UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





QUARTERLY
REPORT UNDER SECTION 13 OR 15(D)


OF THE
SECURITIES EXCHANGE ACT OF 1934





FOR
THE QUARTER ENDED JUNE 30, 2009





COMMISSION
FILE NO. 0-10854




SOMERSET INTERNATIONAL GROUP,
INC.


(Exact
name of Registrant as specified in its charter)




DELAWARE
                        
                        13-2795675(State
      or other jurisdiction of incorporation or organization)
                        
                        (I.R.S.
      Employer Identification  No.)




90
Washington Valley Road, Bedminster, NJ  07921


(Address
of Principal Executive Offices)





Registrant's
Telephone No., including area code:(908)
719-8909








Indicate
by checkmark 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 (“the
Exchange Act”) during the preceding 12 months (or for such shorter period that
the registrant was required to file such report), and (2) has been subject to
such filing requirements for the past 90 days.


Yes x  No
o


(See Note
1B – Basis of Presentation in Notes To Financial Statements)





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).





Yes o  No
o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check
One):




Large
      Accelerated Filer o
            Accelerated
      Filer o
            Non-Accelerated
      Filer o
            Smaller
      Reporting Company x




Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).




Yes o No x




Indicate
the number of shares outstanding of each of the issuer's classes of Common
Stock:




As of
August 14, 2009, there were 23,348,655 shares of the registrant’s Common Stock,
par value $.001 per share, outstanding.













SOMERSET
INTERNATIONAL GROUP, INC. AND SUBSIDIARIES





INDEX TO
FORM 10-Q


(See Note
1B – Basis of Presentation)


June 30,
2009








Part
      I - Financial Information
              PageItem
      1. Financial Statements:Consolidated
      Balance Sheets–June 30, 2009 (Unaudited) and December 31,
    2008
              3Unaudited
      Consolidated Statements of Operations for the Three and Six Months Ended
      June 30, 2009 and 2008
              4Unaudited
      Consolidated Statements of Cash Flows for the Six Months Ended June 30,
      2009 and 2008
              5Notes
      to the Consolidated Financial Statements (unaudited)
              6 -
      12Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations
              13Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk.
              17Item
      4. Controls and Procedures
              18Part
      II - Other Information:Item
      1. Legal Proceedings
              18Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              18Item
      3. Defaults Upon Senior Securities
              18Item
      4. Submission of Matters to a Vote of Security Holders
              18Item
      5. Other Information
              19Item
      6. Exhibits
              19Signatures
              19







2






SOMERSET
INTERNATIONAL GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(SEE
NOTE 1B – BASIS OF PRESENTATION)


JUNE
30, 2009 AND DECEMBER 31, 2008





June
      30,
                      2009
                    
                    
                    December
      31, 2008(Unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                    
                    $
                    36,453
                    
                    
                    $
                    65,732Accounts
      receivable, net
                    
                    
                    649,189
                    
                    
                    
                    645,233Inventories
                    
                    
                    570,318
                    
                    
                    
                    488,156Prepaid
      expenses
                    
                    
                    59,209
                    
                    
                    
                    4,209Other
      current asset
                    
                    
                    9,990
                    
                    
                    
                    10,444Total
      Current Assets
                    
                    
                    1,325,159
                    
                    
                    
                    1,213,774Property
      and equipment, net
                    
                    
                    96,609
                    
                    
                    
                    115,873Other
      Assets:Deposits
                    
                    
                    9,825
                    
                    
                    
                    9,825Deferred
      financing costs, net
                    
                    
                    165,840
                    
                    
                    
                    215,000Customer
      lists, net
                    
                    
                    1,321,811
                    
                    
                    
                    1,619,185Distribution
      agreements, net
                    
                    
                    11,556
                    
                    
                    
                    52,928Goodwill
                    
                    
                    2,200,355
                    
                    
                    
                    2,200,355Total
      other assets
                    
                    
                    3,709,387
                    
                    
                    
                    4,097,293TOTAL
      ASSETS
                    
                    $
                    5,131,155
                    
                    
                    $
                    5,426,940LIABILITIES
      AND STOCKHOLDERS’ (DEFICIT)Current
      Liabilities:Accounts
      payable and accrued expenses
                    
                    $
                    1,509,907
                    
                    
                    $
                    1,264,356Promissory
      notes payable - current
                    
                    
                    1,413,362
                    
                    
                    
                    1,360,561Dutchess
      promissory notes payable - current
                    
                    
                    3,870,600
                    
                    
                    
                    1,023,000Accrued
      interest payable
                    
                    
                    559,264
                    
                    
                    
                    276,865Deferred
      revenue
                    
                    
                    288,626
                    
                    
                    
                    268,081Total
      Current Liabilities
                    
                    
                    7,641,759
                    
                    
                    
                    4,192,863Dutchess
      promissory notes payable – non-current
                    
                    
                    --
                    
                    
                    
                    2,853,407Promissory
      notes – non-current
                    
                    
                    33,711
                    
                    
                    
                    40,499TOTAL
      LIABILITIES
                    
                    
                    7,675,470
                    
                    
                    
                    7,086,769Stockholders’
      (Deficit):Common
      Stock, 200,000,000 shares authorized, $.001 par value, 23,348,655 and
      23,333,655 shares issued and outstanding in 2009 and 2008,
      respectively
                    
                    
                    23,348
                    
                    
                    
                    23,334Capital
      in excess of par value
                    
                    
                    31,367,243
                    
                    
                    
                    31,366,808Accumulated
      deficit
                    
                    
                    (33,934,906
                    )
                    
                    
                    (33,049,971
                    )Total
      stockholders’ (deficit)
                    
                    
                    (2,544,315
                    )
                    
                    
                    (1,659,829
                    )TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT )
                    
                    $
                    5,131,155
                    
                    
                    $
                    5,426,940





The Notes
to the Consolidated Financial Statements are an integral part of these
statements.




