SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark One)
(X)    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2007
                                       OR
( )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

Commission File No. 0-31357

                           EPIC ENERGY RESOURCES, INC.
                           ---------------------------
                 (Name of Small Business Issuer in its charter)

                Colorado                                     94-3363969
         ------------------------------                ----------------------
         (State of incorporation)                          (IRS Employer
                                                         Identification No.)
           10655 Six Pines, Suite 210
           The Woodlands, Texas                                 77380
     --------------------------------------                   --------
    (Address of Principal Executive Office)                   Zip Code

Registrant's telephone number, including Area Code: (281)-419-3742 Securities
registered pursuant to Section 12(b) of the Act: None Securities registered
pursuant to Section 12(g) of the Act:

                                  Common Stock
                            -----------------------
                                (Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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.                                 X
                                     ---         ---
                                     YES          NO

Check  if  disclosure  of  delinquent   filers  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 the 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. [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-25 of the Exchange Act):
                                          Yes [ ] No [X]

The Company's revenues for the most recent fiscal year were $8,470,696.

The aggregate market value of the voting stock held by non-affiliates of the
Company as of March 31, 2008 was approximately $9,941,000.

As of March 31, 2008 the Company had 43,948,921 outstanding shares of common
stock.


<PAGE>

ITEM 1.     DESCRIPTION OF BUSINESS

Background
----------

     Epic was incorporated in Colorado on June 6, 1989 under the name San Juan
Financial. Following its formation Epic was relatively inactive until April
2006, when its management changed and it become involved in oil and gas
exploration and development.

      On March 11, 2005 the shareholders of Epic approved a 1-for-20 forward
split of Epic's common stock. Unless otherwise indicated, all per share data in
this report has been revised to reflect this forward stock split.

      On May 15, 2006 Epic's shareholders:

     o    approved amendments to its Articles of Incorporation which changed the
          corporate name to Epic Capital Group, Inc., and

     o    changed Epic's  authorized  capitalization  to  100,000,000  shares of
          common stock and 10,000,000 shares of preferred stock.

      Between October 2006 and April 2007 Epic raised $1,455,100 from the sale
of 1,455,100 shares of its common stock, plus 491,500 Series A warrants and
963,600 Series B warrants, to private investors. The Series A warrants expired
on December 31, 2007. Each Series B Warrant entitles the holder to purchase one
share of Epic's common stock at a price of $2.50 per share at any time prior to
September 30, 2009.

      On December 1, 2006 Epic's shareholders approved an amendment to its
Articles of Incorporation which changed the corporate name to Epic Energy
Resources, Inc.

      In December 2007 Epic sold to private investors:

     o    5,429,335 shares of its common stock for gross proceeds of $8,144,003,
          or $1.50 per  share,  plus  warrants  which  entitle  the  holders  to
          purchase up to 5.429,335 shares of Epic's common stock.

     o    notes in the  principal  amount of  $20,250,000  plus  warrants  which
          entitle  the holders to  purchase  up to  15,954,545  shares of Epic's
          common stock.

      During 2007 Epic acquired the Carnrite Group, LLC and Pearl Investment
Company. The Carnrite Group and Pearl Investment Company provide engineering,
construction management, operations, maintenance, field, and project management
services to the oil, gas and energy industry.

      In February 2008, Epic acquired Epic Integrated Solutions, LLC, an
unaffiliated entity. Epic Integrated provides the oil and gas industry with


                                       2
<PAGE>

specialized training, operations documentation and data management services for
the start-up and operation of complex energy production facilities.

      Unless otherwise indicated, all references to Epic include the operations
of the Carnrite Group, Pearl Investment Company and Epic Integrated, subsequent
to the dates that Epic acquired these companies.

      As of March 25, 2008, Epic's revenues from the sale of oil and gas were
not significant. However, Epic plans to evaluate undeveloped oil and gas
prospects and participate in drilling activities on prospects which in the
opinion of management are favorable for the production of oil or gas. Epic may
also acquire other producing oil and gas properties which have the potential to
support additional oil and gas wells.

Consulting Services
-------------------

      Through the late 1950's the early oil and gas companies such as Standard
Oil, Texaco and Mobil were fully vertically integrated enterprises with business
units that included oil and gas drilling, pipeline transportation, refining, gas
stations and motor oils. The consensus was that companies needed to own the
entire chain to control the product and maximize profits.

      In the late 1970's a new model emerged with smaller companies being
created that focused on only one aspect of the industry. Independent production
companies were created to find, drill and produce oil and gas. Pipeline
companies were formed to deliver product from producers to refineries and other
end users. Refining companies were organized to refine oil and gas into usable
fuels and products. And, finally retail oriented companies were created to
developed innovative ways to market gasoline (the birth of the gasoline station
as a convenience store!).

      Epic sees the next natural progression to be the separation of oil and gas
producers into two groups: those that want to explore and drill for oil and gas
and those that want to focus on the efficient processing of oil and gas before
it is transported.

      Because of increasing demand and prices, major integrated oil companies
and large independents are exploring for new fields in areas such as West
Africa, Brazil, Venezuela, Trinidad, the Caspian, Western Russia and others. The
scale of these projects requires significant financial and human resources.
These projects usually require assembling a large international team consisting
of staff from the oil company, a large engineering firm, a large fabrication and
construction company to build and assemble the structure and processing
equipment, and an operations and maintenance partner to staff the project and
manage the start-up. This rush to large, international, projects is consuming a
substantial portion of the existing engineering and construction capability in
the oil and gas industry. Many of the majors and larger independent oil and gas
companies are exiting the domestic market and turning their capital, manpower
and technology to new, high investment areas around the world. The service
sector, especially the large engineering and construction companies, are
following their main customers to these international projects leaving few
companies to compete for domestic projects. At the same time, record drilling


                                       3
<PAGE>

activity in the US onshore market will require more production, process and
transportation infrastructure.

      Due to the high operating costs and low production rates of many older oil
and gas fields, most producers have been limited in their ability to maintain
the operating condition of pipelines, compressor stations, gathering systems,
SCADA systems, secondary recovery injection plants, and similar equipment.

      In August 2007 Epic acquired the Carnrite Group LLC for 3,177,810 shares
of common stock. In connection with this acquisition, 1,673,034 additional
shares of common stock were issued to key officers of The Carnrite Group as
retention shares that will vest during the two year period ending March 28,
2009. All or part of these shares will be returned to Epic if one or more
officers of Carnrite voluntarily terminate their employment prior to March 28,
2009. The Carnrite Group currently employs five professionals in its offices in
Houston, Texas and is presently providing services to clients in the United
States, Argentina, Kazakhstan, Nigeria and Russia.

      In December 2007 Epic acquired Pearl Investment Company for 1,786,240
shares of its common stock and cash of $19,020,000. Up to 3,313,760 additional
shares may be issued in the future to key employees and officers of Pearl
Investment Company subject to certain vesting requirements. Pearl Investment
Company currently employs over 200 professionals working from six offices and
serves clients in the greater Rocky Mountain Region and the Middle East.

       In February 2008 Epic acquired Epic Integrated Solutions, LLC, an
unaffiliated entity, for cash and shares of its restricted common stock. At
closing, Epic paid $600,000 and issued 1,000,000 shares of its common stock to
the three owners of Epic Integrated. An additional $1,400,000 will be paid to
the three owners in periodic installments during 2008 and 2009. The 1,000,000
shares were issued to Epic Integrated's owners, each of whom is also an officer
of Epic Integrated. The shares issued to each owner will vest over a three-year
period. All or a portion of the shares issued to each officer will be forfeited
and returned to Epic if the officer voluntarily terminates his or her employment
prior to February 20, 2011.

      Through its subsidiaries the Carnrite Group, Pearl Investment Company and
Epic Integrated, Epic provides the following consulting services to the oil, gas
and energy industry:

     o    monitoring performance of wells and reservoirs,
     o    techniques  to improve  well  productivity  and  increase  recoverable
          reserves,
     o    drilling and completion of oil and gas wells,
     o    reservoir and formation evaluation,
     o    integration of data workflows and operational processes,
     o    oilfield project management,
     o    design of energy and petrochemical projects,
     o    construction management,
     o    commodity marketing and trading,
     o    financial analysis,
     o    organizational design,


                                       4
<PAGE>

     o    specialized training,
     o    operations documentation,
     o    data management.

      Backlog represents the revenue Epic expects to realize in the future from
performing consulting work under multi-period contracts. Epic generally includes
total expected revenue in the backlog when a contract is awarded and the scope
of the services are determined. Backlog is not defined by generally accepted
accounting principles and Epic's process for determining backlog may not be
comparable to the methodology used by other companies in determining backlog.
Backlog may not be indicative of future operating results. Not all of Epic's
consulting revenue is recorded in backlog for a variety of reasons, including
the fact that some projects begin and end within a short-term period. Many
contracts do not provided for a fixed amount of work to be performed and are
subject to modification or termination by the customer. The termination or
modification of any one or more sizeable contracts or the addition of other
contracts may have a substantial immediate effect on backlog.

      For long-term contracts, the amount included in backlog is limited to
twelve months. If the contract duration is indefinite, projects included in
backlog are limited to the estimated revenue within the following twelve months.
Some contracts provide maximum dollar limits, with authorization to perform work
under the contract being agreed upon on a periodic basis with the customer. In
these arrangements, only the amounts authorized are included in backlog.

      As of February 20, 2008, Epic's backlog for consulting services to be
provided in the future was approximately $23.9 million. This compares to a
combined backlog of approximately $16.5 million as of February 28, 2007, all of
which was attributed to Pearl Investment Company since the Carnrite Group was
not formed until March 2007.

     During the year ended December 31, 2007 two customers  accounted for 82% of
Pearl  Investment  Company's total revenues.  During the year ended December 31,
2006 two customers  accounted for 78% of the total revenues of Pearl  Investment
Company.

Oil and Gas Exploration and Development
---------------------------------------

      Epic plans to evaluate undeveloped oil and gas prospects and participate
in drilling activities on prospects which in the opinion of management are
favorable for the production of oil or gas. If, through its review, a
geographical area indicates geological and economic potential, Epic will attempt
to acquire leases or other interests in the area and assemble a prospect. Epic
may then attempt to sell a portion of its leasehold interests in a prospect to
unrelated third parties, thus sharing the risks and rewards of the exploration
and development of the prospect with the joint owners pursuant to an operating
agreement. One or more wells may be drilled on a prospect, and if the results
indicate the presence of sufficient oil and gas reserves, additional wells may
be drilled on the prospect.

      Epic may also acquire producing oil and gas properties which have the
potential to support additional oil and gas wells.



                                       5
<PAGE>


Current Operations
------------------

     Epic has a 100% working interest  (approximately  82% net revenue interest)
in 58 gas wells located on 28,600 acres in Rush County,  Kansas. In January 2007
the gas wells were shut in due to the closure of the plant which was  purchasing
the gas produced from Epic's wells. Epic is in negotiations with another company
which is interested in purchasing the gas from these wells.

      Epic has a 50% working interest (approximate 40% net revenue interest) in
seven shut-in gas wells located on 6,000 acres in Kay County, Oklahoma. Epic
estimates that it will cost approximately $7,000 (with Epic being responsible
for its 50% share) to rework each shut-in well and place the well back on
production. Two wells were successfully tested for commercial production
following workovers in 2007. Depending on weather conditions, Epic plans to
begin reworking the remaining shut-in wells during 2008.

      Epic expects that its gas wells will resume production by June 2008.

      In July 2007 Epic formed a joint venture, Epic Exploration and Production
LLC, with a private investment firm to acquire energy assets and oil and gas
properties. Epic will manage the operations of the joint venture. The private
investment firm is responsible for providing capital required to acquire the
assets on a project-by-project basis.

      Epic will receive 20% of the net income from any asset or oil and gas
property acquired by the joint venture until the private investment firm
receives 100% of the equity contributed by the private investment firm to
acquire the asset or property. Thereafter, the net income from the asset or
property will be allocated equally between Epic and the private investment firm.
As of March 25, 2008, the joint venture was negotiating to acquire working
interests, varying from 50% to 100%, in producing oil wells in Fort Bend and
Bazoria counties, Texas.

      Epic did not participate in the drilling of any wells in 2006 or 2007.

      The following table shows, as of December 31, 2007, Epic's producing
wells, Developed Acreage, and Undeveloped Acreage, excluding service (injection
and disposal) wells:

                    Productive Wells (1)  Developed Acreage  Undeveloped Acreage
                    Gross            Net  Gross         Net  Gross           Net
                    -----            ---  -----         ---  -----           ---

   Oklahoma            2               1     80          40  5,920        2,960
   Kansas             58              58  2,400       2,400 26,200       26,200
                    ----            ----  -----       ----- ------      -------

       Totals         60              59  2,480       2,440 32,120       29,160
                    ====            ====  =====      ====== ======      =======

(1) All wells are gas wells.

      Developed acreage represents the number of acres which are allocated or
assignable to producing wells or wells capable of production.


                                       6
<PAGE>

      Undeveloped acreage represents leasehold interests on which wells have not
been drilled or completed to the point that would permit the production of
commercial quantities of natural gas and oil regardless of whether the leasehold
interest is classified as containing proved undeveloped reserves.

      The following table shows, as of December 31, 2007 the status of Epic's
gross developed and undeveloped acreage.

State          Gross Acreage     Held by Production    Not Held by Production
-----          -------------     ------------------    ----------------------

Kansas            6,000                   --                   6,000
Oklahoma         28,600                   --                  28,600


      Acres held by production remain in force so long as oil or gas is produced
from the well on the particular lease. Leased acres which are not held by
production require annual rental payments to maintain the lease until the first
to occur of the following: the expiration of the lease or the time oil or gas is
produced from one or more wells drilled on the lease acreage. At the time oil or
gas is produced from wells drilled on the leased acreage the lease is considered
to be held by production. Since the wells on the acreage shown in the table are
shut-in, all acreage is classified as "Not Held By Production".

      Epic does not own any overriding royalty Interests.

      Title to properties is subject to royalty, overriding royalty, carried,
net profits, working and other similar interests and contractual arrangements
customary in the oil and gas industry, to liens for current taxes not yet due
and to other encumbrances. As is customary in the industry in the case of
undeveloped properties, little investigation of record title is made at the time
of acquisition (other than a preliminary review of local records). However,
drilling title opinions are always prepared before commencement of drilling
operations.

      The following table shows Epic's net production of oil and gas, average
sales prices and average production costs during the year ended December 31,
2007.

Production Data:

   Production -
      Oil (Bbls)                       -0-
      Gas (Mcf)                        -0-

   Average sales price -
      Oil (Bbls)                       -0-
      Gas (Mcf)                        -0-

   Average production
       costs per MCF                   -0-


                                       7
<PAGE>

      Production costs may vary substantially among wells depending on the
methods of recovery employed and other factors, but generally include severance
taxes, administrative overhead, maintenance and repair, labor and utilities.

      Epic is not obligated to provide a fixed and determined quantity of oil or
gas in the future. During the last fiscal year, Epic did not have, nor does it
now have, any long-term supply or similar agreement with any government or
governmental authority.

      Below are estimates of Epic's net proved reserves and the present value of
estimated future net revenues from its reserves based upon the standardized
measure of discounted future net cash flows relating to proved oil and gas
reserves in accordance with the provisions of Statement of Financial Accounting
Standards No. 69, "Disclosures about Oil and Gas Producing Activities" (SFAS No.
69). The standardized measure of discounted future net cash flows is determined
by using estimated quantities of proved reserves and the periods in which they
are expected to be developed and produced based on period-end economic
conditions. The estimated future production is priced at period-end prices,
except where fixed and determinable price escalations are provided by contract.
The resulting estimated future cash inflows are then reduced by estimated future
costs to develop and produce reserves based on period-end cost levels. No
deduction has been made for depletion, depreciation or for indirect costs, such
as general corporate overhead. Present values were computed by discounting
future net revenues by 10% per year.
                                                        December 31, 2007
                                                        -----------------
                                                        Oil           Gas
                                                       (Bbls)         (Mcf)
                                                       ------         -----

      Proved reserves                                   3,965     4,961,457
      Estimated future net cash flows from proved
           oil and gas reserves                             $10,225,690
      Present value of future net cash flows from
          proved oil and gas reserves                       $ 5,153,686

      Epic's proved reserves include only those amounts which Epic reasonably
expects to recover in the future from known oil and gas reservoirs under
existing economic and operating conditions, at current prices and costs, under
existing regulatory practices and with existing technology. Accordingly, any
changes in prices, operating and development costs, regulations, technology or
other factors could significantly increase or decrease estimates of Proved
Reserves.

Government Regulation
---------------------

      Although Epic's consulting business is not subject to any particular
governmental regulations, Epic's oil and gas operations are subject to numerous
environmental laws and regulations. These laws and regulations include:

     o    the Comprehensive  Environmental Response,  Compensation and Liability
          Act;
     o    the Resources Conservation and Recovery Act;


                                       8
<PAGE>

     o    the Clean Air Act;
     o    the Federal Water Pollution Control Act; and
     o    the Toxic Substances Control Act.

      In addition to the federal laws and regulations, states often have
numerous environmental, legal, and regulatory requirements which Epic must
comply with.

      Epic does not expect that costs pertaining to environmental compliance
will have a material adverse effect on its operations.

      Various state and federal agencies regulate the production and sale of oil
and natural gas. All states in which Epic plans to operate impose restrictions
on the drilling, production, transportation and sale of oil and natural gas.

      The Federal Energy Regulatory Commission (the "FERC") regulates the
interstate transportation and the sale in interstate commerce for resale of
natural gas. The FERC's jurisdiction over interstate natural gas sales has been
substantially modified by the Natural Gas Policy Act under which the FERC
continued to regulate the maximum selling prices of certain categories of gas
sold in "first sales" in interstate and intrastate commerce.

      Epic's sales of any natural gas will be affected by intrastate and
interstate gas transportation regulation. Beginning in 1985, the FERC adopted
regulatory changes that have significantly altered the transportation and
marketing of natural gas. These changes are intended by the FERC to foster
competition by, among other things, transforming the role of interstate pipeline
companies from wholesale marketers of natural gas to the primary role of gas
transporters. All natural gas marketing by the pipelines is required to divest
to a marketing affiliate, which operates separately from the transporter and in
direct competition with all other merchants. As a result of the various omnibus
rulemaking proceedings in the late 1980s and the individual pipeline
restructuring proceedings of the early to mid-1990s, the interstate pipelines
must provide open and nondiscriminatory transportation and
transportation-related services to all producers, natural gas marketing
companies, local distribution companies, industrial end users and other
customers seeking service. Through similar orders affecting intrastate pipelines
that provide similar interstate services, the FERC expanded the impact of open
access regulations to intrastate commerce.

