U.S. SECURITIES AND EXCHANGE COMMISSION
                                 WASHINGTON, DC
                                      20549

                                -----------------

                                   FORM 10-QSB

/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2006



/ /      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                        Commission file number: 001-32134
                                                ---------

                           Z TRIM HOLDINGS, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                        ILLINOIS                     36-4197173
               -------------------------------    ------------------
                (State or Other Jurisdiction of    (I.R.S. Employer
               Incorporation or Organization)     Identification No.)

                  1011 CAMPUS DRIVE, MUNDELEIN, ILLINOIS 60060
                  --------------------------------------------
                    (Address of Principal Executive Offices)

                                 (847) 549-6002
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 / /

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes / / No /X/

The registrant has a single class of common stock, par value $.00005 per share,
of which there were 61,159,357 shares issued and outstanding as of August 9,
2006.

Transitional Small Business Disclosure Format (Alternative 2): Yes / / No /X/

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

See Consolidated Financial Statements beginning on page F-1.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion is intended to assist in understanding the financial
condition and results of operations of Circle Group Holdings, Inc. You should
read the following discussion along with our financial statements and related
notes included in this Form 10-QSB. The following discussion contains
forward-looking statements that are subject to risks, uncertainties and
assumptions. Our actual results, performance and achievements in 2006 and beyond
may differ materially from those expressed in, or implied by, these forward
looking statements.

OVERVIEW

Z Trim Holdings, Inc. was founded in 1994 as Circle Group Entertainment Ltd. The
name was changed in 2006 to Z Trim Holdings, Inc. In 2005, Z Trim Holdings, Inc.
(the "Company") refined its direction from a pioneer of emerging technology
companies where it provided small business infrastructure, funding and
substantial intellectual capital to bring important and timely life-changing
technologies to the marketplace through all phases of the commercialization
process, to a company that will focus its resources primarily on the
manufacture, marketing and sale of Z Trim(R), its zero calorie fat substitute
and other non-Z Trim(R) related products. The company will continue exploring
all available options for its other Z Trim(R) technologies and related assets.

Z Trim(R) is a line of all natural zero calorie fat substitutes originally
developed by the United States Department of Agriculture (USDA). Z Trim(R) is
now sold to consumers for home-use, restaurants, schools, food and fast food
manufacturers, health and wellness centers, and food providers to decrease fat
and calories and increase insoluble fiber in a variety of products. Z Trim(R)
can be used in cheeses, baked goods, meat products, dressings, sauces,
confectionery products and a wide range of other prepared foods. FiberGel
Technologies, a subsidiary of Z Trim Holdings, Inc. owns all exclusive rights to
Z Trim(R) for all fields of use in both the United States and internationally.

The new Mundelein, Illinois plant, built in 2004, was a critical step in our
plan. We needed additional production capacity in order to execute our marketing
plans for the Z Trim(R) and Z-Bind product lines. This, along with the
advancements that we have made within the product development and strategic
marketing areas for our Z Trim(R) and Z-Bind products have positioned us for a
promising future. In order to help us reach our goals, we have assembled an
advisory board comprised of food industry experts, doctors and scientists,
health and fitness professionals, chefs and food formulators.

We are now in the process of executing our marketing plans. The plans include
both wholesale and retail products targeted to food companies, distributors,
restaurants, schools, and consumers. They also include the direct supply of
product, as well as license programs for manufacturers interested in production
in their own plants. We have an aggressive plan to educate both the food
industry and consumers about the uses and benefits of Z Trim(R) products, and we
continue to develop additional products to service these markets.

Z Trim Holdings has accumulated a substantial Intellectual Property Portfolio
for its products and technologies including patents, trademarks, trade secrets
and licensed rights. This portfolio will provide the company with the protection
needed as it moves forward in the competitive business environment. Additional
intellectual property will be added to the portfolio as advances in the existing
technologies and new technologies are developed.

Z-Bind is a registered trademark of Z Trim Holdings, Inc and NATS is a trademark
of Z Trim Holdings, Inc. Z Trim(R) is a registered trademark of FiberGel
Technologies, Inc. Don't Worry Eat Happy is a trademark of FiberGel
Technologies, Inc.

                                       2
<PAGE>
RECENT MATERIAL DEVELOPMENTS


On May 28, 2006, we terminated our November 23, 2005 Letter of Agreement with
George Foreman Enterprises, Inc. ("GFME") following GFME's breach of the
covenant to enter into a definitive agreement. We have also sued GFME for breach
of the parties' nondisclosure agreement and misappropriation of trade secrets.

In February 2006, Circle Group announced that their Board of Directors approved
a change of the company name from Circle Group Holdings, Inc. to Z Trim
Holdings, Inc. After shareholder approval, the name change to Z Trim Holdings,
Inc. took place in June 2006. The Company's trading symbol was also changed from
CXN to ZTM, and the cusip number was changed and new certificates will be issued
to replace all existing shares. In keeping with their efforts to grow the Z
Trim(R) business, the company will focus its resources on Z Trim(R) and Z
Trim(R) related products, while exploring all available options for its other
non-Z Trim(R) technologies and related assets.

On May 2, 2006, the Company announced that it will issue a "D-Share" to all
non-company insiders in exchange for the shareholders' presentation of common
stock certificates. Under the plan as originally conceived Holders of the
D-Share would receive a pro-rata cash dividend calculated on 10% of the after
tax profits from future licensing of the Z Trim process to food manufacturers
for as long as the shares were held by the original holder.

The Company is not pursuing the "D-Share" plan as originally announced in May
2006. The Company is developing an alternative plan. The specifics of the plan
will be released at a later date.

Market demand for Z Trim(R) is escalating, driven by the convergent triangle of
consumer demand, market response, and government interest in healthier food
favorites.

The food industry's need for a solution such as Z Trim(R) is evident by the
number of Z Trim(R) pilot tests recently undertaken by the food manufacturing
and food service sectors.

We have recently delivered Z Trim(R) orders and sample requests to several large
food companies to use in pilot tests in a variety of their products. We have
also provided Z Trim PlusTM for testing by various players within the food
service industry and healthcare food service operations, including one of the
largest privatized school foodservice contractors in the U.S. Z Trim PlusTM is
being tested in school districts in both inner city and suburban areas of the
Midwest and the east coast.

One of the world's largest producers of fresh fruits and vegetables is testing Z
Trim(R) in dressings for salads and inclusion in some of its value-added
products, such as dressings in packaged salads.

Initial orders for Z Trim(R) have been received and shipped to a major Asian
manufacturer and distributor of seasonings and food ingredients. Z Trim(R) is
also being used by an American hamburger chain in its salad dressings in the
Philippines.

Interest in Z Trim(R) products continues to grow internationally with initial
orders and shipments of corn and oat Z Trim(R) made to a cookie company and a
processed meat manufacturer in South America and to a cookie company in
Australia. We have also provided samples of Z Trim(R) to many companies in
Europe, South America, Asia, Australia, and North America with the companies
currently in various stages of product testing.

During the past year, we have built on the foundation that we previously laid
for the production, marketing, and distribution of our products. With the
growing problem of obesity and the many health problems associated with it, we
feel strongly that the Z Trim(R) products and technologies and the markets that
we are pursuing will pave the way for a bright future for the company.

We have four operating subsidiaries: Fiber-Gel Technologies, Inc.,
thebraveway.com, Inc., operating as The Brave Way Training Systems, On-Line
Bedding Corp., and Z-Amaize Technologies, Inc., and have exclusive worldwide
licenses to the Nutrition Analysis Tool website, Mini-Raman Lidar System, and
ThraxVac technology.

