UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 000-33153

STARMED GROUP, INC.
-------------------
(Exact name of small business issuer as specified in its charter)

Nevada 52-2220728
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2029 Century Park East, Suite 1112, Los Angeles, CA 90067
---------------------------------------------------------
(Address of principal executive offices)

(310) 226-2555
--------------
(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 11, 2006, the registrant
had 22,418,424 shares of its common stock outstanding (not including 856,075
shares that the registrant is contractually obligated to issue as of August 4,
2006).

Transitional Small Business Disclosure Format: Yes [ ] No [X]

STARMED GROUP, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FOR THE FISCAL QUARTER ENDED JUNE 30, 2006

PAGE
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets at June 30, 2006 (unaudited)
and December 31, 2005 ........................................... 2

Consolidated Statements of Operations for the three months and
six months ending June 30, 2006 and June 30, 2005 (unaudited) ... 4

Consolidated Statement of Shareholders' Equity (Deficit) for
the six months ending June 30, 2006 (unaudited) ................. 5

Consolidated Statements of Cash Flows for the six months ending
June 30, 2006 and June 30, 2005 (unaudited) ..................... 6

Notes to Consolidated Financial Statements (unaudited) ............ 7

Item 2. Management's Discussion and Analysis or Plan of Operation ......... 11

Item 3. Controls and Procedures ........................................... 17

PART II. OTHER INFORMATION ................................................. 17

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain disclosures in this Quarterly Report on Form 10-QSB include
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. Statements that include words such as "believe," "expect," "should,"
intend," "may," "anticipate," "likely," "contingent," "could," "may,"
"estimate," or other future-oriented statements, are forward-looking statements.
Such forward-looking statements include, but are not limited to, statements
regarding our business plans, strategies and objectives, and, in particular,
statements referring to our expectations regarding our ability to continue as a
going concern, implement our business model, increase our revenues and timely
obtain required financing. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ from anticipated
results. The forward-looking statements are based on our current expectations
and what we believe are reasonable assumptions given our knowledge of the
markets; however, our actual performance, results and achievements could differ
materially from those expressed in, or implied by, these forward-looking
statements. Factors, within and beyond our control, that could cause or
contribute to such differences include, among others, the following: our ability
to implement our business plan and expand operations, raise sufficient working
capital, penetrate its target market and establish its brand; the effects of
competition; regulatory environments and general economic and business
conditions; the effects of our competition; the success of our operating,
marketing and growth initiatives; operating costs; the amount and effectiveness
of our advertising and promotional efforts; and the prospect of adverse
publicity. Readers are also urged to carefully review and consider the various
disclosures made by us in this report and those detailed from time to time in
our reports and filings with the Securities and Exchange Commission.

When used in this Quarterly Report the terms the "Company," "StarMed," " we,"
"our" and "us" refers to StarMed Group, Inc, a Nevada corporation, and our
wholly-owned subsidiary, Sierra Medicinals, Inc., an Arizona corporation. The
information which appears on our web sites at www.starmedgroup.com and
www.sierramed.com is not part of this Quarterly Report.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
________________________________________________________________________________

June 30, December 31,
2006 2005
----------- -----------
ASSETS

Current assets:
Cash ............................................. $ 550,504 $ 1,019,259
Accounts receivable .............................. 5,392 7,489
Inventory ........................................ 24,717 22,110
Prepaid expenses ................................. 399,932 548,730
Deferred financing costs ......................... - 5,017
----------- -----------

Total current assets ............................. 980,545 1,602,605

Equipment and furniture:
Office furniture and computers ................... 68,060 65,063
Accumulated depreciation ......................... (44,489) (39,734)
----------- -----------

Total equipment and furniture .................... 23,571 25,329

Deferred tax assets ................................ - -
Deposits ........................................... 7,316 700
----------- -----------

Total assets ..................................... $ 1,011,432 $ 1,628,634
=========== ===========

See accompanying notes to consolidated financial statements

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
________________________________________________________________________________

June 30, December 31,
2006 2005
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable ................................. $ 63,570 $ 44,910
Accrued expenses ................................. 55,596 54,580
Income tax payable ............................... 9,524 9,359
Note payable ..................................... - 259,245
Capital lease obligation ......................... - 7,164
----------- -----------
Total current liabilities ........................ 128,690 375,258

Commitments ........................................ - -

Shareholders' equity (deficit):
Preferred stock (par value $0.01) 25,000,000
shares authorized, no shares issued and
outstanding at June 30, 2006 and
December 31, 2005, respectively ................ - -
Common stock (par value $0.01) 100,000,000
shares authorized; 22,418,424 and 18,453,424
shares issued and outstanding at June 30, 2006
and December 31, 2005, respectively ............ 224,184 184,534
Common Stock and Warrants To Be Issued ........... 317,880 -
Additional paid in capital ....................... 3,184,416 2,168,566
Accumulated deficit ................................ (2,843,738) (1,099,724)
----------- -----------
Total shareholders' equity (deficit) ............... 882,742 1,253,376
----------- -----------

Total liabilities and shareholders' equity ......... $ 1,011,432 $ 1,628,634
=========== ===========

See accompanying notes to consolidated financial statements

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
______________________________________________________________________________________________________________

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

Sales ................................................. $ 7,173 $ 3,527 $ 11,943 $ 9,731
Revenues from royalties ............................... 3,189 12,553 3,189 23,998
----------- ----------- ----------- -----------

Total revenues .................................... 10,362 16,080 15,132 33,729
----------- ----------- ----------- -----------

Cost of sales ......................................... 1,067 4,709 2,662 9,416
----------- ----------- ----------- -----------

Gross profit .......................................... 9,295 11,371 12,470 24,313

