---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB/AAmendment No. 2

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30,
2006

SALAMON GROUP, INC.(Name
of Small Business Registrant in its charter)

|Nevada                                   | 93-1324674                          
|---------------------------------------- | ------------------------------------
|(State or other jurisdiction of          | (I.R.S. Employer Identification no.)
|incorporation or organization)           |                                     
|                                         | V6E 1A3                             
|302-1028 Alberni Street                  | (Zip Code)                          
|Vancouver, B.C., Canada, V6E 1A3         |                                     
|(Address of principal executive offices) |                                     

(604) 408-3861(Issuer's telephone
number)

Securities to be registered under Section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | None                                     

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

Common Stock, $0.001 par value per share(Title
of class)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

Yes [ x ] No [ ]

Check if there is no disclosure of
delinquent files in response to Item 405 of Regulation S-B is not contained in
this form, and no disclosure will be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[ ]

State issuers revenues for its most recent quarter. $ 0

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days.

(See definition of affiliate in Rule 12b-2 of the Exchange Act.)
N/A. Shares have not traded.

---

Note: If determining whether a person is an affiliate will
involve an unreasonable effort and expense, the issuer may calculate the
aggregate market value of the common equity held by non-affiliates on the basis
of reasonable assumptions, if the assumptions are stated.

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

State the number of shares outstanding of each of the issuers
  classes of common equity, as of the latest practicable date. 8,962,820 as of
  September 30, 2006.

---

Copies of Communications Sent to: 
  Claudia Losie 
  Boughton Law Corporation 
  595 Burrard Street, Suite 1000 
  Vancouver, BC, Canada, V7X 1S8 
  Tel: (604) 687-6789
  Fax: (604) 683-5317

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**EXPLANATORY NOTE**

The Company
  has retained a Nevada law firm for U.S. counsel and is in the process of seeking
  new auditors. Past quarterly financial statements and audits of Salamon Group
  Inc. have all been reviewed up to June 30, 2006 by Manning Elliott, the previous
  auditing firm (contact Keith Elliott). A Form 8-K was filed explaining the conflict
  of interest between the Company and Manning Elliott.

A letter from Manning Elliott, former
  auditors, is attached to this filing as exhibit 16.1.



2

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TABLE OF CONTENTS

|PART
      I. | FINANCIAL
      INFORMATION                                            | 4 
|------------- | ---------------------------------------------------------------------- | --
|              |                                                                        |   
|              | ITEM
      1.FINANCIAL STATEMENTS                                      | 4 
|              |                                                                        |   
|              | ITEM
      2.MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION | 5 
|              | DESCRIPTION
      OF BUSINESS                                          | 5 
|              | RESULTS
      OF OPERATIONS                                            | 5 
|              | LIQUIDITY
      AND CAPITAL RESOURCES                                  | 5 
|              |                                                                        |   
|              | ITEM
      3.CONTROLS AND PROCEDURES                                   | 15
|              |                                                                        |   
|PART II.      | OTHER INFORMATION                                                      | 16
|              |                                                                        |   
|              | ITEM 1.LEGAL PROCEEDINGS                                               | 16
|              |                                                                        |   
|              | ITEM 2.CHANGES IN SECURITIES                                           | 16
|              |                                                                        |   
|              | ITEM 3.DEFAULTS UPON SENIOR SECURITIES                                 | 16
|              |                                                                        |   
|              | ITEM 4.SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS            | 16
|              |                                                                        |   
|              | ITEM 5.OTHER INFORMATION                                               | 16
|              |                                                                        |   
|              | ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K                                | 17
|              |                                                                        |   
|              | SIGNATURES                                                             | 17

3

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The Financial Statements of the Company and Notes to Financial
  Statements required by this Item 1 commence on page F-1 hereof and are incorporated
  herein by this reference. The Financial Statements filed as part of this Report
  on Form 10-QSB are listed in the Index to Financial Statements below.

4

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Salamon Group, Inc.(A Development Stage Company) 
  Financial Statements 
  September 30, 2006 
  (U.S. Dollars) 
  (Unaudited)

|                                                | Index
|----------------------------------------------- | -----
|                                                |      
|Balance Sheets                                  | F-1  
|                                                |      
|Statements of Operations and Comprehensive Loss | F-2  
|                                                |      
|Statements of Cash Flows                        | F-3  
|                                                |      
|Notes to the Financial Statements               | F-4  

F-i

---

|SALAMON GROUP, INC.              
|---------------------------------
|(A Development Stage Company)    
|BALANCE SHEETS                   
|(Expressed in U.S.
      dollars)

|                                                    |  | September   |   |  |              |  
|--------------------------------------------------- |  | ----------- | - |  | ------------ | -
|                                                    |  | 30,         |   |  | December 31, |  
|                                                    |  | 2006        |   |  | 2005         |  
|                                                    |  | $           |   |  | $            |  
|                                                    |  | (unaudited) |   |  | (audited)    |  
|ASSETS                                              |  |             |   |  |              |  
|Current                                             |  |             |   |  |              |  
|Cash                                                |  | 47          |   |  | 25           |  
|                                                    |  |             |   |  |              |  
|Total Current Assets                                |  | 47          |   |  | 25           |  
|Property and equipment (Note 3)                     |  | 279         |   |  | 279          |  
|                                                    |  |             |   |  |              |  
|Total Assets                                        |  | 326         |   |  | 304          |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT               |  |             |   |  |              |  
|Current                                             |  |             |   |  |              |  
|Accounts payable                                    |  | 9,832       |   |  | 19,192       |  
|Due to related party (Note 6)                       |  | 76,959      |   |  | 52,578       |  
|Total Current Liabilities                           |  | 86,791      |   |  | 71,770       |  
|Contingencies and Commitments (Notes 1 and
      4) |  |             |   |  |              |  
|Subsequent Events (Note 7)                          |  |             |   |  |              |  
|Stockholders' Deficit                               |  |             |   |  |              |  
|Capital stock (Note 5)                              |  |             |   |  |              |  
|Authorized                                          |  |             |   |  |              |  
|10,000,000 of preferred shares                      |  |             |   |  |              |  
|40,000,000
      of voting common shares            |  |             |   |  |              |  
|Issued and outstanding                              |  |             |   |  |              |  
|8,962,820
      common shares                       |  | 8,963       |   |  | 8,963        |  
|Additional paid-in capital                          |  | 120,816     |   |  | 120,816      |  
|Deficit, accumulated during the development stage   |  | (216,244    | ) |  | (201,245     | )
|Total Stockholders'
      Equity (Deficit)          |  | (86,465     | ) |  | (71,466      | )
|Total Liabilities and Stockholders' Deficit         |  | 326         |   |  | 304          |  