                                       3
<PAGE>
                          SUMMARY OF FINANCIAL RESULTS

RESULTS OF OPERATIONS

THREE AND SIX MONTHS ENDED JUNE 30, 2006 AS COMPARED TO THE SAME PERIODS ENDING
JUNE 30, 2005

Revenues

Revenues decreased 24% for the three months ended June 30, 2006 from $159,792
for the three months ended June 30, 2005 to $121,087. Revenues decreased 15% for
the six months ended June 30, 2006 from $279,392 for the six months ended June
30, 2005 to $236,530. The decrease in revenues was primarily due to the decrease
in product sales. The following table provides a breakdown of the revenues for
our divisions for the periods indicated:

                                        Three months ended June 30,
                                             2006           2005
                                           --------       --------
           Products                        $120,515       $159,109
           Services                             572            683
             Other                                -              -
                                           --------       --------
        Total Revenues                     $121,087       $159,792
                                           ========       ========


                                       4
<PAGE>
Operating expenses

Operating expenses consist of payroll and related costs, stock option expense,
insurance, occupancy expenses, professional fees, and general operating
expenses. Total operating expenses increased by $707,989 or 49% to $2,160,261
for the three months ended June 30, 2006 from $1,452,272 for the three months
ended June 30, 2005. Total operating expenses increased by $1,829,017 or
approximately 61% to $4,831,358 for the six months ended June 30, 2006 from
$3,002,341 for the six months ended June 30, 2005. The increase in operating
expenses was primarily due to the change in the accounting treatment for stock
option expense.

The stock option expense for the three months and six months ending June 30,
2006 was $472,639 and $1,566,139 respectively. There was no stock option expense
for the three and six months ended June 30, 2005.

Other income (expense)

Total other income for the three months ended June 30, 2006 was $55,680
compared to expenses of $959,586 for the comparable period in fiscal 2005. Total
other income for the six months ended June 30,2006 was $61,377 compared to
expense of $946,358 for the comparable period in fiscal 2005. The increase from
other expense to other income was primarily due to a provision of an
uncollectible note receivable of $965,000.

Net loss

The Company reported a net loss for the second quarter of 2006 of $2,199,219 or
$0.04 per share, a 8% decrease in the net loss of $2,407,801 or $0.05 per share
for the second quarter of 2005. For the six months ending June 30, 2006, the
Company reported a net loss of $4,909,918 or $0.09 per share, which is a 23%
increase from the net loss of $3,964,870, or $0.09 per share for the six month
period ending June 30, 2005. This was due primarily to the implementation of the
change in accounting for stock option expense.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2006 we had cash and cash equivalents of $2,935,890 an increase of
$2,910,891 from December 31, 2005. The increase in cash is due to the proceeds
of stock, exercise of options and warrants, collection on notes receivable of
$5,482,012, less used in operations of $2,490,523 and in the purchase of
property and equipment of $55,599. Our total capital lease obligations were
$27,666 at June 30, 2006.

Net cash used by operating activities decreased by 1% to $2,498,120 for the six
months ended June 30, 2006 as compared to $2,528,290 for the six months ended
June 30, 2005. The decreased cash usage was composed of a net loss $4,904,918,
non-cash items, including depreciation and amortization of $324,758, stock
option expense of $1,566,139, and non-cash services of 1,178,554, and for the
net cash used from the net increases and decreases in liabilities and assets of
approximately $662,653.

Net cash used by investing activities was $55,599 for the six months ended June
30, 2006, as compared to net cash used by investing activities of $165,619
for the six months ended June 30, 2005. The decrease was due to reduced
acquisitions of property and equipment for our manufacturing plant in current
year.

                                       4
<PAGE>
Net cash provided by financing activities was $5,464,610 for the six months
ended June 30, 2006 as compared to $2,814,294 for the six months ended June 30,
2005. Net cash provided by financing activities for the six months ended June
30, 2006 was primarily from the proceeds received from sale of stock, options
and warrants exercised and notes receivable for stock subscriptions of
$5,482,012. Net cash provided by financing activities for the six months ended
June 30, 2005 was primarily from sale of our stocks, proceeds from stock
subscription receivable, and from exercising of options and warrants
approximately of $2,827,250.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements as defined in Item 303(c) of
Regulation S-B.

CAUTIONARY STATEMENT FOR FORWARD LOOKING INFORMATION

Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Forward looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital expenditures,
and financing needs and other information that is not historical information.
When used in this report, the words "estimates," "expects," "anticipates,"
"forecasts," "plans," "intends," "believes" and variations of such words or
similar expressions are intended to identify forward-looking statements.
Additional forward-looking statements may be made by us from time to time. All
such subsequent forward-looking statements, whether written or oral and whether
made by us or on our behalf, are also expressly qualified by these cautionary
statements.

Our forward-looking statements are based upon our current expectations and
various assumptions. Our expectations, beliefs and projections are expressed in
good faith and are believed by us to have a reasonable basis, including without
limitation, our examination of historical operating trends, data contained in
our records and other data available from third parties, but there can be no
assurance that our expectations, beliefs and projections will result or be
achieved or accomplished. Our forward-looking statements apply only as of the
date made. We undertake no obligation to publicly update or revise
forward-looking statements which may be made to reflect events or circumstances
after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause actual results to
differ materially from those set forth in, contemplated by or underlying the
forward-looking statements contained in this report. Those risks and
uncertainties include, but are not limited to, our history of operating losses,
risks associated with our incomplete joint venture with George Foreman, lack

                                       5
<PAGE>
thus far of significant market acceptance of our products, the fact that we may
dilute existing shareholders through additional stock issuances, management's
significant ownership of our common stock, our reliance on our intellectual
property, and the potential negative effects of manipulation in the trading of
our common stock. Those risks and certain other uncertainties are discussed in
more detail in the 2005 10-KSB. There may also be other factors, including those
discussed elsewhere in this report, that may cause our actual results to differ
from the forward-looking statements. Any forward-looking statements made by us
or on our behalf should be considered in light of these factors.

ITEM 3. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures (as defined pursuant to
Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934), based on
their evaluation of such controls and procedures as of the end of the period
covered by this report, are effective to ensure that information required to be
disclosed by the Company in the reports it files under the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and Exchange
Commission and that such information is accumulated and communicated to the
Company's management, including its Chief Executive officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company's internal controls over financial
reporting identified in connection with management's evaluation that occurred
during the Company's last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                                       6
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company filed a lawsuit in the U.S. District Court in 2005 to collect the
unpaid principal balance, default interest and attorney fees for a note
receivable, in total an amount in excess of $1,200,000, for stock issued. The
defendants have sold all of the shares they purchased but did not pay for. In
response, on December 27, 2005 those shareholders and a related hedge fund they
own, Pac Bay Financial, filed a lawsuit back against the Company and its
directors and officers. That lawsuit, which is being heard by the same Judge as
in the Company's Note Default case listed above, alleges that oral
misrepresentations were made to induce purchases of stock over an approximate
one and one-half year period. Plaintiffs seek $2 million in compensatory damages
and $5 million in punitive damages. The basis for these damages claims is yet
unknown. The company believes that they have meritorious defenses against this
action, and will continue to vigorously defend it. The claim against the
officers and directors is covered by directors and officers insurance to the
extent that three of the individual officers and directors are covered. The
insurance coverage pays for the defense costs only and provides no indemnity
coverage. The Company has a pending motion to dismiss all of the defendants'
claims. The Company is in the discovery process and a trial date of April 2007
has been tentatively set.