      Federal, state, and local agencies have promulgated extensive rules and
regulations applicable to Epic's oil and gas exploration, production and related
operations. Most states require permits for drilling operations, drilling bonds
and the filing of reports concerning operations and impose other requirements
relating to the exploration of oil and natural gas. Many states also have
statutes or regulations addressing conservation matters including provisions for
the unitization or pooling of oil and natural gas properties, the establishment
of maximum rates of production from oil and natural gas wells and the regulation
of spacing, plugging and abandonment of such wells. The statutes and regulations
of some states limit the rate at which oil and natural gas is produced from
Epic's properties. The federal and state regulatory burden on the oil and
natural gas industry increases Epic's cost of doing business and affects its
profitability.


                                       9
<PAGE>

Competition
-----------

Consulting Services
-------------------

      The energy consulting industry is highly competitive. Competitors include
large, multinational corporations such as SAIC, Accenture, KBR and Baker Energy
as well as many medium sized and small consulting firms. Because the energy
consulting industry is large and crosses numerous geographic lines, a meaningful
estimate of the total number of Epic's competitors is not possible.
Competitive factors include:

     o    price;
     o    service delivery  (including the ability to deliver services quickly);
          and
     o    technical proficiency.

Oil and Gas
-----------

      Epic will be faced with strong competition from many other companies and
individuals engaged in the oil and gas business, many of which are very large,
with substantial capabilities and well established. Epic will compete with these
individuals and companies, many of which have greater financial resources and
larger technical staffs. Although it is nearly impossible to estimate the number
of competitors; it is known that there are a large number of companies and
individuals in the oil and gas business.

      Exploration for and production of oil and gas are affected by the
availability of pipe, casing and other tubular goods and certain other oil field
equipment including drilling rigs and tools. Epic will depend upon independent
drilling contractors to furnish rigs, equipment and tools to drill its wells.
Higher prices for oil and gas may result in competition among operators for
drilling equipment, tubular goods and drilling crews which may affect Epic's
ability expeditiously to drill, complete, recomplete and work-over its wells.
However, Epic has not experienced and does not anticipate difficulty in
obtaining supplies, materials, drilling rigs, equipment or tools.

      The market for oil and gas is dependent upon a number of factors beyond
Epic's control, which at times cannot be accurately predicted. These factors
include the proximity of wells to, and the capacity of, natural gas pipelines,
the extent of competitive domestic production and imports of oil and gas, the
availability of other sources of energy, fluctuations in seasonal supply and
demand, and governmental regulation. In addition, there is always the
possibility that new legislation may be enacted which would impose price
controls or additional excise taxes upon crude oil or natural gas, or both.
Oversupplies of natural gas can be expected to recur from time to time and may
result in the gas producing wells being shut-in. Increased imports of natural
gas, primarily from Canada, have occurred and are expected to continue. Such
imports may adversely affect the market for domestic natural gas.

      Since the early 1970's the market price for crude oil has been
significantly affected by policies adopted by the member nations of Organization
of Petroleum Exporting Countries ("OPEC"). Members of OPEC establish prices and


                                       10
<PAGE>

production quotas among themselves for petroleum products from time to time with
the intent of controlling the current global supply and consequently price
levels. Epic is unable to predict the effect, if any, that OPEC or other
countries will have on the amount of, or the prices received for, crude oil and
natural gas produced and sold from Epic's wells.

      Gas prices, which were once effectively determined by government
regulations, are now largely influenced by competition. Competitors in this
market include producers, gas pipelines and their affiliated marketing
companies, independent marketers, and providers of alternate energy supplies,
such as residual fuel oil. Changes in government regulations relating to the
production, transportation and marketing of natural gas have also resulted in
significant changes in the historical marketing patterns of the industry.
Generally, these changes have resulted in the abandonment by many pipelines of
long-term contracts for the purchase of natural gas, the development by gas
producers of their own marketing programs to take advantage of new regulations
requiring pipelines to transport gas for regulated fees, and an increasing
tendency to rely on short-term contracts priced at spot market prices.

General
-------

      As of March 31, 2008, Epic and its subsidiaries, the Carnrite Group, Pearl
Investment Company and Epic Integrated Solutions, had 220 full time employees.

      Epic's offices are located at 10655 Six Pines, Suite 210, The Woodlands,
Texas 77380. Approximately 1,500 square feet of space is occupied under the
lease requiring rental payments of $2,400 per month. The lease on this space is
occupied on a month-to-month basis.

      The offices of The Carnrite Group are located at 219 W. 11th Street,
Houston, Texas. The 1,480 square feet of office space is occupied under the
lease requiring rental payments of $2,500 per month through April 2008, $2,750
per month thru April 2009 and $3,000 per month through April 2010. The lease on
this space expires in April 2010.

      The primary offices of Pearl Investment Company are located at 7110
Jefferson Avenue, Lakewood, Colorado. The 30,552 square feet of office space is
occupied under the lease requiring rental payments of $42,168 per month. The
third floor lease on this space expires in July 2011 and the second floor lease
on this space expires in March 2012. Pearl has eight branch offices and
facilities in Colorado, Wyoming, Montana and Utah. The rental for all of the
branch offices is approximately $18,900 per month.

      The offices of Epic Integrated Solutions are located at 2203 Timberloch,
The Woodlands, Texas. The 1,450 square feet of office space is occupied under a
lease requiring rental payments of $5,086 per month through December 2009.


                                       11
<PAGE>



ITEM 2.  DESCRIPTION OF PROPERTIES
----------------------------------

      See Item 1 of this report.

ITEM 3.  LEGAL PROCEEDINGS.
--------------------------

      None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
-------------------------------------------------------------

      Not applicable.

ITEM 5.  MARKET FOR COMMON EQUITY AND OTHER RELATED  STOCK HOLDER MATTERS.
--------------------------------------------------------------------------

      As of March 25, 2008 there were approximately 110 record holders of Epic's
common stock. Epic's common stock began trading on the OTC Bulletin Board on
October 30, 2006 under the symbol "EPCC". Shown below are the range of high and
low closing prices for Epic's common stock for the periods indicated as reported
by the NASD. The market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily represent actual
transactions.

       Quarter Ended             High           Low
       -------------             ----           ---

       December 31, 2006        $ 2.80         $ 1.25
       March 31, 2007           $ 3.07         $ 2.78
       June 30, 2007            $ 3.20         $ 2.90
       September 30, 2007       $ 3.83         $ 3.15
       December 31, 2007        $ 4.29         $ 2.30

      Holders of common stock are entitled to receive dividends as may be
declared by the Board of Directors out of legally available funds and, in the
event of liquidation, to share pro rata in any distribution of Epic's assets
after payment of liabilities. The Board of Directors is not obligated to declare
a dividend. Epic has not paid any dividends on its common stock and Epic does
not have any current plans to pay any common stock dividends.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS/ PLAN OF OPERATIONS
-----------------------------------------------------------------

      The discussion in this section contains forward-looking statements. These
statements relate to future events or future financial performance. Epic has
attempted to identify forward-looking statements by terminology such as
"anticipate," "believe," "can," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "should," "would" or "will" or
the negative of these terms or other comparable terminology, but their absence
does not mean that a statement is not forward looking. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, which could cause actual results to differ from those projected in any


                                       12
<PAGE>

forward-looking statements. This discussion should be read with the financial
statements and related notes included elsewhere in this report.

Overview
--------

       Epic was incorporated in Colorado on June 6, 1989. Following its
formation Epic was inactive until April 2006, when Epic changed management and
began operating in the oil and gas industry.

       In August 2007 Epic acquired the Carnrite Group, LLC for 3,177,810 shares
of its common stock.

       In December 2007 Epic acquired Pearl Investment Company (formerly named
Pearl Development Company) for 1,786,240 shares of its common stock and
$19,020,000 in cash.

       On February 20, 2008, Epic acquired Epic Integrated Solutions, LLC, an
unaffiliated entity, for cash and 1,000,000 shares of its restricted common
stock. At closing, Epic paid $600,000 and issued 1,000,000 shares of its common
stock to the three owners of Epic Integrated. An additional $1,400,000 will be
paid to the three owners in periodic installments during 2008 and 2009.

       The Carnrite Group, Pearl Investment Company and Epic Integrated provide
consulting services to the oil, gas and energy industry in the areas of
engineering, construction management, operations, maintenance, oil field project
management, training, operations documentation and data management.

      The Carnrite Group, Pearl Investment Company and Epic Integrated Services
generated annual revenues in 2007 of approximately $62,000,000.

      Epic plans to continue its growth in the Rocky Mountains, Texas, Oklahoma
and Kansas, where its engineering expertise is its strength, and expand
throughout the United States and into foreign countries.

      As of February 29, 2008, Epic's backlog for future consulting services was
approximately $23.9 million. This compares to a combined backlog of
approximately $16.5 million as of February 28, 2007, all of which was attributed
to Pearl Investment Company since the Carnrite Group was not formed until March
2007. Epic believes demand for its services remains strong and will continue to
increase as it expands its service regions during 2008.

       Epic has a 100% working interest in 58 shut in gas wells and a 50%
working interest in seven shut in gas wells. Epic plans to continue its search
for underperforming oil and gas properties where it believes its engineering
expertise can improve production. Oil prices have recently risen to as high as
$107 a barrel. As a result, enhanced recovery projects have become more
economically feasible.


                                       13
<PAGE>


Results of Operations
---------------------

Epic
----

      Following its formation in 1989 Epic was relatively inactive until April
2006, when its management changed and it became involved in providing consulting
services and oil and gas exploration and development.

      Because Epic had minimal operations until the acquisition of Carnrite in
August 2007, Epic's historical operating results and period to period
comparisons are not significant until 2007. All increases in Epic's revenues and
expenses between 2007 and 2006 are associated with the acquisitions of Carnrite
and the Pearl Investment Company. Refer to the pro forma financial statements
included in "Notes to the Consolidated Financial Statements - Note 3 Business
Combinations" which includes the results of operations had Carnrite and Pearl
been acquired as of January 1, 2006. The results for 2007 contain the historical
results of Carnrite from July 1 through December 31 and Pearl from December 1
through December 31 and may not be indicative of future operating results.

      Expenses which are directly related to oil and gas production are charged
to lease operating expenses. All other expenses (except depletion, accretion and
impairment), whether they relate to consulting services or oil and gas
exploration/development, are recorded as general and administrative expenses.

Analysis of the Year Ended December 31, 2007 versus December 31, 2006
---------------------------------------------------------------------

      Revenues were $8,470,696 for the year ended December 31, 2007 as compared
to $106,263 for the year ended December 31, 2006, an increase of $8,364,433.
This increase was due to the acquisitions of Carnrite in August 2007 and Pearl
in December 2007.

      Operating Expenses were $12,236,495 for the year ended December 31, 2007
as compared to $4,079,565 for the year ended December 31, 2006, an increase of
$8,156,930. This increase was due to the acquisitions of Carnrite in August 2007
and Pearl in December 2007 and increased lease operating expenses of
approximately $324,000, partially offset by a decrease in impairment of oil and
gas properties of approximately $896,000.

      Loss from Operations was $3,765,799 for the year ended December 31, 2007
as compared to $3,973,302 for the year ended December 31, 2006, a decrease of
$(207,503). Because significant operations commenced in 2007 with the
acquisitions of Carnrite and Pearl, no comparison can be made between the
periods.

      Other Income (Expenses) were $(596,917) for the year ended December 31,
2007 as compared to $3,088 for the year ended December 31, 2006. The increase in
Other Expenses was due to interest expense and debt discount amortization on the
$20,250,000 debentures that were sold on December 5, 2007.


                                       14
<PAGE>

      Net Loss was $(4,382,716) or $0.11 per share for the year ended December
31, 2007 as compared to $(3,970,214) for the year ended December 31, 2006, an
increase of $412,502. Because significant operations commenced in 2007 with the
acquisitions of Carnrite and Pearl, no comparison can be made between the
periods.

Analysis of the Year Ended December 31, 2006 versus December 31, 2005
---------------------------------------------------------------------

      During the year ended December 31, 2006 Epic had gross revenues of
$106,263 which were derived from the sale of natural gas and consulting services
and had a loss of $3,970,214, resulting primarily from the impairment of its oil
and gas properties and general and administrative expenses associated with
commencing operations during 2006. During the year ended December 31, 2005,
Epic, then named did not have any operations. As a result, a comparison of
operations for the current period with the year ended December 31, 2005 is not
meaningful.

Liquidity and Capital Resources
-------------------------------

      Between October 2006 and April 2007 Epic raised $1,414,700, net
commissions, from the sale of 1,455,100 shares of its common stock, plus 491,500
Series A warrants and 963,600 Series B warrants, to private investors. The
Series A warrants expired on December 31, 2007. Each Series B Warrant entitles
the holder to purchase one share of Epic's common stock at a price of $2.50 per
share at any time prior to September 30, 2009.

      On December 5, 2007 Epic sold 4,406,334 shares of its common stock to a
group of private investors for gross proceeds of $6,609,501, or $1.50 per share.
The investors also received warrants which entitle the holders to purchase up to
4,406,334 shares of the Company's common stock. The warrants are exercisable at
a price of $1.50 per share and expire on December 5, 2012.

      On December 31, 2007 Epic sold an additional 1,023,001 shares of its
common stock to a group of private investors for gross proceeds of $1,534,502 or
$1.50 per share. The investors also received warrants which entitle the holders
to purchase up to 1,023,001 shares of Epic's common stock. The warrants are
exercisable at a price of $1.50 per share and expire on December 5, 2012.

      On December 5, 2007 Epic also sold notes in the principal amount of
$20,250,000 to a second group of private investors. The notes were sold at their
face value without discount. The notes bear interest annually at 10% per year.
The notes are due and payable on December 5, 2012 and are secured by liens on
all of Epic's assets. The purchasers of the notes also received warrants which
entitle the holders to purchase up to 15,954,545 shares of Epic's common stock.
The warrants are exercisable at a price of $1.65 per share and expire on
December 5, 2012.

      Interest on the notes is payable quarterly with the first interest payment
due on January 1, 2008. Beginning December 1, 2008 Epic is required to make
quarterly payments of $1,265,625 toward the principal amount of the notes.


                                       15
<PAGE>

     The amounts raised in the December 2007 financing were used as follows:

     Amount received from sale of common stock, notes
       and warrants                                              $ 28,394,003

      Less:
          Acquisition of Pearl Investment Company                 (19,020,000)
          Reserve for income taxes of Pearl Investment Company
              for year ended December 31, 2007                     (2,400,000)
          Payment of Pearl Investment Company bank loans           (1,504,884)
          Placement agent fees                                     (1,785,000)
          Legal, accounting and other professional fees              (125,000)
                                                              ---------------
             Remainder to be used as working capital          $    3,559,119
                                                              ===============

      Epic's sources and (uses) of cash during the years ended December 31, 2007
and 2006 were:
                                                       2007          2006
                                                       ----          ----

Cash used by operations                           $(2,667,176)    $(595,807)
Investment in Epic Exploration and Development         22,700            --
Investment in oil and gas properties                 (301,777)     (102,100)
Cash resulting from acquisition of Carnrite            48,727            --
Acquisition of Pearl Investment Company,
    net of cash received                          (20,371,822)           --
Borrowings, net of repayments and issuance costs   17,503,607            --
Sale of common stock                                8,667,103       903,195
Capital contribution                                       --      (304,221)
Increase in restricted cash                        (3,400,000)           --
Bank overdrafts                                     3,441,949            --
Other                                                  (4,901)           --

      Epic's material future contractual obligations as of December 31, 2006 are
shown below:

                       Operating      Capital
                         Leases        Leases        Debt           Total
                       ---------      --------       ----           -----

      2008           $   941,280     $1,055,303   $2,152,832   $  4,149,415
      2009               842,004        889,796    6,032,440      7,764,240
      2010               731,156        481,893    6,885,216      8,098,265
      2011               589,009        363,630    5,082,671      6,035,310
      2012               246,303        388,149    3,807,282      4,441,734
      Thereafter               -      2,876,449            -      2,876,449
                ----------------- ------------- ------------   -------------
            Total     $3,349,752   $6,055,220    $23,960,441    $33,365,413
                      ==========   ==========    ===========    ===========

      Other than the operating leases, as of December 31, 2007 and March 31,
2008 Epic did not have any off balance sheet arrangements.


                                       16
<PAGE>

      Epic's loan from the private lender had a principal balance of $3,710,441
as of December 31, 2007 and is secured by Epic's gas wells in Rush County,
Kansas. The loan bears interest at 10% per year and is payable in equal monthly
installments of $72,000. The loan agreement provides that if the monthly net
income from the wells is less than $72,000, the deficit will be added to the
principal amount of the note. If the monthly net income from the wells is
greater than $72,000, the net income is applied to the note principal. Since the
Kansas wells are shut in, it is anticipated that $25,000 will be added to the
note principal each month until the wells return to production.

      As a result of the acquisition of The Carnrite Group, the Pearl Investment
Company and Epic Integrated, Epic believes that cash provided by its operations
will satisfy its future capital requirements, including principal and interest
payments required by the terms of the note secured by Epic's Kansas gas wells
and the notes sold in December 2007.

      The demand for Epic's services depends on trends in oil and natural gas
prices and is particularly sensitive to the level of exploration, development,
and production by oil and natural gas companies. Historically, the prices for
oil and gas have been volatile and are likely to continue to be volatile.
Spending on exploration and production activities will have a significant impact
on the activity level of Epic's consulting businesses.

       Other than the matters discussed above, Epic does not know of any future
trends or events which would materially affect its operating results or
financial condition.

Critical Accounting Policies

      The preparation of Epic's financial statements requires it to make
estimates and judgments that affect the reported amounts of its assets,
liabilities and expenses and related disclosure of contingent assets and
liabilities. Epic bases its estimates on historical experience and on various
other assumptions that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities. Although Epic reviews its estimates on an ongoing
basis, actual results may differ from its estimates under different assumptions
or conditions. Epic believes the following accounting policies are critical to
the judgments and estimates used in the preparation of its financial statements:

      Revenue Recognition. Revenues from oil and gas production sales are
recognized as revenue in accordance with Securities and Exchange Commission
Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition," when persuasive
evidence of an arrangement exists, fees are fixed or determinable, title has
passed (generally upon transmission of oil and gas production), and collection
is reasonably assured.

      Revenue from consulting services is recognized from consulting engagements
when hours are worked, either on a time-and-materials basis or on a fixed-fee
basis, depending on the terms and conditions defined at the inception of an
engagement with a client. The terms of the contracts with clients are fixed and
determinable and may change based upon agreement by both parties. Individual
consultants' billing rates are principally based on a multiple of salary and


                                       17
<PAGE>

compensation costs. Revenue recognized in excess of billings is recorded as
unbilled accounts receivable. Cash collections and invoices generated in excess
of revenue recognized are recorded as deferred revenue until the revenue
recognition criteria are met. Client reimbursable expenses, including those
relating to travel, other out-of-pocket expenses and any third-party costs, are
included in revenue, and an equivalent amount of reimbursable expenses are
included in professional and subcontracted services as a cost of revenue.