3







SOMERSET
INTERNATIONAL GROUP, INC. AND SUBSIDIARIES


(SEE
NOTE 1B – BASIS OF PRESENTATION)


UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS


FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008







Three
      Months Ending
                        June
      30,
                      
                      
                      Six
      Months Ending
                        June
      30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Equipment
      sales
                      
                      $
                      319,487
                      
                      
                      $
                      365,015
                      
                      
                      $
                      756,937
                      
                      
                      $
                      809,319Installation
      and service revenues
                      
                      
                      290,888
                      
                      
                      
                      550,901
                      
                      
                      
                      513,831
                      
                      
                      
                      631,534Contract
      revenues
                      
                      
                      405,690
                      
                      
                      
                      357,561
                      
                      
                      
                      833,248
                      
                      
                      
                      1,084,080Total
      revenues
                      
                      
                      1,016,065
                      
                      
                      
                      1,273,477
                      
                      
                      
                      2,104,016
                      
                      
                      
                      2,524,933Costs
      of goods soldMaterial
      cost of systems sold
                      
                      
                      201,561
                      
                      
                      
                      348,892
                      
                      
                      
                      467,502
                      
                      
                      
                      704,289Install
      and service costs
                      
                      
                      141,334
                      
                      
                      
                      233,826
                      
                      
                      
                      300,334
                      
                      
                      
                      473,549Engineering
      and development
                      
                      
                      30,962
                      
                      
                      
                      35,576
                      
                      
                      
                      60,801
                      
                      
                      
                      71,526Total
      costs of goods sold
                      
                      
                      373,857
                      
                      
                      
                      618,294
                      
                      
                      
                      827,637
                      
                      
                      
                      1,249,364Gross
      margin
                      
                      
                      642,208
                      
                      
                      
                      655,183
                      
                      
                      
                      1,275,379
                      
                      
                      
                      1,275,569Selling,
      general, and administrative expensesSelling,
      general and administrative expense
                      
                      
                      620,468
                      
                      
                      
                      757,760
                      
                      
                      
                      1,396,544
                      
                      
                      
                      1,693,873Depreciation
      expense
                      
                      
                      10,859
                      
                      
                      
                      8,444
                      
                      
                      
                      21,718
                      
                      
                      
                      15,046Amortization
      expense
                      
                      
                      193,955
                      
                      
                      
                      185,224
                      
                      
                      
                      387,910
                      
                      
                      
                      383,193Total
      selling, general, and administrative expenses
                      
                      
                      825,282
                      
                      
                      
                      951,428
                      
                      
                      
                      1,806,172
                      
                      
                      
                      2,092,112Loss
      from operations
                      
                      
                      (183,074
                      )
                      
                      
                      (296,245
                      )
                      
                      
                      (530,793
                      )
                      
                      
                      (816,543
                      )Other
      Income (Expense)Interest
      (expense)
                      
                      
                      (193,724
                      )
                      
                      
                      (119,125
                      )
                      
                      
                      (349,705
                      )
                      
                      
                      (285,532
                      )Other
      (expense)
                      
                      
                      18
                      
                      
                      
                      --
                      
                      
                      
                      18
                      
                      
                      
                      (500
                      )Total
      other income (expense)
                      
                      
                      (193,706
                      )
                      
                      
                      (119,125
                      )
                      
                      
                      (349,687
                      )
                      
                      
                      (286,032
                      )Loss
      before income taxes
                      
                      
                      (376,780
                      )
                      
                      
                      (415,377
                      )
                      
                      
                      (880,480
                      )
                      
                      
                      (1,102,575
                      )Provision
      for (benefit from) income taxes
                      
                      
                      870
                      
                      
                      
                      (11
                      )
                      
                      
                      4,455
                      
                      
                      
                      259Net
      Loss
                      
                      $
                      (377,650
                      )
                      
                      $
                      (415,366
                      )
                      
                      $
                      (884,935
                      )
                      
                      $
                      (1,102,834
                      )Basic
      and diluted net loss per common share
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.04
                      )
                      
                      $
                      (0.05
                      )Weighted
      Average Number of Common Shares
                      
                      
                      23,348,655
                      
                      
                      
                      23,058,655
                      
                      
                      
                      23,348,489
                      
                      
                      
                      23,058,655




The Notes
to the Consolidated Financial Statements are an integral part of these
statements.





4







SOMERSET
INTERNATIONAL GROUP, INC. AND SUBSIDIARIES


(SEE
NOTE 1B – BASIS OF PRESENTATION)


UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR
THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008





2009
                      
                      
                      2008Cash
      Flows From Operating Activities:Net
      (Loss)
                      
                      $
                      (884,935
                      )
                      
                      $
                      (1,102,834
                      )Adjustments
      to reconcile net loss to net cash used by operating
      activities:Depreciation
                      
                      
                      21,718
                      
                      
                      
                      15,046Amortization
                      
                      
                      387,910
                      
                      
                      
                      383,193Changes
      in operating assets and liabilities:Accounts
      receivable
                      
                      
                      (3,956
                      )
                      
                      
                      104,110Inventories
                      
                      
                      (82,162
                      )
                      
                      
                      39,556Other
      current assets
                      
                      
                      454
                      
                      
                      
                      20,838Accounts
      payable and accrued expenses
                      
                      
                      245,545
                      
                      
                      
                      496,448Prepaid
      expense
                      
                      
                      (55,000
                      )
                      
                      
                      3,568Deposits
                      
                      
                      --
                      
                      
                      
                      (9,554
                      )Accrued
      interest payable
                      
                      
                      282,399
                      
                      
                      
                      45,922Deferred
      revenue
                      
                      
                      20,545
                      
                      
                      
