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, 2006
                                       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 or other jurisdiction of              (IRS  Identification No.)
           incorporation or organization)

           10655 Six Pines, Suite 210
              The Woodlands, Texas                              77380
       -----------------------------------                    --------
      (Address of Principal Executive Office)                 Zip Code

                                 (281) 419-3742
                           -------------------------
                (Issuer's telephone number, including area code)

Securities  registered  pursuant  to Section  12(b) of the  Exchange  Act:  None
Securities  registered  pursuant to Section  12(g) of the Exchange  Act:
                Common Stock, without par value
                Preferred Stock, without par value

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

Check whether the issuer (1) 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.
Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB |X|.

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


Issuer's revenue for its most recent fiscal year: $106,263. The aggregate market
value  of  the  7,437,100   shares  of  voting  and  non-voting  stock  held  by
non-affiliates  of the Company at December  31, 2006,  calculated  by taking the
last sales price of the  Company's  common  stock of $2.78 on December 31, 2006,
was $20,675,138.

The number of shares outstanding of the issuer's common equity as of December
31, 2006 was 53,441,601.

Documents incorporated by reference:  None
Transitional Small Business Disclosure Format:    |_| Yes  |X| No


<PAGE>

          CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

      In addition to historical information, this prospectus contains statements
relating to our future business and/or results, including, without limitation,
the statements under the captions "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business." These
statements include certain projections and business trends that are
"forward-looking" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. You can identify these statements by the use of
words like "may," "will," "shall," "could," "should," "project," "believe,"
"anticipate," "expect," "plan," "predict," "estimate," "possible," "probable,"
"intend," "continue" and variations of these words or comparable words. The
forward- looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guarantee, or warranty
is to be inferred from those forward-looking statements. These risks and
uncertainties include, without limitation, those described under "Risk Factors"
and those detailed from time to time in our filings with the SEC, and include,
among others, the following:

o    The degree and nature of our competition;
o    Our ability to employ and retain qualified employees;
o    The limited trading market for our common stock; and
o    The other factors referenced in this report, including, without limitation,
     under the section entitled "Risk Factors."

      The assumptions used for purposes of the forward-looking statements
specified in the following information represent estimates of future events and
are subject to uncertainty as to possible changes in economic, legislative,
industry, and other circumstances. As a result, the identification and
interpretation of data and other information and their use in developing and
selecting assumptions from and among reasonable alternatives require the
exercise of judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and,
accordingly, no opinion is expressed on the achievability of those
forward-looking statements. We cannot guarantee that any of the assumptions
relating to the forward-looking statements specified in the following
information are accurate, and we assume no obligation to update any such
forward-looking statements.

                             Additional Information

      Descriptions in this report are qualified by reference to the contents of
any contract, agreement or other documents described herein and are not
necessarily complete. Reference is made to each such contract, agreement or
document filed as an exhibit to this report, or incorporated herein by reference
as permitted by regulations of the Securities and Exchange Commission. (See
"Item 13. Exhibits.")

Glossary of Selected Petroleum Terms

      The following abbreviations and definitions are terms commonly used in the
oil and natural gas industry and throughout this Form 10-KSB:


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<PAGE>

"BBL." A  standard  measure  of  volume  for crude  oil and  liquid  petroleum
products; one barrel equals 42 U.S. gallons.

"BCF." Billion Cubic Feet of natural gas at standard temperature and pressure.

"BOE."  Barrels of oil  equivalent.  BOE is  calculated by converting 6 MCF of
natural gas to 1 BBL of oil.

"BTU" or "British Thermal Unit." The standard unit of measure of energy equal to
the amount of heat required to raise the temperature of one pound of water
1degree Fahrenheit. One Bbl of crude is typically 5.8 MMBTU, and one standard
Mcf is typically 1 MMBTU.

"CBM" Coal Bed Methane

"CO2." Carbon dioxide, a gas that can be found in naturally occurring
reservoirs, typically associated with ancient volcanoes, and also is a major
byproduct from manufacturing and power production, also utilized in enhanced oil
recovery through injection into an oil reservoir.

