U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________  FORM 10-QSB _____________  QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended June 30, 2006  Commission File No: 0-10854  Somerset International Group, Inc. (Exact name of small business issuer 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, New Jersey
        07921(Address of Principal Executive Offices)
        (Zip Code)  (908) 719-8909 (Issuers telephone number, including area code)  Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No  Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  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/  As of August 14, 2006, 6,583,676 shares of the registrants Common Stock were outstanding  Transitional Small Business Format. Yes
        No /X/  1     SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY



INDEX TO FORM 10-QSB

June 30, 2006






Part I - Financial Information
        PageItem 1. Financial Statements:Consolidated Balance Sheet (Unaudited) - June 30, 2006
        3Unaudited Consolidated Statements of Operations for the Threeand Six Months Ended June 30, 2006 and 2005 (Restated)
        4Unaudited Consolidated Statements of Cash Flows for the Threeand Six Months Ended June 30, 2006 and 2005 (Restated)
        5Notes to the Consolidated Financial Statements
        6Item 2. Managements Discussion and Analysis ofFinancial Condition and Results of Operations
        15Item 3. Controls and Procedures
        19Part II - Other Information:Item 1. Legal Proceedings
        20Item 2. Changes in Securities
        20Item 3. Defaults Upon Senior Securities
        21Item 4. Submission of Matters to a Vote of Security Holders
        21Item 5. Other Information
        21Item 6. Exhibits
        21Signatures
        21



2



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED BALANCE SHEET

JUNE 30, 2006




ASSETSCurrent Assets:Cash
        $
        10,005Accounts receivable
        
        295,156Inventories
        
        308,243Prepaid expenses
        
        61,267Deposits
        
        9,554Total Current Assets
        
        684,225Property and equipment, net
        
        2,686Other Assets:Non compete covenant, net
        
        123,359Customer lists, net
        
        806,041Software, net
        
        119,221Goodwill
        
        2,200,355Total other assets
        
        3,248,976TOTAL ASSETS
        $
        3,935,887LIABILITIES AND STOCKHOLDERS DEFICITCurrent Liabilities:Accounts payable and accrued expenses
        $
        640,088Promissory notes payable
        
        899,000Stockholder note payable, current maturities
        
        165,719Employment contracts payable
        
        25,527Accrued interest payable
        
        189,254Deferred revenue
        
        137,053Total Current Liabilities
        
        2,056,641Stockholder note payable, netof current maturities
        
        403,095TOTAL LIABILITIES
        
        2,459,736Convertible redeemable preferred stock
        
        3,524,971Stockholders Deficit:Common Stock, 200,000,000 shares authorized,
        
        6,583$.001 par value, 6,583,676 shares issued andoutstandingCapital in excess of par value
        
        26,481,624Accumulated deficit
        
        (28,537,027)Total Stockholders Deficit
        
        (2,048,820)TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
        $
        3,935,887

The Notes to Consolidated Financial Statements are an integral part of this Statement.







3



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2006 AND 2005




Three
        
        Months
        
        Six
        
        Months2006
        
        2005 (Restated Note 3)
        
        2006
        
        2005 (Restated Note 3)RevenuesEquipment Sales
        $
        123,140
        $
        177,591
        $
        198,598
        $
        190,582Installation Revenues
        
        199,959
        
        130,647
        
        235,385
        
        144,447Subscription Revenues
        
        59,001
        
        59,001
        
        118,002
        
        72,323Maintenance Revenues
        
        179,459
        
        175,747
        
        354,891
        
        209,748Total revenues
        
        561,559
        
        542,986
        
        906,876
        
        617,100Costs and expensesMaterial cost of systems
        
        61,674
        
        88,519
        
        98,181
        
        95,176Overhead cost
        
        62,637
        
        75,924
        
        119,624
        
        92,820Install and service costs
        
        132,066
        
        156,617
        
        266,640
        
        194,256Engineering and development
        
        41,924
        
        39,172
        
        81,130
        
        46,251Selling and marketing expense
        
        36,114
        
        32,037
        
        74,063
        
        34,579Gen and admin expense
        
        265,405
        
        269,509
        
        617,540
        
        377,496Amortization expense
        
        62,475
        
        62,473
        
        124,948
        
        99,962Depreciation expense
        
        1,875
        
        3,654
        
        3,750
        
        4,479Total costs and expenses
        
        664,170
        
        727,905
        
        1,385,876
        
        945,019Loss from operations
        
        (102,611)
        