In March 2005 the Company's general contractor that built the manufacturing
plant and installed the equipment filed a mechanics lien for unpaid billings.
The claim represents the construction cost overruns in the build-out of the
facility. The claim was settled for $175,000 in May, 2006.

On November 23, 2005, the Company entered into Letter Agreement (the
"Agreement") with George Foreman Enterprises, Inc. ("GFME") pursuant to which
both parties would form a new limited liability company ("Newco") for the
purpose of promoting the Company's zero calorie fat replacement food ingredient,
Z Trim(R) (the "Joint Venture"). The parties did not reach any definitive
agreement. On May 9, 2006, the Company filed a lawsuit alleging breach of the
Parties' nondisclosure agreement and trade secret misappropriation in the
Circuit Court of the 19th Judicial District, Lake County, Illinois seeking
damages and injunctive relief against George Foreman Enterprises, Inc. On August
3, 2006 the court, based upon a finding that the Company has demonstrated a
likelihood of success on the merits of the case, issued an order granting the
Company a preliminary injunction enforcing the non-disclosure agreement between
the parties.

On July 17, 2006, George Forman Enterprises, Inc. filed a complaint against Z
Trim Holdings, Inc. in the U.S. District Court seeking damages in excess of
$70,000,000 for specific performance, breach of contract, promissory estoppel
and unjust enrichment. The basis for all such claims is the underlying Letter of
Agreement, set forth above. Management believes that the allegations are
frivolous and wholly without merit and will vigorously defend the claim.

On July 6, 2006, the Company filed a patent infringement suit in the United
States District Court for the Western District of Wisconsin seeking unspecified
damages and equitable relief against a manufacturer of a competing product. A
trial date has not been set.

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

In January 2006, the Company commenced a self-underwritten offering of the
Company's common stock for up to $1.24 million. The stock was sold for $31,000
per unit. Each unit consists of 50,000 shares of common stock and 50,000
warrants. The warrants are exercisable at $1.00 per share and expire in three
(3) years
after purchase of the above-described unit. In second quarter, the Company
received proceeds of $55,104 in this offering. The Company determined that all
of the securities sold and issued in the private placement were exempt from
registration under the Securities Act of 1933, as amended (the "Act") pursuant
Section 4(2) of the Act and Rule 506 of Regulation D Promulgated under the Act.
The Company based this determination on the non-public manner in which it
offered the securities and on the representations of the persons purchasing such
securities, which included, in pertinent part, that such persons were
"accredited investors" within the meaning of Rule 501 of Regulation D
promulgated under the Act, and that such persons were acquiring such securities
for investment purposes for their own respective accounts and not as nominees or
agents, and not with a view to resale or distribution, and that each such
persons understood such securities may not be sold to otherwise deposed of
without registration under the Act or an applicable exemption therefrom. The
Company will use the proceeds from this offering for general and administrative
expenses.

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

On June 21, 2006, the Company held a special meeting of shareholders for the
purposes of considering two amendments to the Company's Articles of
Incorporation. The first proposed amendment, to change the Company's name to Z
Trim Holdings, Inc., passed with 44,203,016 shares voting in favor of the
amendment, 157,391 shares voting against or withheld, and 34,555 shares
consisting of broker non-votes or abstentions. The second proposed amendment, to
change the number of votes required to amend the Articles of Incorporation from
two-thirds of the shares entitled to vote on such amendment to a majority of the
shares entitled to vote on such amendment, did not pass. 29,651,177 shares voted
in favor of the amendment, 157,391 shares voted against or withheld, and 34,555
shares consisted of broker non-votes or abstentions.

                                       7
<PAGE>
ITEM 6. EXHIBITS

Exhibit No.                           Description
----------    ----------------------------------------------------------------

3.1(i)         Articles of Incorporation of Circle Group Holdings,
               Inc.[Incorporated by reference to Exhibit 2.1 to Circle Group's
               Registration Statement on Form 10-SB]

3.1(ii)        Bylaws of Circle Group Holdings, Inc. [Incorporated by reference
               to Exhibit 2.2 to Circle Group's Registration Statement on Form
               10-SB]

4.1            Form of Subscription Agreement (filed as Exhibit
               4.1 to the Company's Form 8-K filed on March 30, 2006 and
               incorporated herein by reference).

4.2            Form of Warrant to Purchase Common Stock (filed as Exhibit 4.2 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

4.3            Form of Registration Rights Agreement (filed as Exhibit 4.3 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

10.1           Gregory J. Halpern Employment Agreement [Incorporated by
               reference to Exhibit 6.1 to Circle Group's Registration Statement
               on Form 10-SB]

10.2           Michael Theriault Employment Agreement [Incorporated by reference
               to Exhibit 6.3 to Circle Group's Registration Statement on Form
               10-SB]


                                       8
<PAGE>
10.3           Dana L. Dabney Employment Agreement [Incorporated by reference to
               Exhibit 6.4 to Circle Group's Registration Statement on Form
               10-SB]

10.4 (a)       Circle Group Holdings,Inc. 1999 Stock Option Plan [Incorporated
               by reference to Exhibit 6.6 to Circle Group's Registration
               Statement on Form 10-SB]

10.4 (b)       Circle Group Holdings, Inc. 2004 Equity Incentive Plan
               [Incorporated by reference to Circle Group's Proxy Statement for
               its Annual Meeting conducted on June 16, 2004 and approved by its
               Shareholders on that date]

10.5           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated May 20, 1999 [Incorporated by
               reference to Exhibit 6.7 to Circle Group's Registration Statement
               on Form 10-SB]

10.6           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated June 18, 1999 [Incorporated by
               reference to Exhibit 6.8 to Circle Group's Registration Statement
               on Form 10-SB]

10.7           Promissory Note, Dated November 30, 2002, delivered by Circle
               Group Holdings, Inc. in favor of Edward L. Halpern [Incorporated
               by reference to Exhibit 6.11 to Circle Group's Annual Report on
               Form 10-KSB for the year ended December 31, 2002]

10.8           Asset Purchase Agreement, dated August 27, 2002, by and between
               Circle Group Holdings, Inc. and UTEK Corporation [Incorporated by
               reference to Circle Group's Current Report on Form 8-K filed on
               September 11, 2002]

10.9           Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and Brookhaven Science Associates dated
               March 26 2003 [Incorporated by reference to Exhibit 10.14 to
               Circle Group's Form 10-QSB for the quarter ending September 30,
               2003]

10.10          Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and University of Illinois dated July 9,
               2003 [Incorporated by reference to Exhibit 10.15 to Circle
               Group's Form 10-QSB for the quarter ending September 30, 2003]

10.11          Assignment of License Agreement between Circle Group Holdings,
               Inc. and Brookhaven Science Associates dated July 22, 2003
               [Incorporated by reference to Exhibit 10.16 to Circle Group's
               Form 10-QSB for the quarter ending September 30, 2003]

10.12*         Steve Cohen Employment Agreement

31.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

     * Filed herewith

                                       9
<PAGE>
Z TRIM HOLDINGS, INC. AND SUBSIDIARIES

                  Index to Financial Statements
                  -----------------------------

Consolidated Balance Sheet at June 30, 2006(unaudited).......................11

Consolidated Statement of Operations as of June 30, 2006(unaudited)..........12

Consolidated Statements of Cash Flows as of June 30, 2006(unaudited..........13

Notes to Interim Unaudited Consolidated Financial Statements.................14


                                       10
<PAGE>
Z TRIM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
JUNE 30
<TABLE>
<CAPTION>