On behalf of the Board:

*/s/ "John E. Salamon"*      Director

The accompanying notes are an integral part of these financial
  statements 
  F1

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|SALAMON GROUP, INC.             
|--------------------------------
|(A Development Stage Company)   
|STATEMENTS OF OPERATIONS        
|(unaudited)                     
|(Expressed in U.S
      dollars)

|                                        |  |                   |   |  |                |   |  | Accumulated from |  
|--------------------------------------- |  | ----------------- | - |  | -------------- | - |  | ---------------- | -
|                                        |  |                   |   |  |                |   |  | April 27, 2001   |  
|                                        |  | Nine Months Ended |   |  | (Inception) to |  
|                                        |  | September 30,     |   |  | September 30,  |  
|                                        |  | 2006              |   |  | 2005           |   |  | 2006             |  
|                                        |  | $                 |   |  | $              |   |  | $                |  
|                                        |  |                   |   |  |                |   |  |                  |  
|GENERAL AND ADMINISTRATIVE              |  |                   |   |  |                |   |  |                  |  
|Amortization of intangible
      asset  |  |                  |   |  |               |   |  | 55,000           |  
|Amortization of property and equipment  |  | -                 |   |  | -              |   |  | 4,236            |  
|Consulting and technical
      services |  |                  |   |  |               |   |  | 11,109           |  
|Foreign exchange                        |  | 63                |   |  | 310            |   |  | 4,711            |  
|Interest and bank charges               |  | 52                |   |  | 60             |   |  | 498              |  
|Office and miscellaneous                |  | 1,800             |   |  | 1,235          |   |  | 12,152           |  
|Professional fees                       |  | 1,634             |   |  | 12,153         |   |  | 66,847           |  
|Telephone                               |  | 2,700             |   |  | 2,251          |   |  | 15,070           |  
|Transfer agent and filing
      fees    |  | 4,250             |   |  | 5,050          |   |  | 11,634           |  
|Travel
      and entertainment          |  | 4,500             |   |  | 1,230          |   |  | 33,877           |  
|Net Loss for the Period                 |  | (14,999           | ) |  | (22,259        | ) |  | (216,244         | )
|                                        |  |                   |   |  |                |   |  |                  |  
|Loss per share  Basic                  |  | (0.00             | ) |  | (0.00          | ) |  |                  |  
|                                        |  |                   |   |  |                |   |  |                  |  
|Weighted Average Shares Outstanding     |  | 8,962,820         |   |  | 8,962,820      |   |  |                  |  

The accompanying notes are an integral part of these financial
  statements 
  F2

---

|SALAMON GROUP, INC.             
|--------------------------------
|(A Development Stage Company)   
|STATEMENTS OF CASH FLOWS        
|(unaudited)                     
|(Expressed in U.S
      dollars)

|                                                                              |  | Nine Months Ended |  
|----------------------------------------------------------------------------- |  | ----------------- | -
|                                                                              |  | September 30,     |  
|                                                                              |  | 2006              |  
|                                                                              |  | $                 |  
|Cash flows from operating activities                                          |  |                   |  
|Net loss for the period                                                       |  | (14,999           | )
|Adjustments to reconcile
      loss to net cash used by operating activities: |  |                   |  
|                                                                              |  |                   |  
|Amortization of property and equipment                                        |  | -                 |  
|                                                                              |  |                   |  
|                                                                              |  | (14,999           | )
|Changes in operating assets and liabilities:                                  |  |                   |  
|Increase (decrease) in accounts payable                                       |  | (9,360            | )
|                                                                              |  | (24,359           | )
|Cash flows from investing activities                                          |  |                  |  
|Cash flows from financing activities                                          |  |                   |  
|Advances from (to) related
      parties                                      |  | 24,381            |  
|Issue
      of share capital for cash                                         |  |                  |  
|                                                                              |  | 24,381            |  
|Increase (decrease) in cash and cash equivalents                              |  | 22                |  
|Cash, beginning of period                                                     |  | 25                |  
|Cash, end of period                                                           |  | 47                |  
|Non-cash Financing Activity                                                   |  |                   |  
|Shares
      issued for services and other expenses                           |  |                  |  
|Supplemental Disclosures                                                      |  |                   |  
|Interest paid                                                                 |  |                  |  
|Income tax paid                                                               |  |                  |  

The accompanying notes are an integral part of these financial
  statements 
  F3

---

|SALAMON GROUP, INC.              
|---------------------------------
|(A Development Stage Company)    
|**NOTES TO FINANCIAL STATEMENTS**
|(unaudited)                      
|(Expressed in U.S
      dollars) 

|1. | Nature of Operations and Continuance of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Salamon Group, Inc. (the "Company") was incorporated
        in the State of Nevada, USA, on April 27, 2001. The Company is a development
        stage company whose principal business plan is to seek earnings by exploiting
        technology held under a license agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In a development stage company, management
        devotes most of its activities in investigating business opportunities
        and further advancing its technologies. The ability of the Company to
        emerge from the development stage with respect to any planned principal
        business activity is dependent upon its successful efforts to raise additional
        equity financing and/or attain profitable operations. There is no guarantee
        that the Company will be able to complete any of the above objectives.
        At September 30, 2006, the Company had a working capital deficit of $86,744
        and an accumulated deficit of $216,244. These factors raise substantial
        doubt regarding the Companys ability to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On July 5, 2001, the Company entered into
        a licensing agreement with Space Globe Technologies Ltd. ("Space Globe"),
        a Canadian corporation. The agreement allows the Company to use certain
        technology with respect to a power cell technology used for internal and
        external electrical applications.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In January, 2005, Space Globe Technologies
        and Salamon Group in mutual agreement replaced the license agreement with
        an Agreement which transferred 100% ownership of and rights to the Technology
        to Salamon Group for no additional compensation. John Salamon also assigned
        all rights to the patent pending to Salamon Group.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Computer equipment
      3 years straight-lineOffice equipment
      5 years straight-line