"EOR." Enhanced Oil Recovery projects involve injection of heat, miscible or
immiscible gas, or chemicals into oil reservoirs, typically following full
primary and secondary waterflood recovery efforts, in order to gain incremental
recovery of oil from the reservoir.

"Field." An area consisting of a single reservoir or multiple reservoirs all
grouped on or related to the same individual geologic structural feature and/or
stratigraphic feature.

"Farmout." Sale or transfer of all or part of the operating rights from the
working interest owner (the assignor or farmout party), to an assignee (the
farmin party) who assumes all or some of the burden of development, in return
for an interest in the property. The assignor may retain an overriding royalty
or any other type of interest. For Federal tax purposes, a farmout may be
structured as a sale or lease, depending on the specific rights and carved out
interests retained by the assignor.

"Gross acres or gross wells." The total acres or number of wells participated
in, regardless of the amount of working interest owned.

"MBOE." One thousand barrels of oil equivalent.

"MCF." One thousand cubic feet of natural gas at standard conditions, being
approximately sea level pressure and 60 degrees Fahrenheit temperature. Standard
pressure in the state of Louisiana is deemed to be 15.025 psi by regulation, but
varies in other states.

"MMBTU." One million British thermal units (BTU's).

"MMCF." One million  cubic feet of natural  gas at  standard  temperature  and
pressure.

"Net acres or net wells." The sum of the fractional working interests owned in
gross acres or gross wells.


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<PAGE>

"NGL." Natural gas liquids, being the combination of ethane, propane, butane and
natural gasoline's that can be removed from natural gas through processing,
typically through refrigeration plants that utilize low temperatures, or through
J-T plants that utilize compression, temperature reduction and expansion to a
lower pressure.

"Overriding royalty." A royalty interest that is created out of the operating or
working interest. Unlike a royalty interest, an overriding royalty interest
terminates with the operating interest from which it was created or carved out
of. See "royalty interest".

"PDNP" Proved Developed Non-Producing (oil/gas reserves classification)

"Permeability."  The measure of ease with which  petroleum  can move through a
reservoir.

"Porosity" (of sand or sandstone). The relative volume of the pore space (or
open area) compared to the total bulk volume of the reservoir.

"Proved developed reserves." Reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods. Additional
oil and gas expected to be obtained through the application of fluid injection
or other improved recovery techniques for supplementing the natural forces and
mechanisms of primary recovery should be included as "proved developed reserves"
only after testing by pilot project or after the operation of an installed
program has confirmed through production responses that increased recovery will
be achieved.

"Proved reserves." Estimated quantities of crude oil, natural gas, and natural
gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions, i.e., prices and costs as of the date the
estimate is made. Prices include consideration of changes in existing prices
provided only by contractual arrangements, but not on escalations based upon
future conditions.

"proved undeveloped reserves." Reserves that are expected to be recovered from
new wells on undrilled acreage or from existing wells where a relatively major
expenditure is required for recompletion. Reserves on undrilled acreage are
limited to those drilling units offsetting productive units that are reasonably
certain of production when drilled. Proved reserves for other undrilled units
can be claimed only where it can be demonstrated with certainty that there is
continuity of production from the existing productive formation. Proved
undeveloped reserves may not include estimates attributable to any acreage for
which an application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual tests
in the area and in the same reservoir.

"Psi," or pounds per square inch, a measure of pressure. Pressure is typically
measured as "psig", or the pressure in excess of standard atmospheric pressure.

"Present  value" or  "PV-10."  When used with  respect to oil and gas  reserves,
present  value  means the  estimated  future net  revenues  computed by applying
current prices of oil and gas reserves (with consideration of price changes only
to  the  extent  provided  by  contractual  arrangements)  to  estimated  future


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<PAGE>

production  of proved oil and gas reserves as of the date of the latest  balance
sheet presented,  less estimated future  expenditures (based on current costs to
be incurred in developing  and producing the proved  reserves  computed  using a
discount factor of ten percent and assuming  continuation  of existing  economic
conditions. PV-10 means a present value, discounted at 10% per annum.