        (184,919)
        
        (479,000)
        
        (327,919)Other ExpenseAmortization of debt discount
        
        --
        
        (89,314)
        
        --
        
        (114,514)Interest expense
        
        (41,476)
        
        (42,482)
        
        (84,826)
        
        (60,026)Total other expense
        
        
        
        (131,796)
        
        (84,826)
        
        (174,540)Loss before income taxes
        
        (144,087)
        
        (316,715)
        
        (563,826)
        
        (502,459)Provision for income taxes
        
        --
        
        800
        
        550
        
        1,350Net Loss
        $
        (144,087)
        $
        (317,515)
        $
        (564,376)
        $
        (503,809)Dividends on preferred stock
        
        (89,582)
        
        (60,000)
        
        (179,164)
        
        (240,000)Net loss attributable toCommon stockholders
        $
        (233,669)
        $
        (377,515)
        $
        (743,540)
        $
        (743,809)Basic loss per common share
        $
        (0.04)
        $
        (0.07)
        $
        (0.12)
        $
        (0.14)Weighted Average Number ofCommon Shares
        
        6,244,858
        
        4,991,256
        
        6,096,421
        
        5,249,732

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







4



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDING JUNE 30, 2006 AND 2005


2006
        
        2005 (Restated Note 3)Cash Flows From Operating Activities:Net Loss
        $
        (564,376)
        $
        (503,809)Adjustments to reconcile net loss tonet cash provided (used) by operating activities:Amortization of debt discount
        
        --
        
        114,514Amortization
        
        124,948
        
        99,962Depreciation
        
        3,750
        
        4,479Stock issued for services
        
        115,000
        
        15,625Changes in operating assets and liabilities:Accounts receivable
        
        (92,908)
        
        (145,704)Inventories
        
        31,690
        
        17,481Other current assets
        
        (31,643)
        
        13,535Accounts payable and accrued expenses
        
        227,575
        
        168,883Accrued interest payable
        
        58,680
        
        47,330Employment contracts payable
        
        (18,590)
        
        (76,985)Deferred revenue
        
        115,683
        
        (101,016)Net Cash Used by Operating Activities
        
        (30,191)
        
        (345,705)Cash Flows From Investing Activities:Acquisition of subsidiary,net of cash acquired
        
        --
        
        14,810Purchase of equipment
        
        --
        
        (3,071)Net Cash Provided by Investing Activities
        
        --
        
        11,739Cash Flows From Financing Activities:Payment of note payable
        
        --
        
        (53,503)Proceeds from issuance of promissory notes
        
        --
        
        524,000Proceeds from issuance of stock
        
        40,000
        
        25,000Proceeds from insurance on vehicle
        
        10,382Payment of stockholders note payable
        
        (51,673)
        
        (150,000)Net Cash Provided (Used) by `Financing Activities
        
        (1,291)
        
        345,497Net Change in Cash
        
        (31,482)
        
        11,531Cash at Beginning of the Period
        
        41,487
        
        115Cash at End of the Period
        $
        10,005
        $
        11,646Non Cash Investing and Financing Activities:Common stock issued in connection withprivate placement of notes
        $
        --
        $
        157,200Accrual of preferred stock dividends
        $
        179,164
        $
        240,000Convertible redeemable preferredstock issued in business combination
        $
        --
        $
        3,000,004Stock issued for officer loan
        $
        34,357
        $
        --The Notes to Consolidated Financial Statements are an integral part of these statements.




5



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)





Note 1 - Business and Basis of Presentation:




A.
        Nature of the Business:

Somerset International Group, Inc. (Somerset) was incorporated under the laws of the State of Delaware in 1968 and commenced operations in 1972. Effective December 31, 2001, Somerset (formerly known as ORS Automation, Inc.) ceased conducting operations. The decision to cease operations was made prior to the year end after our two principal customers, who accounted for substantially all of our sales, canceled all orders for products in the foreseeable future and based upon the general decline in electronics manufacturing activity. Our current activity is the acquisition of profitable and 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. On July 7, 2004, we entered into a Plan and Agreement of Merger with Secure Systems, Inc., a New Jersey corporation, which provides wireless security products and services marketed throughout the United States. The acquisition was completed on March 11, 2005 (see Note 9). Our executive office is located at 90 Washington Valley Road, Bedminster, New Jersey, 07921.