| | (c) | Basic and Diluted Net Income (Loss) per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company computes net income (loss) per share in
        accordance with SFAS No. 128, Earnings per Share (SFAS 128).
        SFAS 128 requires presentation of both basic and diluted earnings per
        shares (EPS) on the face of the income statement. Basic EPS is computed
        by dividing net income (loss) available to common shareholders (numerator)
        by the weighted average number of common shares outstanding (denominator)
        during the period. Diluted EPS gives effect to all dilutive potential
        common shares outstanding during the period including stock options, using
        the treasury stock method, and convertible preferred stock, using the
        if-converted method. In computing Diluted EPS, the average stock price
        for the period is used in determining the number of shares assumed to
        be purchased from the exercise of stock options or warrants. Diluted EPS
        excludes all dilutive potential common shares if their effect is antidilutive.

F4

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|SALAMON GROUP, INC.              
|---------------------------------
|(A Development Stage Company)    
|**NOTES TO FINANCIAL STATEMENTS**
|(unaudited)                      
|(Expressed in U.S
      dollars) 

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | (d)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   | (e)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   | (f)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   | (g)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   | (h)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   | (i)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   | (j)                                                           
|   |                                                               
|   |                                                               

F5

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|SALAMON GROUP, INC.              
|---------------------------------
|(A Development Stage Company)    
|**NOTES TO FINANCIAL STATEMENTS**
|(unaudited)                      
|(Expressed in U.S
      dollars) 

|3. | Property and Equipment
|-- | ----------------------

| |                    |  |       |  |  |              |  |  | Net book value | 
| | ------------------ |  | ----- |  |  | ------------ |  |  | -------------- | 
| |                    |  |       |  |  | Accumulated  |  |  | September 30,  | 
| |                    |  | Cost  |  |  | Depreciation |  |  | 2006           | 
| |                    |  | $     |  |  | $            |  |  | $              | 
| |                    |  |       |  |  |              |  |  | (unaudited)    | 
| |                    |  |       |  |  |              |  |  |                | 
| | Computer equipment |  | 3,161 |  |  | 3,161        |  |  | -              | 
| | Office equipment   |  | 1,354 |  |  | 1,075        |  |  | 279            | 
| |                    |  | 4,515 |  |  | 4,236        |  |  | 279            | 

|4. | Capital Stock             
|-- | --------------------------
|   |                           
|   | (a)                       
|   |                           
|   | (b)                       
|   |                           
|   | (c)                       
|   |                           
|   | (d)                       
|   |                           
|   | (e)                       
|   |                           
|5. | Related Party Transactions
|   |                           
|   | (a)                       
|   |                           
|   | (b)                       

F6

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|SALAMON GROUP, INC.              
|---------------------------------
|(A Development Stage Company)    
|**NOTES TO FINANCIAL STATEMENTS**
|(unaudited)                      
|(Expressed in U.S
      dollars) 

|6. | Related Party Transactions                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                               
|   | (a)                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                               
|   | (b)                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                               
|7. | Subsequent Events                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                               
|   | The financial statements
          for the period ended September 30, 2006 have been prepared and filed
          by the management of Salamon Group Inc. The financial statements and
          audits that ended up to June 30, 2006 have all been reviewed by Manning
          Elliott, previous auditors.

F7

---

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

Plan of Operations

Since its inception, the Company
has conducted no business operations except for organizational and capital
raising activities and the completion of a working model of the Power generator.
For the period from inception (April 27, 2001) through September 30, 2006, the
Company had no revenue from operations and accumulated operating expenses
amounted to $216,244. The Company proposes to aggressively compete in the
alternative energy source technology market.

The Company plans to generate
revenues through the sale of manufacturing and marketing licenses on a
world-wide basis.

Salamon Group will also be
involved in research and development activities . The corporation will search
for a private investment group to provide up to $200,000 CAD, to cover the costs
of product development. All products will be licensed to other corporations for
manufacturing, thus no additional money is anticipated to be used to manufacture
and/or distribute.

Future research and development
will be focused on smaller, portable EPGs adding a solar power component. Mr
Salamon has a conceptual design and will proceed with plans when funding
allows.

The Company is not planning to
purchase a plant or equipment at this time but rather to enter into Licensing
agreements to manufacture and market the products. .

If the Company is unable to
generate sufficient revenue from operations to implement its plans, management
intends to explore all available alternatives for debt and/or equity financing,
including but not limited to private and public securities offerings. Depending
upon the amount of revenue, if any, generated by the Company, management
anticipates that it will be able to satisfy its cash requirements for the next
approximately nine (9) to twelve (12) months without raising funds via debt
and/or equity financing or from third party funding sources.

Accordingly, management expects
that it will be necessary for Salamon Group to raise additional funds in the
event that the Company is unable to generate any revenue from operations and if
only a minimal level of revenue is generated in accordance with management's
expectations.

Mr. Salamon, at least initially,
will be responsible for developing Salamon Group's business. However, at such
time, if ever, as sufficient operating capital becomes available, he expects to
employ additional staffing. In addition, the Company expects to continuously
engage in market research in order to monitor new market trends and other
critical information deemed relevant to Salamon Group's business.

Financial Condition, Capital Resources and Liquidity

At September 30, 2006, the Company
  had assets totaling $326 and current liabilities of $86,791 attributable to
  unpaid Space Globe Technologies license fees, audit fees and general operating
  expenses. Since the Company's inception, it has received $129,779 in cash and
  services contributed as consideration for the issuance of shares of Common Stock.

