive legend.

Item 3.   Defaults Upon Senior Securities

None

Item 4.  Submission of Matters to a Vote of Security Holders

None

Item 5.  Other Information

Advisory  Agreement.  On January 6, 2006,  the Company  entered into an Advisory
Agreement (the "Advisory  Agreement") with BayHill Group LC ("BayHill") pursuant
to which  BayHill has agreed to assist the Company in  developing  business  and
financial  strategies and in furthering its investor  relations  activities (See
Exhibit 10.3).  The Advisory  Agreement will terminate on June 30, 2006,  unless
extended  for  additional  six month  periods  by the  mutual  agreement  of the
parties.

Pursuant to the Advisory Agreement,  the Company agreed to pay $5,000 to BayHill
in connection with services provided to the Company by BayHill during the period
between  December 19 and  December  31,  2005,  which fee is payable on June 30,
2006, and the Company has agreed to pay $10,000 each month to BayHill during the
term of the Advisory Agreement for its services.  The Company has also agreed to
reimburse  BayHill  for all  reasonable  expenses  incurred in  connection  with
BayHill's performance of the services on behalf of the Company. In addition, the
Company  has agreed to issue to BayHill a warrant to purchase  1,200,000  common
shares  of the  Company  at an  exercise  price of  $0.75  per  common  share in
principal face amount.  The warrant is  exercisable  for a period of five years,
and will vest on  January 6, 2010,  subject  to earlier  vesting  based upon the
achievement  of certain  milestones  to be  contained  in the  warrant  and more
particularly described in the Advisory Agreement.


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<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



Executive Employment Agreement.  On January 18, 2006 the Company entered into an
executive  employment  agreement  with Bradley E. Wittwer,  its Chief  Financial
Officer (See Exhibit 10.4). Mr. Wittwer's  employment agreement provides for his
continued   employment  for  two  years  following  a  change  of  control  (the
"Employment  Period") in  essentially  the position  held prior to the change of
control  and at an annual  base  salary and  average  annual  bonus based on the
salary paid during the last  fiscal year and the bonus paid in  accordance  with
the Company's practice prior to the change of control.  In addition,  during the
Employment  Period,  Mr.  Wittwer is entitled to  participate  in all retirement
plans,  benefit plans and other employee  benefits in effect prior to the change
of control.

Upon  termination  of employment  by the Company  following a change of control,
other than for death,  disability or cause,  Mr.  Wittwer is entitled to receive
the sum of (i) his base salary and bonus through the date of  termination,  (ii)
any accrued or deferred compensation or benefits, (iii) an amount equal to twice
his annual base salary and target bonus, and (iv) continued  coverage during the
remainder of the Employment Period under the Company's benefit plans,  programs,
practices or policies.  If termination of Mr.  Wittwer's  employment  occurs for
reasons unrelated to a change of control and is for other than death, disability
or cause, he is entitled to receive his base salary and bonus through the stated
term of the  agreement,  together with any accrued or deferred  compensation  or
benefits.

If Mr.  Wittwer's  termination  of  employment  occurs  by  reason  of  death or
disability,  he is entitled to payment of his base salary and bonus  through the
date of  termination,  any  deferred  or accrued  benefits,  and other  death or
disability benefits. If he is terminated for cause during the Employment Period,
the Company is obligated  to pay to him his annual base salary  through the date
of termination,  the amount of any  compensation  previously  deferred,  and any
other benefits due through the date of  termination,  in each case to the extent
not previously paid.


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<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



Item 6.  Exhibits and Reports on Form 8-K

(A) EXHIBITS

The  exhibits  listed below are hereby  filed with the  Securities  and Exchange
Commission  as part of this  Quarterly  Report on Form  10-QSB.  Certain  of the
following  exhibits have been previously  filed with the Commission  pursuant to
the  requirements  of the 33 Act or the 34 Act. Those exhibits are identified by
the parenthetical  references following the listing of each such exhibit and are
incorporated  herein by  reference.  We will  furnish a copy of any exhibit upon
request, but a reasonable fee will be charged to cover our expense in furnishing
such exhibit.

     Exhibit                Description
     -------                -----------

      2.1            Agreement   and   Plan   of   Merger   between   Millennium
                     Electronics, Inc. and Speaking Roses International, Inc.(1)

      3.1            Articles of Incorporation of Speaking Roses  International,
                     Inc (1)

      3.2            Bylaws of Speaking Roses International,  Inc. as amended on
                     October 19, 2005 (2)

      10.1           Contribution  Agreement  between  Speaking  Roses,  LLC and
                     Millennium Electronics, Inc. (3)

      10.2           Line of Credit Agreement between the Company and Dos Lagos,
                     LLC dated May 11, 2006

      10.3           Advisory Agreement between the Company and BayHill Group LC
                     dated January 6, 2006 (4)

      10.4 *         Executive  Employment  Agreement  between  the  Company and
                     Bradley E. Wittwer dated January 18, 2006 (5)

      14             Codes of Ethics (6)

      31             Certifications required by Rule 13a-15(e) and 15d-15(e)

      32             Section 1350 Certifications

________________

(1)  Incorporated  by reference from our  information  statement on Schedule 14C
filed December 23, 2003.

(2)  Incorporated  by reference  from our current report on Form 8-K filed March
29, 2006.

(3) Incorporated by reference from our current report on Form 8-K filed February
5, 2004.

(4) Incorporated by reference from our current report on Form 8-K filed February
8, 2006.

(5)  Incorporated by reference from our annual report on Form 10-KSB filed April
3, 2006.

(6)  Incorporated by reference from our annual report on Form 10-KSB filed April
13, 2004.

* Compensatory plan, contract or arrangement

                                       33
<PAGE>
               SPEAKING ROSES INTERNATIONAL, INC. AND SUBSIDIARY



(B) REPORTS ON FORM 8-K

The following reports on Form 8-K were filed during the three months ended March
31, 2006:

      Report Filing Date                       Items Reported

(a)   Current Report on Form         Entry into a Material Definitive Agreement
      8-K filed  February 8,
      8-K filed                      Results of Operations and Financial
                                     Condition

                                     Creation of a Direct Financial Obligation
                                     or an Obligation Under an Off-balance Sheet
                                     Arrangement of Registrant

                                     Unregistered Sale of Equity Securities

(b)   Current Report on Form         Amendments to Articles of Incorporation or
      8-K filed March 29,            Bylaws; Change in Fiscal Year
      2006

SIGNATURES

In accordance with the requirements Exchange Act, the Registrant has duly caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


SPEAKING ROSES INTERNATIONAL, INC.

By:       /s/ John W. Winterholler
          John W. Winterholler
          President and Chief Executive Officer
Date:     May 15, 2006

By:       /s/ Bradley E. Wittwer
          Bradley E. Wittwer
          Chief Financial Officer
Date:     May 15, 2006


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