                                     ASSETS
Current Assets                                                               2006                2005
                                                                       -----------------   -----------------
<S>                                                                          <C>                   <C>
  Cash and cash equivalents                                            $       2,935,890   $         214,133
  Accounts receivable, net of allowance for doubtful
    accounts of $0 for 2006 and 2005                                              77,960              53,119
  Prepaid expenses and other assets                                              107,728              85,580
  Inventory                                                                      109,700             135,846
                                                                       -----------------   -----------------
    Total current assets                                                       3,231,278             488,678
                                                                       -----------------   -----------------

Property and equipment, net                                                    6,260,134           6,817,678
                                                                       -----------------   -----------------

Other Assets
  Deposits                                                                        11,103              11,103
  Intangible assets, net                                                         511,750             546,083
                                                                       -----------------   -----------------
    Total other assets                                                           522,853             557,186
                                                                       -----------------   -----------------

      TOTAL ASSETS                                                     $      10,014,265   $       7,863,542
                                                                       =================   =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts payable                                                     $         437,407   $         966,896
  Accrued expenses                                                               189,504             332,607
  Capital lease obligations                                                       25,568              33,296
                                                                       -----------------   -----------------
    Total current liabilities                                                    652,479           1,332,799
                                                                       -----------------   -----------------

Long-Term Liabilities,
  Capital lease obligations                                                        2,098              27,666
                                                                       -----------------   -----------------

TOTAL LIABILITIES                                                                654,577           1,360,465
                                                                       -----------------   -----------------

Minority Deficit                                                                       -            (122,088)

Stockholders' Equity
  Common stock, $0.00005 par value; authorized 200,000,000 shares;
   issued and outstanding 60,921,238 shares                                        3,043               2,311
  Common stock to be issued                                                            -                  22
  Additional paid-in capital                                                  47,948,621          39,135,480
  Notes receivable for issuance of stock, net                                    (20,000)           (245,818)
  Unamortized expenses                                                          (613,643)         (1,262,861)
  Accumulated Deficit                                                        (37,958,333)        (30,992,700)
  Treasury stock, at cost                                                              -             (11,269)
                                                                       -----------------   -----------------
TOTAL STOCKHOLDERS' EQUITY                                                     9,359,688           6,625,165
                                                                       -----------------   -----------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $      10,014,265   $       7,863,542
                                                                       =================   =================

        See notes to interim unaudited consolidated financial statements
</TABLE>
                                       11
<PAGE>

Z TRIM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>


                                                             Three Months ended                   Six Months ended
                                                          June 30,                            June 30,
                                                            2006            2005                2006           2005
--------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>            <C>                 <C>             <C>
REVENUES:
  Products                                                   $ 120,515      $ 159,109           $ 232,235       $ 276,684
  Services                                                         572            683               4,295           2,708
--------------------------------------------------------------------------------------------------------------------------
    Total revenues                                             121,087        159,792             236,530         279,392
--------------------------------------------------------------------------------------------------------------------------

COST OF REVENUES:
  Products                                                     215,725        170,807             371,467         315,178
  Services                                                           -          6,496                   -          23,607
--------------------------------------------------------------------------------------------------------------------------
    Total cost of revenues                                     215,725        177,303             371,467         338,785
--------------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES:
  Selling, general and administrative                        1,679,038      1,443,688           3,248,052       2,985,174
  Stock option expense                                         472,639              -           1,566,139               -
  Amortization of intangible assets                              8,584          8,584              17,167          17,167
--------------------------------------------------------------------------------------------------------------------------
    Total operating expenses                                 2,160,261      1,452,272           4,831,358       3,002,341
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
     OPERATING LOSS                                         (2,254,899)    (1,469,783)         (4,966,295)     (3,061,734)
--------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSES):
  Other income                                                  10,500         10,530              21,566          23,530
  Interest income                                               51,429            476              51,429           4,185
  Provision for loan loss                                            -       (965,000)                  -        (965,000)
  Interest expense                                              (6,249)        (5,592)            (11,618)         (9,073)
--------------------------------------------------------------------------------------------------------------------------
    Total other income (expenses)                               55,680       (959,586)             61,377        (946,358)
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
NET LOSS BEFORE MINORITY INTEREST                           (2,199,219)    (2,429,369)         (4,904,918)     (4,008,092)
--------------------------------------------------------------------------------------------------------------------------

Minority interest in losses of subsidiairies                         -         21,568                   -          43,222

--------------------------------------------------------------------------------------------------------------------------
NET LOSS                                                  $ (2,199,219)  $ (2,407,801)       $ (4,904,918)   $ (3,964,870)
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
Net loss per Share - Basic and Diluted                         $ (0.04)       $ (0.05)            $ (0.09)        $ (0.09)
--------------------------------------------------------------------------------------------------------------------------

Weighted Average Number of Shares                           60,779,041     45,461,557          57,626,106      45,048,166
</TABLE>

                                       12
<PAGE>
Z TRIM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
                                                                                    For the Six Months ended June 30,
                                                                                           2006                  2005
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                   <C>
Cash Flows From Operating Activities:
  Net loss                                                                        $    (4,904,918)       $   (3,964,870)
  Adjustments to reconcile net loss to net cash used in operations:
   Minority deficit                                                                                             (43,222)
   Depreciation and amortization                                                          324,758               329,150
   Issuance of common stocks and warrants for services                                    205,700               177,477
   Amortization of noncash expenses                                                       972,854               859,268
   Provision for uncollectible loan loss                                                        -               965,000
   Stock option expense                                                                 1,566,139                     -
   (Increase) decrease in:
     Accounts receivable                                                                  (17,514)               33,346
     Inventory                                                                            (10,913)              (20,104)
     Prepaid expenses and other assets                                                    (22,058)               30,468
   Decrease in:
     Accounts payable and accrued expenses                                               (612,168)             (894,803)
                                                                                  -------------------------------------
   Cash flows used in operating activities                                             (2,498,120)           (2,528,290)

Cash Flows From Investing Activities:
  Purchase of property and equipment                                                      (55,599)             (165,619)
   Cash flows used in investing activities                                                (55,599)             (165,619)

Cash Flows From Financing Activities:
  Net payments on capital lease obligations                                               (17,402)              (12,956)
  Proceeds from stock subscription receviable                                                   -             1,575,000
  Decrease in Note Receivable for Stock                                                   165,000               775,000
  Exercise of options and warrants                                                        160,550               177,250
  Net proceeds from sales of stock                                                      5,156,462               300,000
                                                                                  -------------------------------------

   Cash flows provided by financing activities                                          5,464,610             2,814,294

     Net increase in cash and cash equivalents                                          2,910,891               120,385

Cash and cash equivalents, at beginning of period                                          24,999                93,748
                                                                                  -------------------------------------
Cash and cash equivalents, at end of period                                       $     2,935,890        $      214,133

Supplemental Disclosures of Cash Flow Information:
    Interest paid                                                                 $        11,618        $        3,559

Supplemental schedule of noncash investing and financing activities:
  Issuance of common stock and warrants for services                              $     1,534,879        $            -
  Stock subscriptions and notes receivable incurred for issuance of stock         $             -        $      111,318
  Issuance of common stock for liabilities incurred for equipment purchase        $             -        $      186,582
  Issuance of common stock  to retire note payable                                $             -        $       25,000
  Retirement of treasury stock                                                           $ 11,269        $            -

</TABLE>

                                       13
<PAGE>
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

In 2005, Z Trim Holdings, Inc. (formerly Circle Group Holdings, Inc., the
"Company") refined its direction from a pioneer of emerging technology companies
where it provided small business infrastructure, funding and substantial
intellectual capital to bring important and timely life-changing technologies to
the marketplace through all phases of the commercialization process, to a
company that will focus its resources primarily on the manufacture, marketing
and sale of Z Trim, its zero calorie fat substitute and other Z Trim related
products. The company will continue exploring all available options for its
other non Z Trim technologies and related assets.