Salamon Group's working capital
  is presently minimal and there can be no assurance that the Company's financial
  condition will improve. The Company is expected to continue to have minimal
  working capital or a working capital deficit as a result of current liabilities.
  The Company, at inception, issued 1,500,000 shares of the Company's Common Stock
  to Mr. Salamon, the executive officer and

5

---

director of Salamon Group, and 500,000 shares of the Company's
Common Stock to White & Lee Investments, LP, an investment vehicle
controlled by White & Lee LLP, former legal counsel to the Company, as
founder shares. From April 2001 through September 30, 2006, Salamon Group
received gross proceeds of $124,279 (including $102,500 in cash and services
valued at $21,779) from the sale of a total of 1,962,820 shares of Common Stock,
$0.001 par value per share, in an offering conducted pursuant to Section 4(2) of
the Act and Rules 504 and 901 (See Part II, Item 4. Recent Sales of
Unregistered Securities). These offerings were made in the Provinces of British
Columbia and Alberta, Canada. Even though management believes, without
assurance, that it will obtain sufficient capital with which to implement its
business plan on a limited scale, the Company is not expected to continue in
operation without an infusion of capital. In order to obtain additional equity
financing, management may be required to dilute the interest of existing
shareholders or forego a substantial interest of its revenues, if any. (See Part
I, Item 1. Description of Business; See Part I, Item 4. Security Ownership of
Certain Beneficial Owners and Management and Part I, Item 7. Certain
Relationships and Related Transactions.)

The Company has no potential capital
  resources from any outside sources at the current time. In its initial phase,
  the Company will operate out of the facility provided by Mr. Salamon.

The ability of the Company to continue
  as a going concern is dependent upon its ability to attract a sufficiently large
  and profitable licensee base to license its electrical generator technology.

To implement such plan, also during
  this initial phase, the Company intends to initiate a self-directed private
  placement under Rule 506 in order to raise an additional $200,000. In the event
  such placement is successful, the Company believes that it will have sufficient
  operating capital to meet the initial expansion goals and operating costs for
  a period of one (1) year.

Net Operating Losses

As of September 30, 2006, the Company
  has a net operating loss carry forward of approximately $216,244.

Forward-Looking Statements

This Form 10-SB includes 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. All statements, other than statements of historical facts, included
  in this Form 10-QSB which address activities, events or developments which the
  Company expects or anticipates will or may occur in the future, including such
  things as future capital expenditures (including the amount and nature thereof),
  business strategy, expansion and growth of the Company's business and operations,
  and other such matters are forward-looking statements. These statements are
  based on certain assumptions and analyses made by the Company in light of its
  experience and its perception of historical trends, current conditions and expected
  future developments as well as other factors it believes are appropriate in
  the circumstances. However, whether actual results or developments will conform
  with the Company's expectations and predictions is subject to a number of risks
  and uncertainties, general economic market and business conditions; the business
  opportunities (or lack thereof) that may be presented to and pursued by the
  Company; changes in laws or regulation; and other factors, most of which are
  beyond the control of the Company. Consequently, all of the forward-looking
  statements made in this Form 10-QSB are qualified by these cautionary statements
  and there can be no assurance that the actual results or developments anticipated
  by the Company will be realized or, even if substantially realized, that they
  will have the expected consequence to or effects on the Company or its business
  or operations. The Company assumes no obligations to update any such forward-looking
  statements.

6

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Business Development.

SALAMON GROUP, INC. (hereinafter
referred to as the Company or Salamon Group) was organized under the laws of
the State of Nevada on April 27, 2001. The Company is a developmental stage
company organized by John E. Salamon, the President and Director of the Company.
The Companys aim is to develop, license and/or acquire certain electrical
generator technologies which the Company believes to be proprietary. The
Company's offices are presently located at 302-1028 Alberni Street, Vancouver,
B.C., Canada, V6E 1A3 and its telephone number is (604) 408-3861. The Companys
Nevada registered agent is National Registered Agents, Inc. of NV, 1100 East
William Street, Suite 207, Carson City, NV 89701.

Every public issuer of stock
engaged in interstate business and which has total assets exceeding $ 1 million
and has more than 750 shareholders is required to register its securities with
the Securities and Exchange Commission under the Exchange Act of 1934. The
Company has not reached these threshold requirements and is therefore exempt
from required registration under Section 12(g) of the Exchange Act. However, a
Form 10-SB registration statement has been filed on a voluntary basis in order
to possibly enhance shareholder and investor confidence by way of full
disclosure of the Companys current status and financial condition. Registration
may also allow the Company to establish a trading market on the OTC Bulletin
Board. We believe that registration may assist in securing private investment
capital which is needed to complete product testing, to establish a market for
its product and to continue research and development of additional
products..

Since its inception the Company
has been involved in organizational and fund raising activities and the
licensing, subsequent acquisition and further development of certain electrical
generator technology from Space Globe Technologies Ltd., a private British
Columbia, Canada corporation (Space Globe Technologies), founded and organized
also by John Salamon, founder, president and director of Salamon Group, Inc.
Space Globe Technologies was founded for the purpose of developing technologies
and concepts in the field of Alternative Energy Sources. Alternative Energy
Sources are those which are not supplied by the burning of fossil fuels or the
splitting of atoms. Some of the alternative energy sources include solar energy,
wind power, geothermal, tides and hydro power. Space Globe Technologies was
incorporated in the Province of British Columbia, Canada in 1998 by John
Salamon. It was initially established as a management/consulting company and in
which to develop ideas and concepts for power generation. The assets at present
consist of a vehicle, office equipment and investments in Salamon group. Its
current operation consists mainly of securing private investment capital to
assist in funding the operations and growth of Salamon Group. From 1999 to 2001
Space Globe and Mr. Salamon developed the concept and design of an Electrical
Power Generator (EPG) for home and office use and for emergency power backup
situations. Mr. Salamon filed a patent application in Canada on September 4,
2001 for protection of the design of the EPG.

The Company initially distributed
to Mr. John E. Salamon and White & Lee Investments, L.P. a total of
1,500,000 and 500,000 shares, respectively, of common stock, $0.001 par value
per share (Common Stock). These founders shares were issued pursuant to
Section 4(2) of the Securities Act of 1933 (the Act).