General, selling and administrative expenses:
Compensation ........................................ 154,500 20,518 863,594 78,631
Professional fees ................................... 129,543 19,254 391,865 34,221
Accounting fees ..................................... 16,638 11,719 64,194 16,238
Office .............................................. 20,724 5,814 48,625 9,170
Rent ................................................ 35,224 15,353 59,093 30,251
Insurance ........................................... 15,339 5,182 21,559 10,267
Advertising, marketing and promotion ................ 17,597 663 33,846 1,228
Depreciation ........................................ 2,431 2,324 4,755 4,648
Travel and entertainment ............................ 5,821 503 9,493 636
----------- ----------- ----------- -----------

Total general, selling and administrative expenses 397,817 81,330 1,497,024 185,290
----------- ----------- ----------- -----------

Income (loss) from operations ......................... (388,522) (69,959) (1,484,554) (160,977)

Total other income and (expense)
Interest income ....................................... 5,449 - 13,315 -
Gain on forgiveness of debt ........................... - - 44,245 -
Interest expense ...................................... 860 (981) 860 (1,911)
Common stock and warrants expense ..................... (317,880) - (317,880) -
----------- ----------- ----------- -----------
Total other Income and (expense) ...................... (311,571) (981) (259,460) (1,911)

Income (loss) before income taxes ..................... (700,093) (70,940) (1,744,014) (162,888)
(Benefit) provision for income taxes ................. - - - 105,000
----------- ----------- ----------- -----------
Net income (loss) ..................................... $ (700,093) $ (70,940) $(1,744,014) $ (267,888)
=========== =========== =========== ===========

Net income (loss) per share - basic ................... $ (0.03) $ (0.01) $ (0.08) $ (0.03)
=========== =========== =========== ===========

Net income (loss) per share - diluted ................. $ (0.03) $ (0.01) $ (0.08) $ (0.03)
=========== =========== =========== ===========

Weighted average number of shares outstanding - basic . 22,418,424 9,126,424 21,407,036 8,996,590
=========== =========== =========== ===========

Weighted average number of shares outstanding - diluted 22,418,424 9,126,424 21,407,036 8,996,590
=========== =========== =========== ===========

See accompanying notes to consolidated financial statements.

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
_________________________________________________________________________________________________________________________________

PREFERRED STOCK COMMON STOCK COMMON
--------------------- ---------------------- SHARES AND
NUMBER OF PAR VALUE NUMBER OF PAR VALUE PAID IN WARRANTS TO ACCUMULATED
SHARES ($0.01) SHARES ($0.01) CAPITAL BE ISSUED (DEFICIT) TOTAL
--------- --------- ---------- --------- ---------- --------- ----------- -----------

Balance at December 31, 2005
(unaudited) .............. - $ - 18,453,424 $ 184,534 $2,168,566 $ - $(1,099,724) $ 1,253,376
--------- --------- ---------- --------- ---------- --------- ----------- -----------

Common shares issued during
six months ended
June 30, 2006

For cash ................. - $ - 1,740,000 $ 17,400 $ 417,600 $ - $ - $ 435,000

For services provided .... - $ - 2,225,000 $ 22,250 $ 378,250 $ - $ - $ 400,500

For common shares and
warrants to be issued .... - $ - - $ - - $ 317,880 $ - $ 317,880

Stock options issued during
six months ended
June 30, 2006

As compensation .......... - $ - - $ - $ 220,000 $ - $ - $ 220,000

Net Loss ................. - $ - - $ - $ - $ - $(1,744,014) $(1,744,014)
--------- --------- ---------- --------- ---------- --------- ----------- -----------

Balance at June 30, 2006 .. - $ - 22,418,424 $ 224,184 $3,184,416 $ 317,880 $(2,843,738) $ 882,742
========= ========= ========== ========= ========== ========= =========== ===========

See accompanying notes to consolidated financial statements.

STARMED GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
________________________________________________________________________________

FOR THE SIX MONTHS ENDING
June 30, June 30,
2006 2005
----------- -----------
Cash flows from operating activities:
Net income (loss) ................................ $(1,744,014) $ (267,888)
Adjustments to reconcile net income (loss)
to net cash:
Common Stock ..................................... 22,250 -
Common Stock and Warrants to be Issued............ 317,880 -
Additional Paid In Capital ....................... 598,250 -
Note Payable ..................................... (44,245) -
Depreciation ..................................... 4,755 4,648
Deferred Tax Assets .............................. - 105,000
Shares Issued for Services ....................... - 20,700
Operating assets:
Accounts Receivable .............................. 2,097 (46,160)
Decrease in Inventory ............................ (2,607) 3,774
Prepaid expenses ................................. 148,798 (22,273)
(Decrease) Increase in Deposit ................... (6,616) 250
Increase in Accounts Payable ....................... 18,660 11,797
Accrued expenses ................................. 1,016 5,290
Decrease in Income tax payable ..................... 165 (3,000)
----------- -----------
Net Cash Used by Operating Activities .............. $ (683,611) $ (187,862)

Cash flows from financing activities:
Deferred financing costs............................ $ 5,017 -
Note payable ....................................... (215,000) -
Capital lease payments ............................. (7,164) (7,378)
Loans from Shareholders ............................ - 20,000
Issuance of notes payable and warrants ............. - 450,000
Equipment .......................................... - 20,000
Cash received from issuance of common stock ........ 435,000 -
----------- -----------
Net cash provided (used) by financing activities ... $ 217,853 $ 462,622

Cash flows from Investing Activities:
Office furniture and computer....................... (2,997) -
----------- -----------
Net cash provided (used) by financing activities ... $ (2,997) $ -

Net increase (decrease) in cash .................... $ (468,755) $ 274,760

Cash, beginning of period .......................... $ 1,019,259 $ 72,708
----------- -----------

Cash, end of period ................................ $ 550,504 $ 347,468
=========== ===========

Supplemental information on non-cash and financing
activities:

Stock issued for cash............................... $ 435,000 $ -
=========== ===========
Stock issued for compensation and services ......... $ 220,000 $ 20,700
=========== ===========
Stock options issued for compensation .............. $ 400,500 $ -
=========== ===========
Common Stock and Warrants to be issued ............. $ 317,880 $ -
=========== ===========

Supplemental cash flow information:

Cash paid for interest ............................. $ - $ 1,911
=========== ===========

See accompanying notes to consolidated financial statements

STARMED GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2006
(UNAUDITED)
________________________________________________________________________________

1. HISTORY AND ORGANIZATION OF THE COMPANY

The Company was incorporated in Nevada on August 13, 1981, under the name Port
Star Industries, Inc. and was organized to succeed to the properties, rights and
obligations of Port Star Industries, Inc., a publicly-held North Carolina
corporation formed on November 3, 1961 under the name of Riverside Homes, Inc.
("Port Star North Carolina").