      Service revenue is received from certain contractual relationships under
time and materials type contracts, for which revenue is recognized monthly in
the period in which the related time is incurred and as expenses are recognized.
Revenues from lump-sum turn-key contracts are recognized upon achievement of
contract milestones, based on contracts. Interest income is generated from
certain customer prepayments for materials to be procured, received, and paid
for on behalf of the customer and is recognized monthly.

      Accounts Receivable. Accounts receivable represent amounts due from
customers for services performed. Epic extends various terms to its customers,
with payment terms generally 30 days, depending on the customer and country, and
Epic does not require collateral. Epic periodically assesses the collectibility
of its receivables, as necessary, based on various considerations including
customer credit history, payment patterns, and aging of accounts. Once
management determines an account receivable is not collectible, the account is
written off. Epic has not experienced collectibility problems to date. If the
collection history or aging of accounts receivable deteriorates, Epic may have
to record a charge to operations to establish an allowance for doubtful
accounts. A customer of Pearl Investment, which owed Pearl approximately
$1,200,000, recently filed for Chapter 11 bankruptcy. As a result of this
filing, Epic, on its December 31, 2007 balance sheet, recorded an allowance for
doubtful accounts of $636,000.

      Full Cost Method of Accounting for Crude Oil and Natural Gas Activities .
SEC Regulation S-X defines the financial accounting and reporting standards for
companies engaged in crude oil and natural gas activities. Two methods are
prescribed: the successful efforts method and the full cost method. Epic has
chosen to follow the full cost method under which all costs associated with
property acquisition, exploration and development are capitalized. Epic also
capitalizes internal costs that can be directly identified with acquisition,
exploration and development activities and do not include any costs related to
production, general corporate overhead or similar activities. Effective with the
adoption of SFAS No. 143 in 2003, the carrying amount of oil and gas properties
also includes estimated asset retirement costs recorded based on the fair value
of the asset retirement obligation when incurred. Gain or loss on the sale or
other disposition of oil and gas properties is not recognized, unless the gain
or loss would significantly alter the relationship between capitalized costs and
proved reserves of oil and natural gas attributable to a country. Under the
successful efforts method, geological and geophysical costs and costs of
carrying and retaining undeveloped properties are charged to expense as
incurred. Costs of drilling exploratory wells that do not result in proved
reserves are charged to expense. Depreciation, depletion, amortization and
impairment of crude oil and natural gas properties are generally calculated on a
well by well or lease or field basis versus the "full cost" pool basis.
Additionally, gain or loss is generally recognized on all sales of crude oil and
natural gas properties under the successful efforts method. As a result Epic's
financial statements will differ from companies that apply the successful
efforts method since Epic will generally reflect a higher level of capitalized


                                       18
<PAGE>

costs as well as a higher depreciation, depletion and amortization rate on our
crude oil and natural gas properties.

       At the time it was adopted, management believed that the full cost method
would be preferable, as earnings tend to be less volatile than under the
successful efforts method. However, the full cost method makes Epic more
susceptible to significant non-cash charges during times of volatile commodity
prices because the full cost pool may be impaired when prices are low. These
charges are not recoverable when prices return to higher levels. Epic's crude
oil and natural gas reserves have a relatively long life. However, temporary
drops in commodity prices can have a material impact on Epic's business,
including impact from the full cost method of accounting.

      Ceiling Test. Companies that use the full cost method of accounting for
oil and gas exploration and development activities are required to perform a
ceiling test each quarter. The full cost ceiling test is an impairment test
prescribed by SEC Regulation S-X Rule 4-10. The test determines a limit, or
ceiling, on the book value of oil and gas properties. That limit is basically
the after tax present value of the future net cash flows from proved crude oil
and natural gas reserves, excluding future cash outflows associated with
settling asset retirement obligations that have been accrued on the balance
sheet, plus the lower of cost or fair market value of unproved properties. If
net capitalized costs of crude oil and natural gas properties exceed the ceiling
limit, Epic must charge the amount of the excess to earnings. This is called a
"ceiling limitation write-down." This charge does not impact cash flow from
operating activities, but does reduce Epic's stockholders' equity and reported
earnings. The risk that Epic will be required to write-down the carrying value
of crude oil and natural gas properties increases when crude oil and natural gas
prices are depressed or volatile. In addition, write-downs may occur if Epic
experiences substantial downward adjustments to its estimated proved reserves or
if purchasers cancel long-term contracts for natural gas production. An expense
recorded in one period may not be reversed in a subsequent period even though
higher crude oil and natural gas prices may have increased the ceiling
applicable to the subsequent period.

       Estimates of Epic's proved reserves included in this prospectus are
prepared in accordance with GAAP and SEC guidelines. The accuracy of a reserve
estimate is a function of:

     o    the quality and quantity of available data;
     o    the interpretation of that data;
     o    the accuracy of various mandated economic assumptions; and
     o    the judgment of the persons preparing the estimate.

      Epic's proved reserves and the present value of estimated future net
revenues from its reserves are based upon estimates which Epic believes are
reasonable. Because these estimates depend on many assumptions, all of which may
substantially differ from future actual results, reserve estimates will be
different from the quantities of oil and gas that are ultimately recovered. In
addition, results of drilling, testing and production after the date of an
estimate may justify material revisions to the estimate. It should not be
assumed that the present value of future net cash flows is the current market
value of Epic's estimated proved reserves. In accordance with SEC requirements,
Epic bases the estimated discounted future net cash flows from proved reserves


                                       19
<PAGE>

on prices and costs on the date of the estimate. Actual future prices and costs
may be materially higher or lower than the prices and costs as of the date of
the estimate.

      The estimates of proved reserves materially impact DD&A expense. If the
estimates of proved reserves decline, the rate at which we record DD&A expense
will increase, reducing future net income. Such a decline may result from lower
market prices, which may make it uneconomic to drill for and produce higher cost
fields.

      Excluded Costs. Oil and gas properties include costs that are excluded
from capitalized costs being amortized. These amounts represent investments in
unproved properties and major development projects. These costs are excluded
until proved reserves are found or until it is determined that the costs are
impaired. All costs excluded are reviewed at least quarterly to determine if
impairment has occurred. The amount of any impairment is transferred to the
capitalized costs being amortized (the DD&A pool) or a charge is made against
earnings for those international operations where a reserve base has not yet
been established. Impairments transferred to the DD&A pool increase the DD&A
rate. Costs excluded for oil and gas properties are generally classified and
evaluated as significant or individually insignificant properties.

      Property and Equipment. Property and equipment is stated at cost.
Equipment under capital leases is valued at the lower of fair market value or
net present value of the minimum lease payments at inception of the lease.
Depreciation and amortization is provided utilizing the straight-line method
over the estimated useful lives for owned assets, ranging from 3 to 10 years,
and the related lease terms for leasehold improvements and equipment under
capital leases.

      Valuation of Intangibles and Long-Lived Assets. SFAS No. 142 provides that
goodwill and other intangible assets that have indefinite useful lives not be
amortized but, instead, must be tested at least annually for impairment, and
intangible assets that have finite useful lives should continue to be amortized
over their useful lives. SFAS No. 142 also provides specific guidance for
testing goodwill and other non-amortized intangible assets for impairment. SFAS
No. 142 does not allow increases in the carrying value of reporting units that
may result from Epic's impairment test; therefore, Epic may record goodwill
impairments in the future, even when the aggregate fair value of its reporting
units and the company as a whole may increase. Goodwill of a reporting unit will
be tested for impairment between annual tests if an event occurs or
circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. Examples of such events or
circumstances may include a significant change in business climate or a loss of
key personnel, among others. SFAS No. 142 requires that management make certain
estimates and assumptions in order to allocate goodwill to reporting units and
to determine the fair value of reporting unit net assets and liabilities,
including, among other things, an assessment of market conditions, projected
cash flows, cost of capital and growth rates, which could significantly impact
the reported value of goodwill and other intangible assets. Estimating future
cash flows requires significant judgment, and Epic's projections may vary from
cash flows eventually realized.


                                       20
<PAGE>

      Epic reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be realizable. If an
evaluation is required, the estimated future undiscounted cash flows associated
with the asset are compared to the asset's carrying amount to determine if an
impairment of such asset is necessary. Estimating future cash flows requires
significant judgment, and Epic's projections may vary from cash flows eventually
realized. The effect of any impairment would be to expense the difference
between the fair value of such asset and its carrying value. In addition, Epic
estimates the useful lives of its long-lived assets and other intangibles. Epic
periodically reviews factors to determine whether these lives are appropriate.

      Asset Retirement Obligations ("ARO"). The estimated costs of restoration
and removal of facilities are accrued. The fair value of a liability for an
asset's retirement obligation is recorded in the period in which it is incurred
and the corresponding cost capitalized by increasing the carrying amount of the
related long-lived asset. The liability is accreted to its then present value
each period, and the capitalized cost is depreciated by the units of production
method. If the liability is settled for an amount other than the recorded
amount, a gain or loss is recognized. For all periods presented, we have
included estimated future costs of abandonment and dismantlement in the full
cost amortization base and amortize these costs as a component of our depletion
expense.

      Stock-Based Compensation. Epic adopted FAS 123R on January 1, 2006 which
requires the measurement and recognition of compensation expense for all
share-based awards made to employees and directors, including stock options,
restricted stock and employee stock purchases related to employee stock purchase
plans, based on estimated fair values. SFAS No. 123(R) requires companies to
estimate the fair value of share-based awards on the grant date using an option
pricing model. Epic values share-based awards using the Black-Scholes option
pricing model. The Black-Scholes model is highly complex and dependent on key
estimates by management. The estimates with the greatest degree of subjective
judgment are the estimated lives of the stock-based awards and the estimated
volatility of Epic's stock price.

      Income Taxes. Epic uses the asset and liability method of accounting for
income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes."
Deferred tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the financial statement and tax
bases of assets and liabilities. If appropriate, deferred tax assets are reduced
by a valuation allowance which reflects expectations of the extent to which such
assets will be realized. As of December 31, 2007, 2006 and 2005, Epic had
recorded a full valuation allowance for its net deferred tax asset.

      On January 1, 2007, Epic adopted the provisions of FIN 48, "Accounting for
Uncertainty in Income Taxes." FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. FIN 48 requires
that Epic recognize in its consolidated financial statements only those tax
positions that are "more-likely-than-not" of being sustained as of the adoption
date, based on the technical merits of the position. Due to the recent
acquisitions of the Carnrite Group and the Pearl Investment Company, Epic has
been unable determine the impact of FIN 48 as of December 31, 2007.


                                       21
<PAGE>

      Per Share Information. Basic earnings (losses) per share is computed by
dividing net income (losses) from continuing operations attributable to common
stock by the weighted average number of common shares outstanding during each
period. Diluted earnings per share is computed by adjusting the average number
of common shares outstanding for the dilutive effect, if any, of common stock
equivalents such as stock options and warrants. Diluted net loss per share is
the same as basic net loss per share for all periods presented because potential
common stock equivalents were anti-dilutive. For all periods in which there was
a net loss attributable to common stockholders, all of Epic's stock options and
warrants were anti-dilutive. Common stock equivalents of $23,828,961, and
$1,143,143 at December 31, 2007 and 2006, respectively, were excluded because
they were anti-dilutive due to the net loss attributable to common stockholders
incurred in such periods.

      Financial Instruments and Concentrations of Credit Risk. Epic's financial
instruments consist of cash and cash equivalents, accounts receivable, accounts
payable, accrued expenses, derivative financial instruments, and debt. Epic
believes the carrying values of cash and cash equivalents, accounts receivable,
accounts payable and accrued expenses approximate their fair values due to their
short-term nature. The fair value of debt is estimated based on the effective
interest rate method.

      Epic generally does not use derivative financial instruments to hedge
exposures to cash-flow risks or market-risks that may affect the fair values of
its financial instruments. However, certain other financial instruments, such as
warrants and embedded conversion features in Epic's debt that are indexed to its
common stock, are classified as equity with the offset treated as a discount on
the notes. Such financial instruments are initially recorded at fair value and
amortized to interest expense during the life of the debt.

      Epic utilizes various types of financing to fund its business needs,
including debt with warrants attached and other instruments indexed to its
stock. The embedded conversion features utilized in these instruments require an
initial measurement of the fair value of the derivative components. Pursuant to
FAS 133 and EITF 00-19 Epic amortizes the discount associated with these
derivative components to interest expense at each reporting period.

Recent Accounting Pronouncements

      In June 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"),
"Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109"("FAS 109"), which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in accordance
with FAS No. 109, "Accounting for Income Taxes." FIN 48 prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return.
This Interpretation also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. This Interpretation is effective for fiscal years beginning after
December 15, 2006. Due to the recent acquisitions of the Carnrite Group and the
Pearl Investment Company, Epic has been unable determine the impact of FIN 48 as
of December 31, 2007.


                                       22
<PAGE>

      In September 2006, the Financial Accounting Standards Board ("FASB")
published Statement of Financial Accounting Standards No.157, "Fair Value
Measurements" (FAS 157). FAS 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. FAS 157 applies under other
accounting pronouncements that require or permit fair value measurements and
accordingly, does not require any new fair value measurements. FAS 157 is
effective for fiscal years beginning after November 15, 2007. Epic does not
believe the adoption of FAS 157 will have a material impact on its financial
statements.

      In February 2007, the Financial Accounting Standards Board (the "FASB")
issued FASB Statement No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities -- Including an Amendment of FASB Statement No. 115 ("SFAS
159"). This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. Most of the provisions in
SFAS 159 are elective; however, the amendment to FASB Statement No. 115,
Accounting for Certain Investments in Debt and Equity Securities, applies to all
entities with available-for-sale and trading securities. The FASB's stated
objective in issuing this standard is as follows: "to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions."

      The fair value option established by SFAS 159 permits all entities to
choose to measure eligible items at fair value at specified election dates. A
business entity will report unrealized gains and losses on items for which the
fair value option has been elected in earnings (or another performance indicator
if the business entity does not report earnings) at each subsequent reporting
date. The fair value option: (i) may be applied instrument by instrument, with a
few exceptions, such as investments otherwise accounted for by the equity
method; (ii) is irrevocable (unless a new election date occurs); and (iii) is
applied only to instruments and not to portions of instruments.

      SFAS 159 is effective as of the beginning of an entity's first fiscal year
that begins after November 15, 2007. Early adoption is permitted as of the
beginning of the previous fiscal year provided that the entity makes that choice
in the first 120 days of that fiscal year and also elects to apply the
provisions of FASB Statement No. 157, Fair Value Measurements ("SFAS 157"). Epic
is currently assessing the impact of SFAS 159 on its financial statements.

      In December 2007, the FASB issued SFAS No. 141(R), "Business
Combinations," which requires the acquiring entity in a business combination to
recognize and measure all assets and liabilities assumed in the transaction and
any non-controlling interest in the acquiree at fair value as of the acquisition
date. SFAS No. 141 (R) also establishes guidance for the measurement of the
acquirer shares issued in consideration for a business combination, the
recognition of contingent consideration, the accounting treatment
pre-acquisition gain and loss contingencies, the treatment of acquisition
related transaction costs, and the recognition of changes in the acquirer's
income tax valuation allowance and deferred taxes. SFAS No. 141(R) is effective
for fiscal years beginning after December 15, 2008 and is to be applied
prospectively as of the beginning of the fiscal year in which the statement is
applied. Early adoption is not permitted. SFAS No. 141(R) will be effective for
Epic beginning with the 2009 fiscal year.


                                       23
<PAGE>


      In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest
in Consolidated Financial Statements -- an amendment of ARB 51," which
establishes accounting and reporting standards that require noncontrolling
interests to be reported as a component of equity. SFAS No. 160 also requires
that changes in a parent's ownership interest while the parent retains its
controlling interest be accounted for as equity transactions and that any
retained noncontrolling equity investment upon the deconsolidation of a
subsidiary be initially measured at fair value. SFAS No. 160 is effective for
fiscal years beginning after December 15, 2008 and is to be applied
prospectively as of the beginning of the fiscal year in which the statement is
applied. SFAS No. 160 will be effective for Epic beginning with the 2009 fiscal
year. Epic is evaluating the potential impact of SFAS No.160, if any, on its
financial statements.

ITEM 7.     FINANCIAL STATEMENTS
--------------------------------

      See the financial statements attached to this report.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
---------------------------------------------------------

      Effective February 21, 2007 Epic replaced (i.e. dismissed) Comiskey &
Company with Malone & Bailey, P.C. as Epic's independent certified public
accountants. Comiskey & Company audited Epic's financial statements for the
fiscal years ended December 31, 2004 and 2005. During Epic's two most recent
fiscal years and subsequent interim period ended February 21, 2007, there were
no disagreements with Comiskey & Company on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of Comiskey & Company
would have caused it to make reference to such disagreements in its report had a
reports.

      During the two most recent fiscal years and subsequent interim period
ended February 21, 2007, Epic did not consult with Malone & Bailey regarding the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
Epic's financial statements, or any matter that was the subject of a
disagreement or a reportable event as defined in the regulations of the
Securities and Exchange Commission.

      The change in Epic's auditors was recommended and approved by the
directors of Epic.

ITEM 8A(T).  CONTROLS AND PROCEDURES
------------------------------------

      Rex Doyle, Epic's Chief Executive and Principal Financial Officer,
evaluated the effectiveness of Epic's disclosure controls and procedures as of
the end of the period covered by this report; and in his opinion Epic's
disclosure controls and procedures were not effective to ensure that material
information relating to Epic, including its consolidated subsidiaries, is made
known to him by others within Epic, particularly during the period in which this
report is being prepared, so as to allow timely decisions regarding required
disclosure.



                                       24
<PAGE>


Management's Report on Internal Control Over Financial Reporting
----------------------------------------------------------------

      Epic's management is responsible for establishing and maintaining adequate
internal control over financial reporting and for the assessment of the
effectiveness of internal control over financial reporting. As defined by the
Securities and Exchange Commission, internal control over financial reporting is
a process designed by, or under the supervision of Epic's principal executive
officer and principal financial officer and implemented by its Board of
Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with U.S. generally accepted accounting
principles.

      Epic's internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect its transactions and
dispositions of its assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of Epic's financial statements
in accordance with U.S. generally accepted accounting principles, and that its
receipts and expenditures are being made only in accordance with authorizations
of its management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of Epic's assets that could have a material effect on the financial statements.

      Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

      In connection with the preparation of Epic's annual financial statements,
management undertook an assessment of the effectiveness of Epic's internal
control over financial reporting as of December 31, 2007, based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission, or the COSO Framework.
Management's assessment included an evaluation of the design of Epic's internal
control over financial reporting and testing the operational effectiveness of
those controls.