B.
        Basis of Presentation:

The unaudited consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, 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, 2006 and 2005 reflect 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, 2006 and the results of its consolidated operations and its consolidated cash flows for the three and six month periods ended June 30, 2006 and 2005.



The Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2006 and 2005 are not necessarily indicative of results for the full year.



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 and the Company has an accumulated
deficit of approximately $28,537,000. Management is actively involved in
exploring business opportunities which they believe will allow the Company to
increase shareholders value and allow it to continue as a going concern.
As of March 11, 2005, the Company has acquired a company that provides wireless
security products (Note 9). 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



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)







On July 7, 2004, the Company, through a newly created wholly owned subsidiary, which owned no assets as of June 30, 2004, entered into an Agreement and Plan of Merger with a New Jersey Corporation (SSI) which provides wireless security products and services. The closing was subject to a financing for an investment of five hundred thousand dollars ($500,000) to provide working capital to the merged company. In addition, the Company was to issue three million and four shares (3,000,004), valued at $1.00 per share, of Redeemable Convertible Preferred Stock to the shareholders of the wireless company and assume five hundred five thousand dollars ($505,000) of existing indebtedness. The financing for the acquisition of the wireless security products and services company was completed on March 11, 2005 and the transaction was closed on March 11, 2005.



On March 11, 2005, a private placement to accredited investors was completed in the amount of five hundred four thousand dollars ($504,000) with interest payable at twelve (12%) percent per annum. These investors received six month Convertible Secured Promissory Notes in the amount of $504,000 and were issued 504,000 shares of the Companys common stock. The Company has agreed to file a registration statement to register the Common Stock with the Securities and Exchange Commission within one hundred and eighty (180) days from closing, which was September 10, 2005. This stock was issued on March 11, 2005.



Note 2 - Significant Accounting Policies




A.
        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 does not have an allowance for doubtful accounts as of June 30, 2006 based on their historical collectability.




B.
        Property, Equipment, and Leasehold Improvements

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 deprecated over the lesser of their useful lives or the term of the lease. Expenditures for maintenance and repairs are charged to expense as incurred.




C.
        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 has four customers which accounted for all of their revenues. While our goal is to diversify our customer base, we expect to continue to depend upon a relatively small number of customers for a significant percentage of our 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.





7



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)








D.
        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.




E.
        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 deferred compensation and net operating loss carryforwards, and other deferred tax assets have been offset by a valuation allowance for the same amount.




F.
        Fair Value of Financial Instruments:

The carrying amounts of cash, accounts payable, accrued expenses, promissory notes payable, and stockholder note payable approximate fair value because of the short maturity of these items.




G.
        Reclassifications:

Certain reclassifications were made to the 2005 financial statements in order to conform to the 2006 financial statement presentation. Such reclassifications had no effect on the prior year net loss.




H.
        Principles of Consolidation:

The consolidated financial statements include the operations of Somerset International, Inc. and its wholly owned subsidiary, Secure System, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.




I.
        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 2005 and 2006 the Company issued warrants as part of certain 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. See New Accounting Pronouncements for discussion on FAS 123R.







8



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)








J.
        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.




K.
        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 14(a), the Company uses estimated gross profit rates to determine costs of goods sold during interim periods. This is different than the method used at annual inventory dates. The Company performs physical inventory counts when calculating year end inventory values. Historically, this has not resulted in any material adjustment to the cost of goods sold.




L.
        Loss Per Share:

The Company computes net loss per share under the provisions of SFAS No. 128, Earnings per Share (SFAS 128), and 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 loss per share is determined in the same manner as basic loss 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, 2006 and 2005, 115,000 and 0 of common stock equivalent shares were excluded from the computation of diluted net loss per share.




M.
        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.







9



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)








N.
        Recoverability of Intangible and Other Long Lived Assets:

In accordance with SFAS No.142, the Company reviews the carrying value of goodwill an intangible assets with indefinite lives annually or in certain circumstances as required. The Company measures impairment losses by comparing carrying value to fair value. Fair value is determined using a price to sales multiple of comparable companies.