At the time of our formation, Port Star North Carolina had no assets,
liabilities or operations. In order to change the domicile of Port Star North
Carolina to Nevada:

o Port Star North Carolina caused the Company's formation under the laws of
Nevada, with an authorized capitalization that "mirrored" the authorized
capitalization of Port Star North Carolina, and

o Issued to each stockholder of Port Star North Carolina a number of shares
of our common stock equal to such stockholder's share ownership of Port
Star North Carolina.

At the time of the reincorporation, Herman Rappaport, the founder, president and
chief executive officer was the principal stockholder of Port Star North
Carolina. Port Star North Carolina conducted no operations subsequent to the
reincorporation, and was administratively dissolved in 1988.

The Company engaged in no material operations from the time of its formation in
1981, and, in 1985, Nevada revoked the charter for failing to file required
reports.

On January 10, 2000, the Company revived its Nevada charter and changed its name
to StarMed Group, Inc. At the time of the revival, the Company had no assets or
liabilities, and Mr. Rappaport continued as our majority stockholder, either
directly or through his family trust.

On July 27, 2001, the Company acquired Sierra Medicinals, Inc., an Arizona
corporation incorporated in March 2000, in a share exchange whereby the Company
issued a total of 469,792 shares of common stock for all of the issued and
outstanding shares of Sierra Medicinals, Inc. Mr. Rappaport, either directly or
through his family trust, was a majority stockholder of Sierra Medicinals, Inc.
and now operates Sierra Medicinals, Inc. as a wholly owned subsidiary.

On September 10, 2003, the Company formed Vet Medicinals, Inc. as a wholly owned
subsidiary under the laws of the State of Nevada. Vet Medicinals, Inc. is
currently inactive.

The Company is engaged in two businesses: (1) we are developing a network of
StarMed Wellness Centers that offer preventative, traditional medical and
alternative treatments directed towards achieving "total wellness," and (2) we
market a line of proprietary over-the-counter vitamins, minerals and other
supplements under the StarMed and SierraMed brand names. Historically, the
Company's operations were devoted to formulating and marketing a line of
over-the-counter, alternative medicinal products. Severe competition in the
medicinal product market and the loss of a significant distribution outlet whose
revenues accounted for a substantial portion of the Company's 2004 revenues
resulted in a significant reduction in the Company's product sales. Therefore,
during fiscal 2005 the Company's management made a strategic decision to
redirect its efforts to the development and establishment of a network of
StarMed Wellness Centers.

BASIS FOR PRESENTATION

The financial information included herein is unaudited, however, such
information reflects all adjustments (consisting solely of normal occurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods. The results of operations for the
three months ended June 30, 2006 and the six months ended June 30, 2006 are not
necessarily indicative of the results to be expected for the full year.

The accompanying consolidated financial statements do not include footnotes and
certain financial presentations normally required under generally accepted
accounting principles; and therefore, should be read in conjunction with the
Company's Annual Report on Form 10-KSB/A, filed on July 24, 2006, for the year
ended December 31, 2005.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the financial statements of the
Company and its wholly-owned subsidiaries. All significant inter-company
balances and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

The Company has adopted SEC Staff Accounting Bulletin No. 101 "Revenue
Recognition in Financial Statements" (SAB 101) and accordingly recognizes
revenue upon shipment of the product to customers, upon fulfillment of
acceptance terms, if any, when no significant contractual obligations remain and
collection of the related receivable is reasonably assured. Our sales of
products allow customers a 30-day money back guarantee, less shipping costs, for
unused products. The Company has adopted SFAS 48 "Revenue Recognition When Right
of Return Exists" for the website sales and records revenue net of a provision
for estimated product returns.

USE OF ESTIMATES

The preparation of financial statements in accordance with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments consist principally of cash, payables and accrued
expenses. The estimated fair value of these instruments approximate their
carrying value.

INVENTORY

The Company contracts a third party to process and package its formulated herbal
products. The Company accounts for its inventory of finished goods on a
first-in, first-out basis or based on fair market value, if it should be lower.

EQUIPMENT AND FURNITURE

Equipment and furniture is stated at cost and depreciated using the
straight-line method over the estimated useful life of the assets, which is
seven years. The Company has acquired its computers under a capital lease.

INCOME TAXES

Deferred income taxes are reported using the liability method. Deferred tax
assets are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.

STOCK BASED COMPENSATION

On January 1, 2006, the Company adopted the fair value recognition provisions of
SFAS No. 123(R), Share-Based Payment. Prior to January 1, 2006, the Company
accounted for share-based payments under the recognition and measurement
provisions of APB Opinion NO. 25, Accounting for Stock Issued to Employees, and
related Interpretations, as permitted by FASB Statement No. 123, Accounting for
Stock Based Compensation. In accordance with APB 25, no compensation cost was
required to be recognized for options granted that had an exercise price equal
to the market value of the underlying common stock on the date of grant.

The Company adopted FAS 123R using the modified prospective transition method.
Under this method, compensation cost recognized in the quarter ended June 30,
2006 and the six months ended June 30, 2006 includes: a) compensation cost for
all share-based payments granted prior to, but not yet vested as of January 1,
2006, based on the grant date fair value estimated in accordance with the
original provisions of FAS 123, and b) compensation cost for all share-based
payments granted subsequent to January 1, 2006, based on the grant-date fair
value estimated in accordance with the provisions of FAS 123R. Since no stock
options were granted to employees prior to December 31, 2005, the results for
prior periods have not been restated.