Mr. Salamon formed the Company
for the purpose of pursuing his business plan of developing technologies and
concepts in the field of Alternative Energy Sources in a newly established
Nevada corporation. All transactions described below between the Company and
Space Globe Technologies were incidental to the transfer of assets to the
Company in connection with the reorganization of these two entities under Mr.
Salamons common control.

On July 5, 2001, the Company
entered into a Technology License Agreement with Space Globe Technologies
whereby the Company agreed to pay $50,000 cash and issued 5,000,000 shares of
Common Stock to Space Globe Technologies as license fees for the technology
related to the EPG. The cost of the license was determined to be at an estimated
cost of research and development time and materials expended by Space Globe for
the development of the EPG. The 5,000,000 shares issued in

7

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connection with such Technology License Agreement were issued
pursuant to Section 4(2) of the Act at their par value of $0.001 each and the
cash was subsequently paid from proceeds of private placements in Salamon
Group.

In January, 2005, Space Globe
Technologies and Salamon Group replaced the license agreement with an agreement
which transferred 100% ownership of and rights to the technology were
transferred from Space Globe Technologies to Salamon Group for no additional
compensation. John Salamon also assigned all rights to the patent pending to
Salamon Group.

In addition to the foregoing
issuances, from April 2001 through September 30, 2006, Salamon Group received
gross proceeds of $124,779 (including $103,000 in cash and services valued at
$21,779) from the sale of a total of 1,962,820 shares of Common Stock in an
offering conducted pursuant to Section 4(2) of the Act and Regulation S. (See
Part II, Item 4. Recent Sales of Unregistered Securities). These offerings were
made in the Provinces of British Columbia and Alberta, Canada.

The Company intends to offer
additional securities under Rule 506 and Regulation S to fund its short and
medium term expansion plans. (See Part I, Item 1. Description of Business -(b)
Business of Registrant.)

See (b) Business of Registrant
immediately below for a description of the Company's proposed business. As of
the date hereof, the Company has no other employees or customers.

Technology/Product

The EPG device consists of an
electric motor, an alternator, a regulator system, an inverter, a capacitor, an
isolator, a primary battery and a secondary battery. These parts are all
contained in a metal or plastic molded encasement. The primary 12 Volt battery
supplies current and voltage to an inverter which converts the 12V DC voltage to
115V AC voltage. The AC voltage is then supplies power to any AC powered device
such as a television, lamp, radio, small appliances, etc. (depending on required
wattage.)

During operation of the device, a
control system that is powered by the secondary 12V battery, monitors the
primary battery voltage. When the primary battery voltage drops below a setpoint
voltage, the control system starts the electric motor, which in turn drives an
alternator/generator that recharges the primary battery. The
alternator/generator produces AC voltage which is converted to DC voltage and
regulated through a regulator system. The regulator system includes an isolator
which directs the power from the regulator system into the primary battery
allowing the primary battery to be recharged, but the isolator prevents the
direct connection of both batteries. When the primary battery voltage reaches an
upper setpoint voltage, the control system will disable the electric motor and
the recharging of the primary battery will cease. The cycle will repeat itself
again when the primary battery voltage is below the lower setpoint voltage.

Salamon Group has not yet tested
the EPG to determine how long it can supply power before both batteries become
depleted. A connection to an external power supply is provided so that the
secondary battery can be recharged if for some reason, such as long dormant
storage periods, both batteries become completely depleted. The external power
supply is a power supply that converts household current to 12 VDC. For example,
this type of power supply could be a wall transformer type that converts 115 VAC
to 12 VDC.

The performance of the EPG is
relative to the size of the inverter and the number of batteries. For example, a
300 watt inverter can be used to power a TV, laptop computer or a lamp, among
other things. The proof-of-concept model EPG is 115 VAC and 300 watts with a 12
VDC outlet. The charging cycle is relative to the load on the inverter. The
greater the load, the faster the main battery

8

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depletes. The typical midsize EPG requires no venting as it
uses sealed batteries and creates a negligible amount of heat. When charging, it
produces a noise level similar to that of a turntable style microwave. Because
there are no emissions of any sort, the EPG can be used indoors as opposed to
fuel powered generators which can only be used outdoors. All components of the
EPG are CSA approved in Canada. All licensees will be in compliance with
Canadian standards and will be required to comply with standards of the USA and
other countries prior to distributing the EPG in those countries.

The EPG can be used as emergency
back-up power for the homeowner in the event of a power failure. It can also be
used to power small appliances/devices in portable applications such as camping
or in a remote cottage setting. It can also power communication equipment during
disaster relief efforts. Any number of devices can run from the EPG as long as
the combined power of the devices do not exceed the maximum power of the
inverter. For example, if a lamp uses 60W and the inverter is rated at 300W
maximum, 5 lamps can be run. If a TV at 160W is to be powered, and a DVD player
at 15W, then only two 60W lamps may be powered. It is not currently known how
long the EPG may run devices until both batteries are depleted. This will be
determined only when the working model described below has undergone extensive
testing.

Proof-of-Concept and Working Models

A prototype was built by Space
Globe in 2002 and was provided to Salamon Group for further development. In
2004, Salamon Group completed construction of a proof-of-concept model which is
now available for demonstration to potential licensees. The encasement of the
model measures 18L x 11W x 10.5H and weighs approximately 60 pounds with all
the components in it. The primary battery is a sealed deep cycle battery rated
at 33AH with output voltage of 12 VDC and weighs 25 pounds. The secondary
battery is also a sealed deep cycle unit with output voltage of 12 VDC and
weighs 9 pounds.

The recharging voltage for both
batteries is in the 14.4V to 14.6V range. The charge level is determined the
non-charging/non-discharging voltage of the battery with 12.80V being a full
charge, 12.30V a half charge and 11.80V being fully discharged. The
proof-of-concept model does not have the automated control system. The model was
used for the battery testing.