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  Restatement

The June 30, 2005 financial statements have been restated to reflect the effects of three accounting corrections for amounts reported in the June 30, 2005 Form 10QSB. Those corrections include (1) the recognition of amortization expense on certain intangible assets for which final allocation and determination of amounts and corresponding useful lives had not been determined with the previous filing, (2) shares returned by a former shareholder that were previously recorded with underlying footnote disclosure as non-cash other income, but have been reversed with these restated financial statements and (3) the recognition of covenants not to compete pursuant to certain employment agreements that were not previously reflected in the prior June 30, 2005 Form 10QSB filing. The effect of these restatements is a revision of the Companys statement of operations to reflect a restated net loss
of approximately $504,000 ($.10 per share), representing a decrease of $217,000 ($.05 per share) from previously reported net loss of approximately $287,000 ($.05 per share).

Note 4  Stockholders Deficit



The preferred stock of the Company had a par value of $.001 per share and 1,000,000 shares were authorized issued and outstanding as of December 31, 2003. These shares were converted to common stock during 2004.



Under the Amended Restated Certificate of Incorporation dated February 24, 2004, the preferred stock of the Company has a par value of $.001 per share and 100,000,000 shares have been authorized to be issued. No shares of preferred stock were issued or outstanding at June 30, 2006.



Under the Amended Restated Certificate of Incorporation dated February 24, 2004, the common stock of the Company has a par value of $.001 per share and 200,000,000 shares have been authorized to be issued.



In January 2006, the Company approved the issuance of 300,000 shares of common stock for consulting services rendered at $.20 per share. The stock was issued on January 19, 2006.





10



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)





In February 2006, a private placement to an accredited investor was completed in the amount of ten thousand dollars ($10,000). The investor was issued 50,000 shares of the Companys common stock. The stock was issued on February 6, 2006.



In February 2006, the Company approved the issuance of 100,000 shares of common stock for consulting services rendered at $.20 per share. The stock was issued on February 6, 2006.



In May 2006, a private placement to two accredited investors was completed in the amount of thirty thousand dollars ($30,000) at $.20 per share. The investors were issued 150,000 shares of the Companys common stock and warrants to purchase 30,000 shares of common stock expiring three years from issuance. The stock was issued on May 26, 2006.



In May 2006, the Company approved the issuance of 175,000 shares of common stock for advisory services rendered at $.20 per share. The stock was issued on May 26, 2006.



In June, 2006, the Company approved the issuance of 175,781 shares of common stock to an officer of the Company as a full payment for an officer advance of $34,357 to the Company at $.20 per share.



Note 5  Series A Convertible Redeemable Preferred Stock



As of June 30, 2006, 2,986,059 shares of Series A Redeemable Convertible Preferred Stock are issued and outstanding and 538,912 shares of Series A Redeemable Convertible Preferred Stock which are reserved for issuance for accrued dividends are held by the previous Secure Systems, Inc. shareholders. Holders of our Series A Convertible Preferred Stock are not entitled to vote at any meeting of the shareholders or by consent given in lieu of a meeting of the shareholders with respect to any matters presented to the stockholders of the Corporation for their action or consideration.



Holders of Series A Convertible Preferred Stock are entitle to receive, out of the assets of the Corporation legally available for the payment of dividends, dividends payable in cash. Dividends shall accrue at the rate of eight cents ($.08) per share per annum until January 15, 2006 and at the rate of twelve cents ($.12) per share per annum thereafter. Dividends upon the Series A Convertible Preferred Stock are cumulative and accrue from the date of original issue. Dividends shall cease to accrue upon the Conversion Date with respect to any shares of Series A Preferred Stock converted. No cash dividend may be declared and paid or set apart for payment upon the Corporations Common Stock until any accrued dividend on any outstanding shares of Series A Preferred Stock has been fully paid or declared and set apart for payment. Our Board of Directors will have sole discretion with regard
to whether dividends will be paid in cash or stock.



In the event of our liquidation, dissolution and winding up, the holders of the Series A Preferred Stock shall be entitled to receive in cash out of the assets of the Corporation, whether from capital or from earnings available for distribution to its stockholders, before any amount shall be paid to the holders of common stock, the sum of One Dollar ($1.00) per share, plus any accrued and unpaid dividends.





