**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 March 31, 2007**




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 T No £




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


Yes £ No T




As
      of May
      14, 2007, 7,043,676 shares of the registrants Common Stock were
      outstanding.














1

















**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**





INDEX
      TO
      FORM 10-QSB


March
      31,
      2007








Part
                I - Financial Information
            PageItem
                1. Financial Statements:Consolidated
                Balance Sheet (Unaudited) - March 31, 2007
            3Unaudited
                Consolidated Statements of Operations for the ThreeMonths
                Ended March 31, 2007 and 2006
            4Unaudited
                Consolidated Statements of Cash Flows for the ThreeMonths
                Ended March 31, 2007 and 2006
            5Notes
                to the Consolidated Financial Statements (unaudited)
            6Item
                2. Management's Discussion and Analysis of Financial Condition and
                Results
                of Operations
            16Item
                3. Controls and Procedures
            20Part
                II - Other Information:Item
                1. Legal Proceedings
            21Item
                2. Unregistered Sale of Equity Securities and Use of Proceeds
            21Item
                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**


**MARCH
      31, 2007**




ASSETSCurrent
                Assets:Cash
            
            $
            56,045Accounts
                receivable
            
            
            302,822Inventories
            
            
            283,332Prepaid
                expenses
            
            
            15,245Deposits
            
            
            9,554Total
                Current Assets
            
            
            666,998Property
                and equipment, net
            
            
            6,976Other
                Assets:Non
                compete covenant, net
            
            
            100,229Customer
                lists, net
            
            
            699,361Software,
                net
            
            
            65,572Goodwill
            
            
            2,200,355Total
                other assets
            
            
            3,065,517TOTAL
                ASSETS
            
            $
            3,739,491LIABILITIES
                AND STOCKHOLDERS’ DEFICITCurrent
                Liabilities:Accounts
                payable and accrued expenses
            
            $
            1,053,925Promissory
                notes payable
            
            
            949,000Stockholder
                note payable, current maturities
            
            
            206,642Employment
                contracts payable
            
            
            4,207Accrued
                interest payable
            
            
            289,639Deferred
                revenue
            
            
            123,389Total
                Current Liabilities
            
            
            2,626,802Stockholder
                note payable, netof
                current maturities
            
            
            267,514TOTAL
                LIABILITIES
            
            
            2,894,316Convertible
                redeemable preferred stock
            
            
            3,793,716Stockholders’
                Deficit:Common
                Stock, 200,000,000 shares authorized,
            
            
            7,044$.001
                par value, 7,043,676 shares issued andoutstandingCapital
                in excess of par value
            
            
            26,567,163Accumulated
                deficit
            
            
            (29,522,748
            )Total
                Stockholders’ Deficit
            
            
            (2,948,541
            )TOTAL
                LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            3,739,491





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 MONTHS ENDING MARCH 31, 2007 AND 2006**




Three
                Months Ended March 31,2007
            
            2006RevenuesEquipment
                Sales
            
            $
            113,835
            
            $
            75,458Installation
                Revenues
            
            
            303,517
            
            
            35,426Subscription
                Revenues
            
            
            --
            
            
            59,001Maintenance
                Revenues
            
            
            223,010
            
            
            175,432Total
                revenues
            
            
            640,362
            
            
            345,317Costs
                of goods soldMaterial
                cost of systems sold
            
            
            57,907
            
            
            36,507Overhead
                cost
            
            
            74,728
            
            
            56,987Install
                and service costs
            
            
            130,185
            
            
            134,574Engineering
                and development
            
            
            38,993
            
            
            39,206Total
                costs of goods sold
            
            
            301,813
            
            
            267,274Gross
                Margin
            
            
            338,549
            
            
            78,043Selling,
                general, and administrative expensesSelling
                and marketing expense
            
            
            40,838
            
            
            37,949Gen
                and admin expense
            
            
            324,231
            
            
            352,135Depreciation
                expense
            
            
            1,809
            
            
            1,875Amortization
                expense
            
            
            61,151
            
            
            62,473Total
                selling, general, and administrative expenses
            
            
            428,029
            
            
            454,432Loss
                from operations
            
            
            (89,480
            )
            
            (376,389
            )Other
                Income(Expense)Interest
                expense
            
            
            (52,259
            )
            
            (43,350
            )Total
                other income (expense)
            
            
            (52,259
            )
            
            (43,350
            )Loss
                before income taxes
            
            
            (141,739
            )
            
            (419,739
            )Provision
                for income taxes
            
            
            2,253
            
            
            550Net
                Loss
            
            
            (143,992
            )
            