                      (6,556
                      )Net
      Cash Provided (Used) by Operating Activities
                      
                      
                      (67,482
                      )
                      
                      
                      (10,263
                      )Cash
      Flows From Investing Activities:Purchase
      of equipment
                      
                      
                      (2,454
                      )
                      
                      
                      (2,971
                      )Net
      Cash Used by Investing Activities
                      
                      
                      (2,454
                      )
                      
                      
                      (2,971
                      )Cash
      Flows From Financing Activities:Payment
      of Dutchess debenture
                      
                      
                      --
                      
                      
                      
                      (158,000
                      )Proceeds
      from issuance stock
                      
                      
                      450
                      
                      
                      
                      --Proceeds
      from issuance of promissory notes
                      
                      
                      80,000
                      
                      
                      
                      --Payment
      of promissory notes payable
                      
                      
                      (37,793
                      )
                      
                      
                      (104,165
                      )Net
      Cash Provided (Used) by Financing Activities
                      
                      
                      40,657
                      
                      
                      
                      (262,165
                      )Net
      Change in Cash  and cash equivalents
                      
                      
                      (29,279
                      )
                      
                      
                      (275,399
                      )Cash
      and cash equivalents at Beginning of the Period
                      
                      $
                      65,732
                      
                      
                      $
                      350,110Cash
      and cash equivalents at End of the Period
                      
                      $
                      36,453
                      
                      
                      $
                      74,711Cash
      paid for interest
                      
                      $
                      72,874
                      
                      
                      $
                      239,148Cash
      paid for taxes
                      
                      $
                      4,455
                      
                      
                      $
                      259Non
      Cash Investing & Financing Activities:Promissory
      note obligation incurred upon acquisition of
    equipment
                      
                      $
                      --
                      
                      
                      $
                      61,187





The Notes
to the Consolidated Financial Statements are an integral part of these
statements.






5





Note
1.  Business and Basis of Presentation





A.           Nature of the
Business




Somerset
International Group, Inc. (the “Company”) is in the business of acquiring
profitable or near term profitable private small and medium sized businesses
that provide proprietary security products and solutions for people and
enterprises – from personal safety to information security – and maximizing the
profitability of our acquired entities and to act as a holding company for such
entities.





Our executive office is located at 90
Washington Valley Road, Bedminster, New Jersey, 07921.





Customers are located primarily in the
northeastern United States.





B.        
   Basis of
Presentation





The
unaudited consolidated financial statements included herein have not been
reviewed by the Company’s independent registered public accounting
firm.  Therefore, these financial statements have not been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Also, they do not include all of the information and footnotes required by
accounting principles generally accepted in the United States for complete
financial statements. The unaudited interim consolidated financial statements as
of June 30, 2009 reflects all adjustments (consisting of normal recurring
accruals) which, in the opinion of management, are considered necessary for a
fair presentation of its financial position as of June 30, 2009 and the results
of its consolidated operations and its consolidated cash flows for the periods
ended June 30, 2009 and 2008.





The
Unaudited Consolidated Statements of Operations for the periods ended June 30,
2009 and 2008 are not necessarily indicative of results for the full
year.








The
unaudited consolidated financial statements should be read in conjunction with
the audited financial statements of the Company and the notes thereto as of and
for the year ended December 31, 2008 as included in the Company’s Form 10-K
filed with the Commission on March 31, 2009.





The accompanying financial statements
have been prepared in conformity with accounting principles generally accepted
in the United States of America, which contemplate continuation of the Company
as a going concern.  This contemplates the realization of assets and
the liquidation of liabilities in the normal course of business. Currently, the
Company does not have significant cash or other material assets, nor does it
have operations or a source of revenue which is adequate to cover its
administrative costs for a period in excess of one year and allow it to continue
as a going concern.  Management is actively involved in exploring
additional business opportunities which they believe will allow the Company to
increase shareholder’s value and allow it to continue as a going concern. The
Company will require financing to fund its current operations and will require
additional financing to acquire or develop other business
opportunities.  These conditions raise substantial doubt about the
Company’s ability to continue as a going concern.  The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.






6





Note
2.  Significant Accounting Policies




A. Cash and cash
equivalents





Cash and
cash equivalents include cash on hand and in the bank, as well as all short-term
securities held for the primary purpose of general liquidity. Such securities
normally mature within three months from the date of acquisition.





B. Accounts
Receivables





Accounts receivables are
uncollateralized customer obligations due under normal trade terms requiring
payment within 30 days from the invoice date.  Accounts receivables
are stated at the amount billed to the customer.  Interest is not
billed or accrued.  Accounts receivables in excess of 90 days old are
considered delinquent.  Payments to accounts receivables are allocated
to the specific invoices identified on the customers remittance advice or, if
unspecified, are applied to the oldest invoice.  The Company has an
allowance for doubtful accounts of approximately $36,000 and $41,000 as of June
30, 2009 and December 31, 2008, respectively, based on its historical
collectability.





C. Property
and  Equipment





Property, equipment, and leasehold
improvements are stated at cost.  Depreciation is provided on a
straight-line method over the estimated useful lives of the assets ranging from
two-seven years.  Leasehold improvements are depreciated over the
lesser of their useful lives or the term of the lease.  Expenditures
for maintenance and repairs are charged to expense as incurred.




D.           Concentration of Credit
Risk:





The Company maintains its cash in bank
deposit accounts at high credit quality financial institutions.  The
balances, at times, may exceed federally insured limits.





Currently,
Secure System, Inc. has five customers which accounted for all of their
revenues. Meadowlands has approximately 200 accounts and Fire Control has
approximately 150 accounts which accounted for all of their
revenues.  While our goal is to diversify Secure’s and Fire Control’s
customer base, Secure expects to continue to depend upon a relatively small
number of customers for a significant percentage of its revenues for the
foreseeable future. Significant reductions in sales to any of our customers may
have a material adverse effect on us by reducing our revenues and our gross
margins.