11



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)







The holders of shares of Series A Preferred Stock have the right to convert each share of Series A Preferred Stock into that number of fully-paid and nonassessable shares of Common Stock at the Conversion Rate of $1.00 per share until January 15, 2006 and at $.90 per share thereafter.



In December 2005, the Company filed a Form 8K that the Company had, by a vote of a majority of its holders of Series A Convertible Preferred Stock, approved an amendment to its Articles of Incorporation by modifying the Certificate of Designations of its Series A Convertible Preferred Stock effective January 15, 2006.



The holders of shares of Series A Preferred Stock have scheduled and conditional redemption rights. On January 15, 2007 (the First Redemption Date), we shall redeem 50% of the shares of Series A Preferred Stock then held by each Registered Holder. On July 15, 2007 (the Second Redemption Date), we shall redeem all shares of Series A Preferred Stock then outstanding. In the event that any of the following conditions set forth in the Certificate of Designation occurs and is continuing, and the Holders of a majority of the outstanding Series A Preferred Stock send to us a written demand for redemption, then we shall immediately redeem all of the outstanding Series A Preferred Stock for a redemption price of $1.00 per share of Preferred Stock.



Note 6 - Related Party Transactions

On March 10, 2005, our former officer and director Paul Patrizio agreed to return shares totaling 1,289,848, which were valued at $193,476, pursuant to the terms of his resignation as an officer and director of the Company. The Company has retired these shares and has adjusted the par value of common stock and additional paid in capital to reflect this retirement.

The stockholder note payable was $568,814 at June 30, 2006. The principal amount of the note was partially repaid with a $150,000 payment on March 11, 2005 and monthly payments of $17,928 including annual interest at 10% beginning March 1, 2006 and ending July 1, 2009

On December 31, 2005, the Company issued 300,000 shares of restricted common stock to John X. Adiletta, the Companys President and Chief Executive Officer. These shares were issued based on the conversion of $150,000 in accrued compensation owed to John X. Adiletta at the rate of $0.50 per share. 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.

On June 30, 2006, the Company issued 175,781 shares of restricted common stock to John X. Adiletta, the Companys President and Chief Executive Officer. These shares were issued based on the conversion of $34,357 in advances made to the Company by John X. Adiletta at the rate of $0.20 per share. 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.





12



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)





Note 7 - Recent Accounting Pronouncements



In December 2004, the FASB revised FASB Statement No. 123R, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This Statement does not change the accounting guidance for share-based payment transactions with parties other than employees provided
in Statement 123 as originally issued and EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. It applies in the first reporting period beginning after December 15, 2005. The adoption of Statement No. 123R (revised 2004) did not have a material impact on the Companys financial position, liquidity, or results of operations.



In July 2006, the Financial Accounting Standards Board (FASB) has published FASB Interpretation No. 48 (FIN No. 48), Accounting for Uncertainty in Income Taxes, to address the noncomparability in reporting tax assets and liabilities resulting from a lack of specific guidance in FASB Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, on the uncertainty in income taxes recognized in an enterprises financial statements. FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted. The adoption of FIN 48 is not expected to have a material effect on the Companys financial condition or results of operations.



Note 8 - Promissory Notes Payable



On January 17, 2004, Somerset-New Jersey closed a $175,000 bridge financing from one accredited investor pursuant to a Promissory Note with interest payable at twelve (12%) percent per annum. Pursuant to such note, the principal and interest will mature on the earlier of the subsequent financing by the Company or one year from date of issuance. In addition to the agreement to repay the Note and interest, the investor received a 10% ownership interest in Somerset-New Jersey. As a result of this transaction, Somerset-NJ recorded a debt discount of $3,500, which was amortized over the life of the bridge financing agreements. This Note was extended to December 31, 2005. These notes are convertible at any time at the holders option into common stock at $0.25 per share.



On April 29, 2004, the Company closed a $100,000 bridge financing from one accredited investor pursuant to a Promissory Note with interest payable at twelve (12%) percent per annum. Pursuant to such note, the principal and interest will mature on the earlier of the subsequent financing by the Company or one year from date of issuance, with a minimum of 90 days of interest to be paid. As part of the agreement, the investor was to receive 100,000 shares of the Companys Common Stock. The Company has agreed to register the Common Stock with the Securities and Exchange Commission later of June 30, 2004 or one hundred and eighty (180) days from closing of the first acquisition, which is September 10, 2005. This stock was issued on July 1, 2004. This Note was extended to December 31, 2005. These notes are convertible at any time at the holders option into common stock at $0.25 per share.