The following are the detailed
specifications of the proof-of-concept model:

Battery and Alternator Specifications:

Primary Battery:

12 Volt/33 Ampere Valve Regulated Lead-Acid Battery

|a) | Ampere Hour Capacity to 1.75
      Volts per Cell @77F:
|-- | -------------------------------------------------------

| | Discharge in Hours | Amp-Hr Capacity
| | ------------------ | ---------------
| | 1.00               | 23.5           
| | 2.00               | 25.9           
| | 3.00               | 27.2           
| | 4.00               | 28.1           
| | 5.00               | 29.0           
| | 6.00               | 29.7           
| | 7.00               | 30.2           
| | 8.00               | 30.5           
| | 10.00              | 31.0           
| | 12.00              | 31.5           
| | 20.00              | 33.0           

9

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| | 24.00  | 33.1
| | ------ | ----
| | 72.00  | 33.8
| | 100.00 | 34.4

|b) | Specifications:
|-- | ---------------

| | BCI Group Size        | U1                
| | --------------------- | ------------------
| | Cells per unit        | 6                 
| | Full Charge OCV       | 12.84             
| | Electrolyte           | Absorbed H2SO4    
| | Max Discharge Current | 600 Amps @ 0.1 sec
| | Short Circuit Current | 2150 Amps         
| | Ohms Imped 60 Hz      | 0.007 Ohms        

|c) | Discharge Ratings (in amps) at Constant Discharge
    Time
|-- | ----------------------------------------------------------
|   | (in hours)                                                

| | End Point
      Volts/Cell | .083  | 10.0 | 100.00
| | -------------------------- | ----- | ---- | ------
| | 1.90                       | 87.0  | 2.73 | 0.30  
| | 1.85                       | 101.0 | 2.90 | 0.33  
| | 1.80                       | 113.0 | 3.02 | 0.34  
| | 1.75                       | 121.0 | 3.10 | 0.34  

|d) | Capacity
|-- | --------

| | 29.0 Ah @ 5Hr rate to 1.75 volts per cell @
      77`F   
| | ---------------------------------------------------------
| | 33.0 Ah @ 20 hr rate to1.75 volts per cell 2 77`F        
| | 29.6 Ah @ 10 hr rate to 1.80 volts per cell
      @ 68` F

|e) | Operating Temperature Range
|-- | ---------------------------

Discharge: -40`F to
160`FCharge:-10`F to +140`F(with temperature compensation)

|f) | Float Charging voltage
|-- | ----------------------

13.5 to 13.8 VDV/unit Average @
77`F

|g) | Recommended Maximum Charging Current
  Limit
|-- | --------------------------------------------

C/5 amperes (6.6 amperes @ 100% depth
of discharge) @ 20 hour rate

|h) | Equalization and Cycle Service Charging
  Voltage
|-- | -------------------------------------------------

14.4 to 14.8 VDC/unit Average @
77`F

|i) | Maximum AC Ripple (Charger)
|-- | ---------------------------

0.5% RMS or 1.5% P-P of float charge
voltage recommended for best results Maximum AC ripple float charge voltage
allowed=(4% P-P) Maximum AC ripple current allowed=1.65 amperes RMS (C/20)

10

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|j) | Self Discharge
|-- | --------------

Battery may be stored for up to 6
months @ 77`F and then a refreshing charge is required. For higher temperatures
the time interval will be shorter.

Secondary Battery:

12 Volt 18 AH Sealed Lead
AcidRecharging specs are similar to the Main battery above.

Alternator Specs:

|Speed:                    | 1300-6000 RPM          
|------------------------- | -----------------------
|Charging capacity:        | 15-16.5A @ 14V @5000RPM
|Output Current Vs. Speed: | ~0A @1000RPM           
|                          | ~3A @2000RPM           
|                          | 9.5-10.5A@3000RPM      
|                          | 13-14A @4000 RPM       

The Company has now developed and completed the assembly of a
working model, which contains a bigger battery.

The following are the specifications of the working model:

Battery and Alternator Specifications:

Primary Battery:

12 Volt 50 AH Deep-Cycle Sealed Lead-Acid Battery

Secondary Battery:

12 Volt 18 AH Sealed Lead Acid Battery

Alternator Specs:

|Speed:                    | 1300-6000 RPM          
|------------------------- | -----------------------
|Charging capacity:        | 15-16.5A @ 14V @5000RPM
|Output Current Vs. Speed: | ~0A @1000RPM           
|                          | ~3A @2000RPM           
|                          | 9.5-10.5A@3000RPM      
|                          | 13-14A @4000 RPM       

The working model will require
further testing to ensure that the control system is working as expected, to
test the life of the batteries, and to determine if any component parts need to
be upgraded. If required for further testing of the working model, the Company
may engage an independent consulting engineer, subject to obtaining the
necessary capital. To date, no independent evaluations have been done.

Technical Limitations:

The technical limitations of the
EPG are related to the recharging of the primary battery. The alternator should
be large enough to recharge the primary battery while the inverter is under full
load.

11

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If the alternator is not rated to output more power than the
inverter can draw, then eventually the primary battery will be totally depleted
and the inverter will cease to produce power. When there is no more load on the
primary battery, it can be recharged again for future use.

The actual length of time that
the EPG can provide power without completely depleting both batteries will not
be known without extensive testing. If the EPG has sat dormant for a long time
and both batteries have become depleted, then an external power source can be
used to recharge the secondary battery. The external power supply is a power
supply that converts household current to 12 VDC. For example, this type of
power supply could be a wall transformer type that converts 115 VAC to 12 VDC.
As a result of these technical limitations, the EPGs utility may be restricted
to providing power for only smaller appliances, which reduce its commercial
appeal.

Regulatory Approvals

This electrical device is made up
of various parts, as outlined very carefully in the schematic drawings. Each and
every electrical component contained within the research models have already
been approved in Canada under a set of rules called CSA. The inverters,
control mechanisms, batteries, and all other component parts have been CSA
approved. By extension, all working models, as well as future commercial units,
must contain only CSA approved electrical components, if manufactured and/or
sold within Canada. Further, any licensee, legally licensed by the Salamon Group
to manufacture within the United States of America, must comply with any and all
USA government rules covering the manufacturing of electrical devices with the
USA. A minimum requirement would involve the manufacturer satisfying rules set
down under the set of regulations called UL. All completed units would have to
be labeled UL Approved. Salamon Group intends to pursue arrangements whereby
independent manufacturers will, under license obligations to the Salamon Group,
manufacture and be prime distributors of the product. Due to the nature of the
EPG, any manufacturer must comply with CSA regulations.