E.       
    Use of
Estimates:





The preparation of financial statements
in conformity with United States generally accepted accounting principles
requires management to make estimates and assumptions that affect certain
reported amounts and disclosures including the disclosure of contingent assets
and liabilities.  Accordingly, actual results could differ from those
estimates.  Such estimates include the fair value estimates related to
the net tangible and identifiable assets of acquired companies and the estimated
fair value of reporting units used when evaluating Goodwill for
impairment.





F.          
 Income
Taxes:





Deferred income tax assets and
liabilities are recognized for the differences between financial and income tax
reporting basis of assets and liabilities based on enacted tax rates and laws.
The deferred income tax provision or benefit generally reflects the net change
in deferred income tax assets and liabilities during the year. The current
income tax provision reflects the tax consequences of revenues and expenses
currently taxable or deductible on the Company’s various income tax returns for
the year reported. The Company’s deferred tax items are net operating loss
carryforwards, other items, and related deferred tax assets and have been offset
by a valuation allowance for the same amount.






7







G.         
  Fair Value
of Financial Instruments:





The carrying amounts of cash, accounts
receivable, accounts payable, promissory notes payable, and stockholder note
payable approximate fair value because of the terms of these financial
instruments.





H. Reclassifications:





Certain
reclassifications were made to the 2008 financial statements in order to conform
to the 2009 financial statement presentation.  Such reclassifications
had no effect on the prior reported net loss.





I.            
Principles of
Consolidation:





The
consolidated financial statements include the operations of Somerset
International Group, Inc., its wholly owned subsidiaries Fire Control Security
Systems, Inc. and Secure System, Inc., and Secure System Inc.’s wholly owned
subsidiaries Meadowlands Electronics Inc., and Vanwell Electronics
Inc.  All significant intercompany accounts and transactions have been
eliminated in consolidation.





J.         
   Stock Based Compensation and
Stock Sales:





Stock and
warrants issued for employee compensation services have been determined based on
the value of the instrument issued at date of issuance for such
services.  In addition, during 2009 and 2008 the Company issued
warrants as part of certain debt financings and sales of common
stock.  The value of these warrants has been included in additional
paid in capital as part of the value of the overall stock sale.




K.           Revenue
Recognition:





Installation,
subscription and maintenance revenues include installation of equipment and
testing at customer sites, fees for leased wireless equipment, and fees for
equipment maintenance. These revenues are recognized as the services are
performed, or ratably over time in the case of fees that may be billed quarterly
or semi-annually in advance. Revenues related to pre-billed services are
deferred until the service is provided and thereby earned. Equipment revenue is
recognized when the equipment is delivered to the customer. The Company
recognizes revenue only when persuasive evidence of an arrangement exists, when
delivery of merchandise has occurred or services have been rendered, the fee is
established and is determinable and collection is reasonably
assured.





The
Company has three separate and distinct revenue streams – equipment sales,
installation and maintenance.





The
description of each stream is as follows:


·
                  Equipment:


The
pricing for an equipment sale is generally established through a customer
purchase order and is a separate stand-alone arrangement.  Revenue is
recognized for equipment sales upon the delivery of the equipment, which is the
date on which customer becomes responsible for the payment of the
equipment.


8


·
              Installation:


Installation
services are a separate stand-alone arrangement consisting of final connections
of the equipment and individual testing of the equipment pieces.  Such
services occur after electrical work has been contracted and supervised by the
customer, and completed by an outside third party.  Installation
services, when performed by the Company, are separately negotiated with the
customer, and are recognized upon completion of the service by the
Company.





·
              Maintenance:


These are
separately priced contracts that are entered into with a customer typically
after the installation services are performed.  Maintenance services
are not bundled into any other service.  These maintenance services
are recognized as revenues as the services are performed.  These
services are billed at the end of the month after the service is provided or if
provided through a contractual arrangement then pre-billed for the defined
periods, i.e. quarterly, semi-annual, or annual. Deferred Revenue on the
Company’s balance sheet represents amounts billed to customers for maintenance
to be performed in future periods.





L.           
Inventory:





Inventory consists primarily of parts
and work in process products held for sale. Inventory, at year end, is stated at
the lower of cost or market, with cost being determined on a first in/first out
basis.





In
accordance with APB 28, one of the Company’s subsidiaries uses estimated gross
profit rates to determine cost of goods sold during interim
periods.  This is different from the method used at annual inventory
dates.  The other subsidiaries perform physical inventory counts when
calculating quarter-end values.  Historically this has not resulted in
any material adjustment to the cost of goods sold.





M.           Loss Per
Share:




The Company computes net loss per share
under the provisions of SFAS No. 128, “Earnings per Share” (SFAS 128), and
utilizes guidance provided by SEC Staff Accounting Bulletin No. 98 (SAB 98).
Under the provisions of SFAS 128 and SAB 98, basic loss per share is computed by
dividing the Company’s net loss for the period by the weighted-average number of
shares of common stock outstanding during the period. Diluted net loss per share
excludes potential common shares if the effect is anti-dilutive. Diluted
earnings per share are determined in the same manner as basic earnings per share
except that the number of shares is increased assuming exercise of dilutive
stock options and warrants using the treasury stock method. As the Company had a
net loss, the impact of the assumed exercise of the stock options and warrants
is anti-dilutive and as such, these amounts have been excluded from the
calculation of diluted loss per share. For the periods ended June 30, 2009 and
2008, 4,234,753 and 3,018,146 of common stock equivalent shares, respectively,
were excluded from the computation of diluted net loss per share after
considering ownership limitations of certain warrants and conversion
features.