13



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)







On June 25, 2004, the Company closed a $100,000 bridge financing from one accredited investor pursuant to a Promissory Note with interest payable at twelve (12%) percent per annum. Pursuant to such note, the principal and interest will mature on the earlier of the subsequent financing by the Company or one year from date of issuance, with a minimum of 90 days of interest to be paid. In addition to the repayment of the Note and interest, the investor received 100,000 shares of the Companys Common Stock. This stock was valued at $15,000. As a result of this transaction, the Company has recorded a Debt Discount of $15,000, which was amortized over the life of the Promissory Note Payable, which was one year. The Company has agreed to register the Common Stock with the Securities and Exchange Commission the later of June 30, 2004 or one hundred and eighty (180) days from closing of the
first acquisition, which is September 10, 2005. This stock was issued on July 1, 2004. This Note was extended to December 31, 2005. These notes are convertible at any time at the holders option into common stock at $0.25 per share.



On March 11, 2005, a private placement to accredited investors was completed in the amount of five hundred thousand four dollars ($504,000) with interest payable at twelve (12%) percent per annum. These investors received six month Convertible Secured Promissory Notes in the amount of $504,000 and were issued 504,000 shares of the Companys common stock, valued at $.30 per share. The Company has agreed to register the Common Stock with the Securities and Exchange Commission within one hundred and eighty (180) days from closing, which is September 12, 2005. The registration statement was filed on September 12, 2005. This stock was issued on March 11, 2005. These Notes were extended to December 11, 2005. The total value of the shares issued and the corresponding beneficial conversion feature that was created as a result of the issuance of the shares in connection with the convertible
notes totaled $151,200 and was recorded as a debt discount with a corresponding increase to equity. The total discount of $151,200 has been amortized over the original life of the loan, and is fully amortized as of December 31, 2005. These notes are convertible at any time at the holders option into common stock at $0.25 per share.



On April 1, 2005, a private placement to an accredited investor was completed in the amount of twenty thousand dollars ($20,000) with interest payable at twelve (12%) percent per annum. This investor received a six month Convertible Secured Promissory Note in the amount of $20,000 and was issued 20,000 shares of the Companys common stock. The Company has agreed to register the Common Stock with the Securities and Exchange Commission within one hundred and eighty (180) days from closing, which is September 30, 2005. This stock was issued on April 1, 2005. The total value of the shares issued and the corresponding beneficial conversion feature that was created as a result of the issuance of the shares in connection with the convertible notes totaled $6,000 and was recorded as a debt discount with a corresponding increase to equity. The total discount of $6,000 was amortized over the
original life of the loan, and is fully amortized as of December 31, 2005. The Note is convertible at any time at the holders option into common stock at $0.25 per share.







14



SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)





Jan 2004 Note -
        $
        175,000Apr 2004 Note -
        
        100,000Jun 2004 Note -
        
        100,000Mar 2005 Notes -
        
        504,000Apr 2005 Note -
        
        20,000Stockholder Note -
        
        165,719sub - Total -
        $
        1,064,719Long Term Debt:Stockholder Note -
        
        403,095Total debt -
        $
        1,467,814

Note 9 - Acquisition Agreement



On July 7, 2004, the Company, through a newly created wholly owned subsidiary, which owned no assets as of June 30, 2004, entered into an Agreement and Plan of Merger with a New Jersey Corporation which provides wireless security products and services. The closing was subject to a financing of five hundred thousand dollars ($500,000) to provide working capital to the merged company. In addition, the Company was to issue three million four dollars ($3,000,004) of Redeemable Convertible Preferred Stock to the shareholders of the wireless company and assume five hundred five thousand dollars ($505,000) of existing indebtedness. The redemption price of the preferred stock is $1.00 per share. The value of the convertible preferred stock was primarily based upon potential repayment requirements called for in the agreement (assuming the preferred stockholder does not exercise the conversion
option). The financing for the acquisition of the wireless security products and services company was completed on March 11, 2005 and the transaction was closed on March 11, 2005. The results of operations, from March 11, 2005 for the acquired entity, are included in the 10KSB consolidated statements of operations for the year ending December 31, 2005.