            (420,289
            )Dividends
                on preferred stock
            
            
            89,582
            
            
            89,582Net
                loss attributable to common stockholders
            
            $
            (233,574
            )
            $
            (509,871
            )Basic
                and diluted net loss per common share
            
            $
            (0.03
            )
            $
            (0.09
            )Weighted
                Average Number of Common Shares
            
            
            6,986,787
            
            
            5,946,335





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 THREE MONTHS ENDING MARCH 31, 2007 AND 2006**














2007
            
            2006Cash
                Flows From Operating Activities:Net
                Loss
            
            $
            (143,992
            )
            $
            (420,289
            )Adjustments
                to reconcile net loss tonet
                cash provided by operating activities:Amortization
            
            
            61,151
            
            
            62,473Depreciation
            
            
            1,809
            
            
            1,875Stock
                issued for services
            
            
            16,000
            
            
            80,000Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (141,397
            )
            
            71,695Inventories
            
            
            13,120
            
            
            11,037Other
                current assets
            
            
            8,541
            
            
            (34,257
            )Accounts
                payable and accrued expenses
            
            
            163,972
            
            
            255,157Accrued
                interest payable
            
            
            42,691
            
            
            26,970Employment
                contracts payable
            
            
            (2,732
            )
            
            (9,295
            )Deferred
                revenue
            
            
            62,892
            
            
            70,474Net
                Cash Provided by Operating Activities
            
            
            82,055
            
            
            115,840Cash
                Flows From Financing Activities:Payment
                of note payable
            
            
            --
            
            
            (25,622
            )Proceeds
                from issuance of stock
            
            
            --
            
            
            10,000Proceeds
                from insurance on vehicle
            
            
            --
            
            
            10,382Payment
                of stockholders note payable
            
            
            (27,608
            )
            
            --Net
                Cash Provided (Used) by `Financing Activities
            
            
            (27,608
            )
            
            (5,240
            )Net
                Change in Cash
            
            
            54,447
            
            
            110,600Cash
                at Beginning of the Period
            
            
            1,598
            
            
            41,487Cash
                at End of the Period
            
            $
            56,045
            
            $
            152,087Non
                Cash Investing and Financing Activities:Accrual
                of preferred stock dividends
            
            $
            89,582
            
            $
            89,582








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





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 March 31, 2007 and 2006 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
      March 31, 2007 and the results of its consolidated operations and its
      consolidated cash flows for the three month periods ended March 31, 2007 and
      2006.





The
      Unaudited Consolidated Statements of Operations for the three months ended
      March
      31, 2007 and 2006 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 a stockholders’
deficit of approximately $2,949,000. 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. 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.


6


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**


The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




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 March 31, 2007 based on its 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 to 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.




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.


7


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**


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 2006 financial statements in order to conform
      to the 2007 financial statement presentation. Such reclassifications had no
      effect on the prior reported 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 2006 and 2007 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.




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.




8


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**





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 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 is 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
      March 31, 2007 and 2006, 140,000 and 75,000 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.





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.


9


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**


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 - Stockholders Deficit





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 March 31, 2007.





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 2007, the Company approved the issuance of 50,000 shares of common
      stock
      for consulting services rendered at $.20 per share. The stock was issued on
      January 22, 2007.





In
      March
      2007, the Company approved the issuance of 60,000 shares of common stock in
      accordance with an investment agreement rendered at $.10 per share. The stock
      was issued on March 8, 2007.





Note
      4 -
      Series A Convertible Redeemable Preferred Stock




As
      of
      March 31, 2007, 2,986,059 shares of Series A Redeemable Convertible Preferred
      Stock are issued and outstanding and 807,657 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 accrued 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.






10


**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”), the Company was to redeem 50% of
        the shares of Series A Preferred Stock then held by each Registered Holder.
        The
        First Redemption Date was extended to July 14, 2007. 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.





In
      September 2006, 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 September
      29,
      2006 as follows:





The
      Conversion Price for purposes of calculating the Conversion Rate was decreased
      from $.90 per share to $0.40 per share if conversion occurs within 12 months
      of
      the filing of the amendment; $.60 per share if conversion occurs between 12
      and
      24 months; or $80 per share thereafter.; and when the Company either completes
      an acquisition of an entity with in excess of $5.0 million in annual operating
      revenues or causes an acquisition to be completed by its subsidiary, Secure
      Systems, Inc. of an entity with in excess of $2.0 million dollars in annual
      operating revenue then the Company will no longer be required to redeem the
      Series A Convertible Preferred Stock as set in Section 5.1 of the original
      certificate of designation filed on March 11, 2006 and amended on December
      27,
      2005.