      Based on this evaluation, management has concluded that Epic's internal
control over financial reporting was not effective as of December 31, 2007 due
to the fact that a significant number of transactions were not recorded or
presented in Epic's financial statements in accordance with Generally Accepted
Accounting Principles.

      This annual report does not include an attestation report by Epic's
independent registered public accounting firm regarding Epic's internal control
over financial reporting. Management's report was not subject to attestation by
Epic's independent registered public accounting firm pursuant to temporary rules
of the SEC that permit Epic to provide only management's report on internal
control in this annual report.

      There was no change in Epic's internal control over financial reporting
identified in connection with the evaluation described above that occurred
during Epic's fourth fiscal quarter that has materially affected, or is


                                       25
<PAGE>

reasonably likely to materially affect, Epic's internal control over financial
reporting.

ITEM 8B.    OTHER INFORMATION
-----------------------------

      Not applicable

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
------------------------------------------------------------------------

        Name                  Age            Position
        ----                  ---            --------

        Rex Doyle              49            Chief Executive Officer and a
                                             Director
        John Ippolito          48            President
        David Reynolds         56            Executive Vice President and
                                             Secretary
        R. Bret Rhinesmith     44            Executive Vice President
        Michael Kinney         50            Executive Vice President,
                                             Principal Financial and
                                             Accounting Officer
        W. Robert Eissler      57            Director
        Dr. Robert Ferguson    64            Director
        Kevin G. McMahon       40            Director

      Rex P. Doyle has been an officer and director of Epic since April 4, 2006.
Mr. Doyle was a Vice President of Michael Baker Corporation (AMEX:BKR) between
August 2000 and September 2002. Between September 2002 and April 2004 Mr. Doyle
was Vice President of Business Development for Baker Energy, a subsidiary of
Michael Baker Corporation. Between April 2005 and April 2006 Mr. Doyle was
Senior Vice President of Global Operations for Baker Energy and an officer of
Michael Baker Corporation. Mr. Doyle graduated with a BS in Mechanical
engineering from The Ohio State University, and has been a licensed professional
engineering in the state of Louisiana(inactive). He graduated with a Masters of
Business Administration, with Distinction, from the University of Michigan, and
also graduated from the Harvard IPAA Program for Owners and Executives.

      John S. Ippolito has been an officer of Epic since April 4, 2006. Mr.
Ippolito was Business Development Manager - North and South America Integrated
Project Management Division for Schlumberger Ltd. between 2000 and August 2003.
Between August 2003 and April 2006 Mr. Ippolito was Senior Business Development
Director, Continental U.S., and Business Manager - Large Asset Management
Contracts, for Baker Energy, a subsidiary of Michael Baker Corporation.

      David R. Reynolds has been an officer of Epic since April 4, 2006. Mr.
Reynolds was a principal of Orion Oil & Gas L.L.C. between 2003 and December
2005. Between January 2006 and April 2006 Mr. Reynolds was working on a business
plan, adopted by Epic in April 2006, for an oil and gas exploration/energy
consulting company. From 2001 to 2003 Mr. Reynolds was with the Business
Development Group of Union Oil of California.


                                       26
<PAGE>


      R. Bret Rhinesmith was appointed an officer in December 2007 of Epic
following Epic's acquisition of the Pearl Investment Company. Since 1994 Mr.
Rhinesmith has been the President of the Pearl Investment Company and its
predecessor companies.

      W. Robert Eissler has been a director of Epic since December 2006. Since
1983 Mr. Eissler has been the President of Eissler & Associates, an executive
recruiting firm based in The Woodlands, Texas. Mr. Eissler also serves as Texas
State Representatives for the 80th Legislature (2006-2007).

      Michael E. Kinney has been Epic's Executive Vice President and Chief
Financial Officer since February 2008. Between 2005 and February 2008, Mr.
Kinney was employed by Accretive Solutions, a financial consulting firm, leading
its corporate governance team which focused on small to mid-size energy clients
in the Houston area. From 2003 to 2005, Mr. Kinney was the Internal Audit
Director for Stewart & Stevenson, Inc., a manufacturer of tactical vehicles for
the federal government. Between 1996 and 2001 Mr. Kinney held several positions
with Federal Express, including director of logistics operations (1999 to 2001)
and managing director of audit (1997 to 1999) with responsibility for financial
and operational audits. Mr. Kinney has also worked in various audit capacities
with i2 Technologies and Textron. Mr. Kinney is a CPA and holds an MBA in
Finance & Information Technology from Dallas Baptist University and a BBA in
Accounting from the University of Texas at Arlington.

      Dr. Robert M. Ferguson has been a director of Epic since December 2006.
Since October 2005 Dr. Ferguson has been the President of the Leadership
Institute for Vision and Ethics (Live) in Houston, Texas. Between January 2002
and September 2005 Dr. Ferguson was an independent consultant in the areas of
organization and leadership. Since 2002 Dr. Ferguson has been an Adjunct
Professor of Philosophy and Business Ethics at the Lone Star College, Montgomery
in The Woodlands, Texas, and an Adjunct Professor in Business Ethics and
Biblical Studies at Belhaven College in Houston, Texas. Since February 2008 Dr.
Ferguson has been pastor at the Faith Fellowship Church in Spring, Texas.
Between February January 2002 and October 2005 he was pastor at Spring Cypress
Presbyterian Church in Spring, Texas.

      Kevin G. McMahon has been a director of Epic since July 2007. Mr. McMahon
is the Company's financial expert and serves as the Chairman of the Audit
Committee. Since May 2006, Mr. McMahon has been Senior Vice President of
Internal Audit and Sarbanes Oxley Compliance for Calpine Corp. From September
2005 to May 2006, he was the Vice President and General Auditor for Exide
Technologies. From March 1997 to August 2005, he was the Vice President of
Internal Audit. Mr. McMahon has over 19 years experience in banking, public
accounting, healthcare, manufacturing and energy/power generation. Kevin has a
master of business administration degree from Palm Beach Atlantic University and
a bachelor of science degree in accounting from the State University of New
York, and is a Certified Internal Auditor.

      Epic has a compensation committee. Dr. Robert Ferguson is the only member
of the compensation committee. Epic's audit committee is comprised of Dr. Robert
Ferguson and Kevin G. McMahon. Kevin McMahon serves as Epic's financial expert.
All of Epic's directors, with the exception of Rex Doyle, are independent as
that term is defined in Section 121(A) of the listing standards of the American
Stock Exchange.


                                       27
<PAGE>

      Epic has adopted a Code of Ethics applicable to Epic's principal
executive, financial, and accounting officers and persons performing similar
functions.

Changes in Management
---------------------

      On April 4, 2006, Mark W. Moniak, Epic's only officer and director,
appointed Rex Doyle, John S. Ippolito and David R. Reynolds as directors of
Epic. Following these appointments Mr. Moniak, resigned as an officer and
director of Epic.

      Epic's directors then appointed the following persons to be officers:

               Name                   Position
               ----                   --------

               Rex P. Doyle           Chief Executive and Principal  Financial
                                        Officer
               John S. Ippolito       President
               David R. Reynolds      Executive Vice President and Secretary

      On November 6, 2006 John Sherwood was appointed a director of Epic. On
November 30, 2006, John Ippolito and David Reynolds resigned as directors of
Epic, but remained executive officers of Epic. On December 1, 2006 Robert
Eissler and Dr. Robert Ferguson were appointed directors of Epic. On July 1,
2007 Kevin G. McMahon was appointed as a director of Epic. On October 1, 2007
Mr. Sherwood resigned as a director. R. Bret Rhinesmith was appointed as an
officer of Epic in December 2007.

Management of Subsidiaries
--------------------------

      The managing directors of the Carnrite Group are:

          Name                      Age
          ----                      ---

          Lea Ann Robertson         51
          Rita L. Williams          47
          Sherri Herzig             41
          Gillian A. Tilbury        44
          Carolyn Stortstrom        47

      All of Carnrite's managing directors have been employed by Carnrite since
its inception in March 2007. Between 2002 and the formation of Carnrite, all of
these persons were employed by Jeffries Energy Consulting LLC.

      The officers of Pearl Investment Company are:

          Name                     Age        Position
          ----                     ---        --------

          R. Bret Rhinesmith        44        President
          Mona Walker               41        Chief Financial Officer


                                       28
<PAGE>

          Name                     Age        Position
          ----                     ---        --------

          Curtis L. Good            48        Vice President
          Patrick W. Murray         50        Vice President

      Information concerning the management of Pearl Investment Company
(formerly named Pearl Development Company) follows. For purposes of the
biographical information, employment by any subsidiary of Pearl Investment is
considered to be employment by the parent company, Pearl Investment Company.

      R. Bret Rhinesmith has been an officer of Epic since December 2007. Mr.
Rhinesmith has been the Chief Executive Officer of Pearl Investment Company
since 1993.

      Mona Walker has been an officer of Pearl Investment Company since October
2006. Between 2005 and 2006 Ms. Walker was the Director of Accounting and
Finance for Centennial Energy, a natural gas liquids marketing company. Between
1990 and 2005 Ms. Walker was the Risk & Financial Planning Manager for an
affiliate of MarkWest Hydrocarbons, Inc.

      Curtis L. Good has been an officer of the Pearl Investment Company since
2004. Between 2000 and 2004 Mr. Good was a consultant with J.M. Huber
Corporation where he consulted in the construction of pipelines, roads,
reservoirs, and water and gravel pits.

      Patrick W. Murray has been an officer of Pearl Investment Company since
2006. Between 1995 and 2006 Mr. Murray managed his own investments. Between 1988
and 1995 Mr. Murray was Chief Financial Officer and Vice President of Finance
for MarkWest Hydrocarbon Partners, Ltd.

      The managing directors of Epic Integrated are:

            Name                        Age
            ----                        ---

            Joseph Wright               27
            Richard Dean Harvey         47
            Traci Marlene Harvey        46

Joseph Wright has been senior consultant with Epic Integrated Solutions since
February 2006. Between 1997 and 2006, Mr. Wright was employed with Baker Energy
in various capacities including senior technical consultant, technology manager,
systems integrator, and network administrator.

Richard D. Harvey has been a training consultant and technical manager with Epic
Integrated Solutions since February 2006. Between March 2000 and February 2006,
Mr. Harvey was Technical Manager with Baker Energy responsible for project
development, planning, research and development, project estimates, budgeting,
quality control, personnel administration and vendor relationships for major
training projects.


                                       29
<PAGE>

Traci Harvey has been a training consultant and project manager with Epic
Integrated Solutions since 2005. Between 2002 and 2005, Ms. Harvey was employed
by Baker Energy in project, personnel and budget management, project
coordination, training and graphic design.

ITEM 10.    EXECUTIVE COMPENSATION
----------------------------------

      The following table shows the compensation paid or accrued to Epic's
Principal Executive and Financial Officer and the four other most highly
compensated executive officers of Epic, or Epic's subsidiaries, during the years
ended December 31, 2007 and 2006.

                                                               All
                                                              Other
                                                              Annual
                                             Stock    Option  Compen-
Name and Principal  Fiscal  Salary   Bonus   Awards   Awards  sation
    Position         Year    (1)      (2)     (3)       (4)     (5)      Total
------------------  ------  ------   -----   ------   ------  -------    -----

Rex Doyle, Chief      2007 $210,000     --  $990,000 $ 72,713      -- $1,272,713
Principal Executive   2006 $118,750     --        -- $101,439      -- $  220,189
and Financial
Officer

John Ippolito         2007 $175,000     --  $990,000 $ 45,321      -- $1,210,321
President since       2006 $105,625     --        -- $101,439      -- $  207,064
April 4, 2006

R. Bret Rhinesmith,   2007 $343,264 $300,000      --       -- $12,917 $  656,181
President of Pearl    2006 $156,398     --        --       --      -- $  156,398
Investment Company

Pat Murray            2007 $205,192 $500,000      --       -- $ 9,587 $  714,779
President of Pearl    2006 $ 76,154 $ 85,000                  $   477 $  161,631
Development

     (1)  The dollar value of base salary (cash and non-cash) earned.
     (2)  The dollar value of bonus (cash and non-cash) earned.
     (3)  The fair value of stock  issued for  services  computed in  accordance
          with FAS 123R on the date of grant.
     (4)  The fair value of options granted computed in accordance with FAS 123R
          on the date of grant.
     (5)  All other compensation received that Epic could not properly report in
          any other column of the table.

      In February 2008 Michael Kinney replaced Rex Doyle as Epic's Principal
Financial and Accounting Officer.

      The  compensation  shown in the table for R. Bret  Rhinesmith and Patrick
Murray was paid by Pearl  Investment  Company.  Epic acquired Pearl  Investment
Company in  December  2007.  Mr.  Rhinesmith  has been the  President  of Pearl
Investment  Company since 1994. Mr. Murray joined Pearl  Investment  Company in
2006.


                                       30
<PAGE>

      Epic  does  not have an  employment  agreement  with any of its  officers
except for Mr. Rhinesmith.

      Carnrite has employment agreements with each of its managing directors
which provide that each managing director will be paid an annual salary of
$150,000.

      Each employment agreement continues in effect until the death or
disability of the employee, or upon 30 days notice of termination given by
either Carnrite or the employee. If the employment agreement is terminated by
Carnrite without cause, then Carnrite will be required to pay the employee
one-twelfth of the employee's then current salary.

      For purposes the employment agreements "cause" means.

     o    The  commission by the employee of acts that's are both  dishonest and
          demonstrably injurious to Carnrite in any material respect;
     o    The failure of the  employee  to observe  and comply  with  Carnrite's
          published policies;
     o    The willful failure the employee to observe and comply with any lawful
          and ethical directions or instruction of Carnrite's Directors;
     o    The failure of the employee to perform,  in any material respect,  her
          duties  with  Carnrite,  but only if such  failure  was not  caused by
          disability or incapacity and shall have continued  unremedied for more
          than  30 days  after  written  notice  is  given  to the  employee  by
          Carnrite;
     o    Any willful  conduct on the part of the employee that  prejudices,  in
          any material respect, the reputation of Carnrite.

      Epic has employment agreements with the officers of Pearl Investment which
provide for the following:

      Name of Employee                     Annual Salary
      ----------------                     -------------

      R. Bret Rhinesmith                      $310,000
      Mona L. Walker                          $175,000
      Curtis L. Good                          $220,000
      Patrick W. Murray                       $220,000

       Each employment agreement continues in effect until the death or
disability of the employee, or upon 30 day's notice of termination given by
either Epic or the employee. If the employment agreement is terminated by Epic
without cause, then Epic will be required to pay the employee the greater of:

     o    Three months of employee's then current salary;
     o    The amount the employee would have received had the employee continued
          to work between the date of termination and September 1, 2010.


                                       31
<PAGE>

     o    If the employment agreement is terminated after September 1, 2010, the
          amount the employee would have received had the employee  continued to
          work between the date of termination and the next following  September
          1st.

      For purposes of the employment agreements, "cause" means:

     o    An act of fraud,  embezzlement,  or theft in the course of  employment
          with Epic;
     o    Unauthorized   intentional  disclosure  of  Epic's  trade  secrets  or
          confidential information;
     o    Violation  of any federal,  state or local law,  ordinance,  rule,  or
          regulation  while  conducting  business  on behalf of Epic (other than
          traffic violations or similar offenses);
     o    Any material breach of fiduciary duties owed to Epic;
     o    Refusal to perform the duties reasonably required by Epic;
     o    Unsatisfactory job performance;
     o    Any  material  misconduct  in the course  and scope of the  employee's
          employment  with  Epic,  including  dishonesty,   disorderly  conduct,
          insubordination,  harassment of other  employees or customers or abuse
          of alcohol or controlled substances, or
     o    The violation of any material provision of the employment agreement.

       Epic has employment agreements with each managing director of Epic
Integrated. Each employment agreement provides that the director will be paid an
annual salary of $150,000 and that the employment agreement will continue in
effect until February 20, 2011 or the death or disability of the director,
whichever occurs first. However, either Epic or the director may terminate the
employment agreement earlier upon written notice. If the employment agreement is
terminated earlier by Epic without cause, then Epic will be required to pay the
director $150,000.

      For purposes of the employment agreements, "cause" has the same meaning as
that term is used in Epic's employment agreements with the officers of the Pearl
Investment Company.

      Long-Term Incentive Plans. Epic does not provide its officers or employees
with stock appreciation rights, long-term incentive or similar plans.

      Employee Pension, Profit Sharing or other Retirement Plans. Epic does not
have a defined benefit, pension plan, profit sharing or other retirement plan,
although it may adopt one or more of such plans in the future.

Compensation of Directors During Year Ended December 31, 2007
-------------------------------------------------------------

Name                 Paid in Cash  Stock Awards (1)  Option Awards (2)    Total
----                 ------------  ----------------  -----------------   -------

Robert Eissler           $500                               --
Dr. Robert Ferguson      $500                               --

                                       32
<PAGE>

Kevin McMahon              --          --              --             --

(1)  The fair value of stock issued for services computed in accordance with FAS
     123R on the date of grant.
(2)  The fair value of options granted computed in accordance with FAS 123R on
     the date of grant.

      Mr. McMahon was not paid any director's fees in 2007 since he did not
become a director until July 2007.

Stock Option and Bonus Plans

      Epic has adopted stock option and stock bonus plans. A summary description
of these plans follows. In some cases these Plans are collectively referred to
as the "Plans".

      Incentive Stock Option Plan. Epic's Incentive Stock Option Plan authorizes
the issuance of shares of Epic's Common Stock to persons that exercise options
granted pursuant to the Plan. Only Company employees may be granted options
pursuant to the Incentive Stock Option Plan.

      Non-Qualified Stock Option Plan. Epic's Non-Qualified Stock Option Plan
authorizes the issuance of shares of Epic's Common Stock to persons that
exercise options granted pursuant to the Plans. Epic's employees, directors,
officers, consultants and advisors are eligible to be granted options pursuant
to the Plans, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by the Committee but cannot be less than the market
price of Epic's Common Stock on the date the option is granted.

      Stock Bonus Plan. Epic's Stock Bonus Plan allows for the issuance of
shares of Common Stock to it's employees, directors, officers, consultants and
advisors. However bona fide services must be rendered by the consultants or
advisors and such services must not be in connection with the offer or sale of
securities in a capital-raising transaction.

      Summary. The following is a summary, as of December 31, 2007, of the
options granted, or the shares issued, pursuant to the Plans. Each option
represents the right to purchase one share of Epic's common stock.