The Company has participated in several public and private offerings and has
expanded its business. In 2002, the Company acquired FiberGel Technologies, Inc.
("FiberGel"), which owns an exclusive license to Z Trim, an all-natural,
agriculture-based fat replacement. The Company reorganized its business units
into three reportable segments: food product development, personal safety
training and products and e-tailer.

The Company operates through its FiberGel Technologies, Inc., The Brave Way
Training Systems, Inc., On-Line Bedding Corp., and Z-Amaize Technologies, Inc.
divisions.

A summary of significant accounting policies follows.

Presentation of Interim Information

The financial information at June 30, 2006 and 2005 and for the three and six
months ended June 30, 2006 and 2005 is unaudited, but includes all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for a fair presentation of the financial information set forth herein,
in accordance with accounting principles generally accepted in the United States
("U.S. GAAP") for interim financial information, and with the instructions to
Form 10-QSB and Item 310 (b) of Regulation S-B. Accordingly, such information
does not include all of the information and footnotes required by U.S. GAAP for
annual financial statements. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
Report on Form 10-KSB for the year ended December 31, 2005.

The results for the three and six months ended June 30, 2006 may not be
indicative of results for the year ending December 31, 2006 or any future
periods.

Principle of Consolidation and Presentation

The accompanying consolidated financial statements include the accounts of Z
Trim Holdings, Inc. and its subsidiaries after elimination of all intercompany
accounts and transactions. Certain prior period balances have been reclassified
to conform to the current period presentation.

Use of Estimates

The preparation of the accompanying consolidated financial statements in
conformity with accounting principles generally accepted in the United States
(U.S. GAAP) requires management to make certain 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 period.
Actual results could differ from those estimates.



                                       14
<PAGE>
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Income (Loss) Per Common Share

Basic net income (loss) per share includes no dilution and is computed by
dividing net income (loss) available to common stockholders by the weighted
average number of common stock outstanding for the period. Diluted earnings per
share is computed by dividing net income by the weighted average number of
shares outstanding and, when, diluted, potential shares from options and
warrants to purchase common stock using the treasury stock method. Diluted net
loss per common share does not differ from basic net loss per common share since
potential shares of common stock are anti-dilutive for all periods presented.

Stock Based Compensation

Prior to January 1, 2006, the Company's stock option plans were accounted for
under the recognition and measurement provisions of APB Opinion No. 25 (Opinion
25), "Accounting for Stock Issued to Employees," and related Interpretations, as
permitted by FASB Statement No. 123, "Accounting for Stock-Based Compensation"
(as amended by SFAS No. 148, "Accounting for Stock-Based Compensation Transition
and Disclosure") (collectively SFAS 123). No stock-based employee compensation
cost was recognized in the Company's consolidated statements of operations
through December 31, 2005, as all options granted under the plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant. Effective January 1, 2006, the Company adopted the fair value
recognition provisions of FASB Statement No. 123(R), "Share-Based Payment" (SFAS
123R), using the modified-prospective-transition method. Under that transition
method, compensation cost recognized in 2006 includes: (a) compensation cost for
all share-based payments granted prior to, but not yet vested as of January 1,
2006 based on the grant date fair value calculated in accordance with the
original provisions of SFAS 123, and (b) compensation cost for all share-based
payments granted subsequent to December 31, 2005, based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R).

During the three and six months ended June 30, 2006, as a result of adopting
SFAS 123(R) on January 1, 2006, the Company recognized pre-tax compensation
expense related to stock options of $472,639 and $1,566,139, respectively. The
following table illustrates the effect on net loss and net loss per share if the
Company had applied the fair value recognition provisions of SFAS 123 to options
granted under the Company's stock option plan for the three and six months ended
June 30, 2005. For purposes of this pro forma disclosure, the value of the
options is estimated using the Black-Scholes option-pricing model and is being
amortized to expense over the options' vesting periods.
<TABLE>
<CAPTION>
                                                     Three Months        Six Months
                                                        ended             ended
                                                    June 30, 2005     June 30, 2005
------------------------------------------------    --------------    ---------------
<S>                                                   <C>               <C>
Net loss, as reported                               $   (2,407,801)   $    (3,964,870)

Deduct: Total stock-based employee compensation
 expense determined under the fair value of awards
 net of tax related effects                                608,727          1,104,436
                                                    --------------    ---------------

Pro forma net loss                                  $   (3,016,528)   $    (5,069,306)
                                                    ==============    ===============

Reported net loss per share-basic and diluted     - $        (0.05)   $         (0.09)
                                                    ==============    ===============

Pro forma net loss per share-basic and diluted      $        (0.07)   $         (0.11)
                                                    ==============    ===============
</TABLE>

                                       15
<PAGE>
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

New Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes", ("FIN 48").
This Interpretation clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB
Statement No. 109, "Accounting for Income Taxes." This Interpretation prescribes
a recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. This Interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Company does not expect the adoption of FIN 48 to have a
material impact on its consolidated financial statements.


The FASB has also issued Statements of Financial Accounting Standards No. 155,
"Accounting for Certain Hybrid Financial Instruments-an amendment of FASB
Statements No. 133 and 140" and SFAS No. 156, "Accounting for Servicing of
Financial Assets-an amendment of FASB Statement No. 140" but they will not have
a relationship to the operations of the Company. Therefore a description and its
impact for each on the Company's operations and financial position have not been
disclosed.



NOTE 2-INVENTORY

At June 30, inventory consists of the following:

                                       2006             2005
                                   --------------   --------------
Raw materials                      $      39,635    $      53,396
Work-in-process                            7,206            3,847
Packaging and display                     25,878           46,544
Finished goods                            29,678           32,059
Other                                      7,303                -
                                   --------------   --------------
  Total inventory                  $     109,700    $     135,846
                                   ==============   ==============


NOTE 3-PROPERTY AND EQUIPMENT, NET

At June 30, property and equipment, net consists of the following:



                                                 2006               2005
                                            ----------------  -----------------
Production, engineering and other equipment $     4,521,317   $      4,516,010
Leasehold improvements                            2,658,517          2,629,400
Office equipment and furniture                      601,067            596,847
Computer equipment and related software             324,393            315,794
Construction in process - equipment                 100,976             87,407
                                            ----------------  -----------------
                                                  8,206,270          8,145,458
Accumulated depreciation                         (1,946,136)        (1,327,780)
                                            ----------------  -----------------
Property and equipment, net                 $     6,260,134   $      6,817,678
                                            ================  =================



                                       16
<PAGE>
NOTE 4 - INTANGIBLE ASSETS

During the first six months of fiscal 2006, no significant identified intangible
assets were acquired and no identified intangible assets were impaired. The
following table present details of the Company's purchased intangible assets:


                            Gross
                            Carrying  Accumulated
                            Amount    Amortization     Net
     --------------------  ----------  ------------  ---------
     License Rights to

       Develop Technology  $  420,000  $  (68,250)     351,750
       Website                200,000     (40,000)     160,000
     --------------------  ----------  ----------    ---------
        Total intangibles  $  620,000    (108,250)   $ 511,750
     ====================  ==========  ==========    =========

Amortization of intangibles was $17,166 and $17,166 for the six months ended
June 30, 2006 and 2005, respectively.