As disclosed in Note 5, the Company issued 1,000,000 stock options to Herman
Rappaport, an officer of the Company, in February 2006. The stock options were
valued on the date of grant. The weighted average fair value of each option was
$0.22. The fair value of the options were measured using the Black Scholes
option pricing model. The model used the following assumptions: exercise price
of $0.35, weighted average life of options of five years, risk free interest
rate of 4.50%, and average dividend yield of 0.00%. The Company charged $220,000
to compensation expense during the first quarter of 2006. No options were
granted during the three months ended June 30, 2006.

ADVERTISING COSTS

The Company expenses advertising costs as incurred.

LOSS PER SHARE

In February 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 128 "Earnings Per Share" which requires the Company to present basic and
diluted earnings per share, for all periods presented. The computation of loss
per common share (basic and diluted) is based on the weighted average number of
shares actually outstanding during the period.

RECLASSIFICATIONS

Certain amounts in the prior period presented have been reclassified to conform
to the current period financial statement presentation. These reclassifications
have no effect on previously reported accumulated deficit.

3. CORPORATE CREDIT CARD

The Company has available up to $21,000 from two unsecured corporate credit
cards. The Company had an outstanding balance of $7,402 as of June 30, 2006,
which is included in accounts payable. The Company intends to pay off all
outstanding credit balances on a monthly basis.

4. DEBT

On July 23, 2003, the Company entered into an agreement for the cancellation of
the note payable in the amount of $467,255 including accrued interest through
July 23, 2003, in exchange for the issuance of 82,300 restricted shares of
common stock. The agreement included a guarantee and option whereby the Company
guaranteed a market price of $3.50 per share in the event of the future sale of
the shares by the related shareholder in the form of either cash or additional
shares of common stock valued at the bid price on the date of payment. At that
time, there was no public market for the Company's common stock. The Company's
liability associated with the guarantee and option clause of the agreement of
$288,050 was included in accrued expenses on the accompanying consolidated
balance sheet at June 30, 2005.

The Company adopted the accounting provisions of EITF 00-19, "Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock". Based on this pronouncement, in 2005 the Company reduced
the $288,050 liability included in accrued expenses to $259,245 which resulted
in a gain of $28,805. This gain resulted from the reduction in the guarantee
obligation based on the stock price changing from 1 to 35 cents at December 31,
2005.

On February 7, 2006, the Company entered into a settlement agreement with the
creditor pursuant to which the 2003 agreement was rescinded and cancelled, the
Company paid the creditor $215,000, the indebtedness was cancelled. The
remaining balance of notes payable was included in Gain on forgiveness of debt
of $44,245.

5. CAPITAL STOCK

We agreed to file a registration statement with the SEC on or before March 20,
2006 covering the shares of common stock, including the shares underlying the
warrants, issued in this offering so as to permit the resale thereof. We also
agreed to use our best efforts to ensure that the registration statement be
declared effective by the SEC by June 3, 2006. The registration statement was
not filed until with the SEC until June 19, 2006, and it did not become
effective until August 4, 2006. As a result, under the terms of the offering, we
were required to issue an additional 856,075 shares of our common stock and
common stock purchase warrants to purchase an additional 856,075 shares as of
August 4, 2006. As of June 30, 2006, our obligation was to issue an additional
635,761 shares of our common stock and common stock purchase warrants to
purchase an additional 635,761 shares, which obligation was valued at $317,880.
The penalty shares of common stock, including the common stock underlying the
additional warrants, were included in the registration statement.

Subject to certain conditions, from the date the warrants were issued until 30
days prior to the expiration date of the warrants, the Company may require
warrant holders to exercise or forfeit their warrants, provided that (i) the
closing price for our common stock is at least $1.50 per share for 20
consecutive trading days and (ii) trading volume in our common stock exceeds
150,000 shares per day for each trading day during such twenty day period.

For one year following the date of issuance, the Company is obligated to issue
additional shares of Company common stock to purchasers of the units to protect
them against dilution in the event that we issue shares of our common stock
during such one-year period at less than $.25 per share. In addition, for a one
year period following the date of issuance and continuing until the warrants
expire, the exercise price is subject to "weighted-average" anti-dilution
protection for subsequent issuances of common stock or securities convertible
into common stock at less than the then current warrant exercise price,
excluding certain issuances unrelated to capital raising transactions. The
warrants also contain customary anti-dilution adjustments in the event of stock
splits, reorganizations and similar corporate events.

Joseph Stevens & Company, Inc. acted as placement agent for us in the offering.
As compensation for their services we paid Joseph Stevens & Company, Inc.
commissions equal to 10% of the gross proceeds of the offering ($236,500) and a
non-accountable expense allowance equal to 3% of the gross proceeds ($70,815),
and issued Joseph Stevens & Company, Inc. or its designees an aggregate of
2,225,000 shares of our common stock. (The shares of common stock were valued at
$400,500.) We are using the net proceeds from the offering to establish
additional StarMed Wellness Centers and for general working capital.

2004 EQUITY COMPENSATION PLAN

In fiscal 2004 the Company established our 2004 Equity Compensation Plan. The
original Plan was approved by our board of directors and a majority of our
shareholders. The purpose of the Plan is to enable the Company to attract and
retain top-quality employees, officers, directors and consultants and to provide
such employees, officers, directors and consultants with an incentive to enhance
stockholder returns. The Plan provides for the grant to Company directors,
officers, employees and consultants of stock based awards and options to
purchase shares of our common stock. All of our executive officers, directors
and employees are be eligible to participate in the Plan. The plan is funded
with 4,050,000 shares of Company common stock (including an increase of
3,000,000 shares authorized by the board of directors and a majority of our
shareholders in February 2006). In February 2006, our Board of Directors granted
Herman Rappaport an option to purchase 1,000,000 common shares at an exercise
price of $.35. As of June 30, 2006, there were no other options granted under
the Plan. In addition, as of June 30, 2006, 400,000 shares in stock awards have
been issued under the Plan, and 2,650,000 shares remained available for
issuance.