                           Total      Shares
                          Shares    Reserved for   Shares      Remaining
                         Reserved   Outstanding   Issued as  Options/Shares
Name of Plan            Under Plans   Options    Stock Bonus   Under Plans
------------            ----------- ------------ ----------- --------------

Incentive Stock
 Option Plan             2,000,000          --          N/A     2,000,000
Non-Qualified Stock
 Option Plan             3,000,000   1,611,000          N/A     1,389,000
Stock Bonus Plan         1,000,000         N/A      600,000       400,000


                                       33
<PAGE>

      The following tables show, during the fiscal years ended December 31, 2006
and 2007, the options granted to and held by, the persons named below. All of
the options listed below were granted pursuant to Epic's Non-Qualified Stock
Option Plan.

                            Shares underlying
                        unexercised options which are:
                        ----------------------------- Exercise    Expiration
    Name               Exercisable  Unexercisable       Price         Date
    ----               -----------  -------------    ------------  -----------

    Rex Doyle          100,000                         $0.50      10/24/08
    Rex Doyle           50,000          50,000         $3.00      10/24/08
    John Ippolito      100,000                         $0.50      10/24/08
    John Ippolito       50,000          50,000         $3.00      10/24/08
    David Reynolds     100,000                         $0.50      10/24/08
    David Reynolds      50,000          50,000         $3.00      10/24/08
    Rex Doyle               --         292,000         $3.30      12/31/12
    John Ippolito           --         182,000         $3.30      12/31/12
    David Reynolds          --         143,000         $3.30      12/31/12
    Michael Kinney          --          65,000         $3.17       7/10/12
    W. Steven Goff          --          89,000         $3.30      12/13/12
    Sherry L Herzig         --          46,000         $3.30      12/13/12
    Lea Ann Robertson       --          46,000         $3.30      12/13/12
    Carolyn N Stortstrom    --          46,000         $3.30      12/13/12
    Gillian L Tilbury       --          46,000         $3.30      12/13/12
    Rita L Williams         --          46,000         $3.30      12/13/12
    Elizabeth Gallagher     --          10,000         $3.30      12/13/12

      As of March 31, 2008 none of the options granted by Epic had been
exercised.

      The following table shows the weighted average exercise price of the
outstanding options granted pursuant to Epic's stock option plans as of December
31, 2007. Epic's stock option plans were not approved by its shareholders.

<TABLE>
<S>                              <C>                <C>                   <C>

                                            Number of Securities
                               Number       Remaining Available
                            of Securities   For Future Issuance
                             to be Issued     Weighted-Average       Under Equity
                           Upon Exercise      Exercise Price of   Compensation Plans,
                           of Outstanding      of Outstanding    Excluding Securities
Plan category                Options (a)            Options      Reflected in Column (a)
-------------              --------------   -------------------- -----------------------

Incentive Stock
 Option Plan                         --                    --             2,000,000
Non-Qualified Stock
 Option Plan                  1,611,000                 $2.71             1,389,000

</TABLE>

      On December 13, 2007 Rex Doyle and John Ippolito were each awarded 300,000
shares of Epic's common stock pursuant to Epic's Stock Bonus Plan.


                                       34
<PAGE>

      In connection with the December 2007 acquisition of the Pearl Investment
Company, R. Bret Rhinesmith received, in exchange for his shares of the Pearl
Investment Company, 1,075,000 shares of Epic's common stock and was appointed an
officer of Epic.

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------------------------------------------------

      The following table sets forth the number of and percentage of outstanding
shares of common stock owned by Epic's officers, directors and those
shareholders owning more than 5% of Epic's common stock as of March 31, 2008.

                                       Shares of
Name and Address                    Common Stock (1)        Percent of Class (2)
----------------                    ----------------        --------------------

Rex P. Doyle                          8,600,000                    19.6%
10655 Six Pines Drive, Suite 210
The Woodlands, TX 77380

John Ippolito                         8,600,000                    19.6%
10655 Six Pines Drive, Suite 210
The Woodlands, TX 77380

David Reynolds                        2,200,000                     5.0%
10655 Six Pines Drive, Suite 210
The Woodlands, TX 77380

R. Bret Rhinesmith                    1,075,000                     2.5%
7110 Jefferson Ave.
Lakewood, CO  80235

W. Robert Eissler                        15,000                        *
10655 Six Pines Drive, Suite 210
The Woodlands, TX 77380

Dr. Robert Ferguson                      18,000                        *
10655 Six Pines Drive, Suite 210
The Woodlands, TX 77380

Kevin G. McMahon                             --                       --
717 Texas Avenue, Suite 1000
Houston, TX 77002

All Executive Officers               20,508,000                    46.7%
and Directors as a group (7 persons)

*     Less than 1%.


                                       35
<PAGE>

(1)  Includes shares issuable upon the exercise of options, all of which are
     presently exercisable, and held by the following persons:

                                           Shares Issuable Upon
             Name                           Exercise of Options
             ----                          --------------------

             Rex Doyle                            200,000
             John Ippolito                        200,000
             David Reynolds                       200,000

      Except as listed in footnote (1) none of the persons listed in the
Principal Shareholders table hold any options, warrants or other securities
which are convertible into shares of Epic's common stock prior to June 30, 2008.

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------------------

      On April 4, 2006 Epic sold:

     o    20,000,000 shares of its common stock to Rex Doyle for $200;
     o    20,000,000 shares of its common stock to John Ippolito for $200;
     o    2,000,000 shares of its common stock to David Reynolds for $20;
     o    2,000,000 shares of its common stock to two unrelated parties for $20.

      On March 12, 2007 Rex Doyle and John Ippolito each agreed to the
cancellation of 11,600,000 of their shares of Epic's common stock. Mr. Doyle and
Mr. Ippolito did not receive any consideration for the cancellation of their
shares.

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
Number  Exhibit Name
------- ------------
3.1     Articles of Incorporation           Incorporated by reference,  and as
                                            same  exhibit  number,   from  the
                                            Company's  Registration  Statement
                                            on Form 10-SB  filed on August 22,
                                            2000    (Commission    File    No.
                                            000-31357).

3.2     Amendments to Articles              Incorporated by reference, and as
         of Incorporation                   same exhibit number, from the
                                            Company's Registration Statement on
                                            Form SB-2 filed on January 4, 2008
                                            (Commission File No. 333-148479)



                                       36
<PAGE>

Exhibit
Number  Exhibit Name
------- ------------

3.3     Bylaws                                 Incorporated by reference,  and
                                               as same  exhibit  number,  from
                                               the   Company's    Registration
                                               Statement  on Form  SB-2  filed
                                               on January 4, 2008  (Commission
                                               File No. 333-148479)

10.1  Agreement relating to the acquisition    Incorporated by reference to
        of the Carnrite Group, LLC             Exhibit 10 to the Company's
                                               report on Form 8-K dated August
                                               10, 2007.

10.2  Agreement relating to the acquisition    Incorporated by reference to
        of Pearl Investment Company            Exhibit 10.1 to the Company's
                                               report on Form 8-K dated December
                                               5, 2007.

10.3  Securities Purchase Agreement            Incorporated by reference to
        (together with schedule required       Exhibit 10.2 to the Company's
        by Instruction 2 to Item 601 of        report on Form 8-K dated December
        Regulation S-K) pertaining to the      5, 2007.
        sale of common stock and warrants

10.4  Purchase Agreement (together             Incorporated by reference to
        with schedule required by              Exhibit 10.3 to the Company's
        Instruction 2 to Item 601 of           report on Form 8-K dated December
        Regulation S-K) pertaining to          5, 2007.
        the sale of the notes and warrants

10.5    Agreement relating to the acquisition  ___________________
        of Epic Integrated Solutions LLC

21.     Subsidiaries                           Incorporated by reference,  and
                                               as same  exhibit  number,  from
                                               the   Company's    Registration
                                               Statement  on Form  SB-2  filed
                                               on January 4, 2008  (Commission
                                               File No. 333-148479).

31.    Rule 13a-14(a) Certifications

32.    Section 1350 Certifications



                                       37
<PAGE>


ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
--------------------------------------------------

      Effective February 21, 2007 Epic replaced Comiskey & Company with Malone &
Bailey, P.C. as Epic's independent certified public accountants. Comiskey &
Company audited Epic's financial statements for the fiscal years ended December
31, 2004 and 2005.

      The following table shows the aggregate fees billed to Epic by Comiskey &
Company for the two years ended December 31, 2007.

                                                 2007           2006
                                                 ----           ----

            Audit Fees                          $   65         $6,956
            Audit Related Fees
            Tax Fees
            All Other Fees


      Malone & Bailey, P.C. audited Epic's financial statements for the years
ended December 31, 2007 and 2006. However since Malone & Bailey was not hired by
Epic until February 2007, Malone & Bailey did not bill Epic for any services
during 2006.

      The following table shows the aggregate fees billed to Epic by Malone &
Bailey for the year ended December 31, 2007.

                                                 2007

            Audit Fees                        $116,105
            Audit Related Fees
            Tax Fees
            All Other Fees


      Audit fees represent amounts billed for professional services rendered for
the audit of Epic's annual financial statements and the reviews of the financial
statements included in Epic's 10-QSB reports for the fiscal year. Before Malone
& Bailey was engaged by Epic to render audit or audit related services, the
engagement was approved by Epic's Directors. Epic's Board of Directors was of
the opinion that the fees charged by Malone & Bailey were consistent with Malone
& Bailey maintaining its independence from Epic.





                                       38
<PAGE>


                          EPIC ENERGY RESOURCES, INC.


      Report of Independent Registered Public Accounting Firm

      Consolidated Balance Sheets as of December 31, 2007 and 2006.

      Consolidated Statements of Operations for the years ended December 31,
      2007 and 2006.

      Consolidated Statements of Stockholders' Equity for the years ended
      December 31, 2007 and 2006.

      Consolidated Statements of Cash Flows for the years ended December 31,
      2007 and 2006.


                                      F-1
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Epic Energy Resources, Inc.
The Woodlands, Texas

We have audited the accompanying consolidated balance sheets of Epic Energy
Resources, Inc. (Epic) as of December 31, 2007 and 2006 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 2007 and 2006. These consolidated financial
statements are the responsibility of Epic's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. Epic is not required to have, nor
were we engaged to perform an audit of its internal controls over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of Epic's internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Epic as of December
31, 2007 and 2006 and the results of operations and cash flows for the years
ended December 31, 2007 and 2006 in conformity with accounting principles
generally accepted in the United States of America.

/s/ MALONE & BAILEY, PC

www.malone-bailey.com
Houston, Texas

April 9, 2008



                                      F-2
<PAGE>


                           EPIC ENERGY RESOURCES INC.
                           CONSOLIDATED BALANCE SHEETS

                                                          December 31,
                                                    -----------------------
                   ASSETS                           2007               2006
                                                    ----               ----
CURRENT ASSETS
  Cash and cash equivalents .........          $  3,483,179       $   590,172
  Restricted cash  ..................             3,400,003                 -
  Accounts receivable:
   Billed, net of allowance of $636,000
    and $0, respectively                         11,334,690             4,600
   Unbilled, at estimated net realizable
    value ...............                         3,446,757                 -
  Accounts receivable - other .............         639,500                 -
  Prepaid expenses and other ..............         309,081           120,219
                                               --------------   --------------
       TOTAL CURRENT ASSETS                      22,613,210           714,991
Oil and gas properties (full cost method),
 net of accumulated impairments and depletion
 of $5,259,845 and $3,093,079, respectively:
   Proved ................................        5,247,746         7,354,511
   Unproved ..............................                -            60,000
Other mineral reserves ...................          783,474           783,474
Property and equipment, net of accumulated
 depreciation of $112,119.................       10,596,463                 -
Other assets .............................          209,213                 -
Debt issuance costs, net of accumulated
 amortization of $28,650 .................        1,690,350                 -
Goodwill and intangible assets, net of
 accumulated amortization of $4,902 ......       33,609,064                 -
                                               --------------   --------------
       TOTAL ASSETS ......................     $ 74,749,520     $   8,912,976
                                               ==============   ==============
  LIABILITIES AND STOCKHOLDERS' EQUITY
   CURRENT LIABILITIES

  Accounts payable .......................     $  4,066,368     $      97,630
  Bank overdrafts ........................        3,441,949                 -
  Accrued liabilities ....................        2,949,270             7,346
  Customer deposits ......................        1,357,862                 -
  Current portion of long term debt.......        2,152,832           872,990
  Current portion of capital leases.......        1,055,303                 -
                                               --------------   --------------
    TOTAL CURRENT LIABILITIES                    15,023,584           977,966
Asset retirement obligations .............          132,626           142,343
Long-term debt, net of current portion and
 debt discount of $12,878,572 ............        8,929,037         1,707,676
Capital leases, net of current portion....        4,999,917                 -
                                               --------------   --------------
        TOTAL LIABILITIES...........             29,085,164         2,827,985
                                               --------------   --------------
STOCKHOLDERS' EQUITY
  Common stock, no par value: 100,000,000
   authorized; 42,948,921 and 53,441,601
   shares issued and outstanding at
   December 31, 2007 and December 31, 2006,
   respectively ...                              40,698,806         9,822,605
  Additional paid-in capital..............       13,416,792           330,912
  Accumulated deficit ....................       (8,451,242)       (4,068,526)
                                               --------------   --------------
TOTAL STOCKHOLDERS' EQUITY ...............       45,664,356         6,084,991
                                               --------------   --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 74,749,520     $   8,912,976
                                               ==============   ==============

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                           EPIC ENERGY RESOURCES INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Year ended December 31,
                                                     -----------------------
                                                     2007               2006
                                                     ----               ----
  REVENUES
    Consulting fees ....................        $   8,461,022     $     33,190
    Oil and gas revenue ................                9,674           73,073
                                                --------------    -------------
         TOTAL REVENUES ................            8,470,696          106,263

  OPERATING EXPENSES
      General and administrative........            3,857,958          926,301
      Lease operating expenses..........              383,280           59,460
      Professional and subcontracted services       1,127,293                -
      Compensation and benefits.........            2,152,067                -
      Reimbursed expenses ..............            2,103,522                -
      Occupancy, communication and other ....         319,376                -
      Depreciation, depletion and amortization ..     117,021           30,814
     Accretion expense .................                9,212              725
     Impairment of oil and gas properties ....      2,166,766        3,062,265
                                                --------------    -------------
         OPERATING EXPENSES ............           12,236,495        4,079,565

  LOSS FROM OPERATIONS .................           (3,765,799)      (3,973,302)
  OTHER INCOME (EXPENSE)
     Interest and other income                         13,328            3,519
     Interest expense ..................             (610,245)            (431)
                                                --------------    -------------
         OTHER INCOME (EXPENSE) ........             (596,917)           3,088

  NET LOSS BEFORE INCOME  TAXES.........        $  (4,362,716)    $ (3,970,214)
     Provision for income taxes                        20,000                -
                                                --------------    -------------
  NET LOSS .............................        $  (4,382,716)    $ (3,970,214)
                                                ==============    =============

  LOSS PER COMMON SHARE - Basic and Diluted     $       (0.11)    $      (0.10)
  WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING - Basic and Diluted ......           38,946,918       38,045,590





          See accompanying notes to consolidated financial statements.




                                      F-4
<PAGE>

                           EPIC ENERGY RESOURCES INC.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<S>                         <C>           <C>         <C>           <C>          <C>

                                                   Additional
                                Common Stock        Paid-In      Accumulated
                             Shares      Amount     Capital         Deficit       Total
                             -----------------------------------------------------------
BALANCE, December
 31, 2005                  5,260,000    $ 68,000   $  26,691    $  (98,312)     $ (3,621)
                           =============================================================

Shares issued for cash    44,902,755     903,195     304,221             -     1,207,416
Shares issued for
  services .........          75,000      57,094           -             -        57,094
Shares issued for Kansas
   properties ......       3,200,000   8,480,000           -             -     8,480,000
Shares issued for Oklahoma
    properties .....           3,846      10,000           -             -        10,000
Stock option compensation
   expense ........                -     304,316           -             -       304,316
Net loss for the year
 ended December 31, 2006           -           -           -    (3,970,214)   (3,970,214)
                           --------------------------------------------------------------
BALANCE December
  31, 2006                53,441,601   9,822,605     330,912    (4,068,526)    6,084,991
                           ==============================================================

Amortization of shares
 issued for compensation           -     184,672           -             -       184,672
Amortization of stock
 options and stock bonus           -      76,891           -             -        76,891
Shares retired by
 officers and other      (23,230,655)    (23,741)          -             -       (23,741)
Shares issued for
 services                     43,500     127,100         500             -       127,600
Shares issued for
 cash to private
 investors                   564,500     523,100           -             -       523,100
Shares issued for the
 acquisition of
 Carnrite                  4,914,400  16,217,520           -             -    16,217,520
Shares issued for the
 acquisition of
 Pearl                     1,786,240   5,626,656           -             -     5,626,656
Sale of stock and
 warrants via
 private placement         5,429,335   8,144,003           -             -     8,144,003
Sale of debentures and
 warrants                          -           -  13,085,380             -    13,085,380
Net loss for the year
 ended December
 31, 2007                          -           -           -    (4,382,716)   (4,382,716)

                           --------------------------------------------------------------
BALANCE, December 31,
2007                      42,948,921  $40,698,806 $13,416,792   (8,451,242)  $45,664,356
                           ==============================================================
</TABLE>



          See accompanying notes to consolidated financial statements.