Based on the carrying amount of the intangibles as of June 30, 2006, and
assuming no impairment of the underlying assets, the estimated future
amortization is as follows:


                         Years ended December 31,
                         ------------------------------------
                         2006 July 1 to December 31,             $ 17,165
                         2007                                      34,333
                         2008                                      34,333
                         2009                                      34,333
                         2010                                      34,333
                                                                 --------
                         Thereafter                              $511,750
                                                                 ========


NOTE 5- STOCKHOLDERS' EQUITY

Private Placement Offering

On March 24 through 30, 2006, the Company entered into private placement
subscription agreements pursuant to which it sold unregistered shares of our
common stock, par value $0.00005 per share ("Common Stock"), and warrants
exercisable for Common Stock. The Company sold approximately 205 units in the
private placement, with each unit consisting of 40,323 shares of Common Stock.
In addition, investors who invested at least $500,000 in the private placement
received a five-year warrant with an exercise price of $1.00 per share to
purchase a number of shares of Common Stock equal to 10% of the number of shares
of Common Stock purchased (the "Warrants"). In the aggregate the Company sold
8,245,368 shares of Common Stock, and Warrants to purchase an additional 161,292
shares of Common Stock. Proceeds from the sale, net of commissions and fees of
$575,645, totaled $4,536,433. The Company also entered into a registration
rights agreement in connection with the private placement pursuant to which it
has agreed to file with the Securities and Exchange Commission a registration
statement covering the resale of the Common Stock and Common Stock underlying
the Warrants.


                                       17
<PAGE>
NOTE 5 STOCKHOLDERS' EQUITY (CONTINUED)

National Securities Corporation ("National Securities") served as the lead
placement agent in connection with the private placement. National Securities
will receive cash fees in the aggregate of $575,645 and warrants to purchase
824,537 shares of Common Stock on terms which are identical to the Warrants
included in the units except that the exercise price is $0.68 per share and they
contain an assignment provision. In addition, the placement agent's warrant has
registration rights that are the same as those afforded to investors in the
private placement.


The Company determined that all of the securities sold and issued in the private
placement were exempt from registration under the Securities Act of 1933, as
amended (the "Act") pursuant Section 4(2) of the Act and Rule 506 of Regulation
D Promulgated under the Act. The Company based this determination on the
non-public manner in which it offered the securities and on the representations
of the persons purchasing such securities, which included, in pertinent part,
that such persons were "accredited investors" within the meaning of Rule 501 of
Regulation D promulgated under the Act, and that such persons were acquiring
such securities for investment purposes for their own respective accounts and
not as nominees or agents, and not with a view to resale or distribution, and
that each such persons understood such securities may not be sold to otherwise
deposed of without registration under the Act or an applicable exemption there
from.


In January 2006, the Company conducted a self-underwritten offering of the
Company's common stock up to $1.24 million. The stock was sold for $31,000 per
unit. Each unit consists of 50,000 shares of common stock and 50,000 warrants.
The warrants are exercisable at $1.00 per share and expire in three (3) years
after purchase of the above-described unit. The Company sold and issued
1,000,000 shares and received proceeds of $620,000 under the offering.

Exercising of stock warrants and options

During the first six months of 2006, there were 506,400 stock warrants and
options exercised. The Company received total proceeds of $160,550.

"D-Share" Plan

On May 2, 2006, the Company announced that it will issue a "D-Share" to all
non-company insiders in exchange for the shareholders' presentation of common
stock certificates. Under the plan as originally conceived Holders of the
D-Share would receive a pro-rata cash dividend calculated on 10% of the after
tax profits from future licensing of the Z Trim process to food manufacturers
for as long as the shares were held by the original holder.

The Company is not pursuing the "D-Share" plan as originally announced in May
2006. The Company is developing an alternative plan. The specifics of the plan
will be released at a later date.


                                       18
<PAGE>
NOTE 6 - NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per
share:
<TABLE>
<CAPTION>

                                                           Three Months ended                     Six Months ended
                                                                June 30,                              June 30,
                                                         2006              2005                2006              2005
--------------------------------------------------  ---------------- -----------------   ----------------- -----------------
Numerator:
--------------------------------------------------  ---------------- -----------------   ----------------- -----------------
<S>                                                    <C>               <C>                 <C>               <C>
  Net loss                                          $    (2,199,219) $     (2,407,801)   $     (4,904,918) $     (3,964,870)
--------------------------------------------------  ---------------- -----------------   ----------------- -----------------

Denominator:
--------------------------------------------------  ---------------- -----------------   ----------------- -----------------
  Weighted average number of shares outstanding          60,779,041        45,461,557          57,626,106        45,048,166
--------------------------------------------------  ---------------- -----------------   ----------------- -----------------

--------------------------------------------------  ---------------- -----------------   ----------------- -----------------
Net loss per share-basic and diluted                $         (0.04) $          (0.05)   $          (0.09) $          (0.09)
--------------------------------------------------  ---------------- -----------------   ----------------- -----------------
</TABLE>

As the Company incurred net losses for the three and six months ended June 30,
2006, the effect of dilutive securities totaling 4,965,871 and 3,709,516,
respectively, equivalent shares has been excluded from the calculation of
diluted loss per share because their effect was anti-dilutive.

As the Company incurred net losses for the three and six months ended June 30,
2005, the effect of dilutive securities totaling 414,969 and 640,710 equivalent
shares, respectively, has been excluded from the calculation of diluted loss per
share because the effect was anti-dilutive.


NOTE 7 - STOCK OPTION PLAN

The Company has a Stock Option Plan (the Plan) effective January 2, 1999 and
amended in 2004, which provides for the issuance of qualified options to all
employees and non-qualified options to consultants and other service providers.

A summary of the status of stock options issued by the Company as of June 30,
2006 and 2005 is presented in the following table.
<TABLE>
<CAPTION>
                                                   2006                           2005
                                              --------------------------    ---------------------------
                                                               Weghted                        Weghted
                                                  Number       Average           Number       Average
                                                    of        Exercise             of        Exercise
                                                  Shares        Price            Shares        Price
                                              --------------------------    ---------------------------
<S>                                                <C>           <C>               <C>          <C>
Outstanding at beginning of year                   12,892,939    $ 1.03            7,496,750    $ 1.15
Granted                                             2,200,000      1.04            4,892,000      0.59
Exercised                                            (471,400)     0.29           (1,131,556)     0.32
Expired and Cancelled                              (1,120,000)     0.84             (450,000)     1.11
                                              ----------------              -----------------
Outstanding at end of period                       13,501,539    $ 1.08           10,807,194    $ 0.99
                                              ================              =================

Exercisable at end of period                       13,501,539    $ 1.08           10,307,194    $ 0.99
                                              ================              =================

</TABLE>

                                       19
<PAGE>
NOTE 7 - STOCK OPTION PLAN (CONTINUED)

The fair value of each stock option granted is estimated on the date of grant
using the Black-Scholes option valuation model. This model uses the assumptions
listed in the table below. Expected volatilities are based on the historical
volatility of the Company's stock. The risk-free rate for periods within the
expected life of the option is based on the U.S. Treasury yield curve in effect
at the time of grant.
<TABLE>
<CAPTION>
                                                                        2006             2005
                                                                     ------------------------------
<S>                                                                       <C>              <C>
               Weighted average fair value per option granted             $ 0.71           $ 0.44
               Risk-free interest rate                                     4.91%            1.56%
               Expected dividend yield                                     0.00%            0.00%
               Expected lives                                               3.00             3.00
               Expected volatility                                       127.40%          170.49%
</TABLE>


The following table sets forth additional information about stock options
outstanding at June 30, 2006:
<TABLE>
<CAPTION>
                                                     Weighted
                                                     Average            Weighted
              Range of                              Remaining           Average
              Exercise           Options           Contractual          Exercise          Options
               Prices          Outstanding             Life              Price          Exercisable
           ---------------   ----------------    -----------------    -------------    ---------------
<S>         <C>   <C>             <C>                   <C>                 <C>            <C>
            $0.01-$1.50           11,136,539            2.1 years           $ 0.84         11,136,539
            $1.51-$3.00            2,215,000            0.7 years           $ 2.02          2,215,000
            $3.01-$5.00              150,000            0.7 years           $ 4.61            150,000
                             ----------------                                          ---------------
                                  13,501,539            1.8 years           $ 1.08         13,501,539
                             ================                                          ===============
</TABLE>
All stock options granted during 2006 were fully vested.