"Productive well." A well that is producing oil or gas or that is capable of
production.

"PUD" proved undeveloped reserves. A location containing proved undeveloped
reserves. Proved undeveloped oil and gas reserves are reserves that are expected
to be recovered from new wells on undrilled acreage or from existing wells where
a relatively major expenditure is required for recompletion.

"Recompletion" the completion for production of an existing well bore in another
formation from that in which the well has been previously completed.

"Royalty" or "royalty interest." The mineral owner's share of oil or gas
production (typically 1/8, 1/6 or 1/4), free of costs, but subject to severance
taxes unless the lessor is a government. In certain circumstances, the royalty
owner bears a proportionate share of the costs of making the natural gas
saleable, such as processing, compression and gathering. A royalty interest that
is coterminous with an operating or working interest is an "overriding royalty"
interest.

"Shut-in well." A well that is not on production, but has not yet been plugged
and abandoned. Wells may be shut-in in anticipation of future utility as a
producing well, plugging and abandonment or other use.

"Standardized measure." The standardized measure is an estimate of future net
reserves from a property, and is calculated in the same exact same fashion as a
PV-10 value, except that the projected revenue stream is adjusted to account for
the estimated amount of federal income tax that must be paid.

"Volumetric Production Payments" means production payment obligations recorded
as deferred revenue in accordance with GAAP, together with all undertakings and
obligations in connection therewith.

"Working interest." The interest in the oil and gas in place which is burdened
with the cost of development and operation of the property. Also called the
operating interest.

"Workover." A remedial operation on a completed well to restore, maintain or
improve the well's production.


                                       4
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

Background

      Epic was incorporated in Colorado on June 6, 1989. Following its formation
Epic was inactive until April 2000, when Epic decided to become involved in the
mortgage business. Epic planned to generate mortgage loans, sell the loans to
financial institutions and service the loans on behalf of the financial
institutions. During the nine months ended September 30, 2001 Epic discontinued
its efforts to become involved in the mortgage business and until April 4, 2006
was engaged primarily in the evaluation of acquisition targets and the filing of
periodic reports with the SEC.

      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 April 4, 2006, Epic sold 44,000,000 shares of its common stock to five
persons, including Rex Doyle and John Ippolito, both officers and directors of
Epic. 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.

      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 1, 2006 and December 1, 2006 Epic sold 481,600 Units, at a
price of $1.00 per Unit, to a group of private investors. Each Unit consisted of
one share of Epic's common stock and one warrant. Each 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.

      Epic's website is: www.1epic.com

Overall Strategy

The Company is involved in the oil and gas business. The Company plans to have
two divisions which will operate in the following areas:

Oil and Gas Acquisition, Optimization and Development - This division will
review and acquire existing low risk oil and gas producing properties.

Engineering and Infrastructure Management - This division will consist of 3 main

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<PAGE>

business  units.  The Company  estimates  that this  division  will  require the
services of 100 or more professionals.

i.   Engineering and  Construction  Management - This business unit will provide
     services  to optimize  drilling,  completion,  field level work  processes,
     physical plant  construction,  processing and  transportation.  The Company
     considers the integration of construction,  operations, and financing to be
     critical for older fields with outdated  systems and for new projects which
     lack an experienced team of professionals dedicated to the project.

ii.  Professional Staffing - This business unit will provide to the industry, on
     a contract  basis,  both short term and long term,  experienced and skilled
     engineers  (reservoir,   production,   operations,   construction,   etc.),
     geologists,  geoscientists,  and other  technicians.  The  availability  of
     skilled professionals is quickly becoming the limiting resource for the oil
     and gas  industry.  Both large and small oil and gas  companies do not have
     the available human talent to analyze, plan, engineer and execute projects.
     Of concern is the growing  number of college  graduates who opt for careers
     outside  the  oil  and  gas  industry.   Enrollment  in  petroleum  related
     disciplines  at major  U.S.  universities  has  only  recently  started  to
     increase but is not near the enrollment of the 1980's.  In most oil and gas
     companies,  the average age  continues to climb  toward 50 years old,  with
     some studies estimating that less than 30% of the workforce is younger than
     40 years old. The Company  intends to address this talent shortage with its
     Engineering Staffing division.