                                      F-5
<PAGE>

                           EPIC ENERGY RESOURCES, INC
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                      Year Ended December 31,
                                                       2007            2006
                                                       ----            ----
  CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                          $(4,382,716)    $(3,970,214)
  Adjustments  to reconcile  net loss to net cash
  used in operating activities:
  Depreciation, depletion and amortization              145,671          30,814
  Impairment   of   oil   and   gas    properties     2,166,765       3,062,265
  Accretion expense                                       9,212             725
  Shares issued for compensation                        364,922         361,410
  Imputed interest on acquisition                       115,000               -
  Amortization of debt discount                         206,808               -
  Amortization of prepaid assets                        120,219               -
  Changes in operating assets and liabilities:
    Accounts receivable                               1,133,983          (4,600)
    Prepaid expenses and other                          (11,808)       (120,219)
    Accounts payable                                 (2,276,339)         44,012
    Accrued liabilities                                (258,893)              -
                                                  -------------    -------------
       Net  cash  used  in  operating  activities    (2,667,176)       (595,807)
                                                  -------------    -------------
  CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in joint venture                           (22,700)              -
  Increase in restricted cash                        (3,400,003)              -
  Acquisition of oil and gas properties  and
     property and equipment                            (301,777)       (102,100)
  Acquisition of Carnrite, net of cash received          48,727               -
  Acquisition of Pearl, net of  cash received       (20,371,822)
  Increase in other assets                               (4,901)
                                                  -------------    -------------
    Net  cash  used  in  investing  activities      (24,052,476)       (102,100)
                                                  -------------    -------------
  CASH FLOWS FROM FINANCING ACTIVITIES
  Bank overdrafts                                     3,441,949               -
  Payments on debt                                   (2,162,000)        (24,089)
  Proceeds from debt                                 21,384,607         104,752
  Debt issuance costs                                (1,719,000)              -
  Net proceeds from issuance of common stock          8,667,103         903,195
  Capital contributed by stockholders                         -         304,221
                                                  -------------    -------------
    Net cash provided by financing  activities       29,612,659       1,288,079
                                                  -------------    -------------
  NET INCREASE IN CASH AND CASH EQUIVALENTS           2,893,007         590,172
  CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR          590,172               -
                                                  -------------    -------------
  CASH AND CASH EQUIVALENTS, END OF YEAR          $   3,483,179    $    590,172
                                                  =============    =============
  SUPPLEMENTAL CASH FLOW DISCLOSURES:
       Interest paid                              $       5,978    $          -
       Income taxes paid                          $           -    $          -
  NON-CASH INVESTING AND FINANCING ACTIVITIES:
     Oil and gas properties acquired with
         common stock                             $           -    $  8,480,000
     Note payable for oil and gas properties      $     193,777    $  1,707,673
     Acquistion of Pearl with stock               $   5,626,656    $          -
     Acquisition of Carnrite with stock           $  16,217,520    $          -

                See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                           EPIC ENERGY RESOURCES INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Organization and Operations

Epic Energy Resources, Inc ("Epic") was formed in April 2006, completed a
purchase of a public shell and began trading under the ticker symbol EPCC.OB in
September 2006. Epic acquired certain oil and gas properties in December of 2006
and January 2007. In August 2007, Epic acquired The Carnrite Group ("Carnrite"),
an engineering consulting firm focused on the energy industry. In December 2007,
Epic acquired Pearl Development Group and its subsidiaries ("Pearl"), also an
engineering firm focused on the energy industry. Epic was in the development
stage until the acquisition of Carnrite in August 2007. As a result, 2007 is the
first year during which the Company is no longer in the development stage.

Epic is engaged primarily in providing engineering, construction management,
operations, maintenance, field and project management services to the oil, gas
and energy industry. Epic is also engaged in the acquisition, exploration,
development, production, and sales of oil, gas and natural gas liquids.

2. Summary of Significant Accounting Policies

Use of Estimates. The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, and
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 could differ from those estimates.

Principles of consolidation. The consolidated financial statements include the
accounts of Epic and its controlled subsidiaries. Equity investments in which
the Company exercises significant influence, but do not control and are not the
primary beneficiary, are accounted for using the equity method of accounting.
Investments in which we do not exercise significant influence over the investee
are accounted for using the cost method of accounting. Intercompany transactions
are eliminated.

Cash and Cash Equivalents. Cash equivalents include demand deposits and money
market funds for purposes of the statements of cash flows. The Company considers
all highly liquid monetary instruments with original maturities of three months
or less to be cash equivalents.

Restricted Cash. The Company had restricted cash in the amount of $3.4 million
as of December 31, 2007, all of which was classified as current. Of the $3.4
million, $2.4 million was held in escrow to pay income taxes for the former
owners of Pearl and $1 million was held in escrow at year end related to sales
of common stock. The Company has chosen to report this restricted cash in
investing activities of its Statements of Cash Flows.


                                      F-7
<PAGE>


Accounts Receivable. Accounts receivable represent amounts due from customers
for services performed. Unbilled receivables represent revenue earned in the
current period but not billed to the customer until future dates, usually within
one month. Epic extends various terms to its customers, with payment terms
generally 30 days, depending on the customer and country, and does not require
collateral. Epic periodically assesses the collectibility of its receivables, as
necessary, based on various considerations including customer credit history,
payment patterns, and aging of accounts. Once management determines an account
receivable is not collectible, the Company provides for an allowance for
doubtful accounts equal to the estimated uncollectible amounts.

Business Combinations. Our business combinations are accounted for in accordance
with the provisions set forth in Statement of Financial Accounting Standards, or
SFAS, No. 141, Business Combinations, whereby the tangible and separately
identifiable intangible assets acquired and liabilities assumed are recognized
at their estimated fair market values at the acquisition date. The portion of
the purchase price in excess of the estimated fair market value of the net
tangible and separately identifiable intangible assets acquired represents
goodwill. The allocation of the purchase price related to our business
combinations involves estimates and judgments by our management that may be
adjusted during the allocation period, but in no case beyond one year from the
acquisition date. These allocations are made based on management's best
estimates and assumptions. In arriving at the fair values of assets acquired and
liabilities assumed, we consider the following generally accepted valuation
approaches: the cost approach, income approach and market approach. Our
estimates may also include assumptions about projected growth rates, cost of
capital, effective tax rates, tax amortization periods, technology royalty rates
and technology life cycles, the regulatory and legal environment, and industry
and economic trends.

Full Cost Method of Accounting for Crude Oil and Natural Gas Activities. SEC
Regulation S-X defines the financial accounting and reporting standards for
companies engaged in crude oil and natural gas activities and use of the full
cost method. We have chosen to follow the full cost method under which all costs
associated with property acquisition, exploration and development are
capitalized. We also capitalize internal costs that can be directly identified
with acquisition, exploration and development activities and do not include any
costs related to production, general corporate overhead or similar activities.
Effective with the adoption of SFAS No. 143 in 2003, the carrying amount of oil
and gas properties also includes estimated asset retirement costs recorded based
on the fair value of the asset retirement obligation when incurred. Gain or loss
on the sale or other disposition of oil and gas properties is not recognized,
unless the gain or loss would significantly alter the relationship between
capitalized costs and proved reserves of oil and natural gas attributable to a
country. As a result our financial statements will differ from companies that
apply the successful efforts method since we will generally reflect a higher
level of capitalized costs as well as a higher depreciation, depletion and
amortization rate on our crude oil and natural gas properties.

At the time it was adopted,  management believed that the full cost method would
be  preferable,  as earnings tend to be less volatile than under the  successful
efforts  method.  However,  the full cost method  makes us more  susceptible  to
significant  non-cash charges during times of volatile  commodity prices because
the full cost pool may be impaired  when prices are low.  These  charges are not
recoverable  when prices return to higher levels.  Our crude oil and natural gas
reserves  have a relatively  long life.  However,  temporary  drops in commodity
prices can have a material impact on our business including impact from the full
cost method of accounting.


                                      F-8
<PAGE>

Ceiling Test. Companies that use the full cost method of accounting for oil and
gas exploration and development activities are required to perform a ceiling
test each quarter. The full cost ceiling test is an impairment test prescribed
by SEC Regulation S-X Rule 4-10. The test determines a limit, or ceiling, on the
book value of oil and gas properties. That limit is basically the after tax
present value, based upon a 10% discount rate, of the future net cash flows from
proved crude oil and natural gas reserves calculated using constant prices based
upon pricing in effect at yearend , excluding future cash outflows associated
with settling asset retirement obligations that have been accrued on the balance
sheet, plus the lower of cost or fair market value of unproved properties. If
net capitalized costs of crude oil and natural gas properties exceed the ceiling
limit, we must charge the amount of the excess to earnings. This is called a
"ceiling limitation write-down." This charge does not impact cash flow from
operating activities, but does reduce our stockholders' equity and reported
earnings. The risk that we will be required to write down the carrying value of
crude oil and natural gas properties increases when crude oil and natural gas
prices are depressed or volatile. In addition, write-downs may occur if we
experience substantial downward adjustments to our estimated proved reserves or
if purchasers cancel long-term contracts for natural gas production. An expense
recorded in one period may not be reversed in a subsequent period even though
higher crude oil and natural gas prices may have increased the ceiling
applicable to the subsequent period.

Estimates of our proved reserves included in this report are prepared in
accordance with GAAP and SEC guidelines. The accuracy of a reserve estimate is a
function of:

     o    the quality and quantity of available  data;
     o    the  interpretation of that data;
     o    the accuracy of various mandated economic assumptions;
     o    and the judgment of the persons preparing the estimate.

Our proved reserve information included in this report was based on evaluations
prepared by independent petroleum engineers. Estimates prepared by other third
parties may be higher or lower than those included herein. Because these
estimates depend on many assumptions, all of which may substantially differ from
future actual results, reserve estimates will be different from the quantities
of oil and gas that are ultimately recovered. In addition, results of drilling,
testing and production after the date of an estimate may justify material
revisions to the estimate. It should not be assumed that the present value of
future net cash flows is the current market value of our estimated proved
reserves. In accordance with SEC requirements, we base the estimated discounted
future net cash flows from proved reserves on prices and costs on the date of
the balance sheets and a 10% discount rate. Actual future prices and costs may
be materially higher or lower than the prices and costs as of the date of the
balance sheets.

The estimates of proved reserves materially impact DD&A expense. If the
estimates of proved reserves decline, the rate at which we record DD&A expense
will increase, reducing future net income. Such a decline may result from lower
market prices, which may make it uneconomic to drill for and produce higher cost
fields.

Excluded  Costs.  Oil and gas  properties  include  costs that are excluded from
capitalized  costs being  amortized.  These  amounts  represent  investments  in
unproved  properties and major  development  projects.  These costs are excluded
until  proved  reserves are found or until it is  determined  that the costs are


                                      F-9
<PAGE>

impaired.  All costs  excluded are  reviewed at least  quarterly to determine if
impairment  has occurred.  The amount of any  impairment is  transferred  to the
capitalized costs being amortized (the DD&A pool).

Property and Equipment. Property and equipment is stated at cost. Equipment
under capital leases is valued at the lower of fair market value or net present
value of the minimum lease payments at inception of the lease. Depreciation and
amortization is provided utilizing the straight-line method over the estimated
useful lives for owned assets, ranging from 3 to 10 years, and the related lease
terms for leasehold improvements and equipment under capital leases.

Valuation of Intangibles and Long-Lived Assets. Under SFAS No. 142, goodwill and
other intangible assets that have indefinite useful lives are not amortized but,
instead, must be tested at least annually for impairment, and intangible assets
that have finite useful lives are amortized over that life. SFAS No. 142 also
provides specific guidance for testing goodwill and other nonamortized
intangible assets for impairment. SFAS No. 142 does not allow increases in the
carrying value of reporting units that may result to be considered in our
impairment test; therefore, we may record goodwill impairments in the future,
even when the aggregate fair value of our reporting units and the company as a
whole may increase. Goodwill of a reporting unit will be tested for impairment
between annual tests if an event occurs or circumstances change that would more
likely than not reduce the fair value of a reporting unit below its carrying
amount. Examples of such events or circumstances may include a significant
change in business climate or a loss of key personnel, among others. SFAS No.
142 requires that management make certain estimates and assumptions in order to
allocate goodwill to reporting units and to determine the fair value of a
reporting unit net's assets and liabilities, including, among other things, an
assessment of market conditions, projected cash flows, cost of capital and
growth rates, which could significantly impact the reported value of goodwill
and other intangible assets.

We review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be realizable. If an
evaluation is required, the estimated future undiscounted cash flows associated
with the asset are compared to the asset's carrying amount to determine if an
impairment of such asset is necessary. Estimating future cash flows requires
significant judgment, and our projections may vary from cash flows eventually
realized. The effect of any impairment would be to expense the difference
between the fair value of such asset and its carrying value. In addition, we
estimate the useful lives of our long-lived assets and other intangibles. We
periodically review factors to determine whether these lives are appropriate.

Customer Deposits. Customer Deposits represent advance payments for procurement
of materials for a customer. During 2006, the Company entered into a contractual
relationship with a customer to procure engineered materials for a gas plant
project. The customer provides funds in a lump sum to the Company to procure the
materials for use in the project. The Company recognizes the related cash and a
liability in the financial statements for future materials to be purchased as
agent for the customer. Any excess funds received are refunded to the customer
at the end of the contract.

Asset  Retirement  Obligations  ("ARO").  The estimated costs of restoration and
removal of facilities are accrued.  The fair value of a liability for an asset's
retirement  obligation is recorded in the period in which it is incurred and the
corresponding  cost capitalized by increasing the carrying amount of the related
long-lived  asset.  The  liability  is accreted to its then  present  value each
period,  and the  capitalized  cost is depreciated  with the related  long-lived



                                      F-10
<PAGE>

asset. If the liability is settled for an amount other than the recorded amount,
a gain or loss is recognized. For all periods presented,  estimated future costs
of abandonment and dismantlement are included in the full cost amortization base
and are amortized as a component of depletion expense.

Revenue Recognition. Revenues from oil and gas production sales are recognized
as revenue in accordance with Securities and Exchange Commission Staff
Accounting Bulletin (SAB) No. 104, "Revenue Recognition," when persuasive
evidence of an arrangement exists, fees are fixed or determinable, title has
passed (generally upon transmission of oil and gas production), and collection
is reasonably assured.

Revenue from consulting services are recognized from consulting engagements when
hours are worked, either on a time-and-materials basis or on a fixed-fee basis,
depending on the terms and conditions defined at the inception of an engagement
with a client. The terms of the contracts with clients are fixed and
determinable and may change based upon agreement by both parties. Individual
consultants' billing rates are principally based on a multiple of salary and
compensation costs. Revenue recognized in excess of billings is recorded as
unbilled accounts receivable. Cash collections and invoices generated in excess
of revenue recognized are recorded as deferred revenue until the revenue
recognition criteria are met. Client reimbursable expenses, including those
relating to travel, other out-of-pocket expenses and any third-party costs, are
included in revenue, and an equivalent amount of reimbursable expenses are
included as operating expenses..

Service revenue is received from certain contractual relationships under time
and materials type contracts, for which revenue is recognized monthly in the
period in which the related time is incurred and as expenses are recognized.
Revenues from lump-sum turn-key contracts are recognized upon achievement of
contract milestones. Interest income is generated from certain customer
prepayments for materials to be procured, received, and paid for on behalf of
the customer and is recognized monthly.

Financial Instruments and Concentrations of Credit Risk Our financial
instruments consist of cash and cash equivalents, accounts receivable, accounts
payable, accrued expenses and debt. We believe the carrying values of cash and
cash equivalents, accounts receivable, accounts payable and accrued expenses
approximate their fair values due to their short-term nature. The fair value of
debt is estimated based on the effective interest rate method.

We generally do not use derivative financial instruments to hedge exposures to
cash-flow risks or market-risks that may affect the fair values of our financial
instruments. We review our warrants and conversion features of the securities we
issue as to whether they are freestanding or contain an embedded derivative and,
if so, whether they are classified as a liability at each reporting period until
the amount is settled and reclassified into equity with changes in fair value
recognized in current earnings. We have concluded that certain warrants with
embedded conversion features in our debt that are indexed to our common stock,
are classified as equity with the offset treated as a discount on the notes.
Such financial instruments are initially recorded at fair value and amortized to
interest expense during the life of the debt.

We utilize various types of financing to fund our business needs, including debt
with warrants attached and other instruments indexed to our stock. The embedded
conversion features utilized in these instruments require an initial measurement
of the fair value of the derivative, if any. We amortize the discount associated
with these warrants to interest expense at each reporting period.

                                      F-11
<PAGE>

Stock-Based Compensation. We adopted FAS 123(R) upon commencement of operations,
which requires the measurement and recognition of compensation expense for all
share-based awards made to employees and directors, including stock options,
restricted stock and employee stock purchases related to employee stock purchase
plans, based on estimated fair values. SFAS No. 123(R) requires companies to
estimate the fair value of share-based awards on the grant date using an option
pricing model. We value share-based awards using the Black-Scholes option
pricing model. The Black-Scholes model is highly complex and dependent on key
estimates by management. The estimates with the greatest degree of subjective
judgment are the estimated lives of the stock-based awards and the estimated
volatility of our stock price.

Income Taxes. We use the asset and liability method of accounting for income
taxes, in accordance with SFAS No. 109, "Accounting for Income Taxes." Deferred
tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the financial statement and tax
bases of assets and liabilities. If appropriate, deferred tax assets are reduced
by a valuation allowance which reflects expectations of the extent to which such
assets will be realized. As of December 31, 2007 and 2006, we had recorded a
full valuation allowance for our net deferred tax asset.

On January 1, 2007, we adopted the provisions of FIN 48, "Accounting for
Uncertainty in Income Taxes." FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. FIN 48 requires
that we recognize in our consolidated financial statements only those tax
positions that are "more-likely-than-not" of being sustained as of the adoption
date, based on the technical merits of the position. Because of the recent
acquisitions, the Company, has been unable determine the impact of FIN 48 as of
December 31, 2007.

Per Share Information. Basic earnings (losses) per share is computed by dividing
net income (losses) from continuing operations attributable to common stock by
the weighted average number of common shares outstanding during each period.
Diluted earnings per share is computed by adjusting the average number of common
shares outstanding for the dilutive effect, if any, of common stock equivalents
such as stock options and warrants. Diluted net loss per share is the same as
basic net loss per share for all periods presented because potential common
stock equivalents were anti-dilutive. Common stock equivalents of 23,828,961,
and 1,143,143 at December 31, 2007 and 2006, respectively, were excluded due to
their anti-dilutive effect.

Recent Accounting Pronouncements.

In September 2006, the FASB published SFAS No.157, Fair Value Measurements (SFAS
157). SFAS 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosures about
fair value measurements. SFAS 157 applies under other accounting pronouncements
that require or permit fair value measurements and accordingly, does not require
any new fair value measurements. SFAS 157 is effective for fiscal years
beginning after November 15, 2007. Epic does not believe the adoption of SFAS
157 will have a material impact on its financial statements.

In  February  2007,  the FASB issued  SFAS No.  159,  The Fair Value  Option for
Financial  Assets and  Financial  Liabilities  -- Including an Amendment of FASB
Statement  No. 115 ("SFAS 159").  This  standard  permits an entity to choose to
measure many financial  instruments and certain other items at fair value.  Most


                                      F-12
<PAGE>

of the  provisions  in SFAS 159 are  elective;  however,  the  amendment to FASB
Statement  No.  115,  Accounting  for  Certain  Investments  in Debt and  Equity
Securities,   applies  to  all  entities  with  available-for-sale  and  trading
securities.  The FASB's stated objective in issuing this standard is as follows:
"to improve  financial  reporting by providing  entities with the opportunity to
mitigate  volatility in reported earnings caused by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions."

The fair value option established by SFAS 159 permits all entities to choose to
measure eligible items at fair value at specified election dates. A business
entity will report unrealized gains and losses on items for which the fair value
option has been elected in earnings (or another performance indicator if the
business entity does not report earnings) at each subsequent reporting date. The
fair value option: (i) may be applied instrument by instrument, with a few
exceptions, such as investments otherwise accounted for by the equity method;
(ii) is irrevocable (unless a new election date occurs); and (iii) is applied
only to instruments and not to portions of instruments.