NOTE 8 - DISSOLVING SUBSIDIARIES


In 2006, the Board of Directors approved to wind down two inactive subsidiaries,
CGI Capital, Inc. and Veridisc Corporation, both of which had no asset or
liabilities as of June 30, 2006.


NOTE 9 - NAME CHANGE


On February 6, 2006, the Board of Directors has approved a change of the company
name from Circle Group Holdings, Inc. to Z Trim Holdings, Inc. The change was
approved by the shareholders. On June 21, 2006 the Company effectively changed
the name to Z Trim Holdings, Inc.


NOTE 10 - DEPARTURE OF DIRECTOR; APPOINTMENT OF PRINCIPAL OFFICER


On March 27, 2006, Edward L. Halpern, age 76, announced his retirement from the
Board of Directors.


Also, at its meeting on March 22, 2006, the Board of Directors promoted Steve
Cohen, formerly Vice-President of Corporate Development, to President, an office
previously held by Greg Halpern. Greg Halpern continues to hold the office of
Chief Executive Officer. Mr. Cohen, age 50, has been employed by Circle Group
since 2002 when he was hired as the director of investor relations. He was
promoted to Vice-President of Corporate Development in 2003. Prior to joining
Circle Group, Mr. Cohen had 25 years' experience at the Chicago Mercantile
Exchange where he worked in various trading pit and back office positions. Mr.
Cohen attended college at the University of Illinois and Oakton Community
College.

                                       20
<PAGE>
NOTE 11- PENDING LITIGATION/SUBSEQUENT EVENTS

The Company filed a lawsuit in the U.S. District Court in 2005 to collect the
unpaid principal balance, default interest and attorney fees for a note
receivable, in total an amount in excess of $1,200,000, for stock issued. The
defendants have sold the shares purchased with the note receivable. In response,
on December 27, 2005 those shareholders and a related hedge fund they own, Pac
Bay Financial, filed a countersuit against the Company and its directors and
officers. That lawsuit, which is being heard by the same Judge as in the
Company's Note Default case listed above, alleges that oral misrepresentations
were made to induce purchases of stock over an approximate one and one-half year
period. Plaintiffs seek $2 million in compensatory damages and $5 million in
punitive damages. The basis for these damages claims is yet unknown. The company
believes that they have meritorious defenses against this action, and will
continue to vigorously defend it. The claim against the officers and directors
is covered by directors and officers insurance to the extent that three of the
individual officers and directors are covered. The insurance coverage pays for
the defense costs only and provides no indemnity coverage. The Company has a
pending motion to dismiss all of the defendants' claims. The Company is in the
discovery process and a trial date of April 2007 has been tentatively set.

In March 2005 the Company's general contractor that built the manufacturing
plant and installed the equipment filed a mechanics lien for unpaid billings.
The claim represents the construction cost overruns in the build-out of the
facility. The claim was settled for $175,000 in May, 2006.

On November 23, 2005, the Company entered into Letter of Agreement (the
"Agreement") with George Foreman Enterprises, Inc. pursuant to which both
parties would form a new limited liability company ("Newco") for the purpose of
promoting the Company's zero calorie fat replacement food ingredient, Z Trim(R)
(the "Joint Venture"). The parties did not reach any definitive agreement. On
May 9, 2006, the Company filed a lawsuit alleging breach of the Parties'
nondisclosure agreement and trade secret misappropriation in the Circuit Court
of the 19th Judicial District, Lake County, Illinois seeking damages and
injunctive relief against George Foreman Enterprises, Inc. On August 3, 2006 the
court, based upon a finding that the Company has demonstrated a likelihood of
success on the merits of the case, issued an order granting the Company a
preliminary injunction enforcing the non-disclosure agreement between the
parties.

On July 17, 2006, George Forman Enterprises, Inc. filed a complaint against Z
Trim Holdings, Inc. in the U.S. District Court seeking damages in excess of
$70,000,000 for specific performance, breach of contract, promissory estoppel
and unjust enrichment. The basis for all such claims is the underlying Letter of
Agreement, set forth above. Management believes that the allegations are
frivolous and wholly without merit and will vigorously defend the claim.

On July 6, 2006, the Company filed a patent infringement suit in the United
States District Court for the Western District of Wisconsin seeking unspecified
damages and equitable relief against a manufacturer of a competing product. A
trial date has not been set.

NOTE 12 - RELATED PARTY TRANSACTIONS

As of June 30, 2006, the Company had a stock subscription receivable of $20,000
from the President related to exercising stock options in 2005.

On April 12, 2006, the Company advanced $2,500 to the President. The advance was
repaid on July 31, 2006.


                                       21
<PAGE>
NOTE 13- GUARANTEES

The Company from time to time enters into certain types of contracts that
contingently require the Company to indemnify parties against third party
claims. These contracts primarily relate to: (i) divestiture agreements, under
which the Company may provide customary indemnifications to purchasers of the
Company's businesses or assets; (ii) certain real estate leases, under which the
Company may be required to indemnify property owners for environmental and other
liabilities, and other claims arising from the Company's use of the applicable
premises; and (iii) certain agreements with the Company's officers, directors
and employees, under which the Company may be required to indemnify such persons
for liabilities arising out of their employment relationship. The terms of such
obligations vary. Generally, a maximum obligation is not explicitly stated.
Because the obligated amounts of these types of agreements often are not
explicitly stated, the overall maximum amount of the obligations cannot be
reasonably estimated. Historically, the Company has not been obligated to make
significant payments for these obligations, and no liabilities have been
recorded for these obligations on its consolidated balance sheet as of June 30,
2006.

In general, the Company offers a one-year warranty for most of the products it
sold. To date, the Company has not incurred any material costs associated with
these warranties.


NOTE 14 - MAJOR CUSTOMERS AND CREDIT CONCENTRATION

The Company's principal customers are wholesale companies. Three customers
accounted for approximately 70% of the Food Product Development segment revenues
for the first two quarters of 2006. Two other customers accounted for
approximately 84% of the E-tailer segment revenues for the first half of 2006.
Management does not believe a significant credit risk exists at June 30, 2006.

The Company maintains cash deposits with major banks, which from time to time
may exceed federally insured limits. The Company periodically assesses the
financial condition of the institutions and believes that the risk of any loss
is minimal.


NOTE 15 - SEGMENT INFORMATION

The Company evaluates its reporting segments in accordance with SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. The Chief
Executive Officer has been identified as the Chief Operating Decision Maker as
defined by SFAS No. 131. The Chief Executive Officer allocates resources to each
segment based on their business prospects, competitive factors, net sales and
operating results.

During the third quarter of 2005, the Company changed the structure of its
internal organization to include three principal operating segments: (i) Food
Product Development, (ii) Personal Safety Training and Products and (iii)
E-tailer. The food product development segment owns the exclusive, worldwide
license to Z Trim(TM). The personal safety training and products segment offers
cost effective self-defense training courses and products with a uniquely
targeted curriculum. The e-tailer segment is a distributor of pillows, blankets,
and other bedding products. The Company also has other subsidiaries that do not
meet the quantitative thresholds of a reportable segment.