N.           Goodwill and Intangible
Assets:




Goodwill
and intangible assets result primarily from acquisitions accounted for under the
purchase method. In accordance with Statement of Financial Accounting Standards
(“SFAS") No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142")
goodwill and intangible assets with indefinite lives are not amortized but are
subject to impairment by applying a fair value based test. Intangible assets
with finite useful lives related to software, customer lists, covenant not to
compete and other intangibles are being amortized on a straight-line basis over
the estimated useful life of the related asset, generally three to seven
years.  As of June 30, 2009, no impairment charge was
necessary.






9





In accordance with SFAS No.142, the
Company reviews the carrying value of goodwill and intangible assets with
indefinite lives annually or on an interim basis in certain circumstances as
required. The Company measures impairment losses by comparing carrying value to
fair value. The impairment test compares the carrying amount of the reporting
unit to its fair value.  Discounted cash flows are utilized to
determine the fair value of the assets being evaluated.  The
impairment test in 2008 and 2007 supported the carrying value of goodwill, and
as such, no write-down in the carrying value of goodwill was
recorded.





In
accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets," long-lived assets used in operations are reviewed for
impairment whenever events or change circumstances indicate that carrying
amounts may not be recoverable. For long-1ived assets to be held used, the
Company recognizes an impairment loss only if its carrying amount is not
recoverable through its undiscounted cash flows and measures the impairment loss
based on the difference between carrying amount and fair value.




Note
3.  Recent Accounting Pronouncements





In March
2008, the FASB issued Statement of Financial Accounting Standard No. 161 (SFAS
161), “Disclosures about Derivative Instruments and Hedging Activities—an
amendment of FASB Statement No. 133”, which is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after November 15,
2008.  Early application is encouraged.  SFAS 161 changes
the disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash
flows.  The Statement requires that objectives for using derivative
instruments be disclosed in terms of underlying risk and accounting
designation.  In addition, the standard requires tabular disclosure of
fair value of derivative instruments and their gains and loss, requires
disclosure regarding credit risk related contingent features of the Company’s
derivative instruments and requires cross referencing within the footnote
disclosures regarding information about derivative
instruments.   The Company concluded that this pronouncement did
not have a significant impact on its financial condition or results of
operations.





In
December 2007, the FASB issued Statement of Financial Accounting Standard No.
160 (SFAS 160), “Non-Controlling Interests in Consolidated Financial Statements,
An Amendment of Accounting Research Bulletin No. 51”, which is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008.  Early application is not permitted before
that date.  SFAS 160 changes the terminology of minority interests,
which will now be known as non-controlling interest and requires that
non-controlling interests be clearly identified within stockholders’ equity as a
separate component from the parent company’s equity and net income or loss
attributable to non-controlling interests be clearly identified and presented on
the face of the consolidated statement of operations.  In addition,
the standard requires adequate disclosure between interests of the parent
company and interests of the non-controlling equity
holders.   This pronouncement did not have a significant impact
on its financial condition or results of operations.






10







In
December 2007, the FASB revised Statement of Financial Accounting Standard No.
141 (SFAS 141R), “Business Combinations”, which is effective for business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  Early application is not permitted before that
date.  SFAS 141R requires assets and liabilities recorded in a
business combination to be recorded at fair value and replaces the
cost-allocation process under the prior standard.  In addition, SFAS
141R requires separate recognition of acquisition costs and requires recognition
of contractual contingencies at fair value as of the acquisition
date.  Further, the revised standard requires capitalization of
research and development assets and requires fair value recognition of
contingent consideration as of the acquisition date.   The
Company had no business combinations and therefore there has been no impact
related to this pronouncement.





In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS No. 165”), which
provides guidance on events that occur after the balance sheet date but prior to
the issuance of the financial statements. SFAS No. 165 distinguishes events
requiring recognition in the financial statements and those that may require
disclosure in the financial statements. Furthermore, SFAS No. 165 requires
disclosure of the date through which subsequent events were
evaluated.  SFAS No. 165 is effective for interim and annual periods
after June 15, 2009. The Company adopted SFAS No. 165 for the quarter ended June
30, 2009, and have evaluated subsequent events through August 14,
2009.





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles – a replacement of
the FASB Statement No. 162.” (“SFAS No. 168”). SFAS No. 168 stipulates the FASB
Accounting Standards Codification is the source of authoritative U.S. GAAP
recognized by the FASB to be applied by nongovernmental entities. SFAS No. 168
is effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The implementation of this standard is not
expected to have a material impact on our consolidated financial position and
result of operations.





Note
4.  Commitments and Contingencies




The Company has entered into an
employment agreement with the President and CEO that became effective January 6,
2004. The employment agreement had a term of five years. In the event of
termination of employment without cause, the agreement provides that the Company
shall pay severance equaling the greater of the balance of the term of the
agreement or one year’s salary.  On August 29, 2008, the Board of
Directors, with the approval of a majority of the shareholders of the Company
entered into an amendment to extend the employment agreement dated January 6,
2004 for an additional 3 years from January 6, 2009.  On January 6,
2009, the President and CEO signed an additional agreement, in which he agreed
to permanently waive the fiscal 2009 salary increase provided for in his
employment agreement. The additional agreement is for the period of January 6,
2009 though January 5, 2010.





Secure leases its facility on a year to
year basis at a monthly rent of $4,821.





Meadowlands
leased its facility through a three year lease that terminated on February 28,
2009, at a monthly rent of $3,450.  Effective March 1, 2009, it
relocated its facilities to those occupied by Fire Control.





Fire
Control leases its facility through a three year lease that expires December 31,
2010 at a monthly rent of $4,800.





In the
normal course of business, the Company is subject to various proceedings and
claims, the resolution of which will not, in management's opinion, have a
material adverse affect on the Company's financial position or results of
operations.






