Summary of SOMERSET INTERNATIONAL GROUP,INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (SEE NOTE 1B - BASIS OF PRESENTATION)

Item 2.

General

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

Critical Accounting Policies and Estimates

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

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

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

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

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

Results of Operations

Revenues

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

Costs of Goods Sold

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

Gross Margin

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

Selling, General, and Administrative Expenses ("SG&A")

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

Other Income (Expense)

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

Net (Loss)

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

Liquidity and Capital Resources:

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

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

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

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

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

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

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

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

Recent Accounting Pronouncements

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

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

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

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

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

Item 3.