Note
      5 -
      Related Party Transactions




The
      stockholder note payable was $474,156 at March 31, 2007. 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










11


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**




Note
      6 -
      Recent Accounting Pronouncements






We
      adopted the provisions of Financial Accounting Standards Board ("FASB")
      Interpretation No. 48, "Accounting for Uncertainty in Income Taxes-an
      interpretation of FASB Statement No. 109" ("FIN 48"), on January 1, 2007. FIN
      48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise's financial statements in accordance with FASB Statement 109,
      "Accounting for Income Taxes", and prescribes a recognition threshold and
      measurement process for financial statement recognition and measurement of
      a tax
      position taken or expected to be taken in a tax return. FIN 48 also provides
      guidance on derecognition, classification, interest and penalties, accounting
      in
      interim periods, disclosure and transition. Based on our evaluation, we have
      concluded that there are no significant uncertain tax positions requiring
      recognition in our financial statements or adjustments to our deferred tax
      assets and related valuation allowance. Our evaluation was performed for the
      tax
      years ended December 31, 2003, 2004, 2005 and 2006, the tax years which remain
      subject to examination by major tax jurisdictions as of March 31,
      2007.




In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, and
      (“SFAS No. 157”), which defines fair value, establishes a framework for
      measuring fair value, and expands disclosures about fair value measurements.
      SFAS No. 157 will be effective for the Company beginning January 1, 2008.
      Management is currently evaluating the effect SFAS No. 157 will have on the
      Company’s financial condition or results of operations.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an Amendment of FASB Statement No. 115” which is effective for fiscal
      years beginning after November 15, 2007. This statement permits an entity to
      choose to measure many financial instruments and certain other items at fair
      value at specified election dates. Subsequent unrealized gains and losses on
      items for which the fair value option has been elected will be reported in
      earnings. We are currently evaluating the potential impact of this
      statement.





Note
      7 -
      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.


12


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**


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.




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.


13


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**


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.





On
      November 15, 2006, the Company closed a $50,000 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 six months from date of issuance, with a minimum of one year’s interest to be
      paid. As part of the agreement, the investor was to receive 25,000 shares of
      the
      Company’s Common Stock. The total value of the shares issued and the
      corresponding discount that was created as a result of the issuance of the
      shares in connection with the convertible notes totaled $5,000 and has been
      recorded as a debt discount with a corresponding increase to equity. The Company
      has agreed to piggyback registration rights for the Common Stock. These notes
      are convertible at any time at the holder’s option into common stock at $0.25
      per share.




Current
      Debt at March 31, 2007




Jan
                2004 Note -
            
            $
            175,000Apr
                2004 Note -
            
            
            100,000Jun
                2004 Note -
            
            
            100,000Mar
                2005 Notes -
            
            
            504,000Apr
                2005 Note -
            
            
            20,000Nov
                2006 Note -
            
            
            50,000sub
                - Total -
            
            
            949,000Stockholder
                Note -
            
            
            206,642sub
                - Total -
            
            $
            1,155,642





Long
      Term
      Debt:




Stockholder
                Note -
            
            
            267,514




Total
                debt -
            
            $
            1,423,156




Note
      8 -
      Commitments




The
      Company has entered into an employment agreement with the President and CEO
      that
      became effective January 6, 2004. The employment agreement has 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,


14


**SOMERSET
      INTERNATIONAL GROUP, INC. AND SUBSIDIARY**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**





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





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





Note
      9 -
      Subsequent Events





On
      April
      2, 2007, the Company approved the issuance of a convertible promissory note
      for
      $45,000 to Karl Kaplan and issued a common stock purchase warrant to Karl Kaplan
      for 90,000 warrants. The warrants have a term of three years and exercise prices
      of $.20 if exercised within the twelve months from the issue date, $.30 if
      exercised within 12 months to 24 months from the issue date; and $.40 if
      exercised within 24 months to 36 months from the issue date. Such note and
      warrant 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.






15





**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.




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
      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.







16





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 $640,362
        for the three months ended March 31, 2007 increased by $295,045 over revenues
        of
        $345,317 during the three months ended March 31, 2006. This was primarily
        attributable to an increase in Equipment Sales and Installation Revenues
        of
        $306,468 and an increase in Maintenance Revenues of $47,578 offset by a decrease
        in Subscription Revenues of $59,001 for the same period. Increases in revenue
        are the result of volume increases with customers.





Costs
      of
      Goods Sold




Costs
      of
      Goods Sold for the three months ended March 31, 2007 increased to $301,813,
      representing an increase of $34,539 over costs of goods sold of $267,274 during
      the three months ended March 31, 2006. This was primarily attributable to an
      increase in materials cost of $21,400 and an increase in factory overhead of
      $17,741.