11





Note
5.  Unregistered Sale of Equity Securities





In
January 2009, the Company entered into a convertible promissory note with an
accredited investor for $30,000 bearing an interest rate of 15% per annum and
with a conversion rate of $.25 per share. In accordance with the note the
Company issued the investor 15,000 shares of the Company’s common stock valued
at $450.  Such shares were issued pursuant to an exemption from
registration at Section 4(2) of the Securities Act of 1933 and are restricted in
accordance with Rule 144 of the Securities Act of 1933.  This note was
due July 1, 2009.





In
January 2009, the Company entered into a convertible promissory note with an
accredited investor for $50,000 bearing interest of 15% per annum and with a
conversion rate of $.25 per share. In accordance with the note the Company
issued the investor a warrant to purchase 25,000 shares of the Company’s common
stock which is exercisable at $.001 per share.  This note was due
April 26, 2009.





The debt
discount related to the conversion feature and warrants associated with these
convertible promissory notes are insignificant to these financial
statements.





Note
6.  Dutchess Debentures





Substantially
all principal payments due under the terms of the Dutchess Debentures during
2009 are in arrears.  Partial payments of interest on these debentures
have been made during 2009.





Note
7.  Equity Incentive Plan





On August
29, 2008, the Board of Directors, with the approval of a majority of the
shareholders of the Company, adopted the 2008 Equity Incentive Plan (the “Plan”)
which will be administered by a compensation committee (the “Committee”)
appointed by the Board.





On April
2, 2009, in accordance with the Plan, two employees were issued a total of
175,000 shares under the Plan.  The shares vest over three years, have
an exercise period of seven years, and were issued at an exercise price of
$0.015 per share.





Note 8.
Subsequent Events





None.








12





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL


CONDITION
AND RESULTS OF OPERATIONS


(SEE
NOTE 1B – BASIS OF PRESENTATION)





Item
2.




General





The
information contained in Item 2 contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual results may
materially differ from those projected in the forward-looking statements as a
result of certain risks and uncertainties set forth in this report. Although
management believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual results
will not be different from expectations expressed in this report.




Critical
Accounting Policies and Estimates





The
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amount of assets and liabilities, revenues
and expenses, including stock issued for services and or compensation and
related disclosure on contingent assets and liabilities at the date of our
financial statements. Actual results may differ from these estimates under
different assumptions and conditions.  Critical accounting policies
are defined as those that are reflective of significant judgments, estimates,
and uncertainties and potentially result in materially different results under
different assumptions and conditions.





We have
established an allowance for doubtful accounts for accounts
receivable.  We analyzed the ability to collect accounts that are
large, none of which are currently past due.  Management will evaluate
the adequacy of the subsidiaries’ allowance on a periodic basis.





We
write down inventory for estimated excess or obsolete inventory equal to the
difference between the cost of inventory and the estimated market value based
upon assumptions about future demand and market conditions.  If actual
market conditions are less favorable than those projected by management,
additional inventory write-downs may be required.





We
account for our goodwill and intangible assets pursuant to SFAS No. 142,
Goodwill and Other Intangible Assets. Under SFAS 142, intangibles with definite
lives continue to be amortized on a straight-line basis over the lesser of their
estimated useful lives or contractual terms. Goodwill and intangibles with
indefinite lives are evaluated at least annually for impairment by comparing the
asset’s estimated fair value with its carrying value, based on cash flow
methodology.





There are
13,100,000 warrants for common stock issued and outstanding.  At June
30, 2009, fair value associated with the outstanding warrants is not
significant.  The holders of the majority of such warrants are subject
to ownership limitations and the warrants are not freely
transferable.  Common stock equivalents are reflected net of such
limitiations.








13







Results
of Operations





Revenues




Revenues
of $1,016,065 and $2,104,016, for the three and six months ended June 30,
2009, respectively, decreased by $257,412 and $420,917 over revenues of
$1,273,477 and $2,524,933 for the three and six months ended June 30,
2008.  This was primarily attributable to a decrease in revenues
at Meadowlands of $190,109 and $201,793 and Secure of $89,424 and $160,575,
respectively, for the three months and six months ended June 30, 2009 versus the
same periods in 2008.   Equipment Sales and Installation revenues
decreased by $305,541 and $170,085, respectively, for the three months and six
months ended June 30, 2009 versus the same periods in 2008, and Maintenance
revenues increased $48,129 and decreased by $250,832, respectively, the three
months and six months ended June 30, 2009 versus the same periods in
2008.





Costs
of Goods Sold




Costs of
Goods Sold of $373,857 and $827,637 for the three and six months ended June 30,
2009, respectively, decreased by $244,437 and $421,727 over Cost of Goods Sold
of $618,294 and $1,249,364 for the three and six months ended June 30, 2008.
This was primarily attributable to a decrease in cost of systems sold of
$147,331 and $258,267, respectively, as well as a decrease in the installation
and service costs of $92,492 and $173,215, respectively, for the three and
six months ended June 30, 2009 and 2008.





Gross
Margin





Gross
Margin of $642,208 and $1,275,379, respectively, for the three and six months
ended June 30, 2009 decreased by $12,975 and $190 over Gross Margin of
$655,183 and $1,275,569, respectively, for the three and six months ended June
30, 2008. This was a direct result of the decreases in Revenues and the Cost of
Goods Sold described above.





Selling,
General, and Administrative Expenses (“SG&A”)





SG&A
expenses of $620,468 and $1,396,544 for the three and six months ended June 30,
2009, respectively, decreased by $137,292 and $297,327, respectively, over
SG&A expenses of $757,760 and $1,693,871 for the three and six months ended
June 30, 2008. This was primarily attributable to decrease in Payroll of $63,010
and $421,416, respectively, for the three and six months ended June 30,
2009.