Note 10 - Commitments



The Company has entered into employment agreements with two officers that became effective January 6, 2004. The employment agreements have 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, The officers have signed an additional agreement, in which they have agreed to waive any claims for payment of salary and auto, mobile phone, and medical benefits provided for in their employment agreements. The additional agreement was for the period of October 1, 2004 though June 30, 2005.





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SOMERSET INTERNATIONAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)





Effective March 10, 2005, one employment agreement was terminated by the resignation of one of the officers.




Secure System, Inc. leases its facility on a year to year basis.

The employment agreements resulting from the business combination requires payments of approximately $10,000 per month until July of 2007.







MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS



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.



Effective December 31, 2001, we ceased conducting operations. The decision to cease operations was made prior to the year end after our two principal customers, who accounted for substantially all of our, canceled all orders for products in the foreseeable future and based upon the general decline in electronics manufacturing activity.



Effective January 1, 2002, our principal activity was to search for opportunities to maximize the value of its tangible and intangible assets. Our current activity is the acquisition of profitable and 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. On July 7, 2004, we entered into an Agreement and Plan of Merger with a Secure Systems, Inc. which provides wireless security products and services. The closing was subject to a financing for an investment of five hundred thousand dollars ($500,000) to provide working capital to the merged company. In addition, we issued three million and four dollars ($3,000,004) of Redeemable
Convertible Preferred Stock to the shareholders of Secure Systems and assumed five hundred five thousand dollars ($505,000) of existing indebtedness plus accrued interest. The financing for the acquisition was completed on March 11, 2005, and the merger was closed on March 11, 2005.



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



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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 not established an allowance for doubtful accounts on our accounts receivable. In not establishing the allowance for doubtful accounts, we analyzed the ability to collect accounts that are large, none of which are currently past due. Historically, SSI has not incurred bad debt expense and that trend is anticipated to continue.



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.



The Company currently generates all of its revenue from its acquisition of Secure System, Inc. The opportunity for increased revenues at Secure will result from an increase in installations at new and existing customer sites. There are approximately 6,900 accredited post secondary institutions and 5,700 hospitals the represent Secures primary addressable market. The recognition and need for security solutions has increased significantly in the post 9/11 environment. Secure has established a website for additional leads and marketing exposure and has increased its emphasis on indirect sales channels since the acquisition and expects that this emphasis and its direct sales efforts will result in additional installations. In addition, the Company expects to increase its revenues through the acquisition of additional companies that it has targeted.



Revenues:



Revenues of $561,559 and $906,876 for the three and six months ended June 30, 2006 respectively, increased by $18,573 and $289,776 over revenues of $542,986 and $617,100 for the three and six months ended June 30, 2005. The increase in revenues for the period was attributable to the March 11, 2005 merger with Secure System, Inc. Revenues for Secure, on a proforma basis, increased by $18,573 for the three months ended June 30, 2006 and decreased by $81,793 for the six months ended June 30, 2006 as compared to the three and six months ended June 30, 2005. This was primarily attributable to a decrease in Equipment Sales and Installation Revenues of $102,778 for the six months ended June 30, 2006 offset by an increase in Maintenance Revenues of $20,985 for the same period.



Costs and Expenses:



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Costs and expenses for the three months ended June 30, 2006 decreased to $664,170 for the six months ended June 30, 2006 and increased to $1,385,876, representing an decrease of $63,735 and an increase of $280,849 respectively, over costs and expenses of $727,905 and $945,019 during the three and six months ended June 30, 2005. The decrease in costs and expenses for the three months ended June 30, 2006 were attributable primarily to a reduction in general and administrative expenses while the increases in costs and expenses for the six month period were attributable primarily to the March 11, 2005 merger with Secure System, Inc.



Interest Expense:



Interest expense for the three and six months ended June 30, 2006 was $41,476 and $84,826 respectively. This varied from interest expense of $42,482 and $60,026 during the three and six months ended June 30, 2005. The decrease for the three months is attributable to lower outstanding balances on the stockholder note payable while the increase for the six months is attributable to the interest from the promissory notes issued in conjunction with the March 11, 2005 merger with Secure System, Inc.