SFAS 159 is effective as of the beginning of an entity's first fiscal year that
begins after November 15, 2007. Epic is currently assessing the impact of SFAS
159 on its financial statements.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations,"
which requires the acquiring entity in a business combination to recognize and
measure all assets and liabilities assumed in the transaction and any
non-controlling interest in the acquiree at fair value as of the acquisition
date. SFAS No. 141 (R) also establishes guidance for the measurement of the
acquirer shares issued in consideration for a business combination, the
recognition of contingent consideration, the accounting treatment
pre-acquisition gain and loss contingencies, the treatment of acquisition
related transaction costs, and the recognition of changes in the acquirer's
income tax valuation allowance and deferred taxes. SFAS No. 141(R) is effective
for fiscal years beginning after December 15, 2008 and is to be applied
prospectively as of the beginning of the fiscal year in which the statement is
applied. Early adoption is not permitted. SFAS No. 141(R) will be effective for
us beginning with the 2009 fiscal year. We are evaluating the potential impact
of SFAS No. 141(R), if any, on our financial statements.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
Consolidated Financial Statements -- an amendment of ARB 51," which establishes
accounting and reporting standards that require noncontrolling interests to be
reported as a component of equity. SFAS No. 160 also requires that changes in a
parent's ownership interest while the parent retains its controlling interest be
accounted for as equity transactions and that any retained noncontrolling equity
investment upon the deconsolidation of a subsidiary be initially measured at
fair value. SFAS No. 160 is effective for fiscal years beginning after December
15, 2008 and is to be applied prospectively as of the beginning of the fiscal
year in which the statement is applied. SFAS No. 160 will be effective for us
beginning with the 2009 fiscal year. We are evaluating the potential impact of
SFAS No. 160, if any, on our financial statements.


                                      F-13
<PAGE>

3.  Business Combinations

On August 13, 2007, Epic acquired Carnrite for 4,850,844 shares of its common
stock valued at $16,007,785. Of these 4,850,844 shares, 1,673,034 shares were
awarded to key employees of Carnrite as retention shares. These shares will be
required to be returned to the Company if the employees voluntarily terminate
their employment prior to March 28, 2009. In accordance with EITF No. 95-8
"Accounting for Contingent Consideration Paid to the Shareholders for an
Acquired Enterprise in a Business Combination", the contingent consideration is
considered additional purchase price consideration. In addition, Epic issued
63,556 shares of its common stock valued at $209,735 as a transaction fee to an
individual that assisted with the acquisition. The consolidated statement of
operations includes the operations of Carnrite for the period from July 1, 2007
through December 31, 2007. Because the actual purchase date for Carnrite was
August 13, 2007, imputed interest in the amount of $115,000 was recorded during
2007.

On December 5, 2007, the Company acquired Pearl for 1,786,240 shares of its
common stock and cash of $19,020,000. The consolidated statement of operations
includes the operations of Pearl for the period from December 1, 2007 through
December 31, 2007.

The acquisitions and related transactions were treated as a purchase business
combination for accounting purposes, and Carnrite and Pearl's assets acquired
and liabilities assumed were recorded at their fair value. The allocations of
the purchase price to Carnrite and Pearl's assets and liabilities are only
preliminary allocations based on estimates of fair value and will change when
the actual fair values are determined. Among the provisions of SFAS No. 141,
criteria have been established for determining whether intangible assets should
be recognized separately from goodwill. The Company has not made that
determination as of December 31, 2007. The Company has one year from the date of
acquisition to make the determination.

The aggregate purchase price of Carnrite was $16,217,520 and consisted of
4,914,400 shares of common stock valued at $3.30 per share, the closing price on
the day of acquisition. The following table presents the allocation of the
acquisition cost to the assets acquired and liabilities assumed, based on fair
values:

                                                  Amount

        Cash                             $         48,227
       Receivables from clients                 1,207,883
       Property and equipment                      26,442
       Other assets                                 4,901
       Goodwill and intangible assets          15,603,264
                                           --------------
                 Total assets acquired         16,890,717
                                           --------------
        Accounts payable                         (311,197)
        Line of credit                           (362,000)
                                          ---------------
               Total liabilities assumed         (673,197)
                                          ---------------
               Net assets acquired          $  16,217,520
                                            =============

The aggregate purchase price of Pearl was $24,646,656 and consisted of 1,786,240
shares of common stock valued at $3.15 per share, the closing price on the day
of acquisition, and $19,020,000 of cash. The following table presents the
allocation of the acquisition cost to the assets acquired and liabilities
assumed, based on fair values:


                                      F-14
<PAGE>

                                                             Amount

       Receivables from clients                          $  15,342,447
       Property and equipment                               10,370,559
       Other assets                                            453,314
       Goodwill and intangible assets                       18,135,506
                                                         -------------
                 Total assets acquired                      44,301,826
                                                         -------------
        Accounts payable                                    (5,935,519)
       Bank overdrafts                                      (1,351,822)
       Accrued liabilities                                  (4,538,111)
       Debt                                                 (6,329,718)
       Line of credit                                       (1,500,000)
                                                         --------------
                Total liabilities assumed                  (19,655,170)
                                                         -------------
                Net assets acquired                       $ 24,646,656
                                                          ============

Summarized below is the unaudited pro forma statement of operations for the
years ended December 31, 2007 and 2006 had the acquisitions of Carnrite and
Pearl taken place as of January 1, 2006:

                                                  Year Ended December 31,
                                                  2007              2006
                                                 -----              ----

      Revenues                                $ 59,295,344     $  34,717,019
      Operating expenses                        60,496,148        34,292,187
      Other income (expense) and taxes          (5,632,082)       (5,035,331)
                 Net loss                    $  (6,832,886)    $  (4,610,499)
                                             -------------     -------------
                 Net loss per share          $       (0.18)    $       (0.12)
                                             -------------     -------------

The unaudited pro forma information is presented for informational purposes only
and is not necessarily indicative of the results of operations that actually
would have been achieved had the acquisition been consummated as of that time,
nor is it intended to be a projection of future results.

4. Goodwill and Other Intangible Assets

Approximately $32.6 million of the purchase price related to the Carnrite and
Pearl acquisitions has been allocated to goodwill. Goodwill represents the
excess of the purchase price over the fair value of the net tangible assets (See
Note 3 above). In accordance with SFAS No. 142, Goodwill and Other Intangible
Assets, goodwill is not amortized but instead tested for impairment at least
annually (more frequently if certain indicators are present). In the event that
management determines that the value of the goodwill has become impaired, the
company will incur an accounting charge for the amount of the impairment during
the quarter in which the determination is made. During fiscal year 2007, the
Company incurred no impairment charge related to the Goodwill associated with
the acquisitions of Carnrite and Pearl.


                                      F-15
<PAGE>


5. Oil and Gas Properties

In December 2006 Epic acquired a 100% working interest (approximately 82% net
revenue interest) in 28,600 acres in Rush County, Kansas. Located on the acreage
were 58 producing gas wells with total proved reserves at December 31, 2006 of
3,717 barrels of oil and 2,793,000 Mcf of gas. The acreage and wells were
acquired for $100,000 in cash, a $2,500,000 loan from the sellers of the
property and 3,200,000 shares of Epic's common stock valued at $8,480,000 using
the closing price of Epic's common stock at the inception of the agreement. The
$2,500,000 loan bears interest at 10% per year and is payable in 42 equal
monthly installments of $72,000. We based the value of the offer on a 2005
engineering reserve report which showed a value of $10.5 million. As of December
31, 2007, the Company had recorded $5,184,911 of ceiling test impairments to the
Kansas properties, including $2,122,646 of impairment in 2007 and $3,062,265 of
impairment in 2006. The Company recorded $0 and $30,814, respectively, of
depletion expense on these properties for the years ended December 31, 2007 and
2006.

In December 2006 Epic acquired a 50% working interest (approximate 40% net
revenue interest) in 6,000 acres in Kay County, Oklahoma. Located on the leased
acreage were one producing gas well and six shut-in gas wells. For its interest
in this prospect, Epic paid $50,000 in cash and issued 3,846 shares of its
common stock to the sellers valued at $10,000 using the closing price of Epic's
common stock at the inception of the agreement.

6. Other Mineral Reserves

Our proved oil and gas properties in Kansas contain Helium reserves estimated at
between 1% and 2% of the proved gas reserves of the property. Installation of
Nitrogen Rejection Units (NRU) to harvest the helium from the field are in the
final stages of manufacturing and installation. The third party contracted to
build, install and operate the NRU units estimates the installation of the units
to be completed in May of 2008. Capital costs to build, install and operate the
NRU units will be the responsibility of the third party company in exchange for
a percentage of the produced natural gas and Helium.

7. Property and Equipment

Property and equipment consisted of the following at December 31, 2007 and 2006:

                                                            December 31,
                                                        2007            2006

      Computer equipment                           $   859,147$             -
      Airplane                                       4,633,347
      Office furniture and equipment                   576,982
      Cd Construction in progress                    2,102,325
      Vehicles                                       2,221,101              -
      Leasehold improvements                           315,680              -
                                                  ------------     -----------
                                                    10,708,582              -

      Less accumulated depreciation and
        amortization                                  (112,119)             -
                                                  ------------     -----------
               Total property and equipment        $10,596,463     $        -
                                                   ===========     ==========


                                      F-16
<PAGE>

Depreciation expense was approximately $112,119 and $0 for 2007 and 2006,
respectively. During the year ended December 31, 2007 the Company disposed of
fixed assets and realized a loss of approximately $3,807.

8. Asset Retirement Obligations

The following table indicates the changes to the Company's asset retirement
obligations account:

                                                            Amount

      Balance at December 31, 2005                 $             -
       Liabilities incurred                                148,964
       Accretion expense                                       725
                                                    --------------
      Balance at December 31, 2006                         149,689

       Revision in estimated liabilities                   (18,929)
       Accretion expense                                     9,212
                                                     -------------
      Balance December 31, 2007                            139,972

       Current asset retirement obligation                   7,346
       Long-term asset retirement obligation               132,626
                                                       -----------
          Total asset retirement obligation              $ 139,972
                                                         =========

9. Debt and Capital Leases

Debt

In December 2006, Epic borrowed $2,500,000 secured by the Rush County Kansas
property. The note is for a term of 42 months pursuant to 10% interest. The
monthly principal and interest payment of this note is approximately $72,000. If
the cash flow from the property is less than the monthly principal and interest
payment, the deficit is added to the principal amount of the note. If the cash
flow from the property is greater than the monthly principal and interest, the
additional amount reduces the principal of the note.

In December 2007, Epic issued $20,250,000 of 10% Secured Debentures
("Debentures"). The Debentures are due on December 5, 2012, with interest
payable quarterly on January 1, April 1, July 1 and October 1 and are secured by
liens on all of the Company's assets. Beginning December 1, 2008, the Company is
required to make quarterly principal payments of $1,265,625. Any overdue accrued
and unpaid interest shall result in a late fee at an interest rate equal to the
lesser of 18% per annum or the maximum rate permitted by law. Prepayment is not
allowed without prior written consent of the holders. The purchasers of the
notes also received warrants which entitle the holders to purchase up to
15,954,545 shares of the Company's common stock at $1.65 per share. Under the
Black Scholes method using an expected life of five years, volatility of 72% and
a risk-free interest rate of 3.28%, the Company determined the warrants
associated with the debentures had a fair value of $13,085,380 as of the date of
the transaction. Such amount was recorded as additional paid in capital with a
corresponding amount recorded as a debt discount associated with the debentures.
The debt discount is being amortized to interest expense over the life of the
debentures, which mature on December 1, 2012. A total of $206,808 of debt
discount was amortized to interest expense in 2007.


                                      F-17
<PAGE>

Debt at December 31, 2007 and 2006 consists of the following:

                                                            December 31,
                                                        ---------------------
                                                        2007            2006
                                                        ----            -----

      Note payable secured by properties acquired   $ 3,710,441     $ 2,486,386
      Notes payable for insurance coverage                    -          94,280
      10% Debentures                                 20,250,000               -
                                                    -----------     ------------
            Total debt                               23,960,441       2,580,666
      Less current maturities                         2,152,832         872,990
                                                    -----------     ------------
           Total long-term debt                    $ 21,807,609     $ 1,707,676
                                                   ============     ===========

Principal maturities of debt obligations are as follows:

            Year ending December 31,                        Amount

                    2008                              $    2,152,832
                    2009                                   6,032,440
                    2010                                   6,885,216
                    2011                                   5,082,671
                    2012                                   3,807,282

Capital Leases

The Company has acquired assets under the provisions of long-term leases. For
financial reporting purposes, minimum lease payments relating to the assets have
been capitalized. The leases expire between March 1, 2008 and November 27, 2018.
Amortization of the leased property is included in depreciation expense.
Maturities of capital lease obligations are as follows:

            Year ending December 31,                        Amount

                    2008                               $   1,425,389
                    2009                                   1,188,635
                    2010                                     743,048
                    2011                                     598,825
                    2012                                     598,548
                    Thereafter                             3,502,509
                                                        ------------
            Total minimum lease payments                   8,056,954
            Amount representing interest                  (2,001,734)
                                                         -----------
            Present value of net minimum lease payments    6,055,220
            Less current portion                          (1,055,303)
                                                        ------------
            Long-term capital lease obligation           $ 4,999,917
                                                        ============


                                      F-18
<PAGE>


The assets under capital lease that are included in property and equipment have
cost and accumulated amortization as follows:

                                                            December 31,
                                                       ---------------------
                                                       2007             2006
                                                       ----             -----

      Vehicles - cost                               $ 2,221,101     $         -
      Aircraft - cost                                 4,633,347               -
                                                    -----------     -----------
      Less accumulated amortization                     (84,553)              -
                                                    -----------     -----------
           Total                                    $ 6,769,895     $         -
                                                    ===========     ===========

10. Stockholders' Equity

      Common Stock

On April 4, 2006, Epic signed an agreement for the sale of 44,000,000 shares of
common stock to five individuals for an aggregate price of $440. In addition to
the shares issued for cash stated above, 902,755 shares of stock were issued in
a private offering in December 2006. The total cash received was $902,755. The
shares issued were restricted shares in accordance with SEC section 144. In
addition to the shares of common stock issued in the private offering, Series A
warrants to purchase 212,500 shares of common stock exercisable at $2.00 per
share and Series B warrants to purchase 684,600 shares of common stock
exercisable at $2.50 per share were issued.

In April 2006 several shareholders loaned Epic $300,000. The loans were
unsecured, did not bear interest and were to be cancelled at such time as Epic's
common stock became eligible for listing on the OTC Bulletin Board. In September
2006 Epic's common stock was listed on the OTC Bulletin Board, the loans were
cancelled, and the $300,000 liability was reclassified as additional paid-in
capital.

In December 2006, 75,000 shares of common stock were issued to directors and key
employees for services rendered and for services to be rendered over the next 12
months. The fair market value using the closing price of the Epic's stock on the
measurement date was $57,094.

In December 2006, 3,200,000 shares of stock were issued to purchase proved oil
and gas properties in Rush County, Kansas. Based upon the closing price of
Epic's stock on the effective date of the purchase agreement, the value was
$8,480,000. Additionally, 3,846 shares were issued in December 2006 for unproved
oil and gas properties in Oklahoma. The value of the stock at the time of
purchase was $10,000 based upon the closing price of Epic's stock on the
agreement effective date.

On March 12, 2007, Epic's Chief Executive Officer and President surrendered to
the Company a total of 23,200,000 shares of common stock. This action was taken
in order to place the Company in a favorable position to attract the equity and
debt financing required to continue to execute its business plan.


                                      F-19
<PAGE>


During 2007, Epic issued 564,500 shares of unregistered restricted common stock
for net proceeds of $523,100 in private placements. There were $40,400 of
finder's fees related to these offerings. Epic sold 558,500 of these shares in
the form of 279,000 units with each unit consisting of 2 shares of Epic common
stock and one Series A Warrant and one Series B Warrant. Each Series A Warrant
entitles the holder to purchase one share of the Company's common stock at a
price of $2.00 per share at any time prior to December 31, 2007. Each Series B
Warrant entitles the holder to purchase one share of the Company's common stock
at a price of $2.50 per share at any time prior to October 31, 2009. Both the
shares and the shares associated with the warrants are restricted for a one year
period.

In August 2007, a total of 3,241,366 shares of restricted common stock were
issued in conjunction with the Carnrite acquisition. Up to 1,673,034 additional
shares were awarded to key employees of Carnrite as retention shares. See Note
3.

In September and October 2007, a total of 1,786,240 shares of restricted common
stock were issued with the acquisition of Pearl. See Note 3.

A total of 43,500 shares were issued to consultants for services rendered with a
value of $127,100 during the year ended December 31, 2007.

On December 5, 2007 Epic sold 4,406,334 shares of its common stock to a group of
private investors for gross proceeds of $6,609,501, or $1.50 per share. The
investors also received warrants which entitle the holders to purchase up to
4,406,334 shares of Epic's common stock. The warrants are exercisable at a price
of $1.50 per share and expire on December 5, 2012.

On December 31, 2007 Epic sold an additional 1,023,001 shares of its common
stock to a group of private investors for gross proceeds of $1,534,502 or $1.50
per share. Of the total proceeds, $634,500 had not been received as of December
31, 2007 and was included in accounts receivable - other. This amount was
collected in January 2008. The investors also received warrants which entitle
the holders to purchase up to 1,023,001 shares of Epic's common stock. The
warrants are exercisable at a price of $1.50 per share and expire on December 5,
2012.

Warrants

In conjunction with the issuance of common stock in December 2006, the Company
issued warrants to purchase 897,100 shares of common stock at between $2.00 and
$2.50 per share. Under the Black Scholes method using an expected life of two
years, volatility of 47% and a risk-free interest rate of 4.9%, the Company
determined the fair value of the warrants to be $335,619 as of the date of the
transaction. Such amount was recorded as additional paid in capital. In April
2007, the Company issued warrants to purchase 558,000 shares of common stock at
between $2.00 and $2.50 per share. Using the Black Scholes method using an
expected life of two years, volatility of 47% and a risk-free interest rate of
4.9%, the Company determined the fair value of the warrants to be $145,738 as of
the date of the transaction.

In conjunction  with the issuance of $20,250,000 of debentures in December 2007,
the Company  issued  warrants to purchase  15,954,545  shares of common stock at
$1.65 per share (warrants to purchase an additional 1,116,816 shares were issued
to third parties assisting in the  transaction).  Under the Black Scholes method
using an expected life of five years, volatility of 72% and a risk-free interest

                                      F-20
<PAGE>

rate  of  3.28%,  the  Company  determined  the  warrants  associated  with  the
debentures had a fair value of  $13,085,380  as of the date of the  transaction.
Such amount was  recorded as  additional  paid in capital  with a  corresponding
amount  recorded as a debt discount  associated  with the  debentures.  The debt
discount is being amortized to interest expense over the life of the debentures,
which  mature on December 1, 2012.  A total of  $206,808  of debt  discount  was
amortized to interest expense in 2007.