6. INCOME TAXES

The Company had available unused federal and state operating loss carry-forwards
of approximately $1,490,000 at December 31, 2005 that may be applied against
future taxable income. SFAS No. 109 requires a valuation allowance to be
recorded when it is more likely than not that some or all of the deferred tax
assets will not be realized. As of December 31, 2005 the Company has determined
that the net operating losses likely will not be utilized. Accordingly, the
Company has increased the valuation allowance to 100% of all deferred tax
assets.

7. RELATED PARTY TRANSACTIONS

The Company owes two officers/directors a total of $55,596 in expense
reimbursements as of June 30, 2006 and 2005. These amounts are included in
accrued expenses. In addition, as of June 30, 2006, Dr. Steve Rosenblatt, our
Executive Vice President and director, owes $1,068 to the Company under the
revolving line that we have established with him as part of our arrangement to
manage the medically-supervised portion of StarMed Wellness Centers that is
owned by him.

8. COMMITMENTS AND CONTINGENCIES

OFFICE LEASE

The Company entered into a twelve month lease for office space commencing
November 1, 2003 that expired in October 31, 2004 and was extended for an
additional year until December 31, 2005. The Company extended the lease for
office space for three years commencing January 1, 2006 and expiring December
31, 2008.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW OF THE COMPANY'S BUSINESS

StarMedGroup, Inc. is engaged in two businesses: (1) we are developing a network
of StarMed Wellness Centers that offer preventative, traditional medical and
alternative treatments directed towards achieving "total wellness," and (2) we
market a line of over-the-counter vitamins, minerals and other supplements under
the StarMed and SierraMed brand names.

Historically our operations were devoted to formulating and marketing a line of
over-the-counter, alternative medicinal products. All of our revenues for fiscal
2005 were from the sale of our products or royalties related to our products.
Our natural medicinal products are intended to address the effects of various
conditions, including arthritis, aging eyesight, obesity and irritable bowel
syndrome. We also market a proprietary starch blocker designed for weight loss
and maintenance and we have licensed various formulations of our proprietary
starch blocker product to third parties. We currently market our medicinal
products directly to consumers over the Internet.

Severe competition in the medicinal product market and the loss of a significant
distribution outlet in 2005 resulted in a significant reduction in our product
sales. Therefore, in 2005, our management made a strategic decision to redirect
our efforts to the development and establishment of a network of StarMed
Wellness Centers. StarMed Wellness Centers will focus on promoting general
wellness by addressing the underlying causes of a variety of chronic diseases
such as obesity and stress. Our long-term goal is to develop a network of
StarMed Wellness Centers each of which will provide clients a full range of
preventative, traditional medical and alternative treatments directed towards
achieving "total wellness." Our StarMed Wellness Centers concept is founded on
our belief that traditional Western medicines and treatments may be enhanced by
complementing their use with preventative medicine techniques and the use of
alternative medicinals to address the underlying causes of certain illnesses. In
our opinion, addressing these underlying causes is necessary for good health
maintenance and longevity. Our management and affiliated physicians have devoted
significant time, and pooled their collective experience, to develop our StarMed
Wellness Center concept.

It is envisioned that each StarMed Wellness Center will expand the traditional
Western medical treatments, medicines and services provided by an existing
medical clinic to include preventative and alternative healthcare services. We
are developing two models for the operation of the wellness center. In one
model, we will establish a wellness center on behalf of a medical clinic, which
will operate as a participant in the StarMed Wellness Center network under the
supervision of the clinic's existing medical director. Under this model, we will
provide management services to the portion of the medical clinic's practice that
is devoted to wellness in exchange for a management fee. In the second model, we
will affiliate with a physician practice to establish a wellness center that is
adjacent or in close proximity to a medical clinic. The physician practice may
or may not have any existing relationship with the medical clinic and will
supervise the physician services at the wellness center. Under this model, we
will provide management services to the physician practice in exchange for a
management fee.

In February 2006, we began operations at our first wellness center in Encino,
California. We opened our second wellness center in Buena Park, California in
May 2006 and a third wellness center in Santa Ana, California in July 2006.
Another wellness center is proposed for development in Kohala, Hawaii. Our
ability to make these wellness centers successful will depend on several
factors, including: identifying and entering into agreements with the right
physicians who are committed to the wellness concept and the services that we
offer at the wellness center; identifying and implementing the optimal strategy
for marketing our services given our limited funds; and being able to raise
additional capital to fund the opening, operations and marketing of additional
centers.

While we anticipate that our wellness centers will become a recurring market for
our medicinal products in the future, we do not expect that our marketing of
natural medicinal products will consume a significant portion of our future
operating resources, or that medicinal product sales will account for a
substantial portion of our future revenues.

CRITICAL ACCOUNTING POLICIES

A summary of significant accounting policies is included in Note 2 to the
unaudited consolidated financial statements included elsewhere in this quarterly
report. We believe that the application of these policies on a consistent basis
enables our company to provide useful and reliable financial information about
the company's operating results and financial condition.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates.

RECENTLY ISSUED ACCOUNTING STANDARDS

On January 1, 2006, we adopted the fair value recognition provisions of
SFAS No. 123(R), Share-Based Payment. Prior to January 1, 2006, we accounted for
share-based payments under the recognition and measurement provisions of APB
Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations, as permitted by FASB Statement No. 123, Accounting for Stock
Based Compensation. In accordance with APB 25, no compensation cost was required
to be recognized for options granted that had an exercise price equal to the
market value of the underlying common stock on the date of grant. The Company
adopted FAS 123R using the modified prospective transition method. Under this
method, compensation cost recognized during the three months and six months
ended June 30, 2006 includes: a) compensation cost for all share-based payments
granted prior to, but not yet vested as of January 1, 2006, based on the grant
date fair value estimated in accordance with the original provisions of FAS 123,
and b) compensation cost for all share-based payments granted subsequent to
January 1, 2006, based on the grant-date fair value estimated in accordance with
the provisions of FAS 123R. Since no stock options were granted to employees
prior to December 31, 2005, the results for prior periods have not been
restated.