Dividends on Preferred Stock:



Dividends on preferred stock for the three ended June 30, 2006 increased to $89,582 from $60,000 for the three months ended June 30, 2005. Dividends for the six months ended June 30, 2006 were $179,164 representing a decrease from $240,000 in dividends during the six months ended June 30, 2005. This increase for the three months is attributable to dividends recognized in conjunction with the March 11, 2005 merger with Secure System, Inc. The decrease for the six months ended June 30, 2006 from June 30, 2005 is due to the additional dividends recognized in conjunction with the March 11, 2005 merger with Secure System, Inc.



Net (Loss):



Net Loss attributable to common shareholders for the three and six months ended June 30, 2006 was $233,669 and $743,540 respectively. This varied from a net loss attributable to common shareholders of $377,515 and $743,809 during the three and six months ended June 30, 2005. The decrease for the three months is attributable to the reasons stated above as well as a reduction of $89,314 in amortization of debt discount while the increase for the six months is attributable to the increase in costs and expenses recognized in conjunction with the March 11, 2005 merger with Secure System, Inc.



Liquidity and Capital Resources:



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



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



18



received six (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 six 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 has 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.


At June 30, 2006, the Company had negative working capital of $1,369,688.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 reduce or defer expenses until such time as 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 us 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 each shareholder 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





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In December 2004, the FASB revised FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This Statement does not change the accounting guidance for share-based payment transactions with parties other than employees provided
in Statement 123 as originally issued and EITF Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. It applies in the first reporting period beginning after December 15, 2005. The adoption of Statement No. 123 (revised 2004) did not have a material impact on the Companys financial position, liquidity, or results of operations.



In July 2006, the Financial Accounting Standards Board (FASB) has published FASB Interpretation No. 48 (FIN No. 48), Accounting for Uncertainty in Income Taxes, to address the noncomparability in reporting tax assets and liabilities resulting from a lack of specific guidance in FASB Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, on the uncertainty in income taxes recognized in an enterprises financial statements. FIN No. 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted. The adoption of FIN 48 is not expected to have a material effect on the Companys financial condition or results of operations.



Item 3. Controls and Procedures



Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of June 30, 2006. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commissions rules and forms and that our disclosure and controls are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.



There were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the second quarter of fiscal 2006 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.







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PART II - OTHER INFORMATION




Item 1.
        Legal Proceedings.

The Company is currently not a party to any pending legal proceedings and no such action by or to the best of its knowledge, against the Company has been threatened.




Item 2.
        Changes in Securities.On May 26, 2006, the Company approved the issuance of 75,000 shares of restricted common stock to Joshua Emanuel pursuant to a stock purchase agreement at $.20 per shares for a total of $15,000. In addition, the Company issued Mr. Emanuel warrants to purchase a total of up to 15,000 shares of common stock at a per share purchase price of: $.30 if exercised within twelve months from the date of the agreement; $.40 if exercised within 12 months to 24 months from the date of the agreement and $.50 if exercised within 24 months to 36 months from the date of the Agreement. Such shares and warrants 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.

On May 26, 2006, the Company approved the issuance of 75,000 shares of restricted common stock to Randa Globerman pursuant to a stock purchase agreement at $.20 per shares for a total of $15,000. In addition, the Company issued Ms. Globerman warrants to purchase a total of up to 15,000 shares of common stock at a per share purchase price of: $.30 if exercised within twelve months from the date of the agreement; $.40 if exercised within 12 months to 24 months from the date of the agreement and $.50 if exercised within 24 months to 36 months from the date of the Agreement. Such shares and warrants 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.

On May 26, 2006, the Company approved the issuance of 175,000 shares of restricted common stock to Dominick & Dominick, LLC pursuant to a Advisory Agreement dated May 17, 2006. 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.



On June 30, 2006, the Company approved the issuance of 171,785 shares of
restricted common stock to John X. Adiletta as a full payment for the his
Officer Advance of $34,357 as shown on the books and records of the Company.
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.




Item 3.
        Defaults Upon Senior Securities.


None


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


None



21



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


On May 26, 2006, the Company filed an 8K pursuant to Item 3.02 based on theissuance of restricted shares.On June 30, 2006, the Company filed an 8K pursuant to Item 3.02 based on theissuance of restricted shares.



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, 2006
        By:
        /s/ John X. AdilettaJohn X. Adiletta,Chief Executive OfficerChief Financial Officer



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