Other
Income (Expense)




Other
Expense of $193,705 and $349,687 for the three and six months ended June 30,
2009 increased by $74,580 and $63,655, respectively, over Other Expense of
$119,125 and $286,032 for the three and six months ended June 30, 2008. This is
primarily attributable to the interest expense on the Dutchess convertible
debentures issued in June 2007 and November 2007.





Net
(Loss)





Net Loss
attributable to common stockholders of $377,650 and $884,935 for the three and
six months ended June 30, 2009 decreased by $37,716 and $217,899, respectively,
over the Net Loss of $415,366 and $1,102,834 for the three and six months
ended June 30, 2008. This was a direct result of the decrease in Gross Margin
described above and the decreases in the Selling, General, and Administrative
expenses described above.







14




Liquidity
and Capital Resources:





We
are currently financing our operations primarily through cash generated by
financing activities in the form of promissory notes, convertible debentures,
and equity investments. We financed our business acquisitions through the
issuance of redeemable preferred stock, cash generated from promissory notes,
and convertible debentures.





We
completed the Secure merger by obtaining a short term bridge financing of
$504,000. Pursuant to the terms of the offering, we had a minimum raise of
$500,000 and a maximum raise of $700,000. As of March 11, 2005, we raised the
minimum of $500,000 and these proceeds were distributed to Secure as part of
that transaction. Each of the investors in this financing received nine (6)
month notes with a twelve (12%) percent annual interest rate. For each dollar
invested, an investor received a note for a dollar repayable in full nine months
from the date of the note and one share of our common stock. In addition, the
notes are convertible, at the option of the holder, into shares of common stock
at the price of $0.25 per share.  Consequentially, we issued a total
of 504,000 shares to these investors. Such notes were due and payable September
11, 2005. We had requested a ninety day extension on such notes and we received
approval from all of the noteholders. Although the ninety day extension had
passed as of March 28, 2006, none of the noteholders has declared a default and
we intend to repay any unconverted notes through the proceeds of additional
financings.  As of March 31, 2007, $430,000 of principal amount and
all related accrued interest to date has been retired through cash payments due
of $180,000 and the balance converted to common stock in accordance with the
terms of the private placement.





We
completed the Meadowlands acquisition by using a portion of the proceeds of the
five year Convertible Debenture that we issued with gross proceeds of
$2,700,000.  Pursuant to this Debenture, we are required to make
mandatory interest only payments to the Investor in the amount of 1/12th of the
Interest due on the outstanding balance of the Debenture each month for the
first nine months after closing on the acquisition.  Pursuant to this
Debenture, we also are required to make mandatory principal payments to the
Investor throughout the life of the Debenture.  For months 7 thru 12,
we must pay $15,000 per month, for months 13 thru 18 we must pay $35,000 per
month, for months 19 thru 24 we must pay $45,000, for month 25 thru month 35 we
must pay $75,000 per month and on month 36 all amounts then current will be due
payable.





We
completed the Fire Control acquisition by using a portion of the proceeds of the
five year Convertible Debenture that we issued with gross proceeds of
$1,350,000.  Pursuant to this Debenture, we are required to make
mandatory interest only payments to the Investor in the amount of 1/12th of the
Interest due on the outstanding balance of the Debenture each month for the
first two months after closing on the acquisition.  The first payment
is due within thirty (30) days of Closing.  Pursuant to this
Debenture, we also are required to make mandatory principal payments to the
Investor throughout the life of the Debenture.  For months 3 thru 9,
we must pay $8,000 per month, for months 10 thru 15 we must pay $15,000 per
month, for months 16 thru 21 we must pay $20,000, for month 22 thru month 30 we
must pay $30,000 per month, for month 31 thru month 35 we must pay $40,000 per
month and on month 36 all amounts then current will be due payable.





At June
30, 2009, the Company had negative working capital of approximately
$6,317,000.




15






We plan
to establish a source of revenues sufficient to cover our operating costs by
acquiring additional companies that are generating positive cash flows from
operating activities either at acquisition or projected to do so in the future ,
thereby furthering the objective of becoming profitable and generating positive
cash flow from operating activities on a consolidated basis.  The
funds needed to continue operations over the next twelve months will be raised
from accredited investors and/or institutional investors as in the previous
financings. During this period, the Company will attempt to reduce or defer
expenses until the capital is available.





Our need
for capital may change dramatically as a result of any additional business
acquisition or combination transaction.  There can be no assurance
that we will identify any additional suitable business, product, technology or
opportunity in the future.  Further, even if we locate a suitable
target, there can be no assurance that we would be successful in consummating
any acquisition or business consolidation on favorable terms or that we will be
able to profitably manage the business, product, or technology, if acquired, or
otherwise engaged.  The Company intends to acquire cash flow positive
companies of such size or number that will allow it to continue as a going
concern.  If we are unable to obtain debt and/or equity financing on
reasonable terms, we could be forced to delay or scale back our plans for
expansion. Consequently, there is substantial doubt about our ability to
continue to operate as a going concern.





Management
intends to ask pertinent questions of the proposed candidates or opportunities
in the course of its diligence phase.  Management will rely heavily on
a business plan, financial statements and projections, and management’s views of
the future.  Unless something comes to management’s attention as a
result of its review of the proposed candidate’s audited financial statements,
which causes management to have serious concerns on the viability or integrity
of the financial records and business projections, which would result in a
disqualification of such candidate, a transaction would be approved by the Board
of Directors.  When a transaction requires shareholder approval, a
shareholder meeting must be held and a shareholder vote taken.  A
proxy statement would be mailed to shareholders informing them of the meeting
and requesting their vote.  However, in lieu of holding a meeting, a
majority of shareholders may sign a Shareholder’s Resolution approving of such
transaction.  If a meeting is not held, an information statement must
be mailed to all of its shareholder’s informing them of the action taken by the
majority shareholders.