The Company reviews the operating segments' income to evaluate performance and
to allocate resources. Operating companies' income for the reportable segments
excludes income taxes, minority interest and amortization of goodwill. Provision
for income taxes is centrally managed at the corporate level and, accordingly,
such items are not presented by segment. The segments' accounting policies are
the same as those described in the summary of significant accounting policies.
Intersegment transactions are recorded at cost.

                                       22
<PAGE>
NOTE 15 - SEGMENT INFORMATION (CONTINUED)

Summarized financial information of the Company's results by operating segment
is as follows:
<TABLE>
<CAPTION>

                                                          Three Months ended                   Six Months ended
                                                              June 30,                               June 30,
                                                      2006               2005                2006               2005
------------------------------------------------------------------------------------    -----------------------------------
Net Revenue:
<S>                                                     <C>                 <C>                <C>                 <C>
  Food Product Development                       $        12,552    $         5,481     $        35,383    $         9,963
  Personal Safety Training and Products                      376                683               3,903              2,279
  E-tailer                                               107,963            153,628             196,852            266,721
                                                 ----------------   ----------------    ----------------   ----------------
Net Revenue by  Reportable Segment               $       120,891    $       159,792     $       236,138    $       278,963
All Other Operating Revenue                                  196                  -                 392                429
------------------------------------------------------------------------------------    -----------------------------------
  Consolidated Net Revenue                       $       121,087    $       159,792     $       236,530    $       279,392
------------------------------------------------------------------------------------    -----------------------------------
Operating Income (Loss):
  Food Product Development                       $      (763,004)   $      (392,125)    $    (1,297,848)   $      (785,148)
  Personal Safety Training and Products                      300                620               3,756              1,696
  E-tailer                                                  (318)              (242)              9,873            (41,807)
                                                 ----------------   ----------------    ----------------   ----------------
Operating Loss by  Reportable Segment            $      (763,022)   $      (391,747)    $    (1,284,219)   $      (825,259)
All Other Operating Loss                              (1,491,877)        (1,078,036)         (3,682,076)        (2,236,475)
------------------------------------------------------------------------------------    -----------------------------------
  Consolidated Operating Loss                    $    (2,254,899)   $    (1,469,783)    $    (4,966,295)   $    (3,061,734)
------------------------------------------------------------------------------------    -----------------------------------
Net Income (Loss) Before Minority Interest:
  Food Product Development                       $      (766,982)   $      (392,137)    $    (1,302,608)   $      (785,844)
  Personal Safety Training and Products                      300                620               3,756              1,696
  E-tailer                                                  (318)              (171)              9,338            (41,533)
                                                 ----------------   ----------------    ----------------   ----------------
Net Loss by  Reportable Segment                  $      (767,000)   $      (391,688)    $    (1,289,514)   $      (825,681)
All Other Net Loss                                    (1,432,219)        (2,037,681)         (3,615,404)        (3,182,411)
------------------------------------------------------------------------------------    -----------------------------------
Consolidated Net Loss Before Minority Interest   $    (2,199,219)   $    (2,429,369)    $    (4,904,918)   $    (4,008,092)
------------------------------------------------------------------------------------    -----------------------------------


                                                  June 30,
Total Assets:                                       2006                2005
-----------------------------------------------------------------------------------
Food Product Development                           $ 5,897,265         $ 6,378,606
Personal Safety Training and Products                      769                 897
E-tailer                                                59,460             113,946
                                              -----------------   -----------------
                                                     5,957,494           6,493,449
All other segments                                   4,056,771           1,370,093
-----------------------------------------------------------------------------------
Consolidated assets                               $ 10,014,265         $ 7,863,542
-----------------------------------------------------------------------------------
</TABLE>

                                       23
<PAGE>

                                   SIGNATURES

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

                                        CIRCLE GROUP HOLDINGS, INC.
                                        (Registrant)

Date:  August 14, 2006
                                         By:  /s/ Gregory J. Halpern
                                              ----------------------------------
                                              Gregory J. Halpern, President and
                                              Chief Executive Officer

                                         By:  /s/ Dana L. Dabney
                                              ----------------------------------
                                              Dana L. Dabney, Chief Financial
                                              Officer

                                       24
<PAGE>
EXHIBIT INDEX

Exhibit No.                           Description
- -----------    ---------------------------------------------------------------

 3.1(i)        Articles of Incorporation of Circle Group Holdings,
               Inc.[Incorporated by reference to Exhibit 2.1 to Circle Group's
               Registration Statement on Form 10-SB]

 3.1(ii)       Bylaws of Circle Group Holdings, Inc. [Incorporated by reference
               to Exhibit 2.2 to Circle Group's Registration Statement on Form
               10-SB]

4.1            Form of Subscription Agreement (filed as Exhibit
               4.1 to the Company's Form 8-K filed on March 30, 2006 and
               incorporated herein by reference).

4.2            Form of Warrant to Purchase Common Stock (filed as Exhibit 4.2 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

4.3            Form of Registration Rights Agreement (filed as Exhibit 4.3 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

10.1           Gregory J. Halpern Employment Agreement [Incorporated by
               reference to Exhibit 6.1 to Circle Group's Registration Statement
               on Form 10-SB]

10.2           Michael Theriault Employment Agreement [Incorporated by reference
               to Exhibit 6.3 to Circle Group's Registration Statement on Form
               10-SB]

10.3           Dana L. Dabney Employment Agreement [Incorporated by reference to
               Exhibit 6.4 to Circle Group's Registration Statement on Form
               10-SB]

10.4 (a)       Circle Group Holdings,Inc. 1999 Stock Option Plan [Incorporated
               by reference to Exhibit 6.6 to Circle Group's Registration
               Statement on Form 10-SB]

10.4 (b)       Circle Group Holdings, Inc. 2004 Equity Incentive Plan
               [Incorporated by reference to Circle Group's Proxy Statement for
               its Annual Meeting conducted on June 16, 2004 and approved by its
               Shareholders on that date]

10.5           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated May 20, 1999 [Incorporated by
               reference to Exhibit 6.7 to Circle Group's Registration Statement
               on Form 10-SB]

10.6           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated June 18, 1999 [Incorporated by
               reference to Exhibit 6.8 to Circle Group's Registration Statement
               on Form 10-SB]

10.7           Promissory Note, Dated November 30, 2002, delivered by Circle
               Group Holdings, Inc. in favor of Edward L. Halpern [Incorporated
               by reference to Exhibit 6.11 to Circle Group's Annual Report on
               Form 10-KSB for the year ended December 31, 2002]

10.8           Asset Purchase Agreement, dated August 27, 2002, by and between
               Circle Group Holdings, Inc. and UTEK Corporation [Incorporated by
               reference to Circle Group's Current Report on Form 8-K filed on
               September 11, 2002]

10.9           Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and Brookhaven Science Associates dated
               March 26 2003 [Incorporated by reference to Exhibit 10.14 to
               Circle Group's Form 10-QSB for the quarter ending September 30,
               2003]

10.10          Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and University of Illinois dated July 9,
               2003 [Incorporated by reference to Exhibit 10.15 to Circle
               Group's Form 10-QSB for the quarter ending September 30, 2003]

10.11          Assignment of License Agreement between Circle Group Holdings,
               Inc. and Brookhaven Science Associates dated July 22, 2003
               [Incorporated by reference to Exhibit 10.16 to Circle Group's
               Form 10-QSB for the quarter ending September 30, 2003]

10.12*         Steve Cohen Employment Agreement


31.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

* Filed herewith

                                       25