In conjunction with the issuance of common stock to private equity investors in
December 2007, the Company issued warrants to acquire 5,429,335 shares of common
stock at $1.50 per share (warrants to purchase an additional 184,333 shares were
issued to third parties assisting in the transaction). Under the Black Scholes
method using an expected life of five years, volatility of 72% and a risk-free
interest rate of 3.28%, the Company determined the fair value of the warrants to
be $2,830,307 as of the date of the transaction.

A summary of warrant activity for 2007 and 2006 is as follows:

                                                  Number of
                                                   Warrants           Weighted
                                                  Outstanding         Average
                                                and Exercisable   Exercise Price

  Issued in private placements in December 2006      897,100      $      2.38
                                                 -----------
  Outstanding, December 31, 2006                     897,100      $      2.38
    Issued in private placements in April 2007       558,000      $      2.25
    Issued in private placements in December 2007  5,613,668      $      1.50
    Issued with debentures sold in December 2007  17,071,363      $      1.65
    Expirations                                     (491,500)     $      2.00
                                                  ----------
  Outstanding, December 31, 2007                  23,648,631      $      1.65
                                                  ==========

As of December 31, 2007, the range of warrant prices for shares under warrants,
the weighted average remaining contractual life and the aggregate intrinsic
value is as follows:

                                              Remaining
                                             Contractual      Aggregate
                       Exercise   Number of    Life (in       Intrinsic
                         Price    Warrants      months)         Value
                       -------    ---------  ------------     ----------

 Series B Warrants$      2.50       963,600      21.5        $   703,428
 Series C Warrants$      1.50     5,613,668      59.0        $ 9,711,646
 Series D Warrants$      1.6    517,071,363      59.0        $26,972,754
                                -----------                  -----------
                                 23,648,631                  $37,387,827
                                 ==========                  ===========


                                      F-21
<PAGE>


Stock Options

A summary of stock option activity for 2007 and 2006 is as follows:

                                             Number of       Weighted
                                              Options         Average
                                            Outstanding    Exercise Price
                                           ------------    -------------

        Granted  in October 2006               300,000        $  0.50
        Granted  in October 2006               300,000        $  3.00
                                          ------------
      Outstanding, December 31, 2006           600,000        $  1.75
         Granted in July 2007                   65,000        $  3.17
         Granted in December 2007              946,000        $  3.30
                                          ------------
      Outstanding, December 31, 2007         1,611,000        $  2.72
                                           ==========

As of December 31, 2007, the exercise prices, remaining contractual life and
aggregate intrinsic value is as follows:

                     Remaining    Outstanding     Aggregate
        Exercise     Number of      Life          Intrinsic
          Price       Shares     (in months)        Value
      ---------------------------------------------------------

       $ 0.50         300,000         10.0        $819,000
       $ 3.00         300,000         10.0        $ 69,000
       $ 3.17          65,000         54.0        $  3,900
       $ 3.30         946,000         60.0        $      -
                    ---------                     --------
                    1,611,000                     $891,900
                    =========                     ========

As of December 31, 2007, there was approximately 2.0 million of total
unrecognized compensation cost related to unvested share-based compensation
arrangements that is expected to be recognized over a weighted-average period of
4.9 years.

Restricted stock grants consist of the Company's common stock and generally vest
after two or three years, with the exception of grants under the Epic
Non-employee Director Stock Option Plan, which vest when granted due to the fact
that they are granted in lieu of cash payments. All restricted stock grants are
cliff-vested. Restricted stock awards are valued at the average market price of
the Company's common stock at the date of grant. In December 2007, the Company
granted 600,000 shares to two officers under a stock bonus plan. A total of
$19,529 was recorded as compensation expense related to these shares.

11. Income Taxes

The Company accounts for income taxes and the related accounts under the
liability method. Deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax bases of assets and
liabilities using enacted rate expected to be in effect during the year in which
the basis differences reverse.


                                      F-22
<PAGE>


The (provision) for income taxes is comprised of the following:

                                                        December 31,
                                                  -------------------------
                                                      2007         2006
                                                  -------------------------

      Current state                             $ (20,000)     $       -
                                                ---------      ---------
           Provision for income taxes           $ (20,000)     $       -
                                                =========      =========

Deferred income tax assets and liabilities consist of the following:


                                                        December 31,
                                                  -------------------------
                                                      2007         2006
                                                  -------------------------
      Current deferred tax assets:
         Allowance for doubtful accounts          $  216,240    $       -
         Stock options                                17,292

      Non-current deferred tax assets:
         Impairment of oil and gas properties      1,890,666             -
         Other                                        94,357             -
         Net operating loss carryforwards            929,170       225,700
      Total deferred tax assets                    3,147,725       225,700
         Valuation allowance                      (3,147,725)     (225,700)
                                               -------------  ------------
      Net deferred tax assets                  $           -  $          -
                                               =============  ============

A reconciliation of the actual income tax expense recorded to that based upon
expected federal tax rates is as follows:


                                                        December 31,
                                                  -------------------------
                                                      2007         2006
                                                  -------------------------

      Expected federal tax benefit                       34%         35%
      Change in valuation allowance                    (34%)      ( 35%)
                                                     -------   ---------
                                                      (  -)%      (  -)%
                                                   =========   =========

SFAS Statement No. 109 requires that the Company reduce its deferred tax assets
by a valuation allowance if, based on the weight of the available evidence, it
is not more likely than not that all or a portion of a deferred tax asset will
be realized. The ultimate realization of deferred tax assets is dependent upon
the generation of future taxable income during the periods in which those
temporary differences are deductible. Additionally, the future utilization of
the Company's NOL carryforwards to offset future taxable income may be subject
to a substantial annual limitation, as a result of ownership changes that may
have occurred previously or that could occur in the future. The Company has not
yet determined whether such an ownership change has occurred. Based on the
judgment of management at this time, a valuation allowance has been recorded on
all deferred tax assets recorded on its books.


                                      F-23
<PAGE>

At December 31, 2007 and 2006, the Company had federal net operating loss
carryforwards of approximately $2.7 million and $0.9 million, respectively. The
federal tax net operating loss carryforwards will begin to expire in 2015.

In June 2006, the FASB issued FIN 48. Because of the recent acquisitions, the
Company has been unable determine the impact of FIN 48 as of December 31, 2007.

12.  Commitments and Contingencies

In the normal course of business, the Company is party to litigation from time
to time. The Company maintains insurance to cover certain actions and believes
that resolution of such litigation will not have a material adverse effect on
the Company. As of December 31, 2007, management is not aware of any pending or
threatened litigation.

13. Operating Leases

The Company's new corporate offices are located in The Woodlands, Texas, in a
leased facility consisting of approximately 4,500 square feet requiring monthly
lease payments of $12,500 commencing on May 1, 2008.

The offices of Carnrite are located in Houston, Texas. The 1,480 square feet of
office space is occupied under a lease requiring rental payments of $2,500 per
month through April 2008, $2,750 per month thru April 2009 and $3,000 per month
through April 2010. The lease on this space expires in April 2010.

The primary offices of Pearl are located at Lakewood, Colorado. The 30,552
square feet of office space is occupied under a lease requiring rental payments
of $42,168 per month. Pearl has eight branch offices and facilities in Colorado,
Wyoming, Montana and Utah. The rental for all of the branch offices is
approximately $18,900 per month.

The future minimum rental payments under all of these leases for the next five
years are summarized below:

        Year Ending December 31                Amount

        2008                               $   941,280
        2009                                   842,004
        2010                                   731,156
        2011                                   589,009
        2012                                   246,303
                                          ------------
             Total                          $3,349,752



                                      F-24
<PAGE>


14. Segment Reporting

With the acquisition of Carnrite and Pearl in 2007, Epic has two distinct
business segments, (1) engineering consulting and (2) oil and gas production.
These operating segments were determined based on the nature of the products and
services offered. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision-maker in deciding how to allocate
resources and in assessing performance. The Company's chief executive officer
and chief operating officer have been identified as the chief operating decision
makers. The Company's chief operating decision makers direct the allocation of
resources to operating segments based on the profitability and cash flows of
each respective segment. The Company evaluates performance based on several
factors, of which the primary measure is business segment operating income. The
following information summarizes the operating results of these two segments for
the year ended December 31, 2007:

                                         Engineering  Oil and Gas
                                           Segment     Segment      Consolidated
                                         -----------  ------------  ------------

   Revenues                             $ 8,461,022    $    9,674   $ 8,470,696
                                        -----------    ----------   -----------
   Operating expenses:
       General and administrative         1,343,396     2,533,491     3,876,887
       Lease operating expenses                   -       383,280       383,280
       Professional and subcontracted
         services                         1,127,293             -     1,127,293
       Compensation and benefits          2,152,067             -     2,152,067
       Reimbursed expenses.               2,103,522             -     2,103,522
       Occupancy, communication and other   319,376             -       319,376
       Depreciation, depletion and
          amortization                      117,021             -       117,021
       Accretion expense                          -        (9,717)       (9,717)
       Impairment of oil and gas properties       -     2,166,766     2,166,766
            Total operating expenses      7,162,675     5,073,820   12,236,4955
                                        -----------    ----------   -----------
   Income (loss) from operations        $ 1,298,347   $(5,064,146)  $(3,765,799)
                                        ===========   ===========   ===========

   Total assets                         $68,670,788   $ 6,078,732   $74,749,520
                                        ===========   ===========   ===========

15. Subsequent Event

On February  20, 2008,  Epic  acquired  Epic  Integrated  Solutions,  LLC ("Epic
Integrated"),  an  unaffiliated  entity,  for cash and  1,000,000  shares of its
restricted  common stock.  At closing,  Epic paid $600,000 and issued  1,000,000
shares of its common stock to three  owners of Epic  Integrated.  An  additional
$1,400,000 will be paid to the three owners in periodic installments during 2008
and 2009 should they continue  employment  with the Company.  In accordance with
EITF No. 95-8 "Accounting for Contingent  Consideration Paid to the Shareholders
for  an  Acquired  Enterprise  in  a  Business   Combination",   the  contingent
consideration is considered additional purchase price consideration.  Summarized
below is the  unaudited pro forma  statement of  operations  for the years ended
December  31, 2007 and 2006 had the  acquisitions  of  Carnrite,  Pearl and Epic
Integrated taken place as of January 1, 2006:


                                      F-25
<PAGE>


                                                 Year Ended December 31,
                                                2007              2006
                                                ----              ----

      Revenues                              $  62,198,522     $ 35,834,433
      Operating expenses                       63,700,303       35,044,445
      Other income (expense)                   (5,632,107)      (5,035,331)
                                           --------------    --------------
                 Net loss                  $   (6,133,888)   $  (4,245,343)
                                           ==============    =============
                 Net loss per share        $        (0.16)   $       (0.11)
                                           ===============    =============

      On February 21, 2008, Epic entered into a settlement agreement with a
third party related to payment of fees in connection with the private placement
in December 2007. In exchange for a payment of $300,000 from Epic to this third
party, both Epic and the third party agreed to settle any and all claims and
disputes between the two parties.



                                      F-26
<PAGE>


SUPPLEMENTARY  FINANCIAL  INFORMATION  FOR  OIL  AND  GAS  PRODUCING  ACTIVITIES
(UNAUDITED)

      All of our operations are directly related to oil and gas producing
activities located in Kansas and Oklahoma; we did not own or participate in any
oil and gas properties prior to January 1, 2006.

         Capitalized Costs Relating to Oil and Gas Producing Activities

     Year Ending December 31                         Amount

     Proved oil and gas properties                $ 10,507,590
     Unproved oil and gas properties                         -
                                                  ------------
          Total capitalized costs.                  10,507,590
     Less: Impairment allowance                     (5,184,911)
     Less: Accumulated depreciation                    (30,814)
                                                  ------------
          Total                                   $  5,291,865
                                                  ============

               Costs Incurred in Oil and Gas Producing Activities

                                                         December 31,
                                                   -----------------------
    Year Ending December 31                         2007             2006
    -----------------------                        -----            -----

    Acquisition of proved properties             $      -         $10,296,526
    Acquisition of unproved properties                  -              60,000
    Development costs                                   -               2,100
    Exploration costs                                   -                   -
    Asset retirement costs recognized under SFAS
      No. 143                                           -             148,964
                                                   ------         -----------
      Total costs incurred                         $    -         $10,507,590
                                                   ======         ===========

             Results of Operations from and Gas Producing Activities

                                                         December 31,
                                                   -----------------------
    Year Ending December 31                         2007             2006
    -----------------------                        -----            -----

                                                 $   9,674       $  73,073
    Production costs and taxes                    (383,280)        (59,460)
    Depreciation and amortization and ARO
      accretion                                     (9,717)        (31,539)
                                                 ---------       ----------
    Results of operations before income taxes     (383,323)        (17,926)
    Provision for income taxes.                          -               -
                                                  ---------       ---------
    Results of oil and gas producing
      activities                                 $(383,323)       $(17,926)
                                                 =========        =========

      The Company has presented the reserve estimates utilizing an oil price of
$82.53 per Bbl and a natural gas price of $4.32 per Mcf as of December 31, 2007
and an oil price of $56.32 per Bbl and a natural gas price of $5.02 per Mcf as
of December 31, 2006. Information for oil is presented in barrels (Bbl) and for
natural gas in thousands of cubic feet (Mcf).

      The estimates of the Company's proved natural gas reserves and related
future net cash flows that are presented in the following tables are based upon
estimates made by independent petroleum engineering consultants.


                                      F-27
<PAGE>

      The Company's reserve information was prepared by independent petroleum
engineering consultants as of December 31, 2007 and 2006. The Company cautions
that there are many inherent uncertainties in estimating proved reserve
quantities, projecting future production rates, and timing of development
expenditures. Accordingly, these estimates are likely to change as future
information becomes available. Proved oil and natural gas reserves are the
estimated quantities of crude oil and natural gas which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. Proved developed reserves are those reserves expected to be
recovered through existing wells, with existing equipment and operating methods.


      A summary of changes in proved reserve balances is presented below:

                                           Total Proved,     Proved Developed
                                       -----------------------------------------
    Year Ending December 31               BBL        MCF       BBL        MCF
    -----------------------            -----------------------------------------

    Reserves as of January 1, 2006           -                    -
    Purchases of reserves in place       3,717    4,985,197   3,717   2,793,010
    Sale of reserves in place                -            -       -           -
    Extensions and discoveries               -            -       -           -
    Revisions of previous estimates          -            -       -           -
    Production.                              -      (14,879)      -     (14,879)
                                        ------    ---------   -----   ---------
    Reserves at December 31, 2006        3,717    4,970,318   3,717   2,778,131
    Reserves as of January 1, 2006           -            -       -           -
    Purchases of reserves in place           -            -       -           -
    Sale of reserves in place                -            -       -           -
    Extensions and discoveries               -            -       -           -
    Revisions of previous estimates        248       (8,861)    248      (8,861)
    Production                               -            -       -           -
                                        ------    ---------   -----   ---------
    Reserves at December 31, 2007        3,965    4,961,457   3,965   2,769,270
                                        ======    =========   =====   =========

      The following is a standardized measure of the discounted net future cash
flows and changes applicable to proved oil and natural gas reserves required by
SFAS No. 69, "Disclosures about Oil and Gas Producing Acitivities". The future
cash flows are based on estimated oil and natural gas reserves utilizing prices
and costs in effect as of year end, discounted at 10% per year and assuming
continuation of existing economic conditions.

      The standardized measure of discounted future net cash flows, in
management's opinion, should be examined with caution. The basis for this table
is the reserve studies prepared by independent petroleum engineering
consultants, which contain imprecise estimates of quantities and rates of
production of reserves. Revisions of previous year estimates can have a
significant impact on these results. Also, exploration costs in one year may
lead to significant discoveries in later years and may significantly change
previous estimates of proved reserves and their valuation. Therefore, the
standardized measure of discounted future net cash flow is not necessarily
indicative of the fair value of the Company's proved oil and natural gas
properties.

      Future income taxes are based on year-end statutory rates, adjusted for
net operating loss carry forwards and tax credits. A discount factor of 10% was
used to reflect the timing of future net cash flows. The Standardized Measure of


                                      F-28
<PAGE>

Discounted Future Net Cash Flows is not intended to represent the replacement
cost or fair market value of the Company's oil and natural gas properties.

     Standardized Measure of Discounted Future Net Cash Flows Relating to Proved
Oil and Gas Reserves at December 31, 2007 and 2006.

                                                          December 31,
                                                     ---------------------
                                                      2007            2006
                                                     -----            ----

    Future cash inflows                           $ 21,760,766   $  25,156,646
    Future costs:
       Production and development costs             (9,953,970)    (11,801,393)
       Future income taxes                          (1,581,106)     (4,231,950)
                                                  -------------   -------------
    Future net cash flows                           10,225,690       9,123,303
     10% annual discount for estimated timing
        of cash flows                               (5,072,004)     (3,960,490)
                                                  ------------    ------------
    Standardized measure of discounted future
       net cash flows                             $  5,153,686    $  5,162,813
                                                  ============    ============


      The following reconciles the change in the standardized measure of
discounted future net cash flow during 2007:

                                                      Amount
                                                  --------------

      Beginning of year.                          $  5,162,813
      Sales of oil and gas produced, net
        of production cost                             373,606
      Net changes in sales price, net
        of production costs                         (1,908,930)
      Accretion of discount                            600,074
      Revisions of previous quantity estimates         (20,749)
      Changes in future income tax expense           2,191,697
      Changes in production rates and other         (1,244,825)
                                                  ------------
      End of year                                 $  5,153,686
                                                  ============







                                      F-29
<PAGE>

                                   SIGNATURES

      In  accordance  with  Section  13 or  15(a)  of  the  Exchange  Act,  the
Registrant  has  caused  this  Report  to  be  signed  on  its  behalf  by  the
undersigned, thereunto duly authorized on the 7th day of April 2008.

                                    EPIC ENERGY RESOURCES, INC.



                                  By /s/ Rex P. Doyle
                                     -----------------------------------------
                                        Rex P. Doyle, Chief Executive Officer

                                  By /s/ Michael Kinney
                                     -----------------------------------------
                                        Michael  Kinney,  Principal  Financial
                                      and Accounting Officer

         In accordance with the Exchange Act, this Report has been signed by the
following person on behalf of the Registrant in the capacities and on the dates
indicated.


Signature                            Title                     Date


/s/ Rex P. Doyle                    Director                April 7, 2008
------------------------
Rex P. Doyle


                                    Director
------------------------
W. Robert Eissler


/s/ Dr. Robert M. Ferguson          Director                April 7, 2008
------------------------
Dr. Robert M. Ferguson


/s/ Kevin G. McMahon                Director                April 7, 2008
-------------------------
Kevin G. McMahon




<PAGE>





                           EPIC ENERGY RESOURCES, INC.

                                   FORM 10-KSB

                                    EXHIBITS





<PAGE>