Recent
Accounting Pronouncements




In March 2008, the FASB issued
Statement of Financial Accounting Standard No. 161 (SFAS 161), “Disclosures
about Derivative Instruments and Hedging Activities—an amendment of FASB
Statement No. 133”, which is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after November 15,
2008.  Early application is encouraged.  SFAS 161 changes
the disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under Statement 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity’s financial position, financial performance, and cash
flows.  The Statement requires that objectives for using derivative
instruments be disclosed in terms of underlying risk and accounting
designation.  In addition, the standard requires tabular disclosure of
fair value of derivative instruments and their gains and loss, requires
disclosure regarding credit risk related contingent features of the Company’s
derivative instruments and requires cross referencing within the footnote
disclosures regarding information about derivative
instruments.   The Company concluded that this pronouncement did
not have a significant impact on its financial condition or results of
operations.






16







In
December 2007, the FASB issued Statement of Financial Accounting Standard No.
160 (SFAS 160), “Non-Controlling Interests in Consolidated Financial Statements,
An Amendment of Accounting Research Bulletin No. 51”, which is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008.  Early application is not permitted before
that date.  SFAS 160 changes the terminology of minority interests,
which will now be known as non-controlling interest and requires that
non-controlling interests be clearly identified within stockholders’ equity as a
separate component from the parent company’s equity and net income or loss
attributable to non-controlling interests be clearly identified and presented on
the face of the consolidated statement of operations.  In addition,
the standard requires adequate disclosure between interests of the parent
company and interests of the non-controlling equity
holders.   This pronouncement did not have a significant impact
on its financial condition or results of operations.





In
December 2007, the FASB revised Statement of Financial Accounting Standard No.
141 (SFAS 141R), “Business Combinations”, which is effective for business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  Early application is not permitted before that
date.  SFAS 141R requires assets and liabilities recorded in a
business combination to be recorded at fair value and replaces the
cost-allocation process under the prior standard.  In addition, SFAS
141R requires separate recognition of acquisition costs and requires recognition
of contractual contingencies at fair value as of the acquisition
date.  Further, the revised standard requires capitalization of
research and development assets and requires fair value recognition of
contingent consideration as of the acquisition date.   The
Company had no business combinations and therefore there has been no impact
related to this pronouncement.





In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS No. 165”), which
provides guidance on events that occur after the balance sheet date but prior to
the issuance of the financial statements. SFAS No. 165 distinguishes events
requiring recognition in the financial statements and those that may require
disclosure in the financial statements. Furthermore, SFAS No. 165 requires
disclosure of the date through which subsequent events were
evaluated.  SFAS No. 165 is effective for interim and annual periods
after June 15, 2009. The Company adopted SFAS No. 165 for the quarter ended June
30, 2009, and have evaluated subsequent events through August 14,
2009.





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles – a replacement of
the FASB Statement No. 162.” (“SFAS No. 168”). SFAS No. 168 stipulates the FASB
Accounting Standards Codification is the source of authoritative U.S. GAAP
recognized by the FASB to be applied by nongovernmental entities. SFAS No. 168
is effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The implementation of this standard is not
expected to have a material impact on our consolidated financial position and
result of operations.




Item
3.





Quantitative
and Qualitative Disclosures About Market Risk





Not
required for smaller reporting companies.




17







Item
4.





Controls
and Procedures




The
Company's management evaluated, with the participation of its President, the
effectiveness of the design/operation of its disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the SEC Act of 1934) as of
March 31, 2009. Based on such evaluation, the President of the Company concluded
that its disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and
regulations of the Securities and Exchange Commission and is not operating in an
effective manner.





As
reported in the Company’s Form 10-K for the year ended December 31, 2008, the
Company performed an assessment of the effectiveness of its controls and
procedures and disclosed several material weaknesses related to that
assessment.





There were no changes in internal
control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f)
under the SEC Act of 1934) that occurred during the Company’s last fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.







PART
II - OTHER INFORMATION




Item
1.   Legal Proceedings.





On
September 4, 2008, Keith Kesheneff and Kathryn Kesheneff filed suit in Superior
Court in New Jersey against the Company claiming that they are owed $355,000 for
failure to pay a purchase price adjustment note issued by the
Company.  The Company filed an answer, with counterclaims, on October
27, 2008, generally contesting all claims.





In
January 2009, the holders of two promissory notes convertible into the Company’s
common stock filed suit in the Superior Court of New Jersey.  Each
party claims to be owed $20,000 in principal, approximately $11,400 of accrued
interest through December 31, 2008, and counsel fees.  The Company is
attempting to negotiate forbearance agreements.





In
January 2009, the holder of a promissory note convertible into the Company’s
common stock filed suit in the Superior Court of New Jersey.  The
party claims to be owed $54,000 in principal, approximately $30,900 of accrued
interest through December 31, 2008, and counsel fees.  The Company is
attempting to negotiate a forbearance agreement.





In the
normal course of business, the Company is subject to various proceedings and
claims, the resolution of which will not, in management's opinion, have a
material adverse affect on the Company's financial position or results of
operations.




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





None.





Item
3.   Defaults Upon Senior Securities





There
have been no notices of default provided to the Company, except as described in
Item 1 above.





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





None.






18





Item
5.   Other Information.





None.




Item
6.   Exhibits.





(a)           Exhibits:




31.1
Certification pursuant to Section 302 of Sarbanes Oxley Act of
2002.


32.1
Certification pursuant to Section 906 of Sarbanes Oxley Act of
2002.





(b)           Reports
on Form
8K:




None





SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.





SOMERSET INTERNATIONAL
      GROUP, INC.(Registrant)Date:
      August 14, 2009
                By:
                /s/
      John X. AdilettaJohn
      X. Adiletta,Chief
      Executive OfficerChief
      Financial Officer








19