CSA Certification guidelines
require a completed unit to be included with the CSA Certification application
process to satisfy safety testing requirements. The Company will submit all
applications for approvals and to pay all associated costs.

Patent Pending

Request For Examination of Patent
will be filed by September 4, 2006.

Date: 2006/08/29 of
Acknowledgement by Canadian Patent Office of Request For Examination of Canadian
Patent No: 2,357,766. A filing fee of $400.,was paid to the Canadian Patent
Office.

A Patent application (2,357,766)
was filed in Canada by John Salamon on September 4, 2001. The application is
pending and will be examined when informed by the Canadian Patent
Office.Request for Examination started,2006/08/29. The Company intends to apply
for Patent in the US and other countries as soon as financially possible at a
cost of approximately $20,000 or more. The Company feels it is necessary to file
a Patent application in the United States as this might be one of its largest
markets.

Canadian Patent Rules:

Through a patent, the government
grants an inventor the right to exclude others from making, using or selling the
invention from the day the patent is granted to a maximum of 20 years after the
day on which a patent application is filed. The Patent Office lays open the
application 18 months after the

12

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filing date of the application. Anyone may then read about, but
not make, use or sell the invention without the applicants permission until the
patent has expired. The application remains  Patent Pending until a patent is
granted or refused. The applicant must formally request an examination of the
Patent Pending application within 5 years of the filing date, otherwise the
application will be considered abandoned. A Patent Pending application provides
time to assess the feasibility and/or marketability of the invention and
provides some protection for the invention without having to fully commit to the
patent procedures. Competitors will likely be wary of infringing on the
invention after the application is published because the inventor could seek
retroactive compensation in the event that a patent is granted.

Manufacturing

At this time, the Company is
attempting to secure licensees who will be granted the rights to commercially
produce, manufacture, market and sell the product worldwide. The Company will
provide the technological design to the licensee(s) for their use in producing
the product. If licensees cannot be arranged, the Company will seek financing to
manufacture the EPG itself. As yet, neither licensees nor suppliers of the
component parts of the EPG have been secured or arranged.

Sales and Marketing

In spring 2005, the Company had
entered into negotiations to license the world-wide marketing rights for the EPG
for a 5 year period to a marketing company based in Calgary, Alberta, Canada.
The Company determined that the marketing company was not suitable as a licensee
and no formal license agreement was reached between the parties.

The Company is seeking other
potential qualified licensees, which will be granted the right to manufacture,
market and sell the EPG. A qualified licensee will have a successful experience
in marketing electronic devices, and will have knowledge of both sales
strategies and electronic technology. Furthermore, a qualified licensee will
have the network to place the EPG in appropriate large chain stores.

We believe that prospective
licensees would not make an issued patent a precondition for any license
payments. There are many products and devices on the market that have only
patent pending status. Having a patent pending does afford the applicant
certain protections. If the licensee believes that the particular product has a
competitive advantage in the marketplace and has a good prospect for sales to
consumers, we believe the licensee will not be deterred by the fact that the
patent has not yet issued in respect of the EPG.

Management

At this time, the Company is
managed by John Salamon. As finances allow, other personnel will be employed in
various management capacities.

Mr. Salamon began his working
career in the oil industry in Alberta, Canada in 1966. From 1966 to 1985, he
performed various jobs in the oilfields and on drilling platforms for several
oil companies in Canada, United States, England, Africa, Saudi Arabia, Bahrain,
Malta and Peru. His duties included repair and maintenance of electric motors
and generators which provided Mr. Salamon with a comprehensive understanding of
the workings of electric powered devices.

From 1986 to 1990 assisted with
the development of a shopping mall and other properties in Northern Alberta.
From 1991 to 1998, Mr. Salamon contracted to Globus Cellular & to Beitler
Consulting to provide technical and marketing services for their products. In
1998, Mr. Salamon formed Space Globe Technologies to continue research and
development of technologies and products in the field of electric power
generation. In 2001, Mr. Salamon formed Salamon Group, Inc. to license

13

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and/or purchase technologies in the field of electric power
generation. From 1998 to date Mr.Salamon has been directing and managing both
companies.

Consultants and Technicians:

The Company employs consultants
and technicians on a contract and on an as needed basis.. During 2004, Salamon
Group engaged Mr. Mike Ewashen to assist in the completion of the assembly of
the working model of the EPG device. Mr. Ewashen, a certified Electronics
Technician, has been working in the field of electronics for the past 18
years.

Research and Development

Until the Company can secure a
qualified licensee, all further development, testing and commercialization of
the EPG will be completed by the Company, subject to obtaining the necessary
financing. Upon securing a qualified licensee, any further research, development
and commercialization of the EPG and all related costs will be the
responsibility of the licensee.

The Company, under the direction
of Mr. Salamon, is continually researching and studying alternative energy
sources and plans to develop other power generation devices as capital funding
becomes available. Alternative Energy Sources are those which are not supplied
by the burning of fossil fuels or the splitting of atoms. Some of the
alternative energy sources include solar energy, wind power, geothermal, tides
and hydro power.

The Company is currently and may
develop a smaller, portable EPG utilizing similar designs and adding a solar
power component as well as an electric wireless product.

Facilities

In its initial phase, the Company
will operate out of offices provided by Mr. Salamon. The Company address is
302-1028 Alberni Street, Vancouver, B.C., Canada, V6E-1A3. Mr. Salamon will
begin researching the real estate market in order to determine the most
appropriate site to locate Salamon Group's offices and facilities.

Funding

The Company plans to raise
approximately $200,000 by way of private placements from relatives and business
associates of John Salamon. As soon as possible, the Company will seek public
trading status which will enable the Company to raise additional development and
working capital. The funds will be used to secures license agreements, to
continue research and development and for general working capital. The Company
also plans to seek bank financing.

To implement the initial plan,
the Company intends to initiate a private placement under Rule 506 in order to
raise an additional $200,000. In the event such placement is successful, the
Company believes that it will have sufficient operating capital to meet the
initial goals and operating costs for a period of twelve (12) months.