Gross
      Margin





Gross
      Margin for the three months ended March 31, 2007 increased to $338,549 and
      52.9%
      of revenue, from a gross margin of $78,043 and 22.6% of revenue during the
      three
      months ended March 31, 2006. This was a direct result of the increase in
      Revenues described above offset by the increase in the Cost of Goods Sold.








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




SG&A
        expenses for
        the three months ended March 31, 2007 of $428,029, decreased by $26,403 over
        SG&A expenses of $454,432 during the three months ended March 31, 2006.





This
      was
      primarily attributable to decrease in general and administrative expenses for
      the period. The decrease in general and administrative expenses was primarily
      attributable to an decrease in investor relations costs of $14,521 and
      accounting fees of $23,083 for the three months ended March 31, 2007 as compared
      to the three months ended March 31, 2006.


17





Interest
      Expense




Interest
      expense for the three months ended March 31, 2007 increased to $52,259, from
      interest expense of $43,350 during the three months ended March 31, 2006. This
      increase is primarily attributable to the interest on the promissory notes
      issued in conjunction with the March 11, 2005 merger with Secure System, Inc.,
      as well as the promissory note issued in November 2006.




Dividends
      on Preferred Stock




Dividends
      on preferred stock for the three months ended March 31, 2007 were $89,582 which
      was unchanged from $89,582 in dividends during the three months ended March
      31,
      2007. These dividends are attributable to the redeemable convertible preferred
      shares issued in conjunction with the March 11, 2005 merger with Secure System,
      Inc.





Net Loss




Net
        Loss attributable
        to common stockholders for the three months ended March 31, 2007 decreased
        by
        $276,297 to $233,574 from $509,871 during the three months ended March 31,
        2006.
        The increase in net loss is primarily due to an increase in gross margin
        of
        $260,506 for the period and a decrease in selling, general, and administrative
        expenses for the period of $66,058.


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 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
      March
      31, 2007, the Company had negative working capital of $1,959,804.






18





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




We
      adopted the provisions of Financial Accounting Standards Board ("FASB")
      Interpretation No. 48, "Accounting for Uncertainty in Income Taxes-an
      interpretation of FASB Statement No. 109" ("FIN 48"), on January 1, 2007. FIN
      48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise's financial statements in accordance with FASB Statement 109,
      "Accounting for Income Taxes", and prescribes a recognition threshold and
      measurement process for financial statement recognition and measurement of
      a tax
      position taken or expected to be taken in a tax return.


19


FIN
      48 also provides
      guidance on derecognition, classification, interest and penalties, accounting
      in
      interim periods, disclosure and transition. Based on our evaluation, we have
      concluded that there are no significant uncertain tax positions requiring
      recognition in our financial statements or adjustments to our deferred tax
      assets and related valuation allowance. Our evaluation was performed for the
      tax
      years ended December 31, 2003, 2004, 2005 and 2006, the tax years which remain
      subject to examination by major tax jurisdictions as of March 31,
      2007.





In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, and
      (“SFAS No. 157”), which defines fair value, establishes a framework for
      measuring fair value, and expands disclosures about fair value measurements.
      SFAS No. 157 will be effective for the Company beginning January 1, 2008.
      Management is currently evaluating the effect SFAS No. 157 will have on the
      Company’s financial condition or results of operations.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an Amendment of FASB Statement No. 115” which is effective for fiscal
      years beginning after November 15, 2007. This statement permits an entity to
      choose to measure many financial instruments and certain other items at fair
      value at specified election dates. Subsequent unrealized gains and losses on
      items for which the fair value option has been elected will be reported in
      earnings. We are currently evaluating the potential impact of this
      statement.





**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 March 31, 2007. 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 first quarter of fiscal 2007 that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.








20


**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
      January 22, 2007,
      the Company approved the issuance of 50,000 shares to Starobin Partners pursuant
      to a consulting agreement between the Company and Wellfleet Partners, Inc.
      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
      March 8, 2007, the
      Company approved the issuance of 60,000 shares of unrestricted common stock
      to
      Dutchess Private Equities Fund, LP pursuant to the investment agreement between
      the Company and Dutchess Private Equities Fund, LP dated October 24, 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.





Item
      3. Defaults Upon
      Senior Securities




There
      have been no
      notices of default provided to the Company.





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





None.




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
      January 15, 2007, the Company filed an 8K pursuant to Item 5.03 based on an
      amendment to the articles of Incorporation.





On
      January 22, 2007, the Company filed an 8K pursuant to Item 3.02 based on the
      issuance of restricted shares.







21





**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:
                May 14, 2007
            By:
            /s/
                John X. AdilettaJohn
                X. Adiletta,Chief
                Executive OfficerChief
                Financial Officer