In November 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 151, "Inventory Costs, an amendment of ARB
No. 43, Chapter 4" ("SFAS 151"), which is effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. SFAS 151 requires that
abnormal amounts of idle facility expense, freight, handling costs and wasted
material be recognized as current period charges. The Statement also requires
that the allocation of fixed production overhead be based on the normal capacity
of the production facilities. The effect of this Statement on our financial
position or results of operations has been determined to have no impact.

In December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 153, "Exchange of Nonmonetary Assets, an
amendment of APB Opinion No. 29" ("SFAS 153"). The guidance in APB Opinion No.
29, "Accounting for Nonmonetary Transactions" is based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value of
the assets exchanged. The guidance in that Opinion, however, included certain
exceptions to that principle. SFAS 153 amends Opinion 29 to eliminate the
exception for nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. The
provisions of SFAS 153 shall be effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. The effect of this
Statement on our financial position or results of operations has been determined
to have no impact.

In April 2005, the FASB issued Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations", which clarifies that an entity is
required to recognize a liability for the fair value of a conditional asset
retirement obligation when incurred if the liability's fair value can be
reasonably estimated. The fair value of a liability for the conditional asset
retirement obligation should be recognized when incurred, which is generally
upon acquisition, construction, or development and (or) through the normal
operation of the asset. Uncertainty about the timing and (or) method of
settlement of a conditional asset retirement obligation should be factored into
the measurement of the liability when sufficient information exists.
Interpretation No. 47 is effective no later than the end of fiscal years
beginning after December 15, 2005. The effect of this Statement on our financial
position or results of operations has been determined to have no impact.

In May 2005, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 154, "Accounting Changes and Error
Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3"
(SFAS154). This Statement replaces APB Opinion No. 20, "Accounting Changes," and
FASB Statement No. 3, "Reporting Accounting Changes Interim Financial
Statements," and changes the requirements for the accounting for and reporting
of a change in accounting principle. This Statement requires retrospective
application to financial statements of prior periods for changes in accounting
principle. This Statement is effective January 1, 2006. The effect of this
Statement on our financial position or results of operations has been determined
to have no impact.

RESULTS OF OPERATIONS

Total Net Revenues

Total revenues for the six months ended June 30, 2006 was $15,132 as compared to
$33,729 during the same period in 2005, a decrease of $18,597, or approximately
55%. Total revenues for the three months ended June 30, 2006 were $10,362 as
compared to $16,080 during the same period in 2005, a decrease of $5,718, or
approximately 36%.

Revenues from the sale of products declined to $5,329 during the six months
ended June 30, 2006 compared to $9,731 during the same period in 2005, and
declined to $1,888 during the three months ended June 30, 2006 compared to
$3,527 during the same period in 2005. Several factors contributed to the
decrease in sales of our products. First, we have diverted our limited resources
from marketing efforts to the implementation of plans to open wellness centers.
In redirecting our efforts to the opening of wellness centers, we made the
decision not to expend a substantial amount of our funds into advertising,
marketing and promotion of our products. In the future, as we grow our number of
wellness centers, we intend to grow the market for our products through direct
sales to our wellness center customers. We will also be seeking new distribution
channels and partners for our products here in the U.S. and overseas and will
continue to market and sell our products through the internet.

Revenues from royalty payments was $3,189 during the six months ended June 30,
2006 compared to $23,998 during the same period in 2005, and was $3,189 during
the three months ended June 30, 2006 compared to $12,553 during the same period
in 2005. The decrease in revenues from royalties was the result of the loss of a
distribution channel for our weight loss product. L. Perrigo Company, the
principal distributor for our weight loss products in the U.S., orally notified
us in 2005 that it will cease to distribute our weight loss products.

We generated sales of $6,614 during the six months ended June 30, 2006 and
$4,747 during the three months ended June 30, 2006, from services provided at
our first wellness center in Encino, California, which began operations in
February 2006. While our recent marketing efforts have resulted in increased
customer interest and business, our biggest challenge has been the integration
of our personnel with our physician partner's personnel. If this difficulty in
integration cannot be worked out, we may need to relocate the facility to
another location within the same community or partner with a different
physician. If we can resolve our differences with our current physician partner,
we anticipate that our revenues from our wellness operations will increase as
our marketing and promotion efforts begin to generate more customers. We do not
know, however, when, if ever, we will be able to generate sufficient revenues to
cover our expenses at our Encino facility. If our revenues from the Encino
facility does not significantly improve during the third and fourth quarters of
2006, we will likely have to close down the facility.

We opened our second wellness center in Buena Park, California, in May 2006. We
did not generate any revenues at our Buena Park wellness center during the
second quarter of 2006, but we expect that we will begin to generate revenues as
we increase our efforts at marketing that facility. At this time, we cannot
predict future revenues from or performance of our Buena Park wellness center.

We earned interest income of $13,315 and $0 during the six months ended June 30,
2006 and 2005, respectively, and $5,449 and $0 during the three months ended
June 30, 2006 and 2005, respectively. The interest income in 2006 reflects the
cash balances resulting from the gross proceeds of $2,360,000 from a private
equity financing conducted between December 2005 and February 2006 that resulted
in the sale of an aggregate of 9,442,000 units of our common stock.