Competition

The markets in which the Company
is engaged are subject to vigorous competition. Energy generation is a
constantly evolving industry and is dominated by and impacted by large
multi-national oil companies.

14

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There are many portable products
similar to the EPG available on the market, including gasoline and diesel
powered generators, and battery/inverter types of portable power sources. The
Company currently sees its fiercest competition coming from manufacturers of
portable gasoline powered generators.

The main advantages of the EPG
over a gas or diesel powered generator are that unlike fuel-powered generators,
the EPG can be used indoors because of its size, it has negligible noise level
and it does not emit any exhaust. The EPG can be used indoors, for example, as
emergency back-up power for the homeowner. Another significant advantage of the
EPG is that no dangerous flammable fuel is required.

While the EPG is designed to
recharge the primary battery to prolong the availability of power, the extent to
which the EPG can provide prolonged availability of power will not be known
without extensive testing. The battery/inverter systems that are currently on
the market must be recharged with an external source such as a wall transformer
or solar panel before they can be used again after the battery is depleted.
Until further testing of the EPG is completed, it is not known whether its
performance is even equivalent to existing battery inverter products.

Gasoline generators are more
expensive than the EPG. The prices of gasoline generators vary depending on the
size. Gasoline generators in the 900W to 1500W range are priced in thr range of
$475 to $525. The anticipated retail cost of the EPG will be in the low hundreds
of dollars. The anticipated cost of the EPG will be greater than the
battery/inverter units, but will be still be affordable to the consumer in the
non-specialized retail market. The physical size of the EPG needs to be larger
than the battery/inverter system in order to accommodate the control system, the
electric motor, the alternator and the secondary battery.. With a
battery/inverter only system, once the battery is depleted, the battery needs to
be recharged before it can be used again. While the EPG is designed to recharge
the primary battery when it depletes, so that the length of time that power can
be provided by the EPG may be increased in comparison to existing battery
inverter products, Salamon Group has not yet tested the EPG to determine how
long the EPG can supply power before both the primary and the secondary
batteries become depleted.

The Company intends to focus
primarily on the large indoor market for homes, offices, recreational
vehicles, cottages, small warehouses, storage units, etc. We believe that the
EPG will be readily accepted in the market place because it is portable,
compact, price competitive, and does not require fuelling. Our licensees will be
soliciting some of the big retailers such as Wal-Mart, Zellers, Home Depot,
Sears and Canadian Tire.

Item 3. Controls and procedures

Management, including our Chief
  Executive Officer has established and is currently maintaining disclosure controls
  and procedures and internal control over financial reporting for our Company.
  Our Chief Executive Officer has evaluated the effectiveness of our disclosure
  controls and procedures as required by Exchange Act Rule 13a-15(b) as of the
  end of the fiscal year ended December 31, 2005 and the quarter ended September
  30, 2006. Based on that evaluation, the Chief Executive Officer has concluded
  that these disclosure controls and procedures are effective for gathering, communicating
  to management, analyzing, and disclosing the information we are required to
  disclose in our reports filed under the Securities Exchange Act of 1934. There
  were no changes in our internal control over financial reporting during the
  year ended December 31, 2005 and the quarter ended September 30, 2006 that have
  materially affected, or are reasonably likely to materially affect, our internal
  control over financial reporting. The Company is considering a change in company
  Auditors for the coming year. The Company intends to file an 8K notification
  when a change occurs.

15

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company knows of no legal proceedings
  to which it is a party or to which any of its property is the subject which
  are pending, threatened or contemplated or any unsatisfied judgments against
  the Company.

Item 2. Changes in Securities

None

Item 3. Defaults Upon Senior Securities

None

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

No matter was submitted to a vote
  of the Companys shareholders, through the solicitation of proxies or otherwise
  during the quarterly period ended September 30, 2006.

Item 5. Other Information

Market Price and Dividends on the
  Common Equity and Related Stockholder Matters.

No matter covered by this report
  was submitted during the last quarterly period to a vote of the Company's shareholders
  through the solicitation of proxies or otherwise.

(a) Market Information.

There has been no established public
  trading market for the Common Stock since the Company's inception on April 27,
  2001. In June, 2006, the Company executed a 211 Filing Agreement with Spartan
  Securities Group Ltd. The Company is awaiting a response from the NASD on the
  trading symbol status. The Companys stock transfer agent is dealing with
  shareholders of the Company on the notification to shareholders of record for
  over 2 years regarding the issuance of their shares as free trading under the
  144k Blanket Release provisions, CUSIP NO:793893 10 8.

Mr. Raymond Bruce Larway still
  acts as director for the Company (Salamon Group Inc.).

(b) Holders.

As of September 30, 2006, the Company
  had 41 shareholders of record of its 8,962,820 outstanding shares of Common
  Stock.

(c) Dividends.

The Company has never paid or declared
  any dividends on its Common Stock and does not anticipate paying cash dividends
  in the foreseeable future.

16

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Item 6. Exhibits and Reports on Form 8-K

The following exhibits are filed
  with the Form 10-QSB:

|10.1 | Acknowledgement of Request for Examination dated August
      29, 2006 (1)                                                                                                                            
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                       
|10.2 | 211 Filing Agreement dated June 5, 2006 (1)                                                                                                                                                           
|     |                                                                                                                                                                                                       
|10.3 | Resolution Appointing New Directors dated January 15,
      2005(1)                                                                                                                                   
|     |                                                                                                                                                                                                       
|16.1 | Letter
      from Manning Elliott, former auditors                                                                                                                                                    
|     |                                                                                                                                                                                                       
|31.1 | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002.                                                       
|     |                                                                                                                                                                                                       
|32.1 | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to 18
        U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.

|(1) | Filed as an exhibit to our Quarterly Report on Form 10-QSB filed on October
      30, 2006.
|--- | -------------------------------------------------------------------------------------------

SIGNATURES

In accordance with Section 13 or
  15(d) of the Exchange Act, the registrant caused this report to be signed on
  its behalf by the undersigned, thereunto duly authorized.

Date:  February
  2, 2007

Salamon Group, Inc.

|By: | /s/ John E. SalamonJohn E. Salamon, President
|--- | -----------------------------------------------

17

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