Total Expenses

We reported total selling, general and administrative expenses of $1,497,024
during the six months ended June 30, 2006 compared to $185,290 during the six
months ended June 30, 2005, an increase of $1,311,734, or approximately 708%. We
attribute the increase primarily to: (a) an increase of $784,963, or 998%, in
compensation expenses as a result of: (i) a one-time stock compensation expense
of $400,500 in connection with the issuance of 2,225,000 shares of our common
stock valued at $0.18 per share on March 16, 2006 to the placement agent and its
designees in connection with our recent capital raising efforts completed during
the first quarter of 2006 and consulting services; (ii) the charge of $220,000
to compensation expense for the stock option granted to Herman Rappaport during
the first quarter of 2006, and (iii) the hiring of personnel to staff our first
and second wellness centers and to develop our wellness center network and the
addition of staff in our corporate office; (b) an increase of $357,644, or
approximately 1,045%, in professional fees, and an increase of $47,956, or 295%,
in accounting fees, primarily in connection with our capital raising efforts and
the engagement of consultants for business development and expansion; (c) an
increase of $68,297, or 173%, in rent and office expenses, primarily as a result
of the lease of new space for our first and second wellness centers and the
purchase of supply and equipment for those centers, as well the increase in
monthly rent for our corporate office; (d) an increase of $11,292, or 110%, in
insurance expense which reflects an increase in health and general liability
insurance premiums and the acquisition of a directors and officers insurance
policy; (e) an increase of $32,618, or approximately 2,658%, in advertising,
marketing and promotional expenses, primarily in connection with the opening of
our first two wellness centers; and (f) an increase of $8,857, or approximately
1,393%, in travel and entertainment expenses, primarily in connection with our
business development and expansion efforts.

For the three months ended June 30, 2006, we reported total selling, general and
administrative expenses of $397,817 compared to $81,330 during the same period
in 2005. We attribute the increase primarily to the following: (a) an increase
of $133,982, or 653%, in compensation expenses as a result of the hiring of
personnel to staff our first and second wellness center and to develop our
wellness center network and the addition of staff in our corporate office; (b)
an increase of $110,289, or approximately 573%, in professional fees, and an
increase of $4,919, or 42%, in accounting fees, primarily in connection with our
ongoing capital raising efforts and the engagement of consultants for business
development and expansion; (c) an increase of $34,781, or 164%, in rent and
office expenses, primarily as a result of the lease of new space for our first
and second wellness centers and the purchase of supply and equipment for those
centers, as well the increase in monthly rent for our corporate office; (d) an
increase of $10,154, or 196%, in insurance expense which reflects an increase in
health and general liability insurance premiums and the acquisition of a
directors and officers insurance policy; (e) an increase of $16,934, or
approximately 2,554%, in advertising, marketing and promotional expenses,
primarily in connection with the opening of our first two wellness centers; and
(f) an increase of $5,318, or approximately 1,057%, in travel and entertainment
expenses, primarily in connection with our business development and expansion
efforts.

We anticipate that our total general, selling and administrative expenses will
continue to increase as we market our existing centers and develop and open new
wellness centers. We are not able to predict at this time the amount of increase
in total general, selling and administrative expenses that will be attributable
to the wellness centers, nor can we predict whether such increases will
ultimately be offset by increased revenues from the wellness centers.

Total Other Income (Expense)

We reported total other expense of $259,460 for the six months ended June
30, 2006 compared to total other expense of $1,911 during same period in 2005,
an increase of $257,549, and $311,571 for the three months ended June 30, 2006
compared to $981 during the same period in 2005, an increase of $310,590. The
increase in total other expense is primarily attributable to the expense of
$317,880 associated with our contractual obligation to issue 635,761 shares and
635,761 shares underlying warrants as of June 30, 2006 to investors who
purchased our securities during our November 2005 - February 2006 stock offering
as a result of our failure to register the shares and warrants originally
purchased and to have the registration statement be declared effective on a
timely basis. The shares were valued at $190,728 based on our stock's last
quoted trading price of $.30 on or before June 30, 2006. The warrants were
valued at $127,152 based on a Black-Scholes valuation using the following

assumptions: market value of $.30 per share, volatility of 71.23%, an exercise
price of $.25, a term of 5 years, interest rate of 5.10% and variance of
0.50737129. The penalty shares are described in further detail in the "Recent
Events" section below. Our total other expense was offset by the following total
other income: (i) interest income of $13,315 and $5,449 during the six month
period and three month period ending June 30, 2006, respectively, reflecting the
cash balances resulting from the gross proceeds of $2,360,000 from the November
2005 - February 2006 private equity financing that resulted in the sale of an
aggregate of 9,442,000 units of our common stock; and (ii) a gain of $44,245
from forgiveness of debt during the first quarter of 2006.

We reported an interest expense credit of $860 for the six months ended June 30,
2006 as compared to interest expense of $1,911 for the same period in 2005, and
interest expense credit of $860 for the three months ended June 30, 2006 as
compared to interest expense of $981 for the same period in 2005. Interest
expense represents interest payable on our corporate credit cards which now are
paid in full at due date.

We reported a net loss of $1,744,014 for the six months ended June 30, 2006
compared to $162,888 for the same period in 2005, and $700,093 for the three
months ended June 30, 2006 compared to $70,940 during the same period in 2005.
The net loss was primarily attributable to the increase in expenses relating to
our capital raising efforts and the establishment of our first and second
wellness centers, with no corresponding increases in revenue. As we are only
beginning to develop a network of wellness centers, we anticipate that we will
continue to incur losses in the near future. Our ability to increase revenues
while controlling costs will depend on various factors, including our ability to
implement our business plan and expand operations, raise sufficient working
capital, penetrate our target markets and establish our brand, deal with
competition, comply with federal and state regulations, manage expenses, and
create a successful advertising and promotional campaign.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate funds to support its current
and future operations, satisfy its obligations and otherwise operate on an
ongoing basis. At June 30, 2006, we had cash on hand of $550,504 as compared to
cash on hand of $347,468 at June 30, 2005 and the December 31, 2005 cash balance
of $1,019,259. At June 30, 2006 our working capital was $851,855 as compared to
working capital of $1,227,347 at December 31, 2005. The increase in working
capital is primarily attributable to an increase in cash which was provided by
capital raising activities in December 2005 and the first quarter of 2006.

Net cash used in operating activities during the six months ended June 30, 2006
was $683,611 as compared to $187,862 during the same period in 2005, an increase
of $495,749, or 264%. We attribute the increase primarily to our increased
expenses, a one-time settlement of $215,000 paid to Citadel Management Group,
Inc., and a charge to prepaid expense of $568,750, which represented the value
of shares issued in exchange for consulting services, amortized over a period of
23 months beginning the first quarter of 2006 for a charge each quarter of
$74,181.

Net cash provided by financing activities during the six months ended June 30,
2006 was $217,853 compared to $462,622 during the same period in 2005. The
change reflects proceeds received from our capital raising transactions. In
January 2006, we raised $417,000 in proceeds from the sale of our securities.
Our working capital is sufficient to satisfy our current obligations and fund
our ongoing expenses for another four to nine months, depending on various
factors, including the ability of our wellness centers to generate sufficient
revenues to sustain operations. As we continue to develop additional wellness
centers and our operations grow, we will need to raise additional working
capital. Other than cash on hand and available borrowings under our corporate
credit cards that could provide us up to $21,000 on an unsecured basis, we do
not have any other external sources of working capital.

Implementation of our business plan, including the development of a network of
wellness centers and funding ongoing operations as they become due, will require
substantial additional capital. Until such time, if at all, as our wellness
center operations generate sufficient revenues to sustain operations, we will
likely continue to fund operations through the sale of equity or debt
securities, or a combination of both. If we are unable to secure additional
working capital, as needed, our ability to open wellness centers, grow revenues,
meet operating and financing obligations as they become due, and continue
business and operations, will be in jeopardy.

RECENT EVENTS

Issuance of Penalty Shares and Warrants

Between November 2005 and January 2006, the Company sold an aggregate of
9,442,000 units of our securities to 99 accredited investors in an offering
exempt from registration under the Securities Act in reliance on exemptions
provided by Section 4(2) and Rule 506 of Regulation D of the Securities Act.
Each unit was sold for a purchase price of $0.25, and consisted of one share of
our common stock and one redeemable five year common stock purchase warrant,
exercisable at $1.00 per share, which resulted in the issuance by us of an
aggregate of 9,442,000 shares of common stock and common stock purchase warrants
to purchase an additional 9,442,000 shares of our common stock. We agreed to
file a registration statement with the SEC on or before March 20, 2006 covering
the shares of common stock, including the shares underlying the warrants, issued
in this offering so as to permit the resale thereof. We also agreed to use our
best efforts to ensure that the registration statement be declared effective by
the SEC by June 3, 2006. The registration statement was not filed with the SEC
until June 19, 2006, and it did not become effective until August 4, 2006. As a
result, under the terms of the offering, we were required to issue an additional
856,075 shares of our common stock and common stock purchase warrants to
purchase an additional 856,075 shares as of August 4, 2006. As of June 30, 2006,
our obligation was to issue an additional 635,761 shares of our common stock and
common stock purchase warrants to purchase an additional 635,761 shares, which
obligation was valued at $317,880. The penalty shares of common stock, including
the common stock underlying the additional warrants, were included in the
registration statement.

Agreement with Mothers and Daughters Center May Be in Jeopardy

In July 2006, we announced the opening of our third wellness center in
collaboration with and adjacent to the Mothers and Daughters Center in Santa
Ana, California. An issue regarding compensation has arisen that, if not
resolved, could jeopardize the relationship between the two parties. If this
issue cannot be resolved, we will need to close down the facility. If we have to
take such action, we would be adversely impacted primarily in two ways: (1) we
will have wasted time, effort and expense in opening and marketing the center,
and (2) it sets back our time frame to increase our revenues through the
expansion of our network of wellness centers.

OFF BALANCE SHEET ARRANGEMENTS

Under SEC regulations, we are required to disclose our off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors. An off-balance sheet arrangement means a transaction, agreement or
contractual arrangement to which any entity that is not consolidated with us is
a party, under which we have:

o Any obligation under certain guarantee contracts;

o Any retained or contingent interest in assets transferred to an
unconsolidated entity or similar arrangement that serves as credit,
liquidity or market risk support to that entity for such assets;

o Any obligation under a contract that would be accounted for as a
derivative instrument, except that it is both indexed to our stock and
classified in stockholder's equity in our statement of financial position;
and

o Any obligation arising out of a material variable interest held by us in
an unconsolidated entity that provides financing, liquidity, market risk
or credit risk support to us, or engages in leasing, hedging or research
and development services with us.

As of the date of this Report, the Company has no off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.

SEASONALITY AND INFLATION

Our business is not seasonal in nature, and management does not believe that our
operations have been materially influenced by inflationary forces.

ITEM 3. CONTROLS AND PROCEDURES

Our management has concluded its evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures. Disclosure controls and
procedures are controls and procedures designed to reasonably assure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, such as this Quarterly Report, is recorded, processed,
summarized and reported within the time periods described by SEC rules and
regulations, and to reasonably assure that such information is accumulated and
communicated to our management, including the Chief Executive Officer and acting
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.

Our management, including the Chief Executive Officer and acting Chief Financial
Officer, does not expect that our disclosure controls and procedures will
prevent all error and all fraud. A control system, no matter how well designed
and operated, can provide only reasonable, not absolute, assurance that the
control system's objectives will be met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, have
been detected. These inherent limitations include the realities that judgments
in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions.

As of the evaluation date, our Chief Executive Officer and acting Chief
Financial Officer concluded that we maintain disclosure controls and procedures
that are effective in providing reasonable assurance that information required
to be disclosed in our reports under the Exchange Act is recorded, processed,
summarized and reported within the time periods prescribed by SEC rules and
regulations, and that such information is accumulated and communicated to our
management, including its Chief Executive Officer and its acting Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

There was no change in our internal control over financial reporting identified
in connection with the evaluation that occurred during its last fiscal quarter
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

PART III OTHER INFORMATION

ITEM 6. EXHIBITS

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: August 14, 2006 STARMED GROUP, INC.

By: /s/ Herman Rappaport
--------------------
Herman Rappaport,
Chief Executive Officer and
Acting Chief Financial Officer