iii. Energy  Consulting  Services - This  business  unit will provide  planning,
     engineering,  and  consulting  services  to clients in both the private and
     public  markets.   The  consulting  services  will  focus  on  engineering,
     operational,   and   organizational   dynamics   that   contribute  to  the
     optimization  and   profitability  of  producing   assets,   companies  and
     management teams of the Company's clientele; and assets, business units and
     management teams within the Company itself.

     The Company is in the development  stage. The Company's  future  activities
will depend upon available funding.

Recent Events

      Effective December 1, 2006 the Company acquired a natural gas producing
asset in Rush County, Kansas. At the time of purchase the asset was producing
approximately 780 mcf per day from 56 wells. In January of 2007 production was
curtailed in the area by the gas purchaser or midstream company due to problems
associated with their gas processing facility. In addition to the Company's
production other producers in the area were curtailed affecting approximately 5
mmcf per day of third party production. The Company is currently working with a
midstream company pursuing alternative options for the sale of its gas. The
Company considers the curtailment a temporary issue and is actively negotiating
with other producers in the area to acquire additional production to enhance its
position in the area.

     Effective  December 28, 2006 the Company  entered into a Joint Venture with
the Gorden Group to co-develop a shallow gas field located in northern Oklahoma.


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<PAGE>

The Joint  Venture is  currently  developing  a 7 well pilot  project on a 50/50
basis.  If the pilot is  successful  the Joint Venture will continue to identify
workover candidates in the area on a 60/40 basis with Epic owning 60% and Gordon
Group owning 40%.

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

      Effective January 1, 2007 the Company appointed Mr. Steve Goff to the
position of Corporate Vice President and President of the Company's Oil and Gas
Division. Mr. Goff has over 28 years of experience in the oil and gas industry.
He recently held the position of Production Manager for a startup company in the
Gulf of Mexico where he was engaged in building the operating staff and
initiating production operations. Mr. Goff began his career with Mobil Oil
Corporation in various technical and managerial positions specializing in well
completions, production engineering, production operations, developing and
operating new fields and optimizing mature fields. Mr. Goff also held the
position of Production Manager of Operations with El Paso Production and served
as Vice President of International Operations for Baker Energy. Mr. Goff
received a BS in Petroleum Engineering from Mississippi State University.

      In January 2007 the Company was contracted by UBS AG to provide technical,
environmental, operational, reservoir and commodity marketing consulting
services to support its due-diligence for a Volumetric Production Payment (VPP)
loan to a large operator in central California. Effective February 14, 2007 the
Company entered into a multi-year contract that, in addition to the above
mentioned services supporting the required due-diligence, the Company will
provide operational and environmental auditing services, on a semi-annual basis,
of the same VPP contract. The Company will receive a quarterly retainer fee and
serve as designated "Back-up Operator" in the event UBS's client defaults on its
VPP covenants. The Company will also provide the same services under similar
contact terms and conditions for each VPP contact closed by UBS on a go-forward
basis.

      On February 6, 2007 the Company signed a seismic farm-in agreement with a
third party covering Epic's leasehold in the northwest portion of it's Reichel
Field, located in Rush County, Kansas. The agreement was entered into with an
independent oil and gas company currently shooting 3D seismic on leases adjacent
to and across a portion of Epic's leasehold. The agreement provides Epic access
to the seismic information covering its leasehold and potentially could provide
additional low risk development drilling opportunities. It is anticipated that
the seismic information will confirm the further extension of commercial
quantities of hydrocarbons beyond the current estimated boundaries.

      On February 16, 2007 the Company entered into a Joint Venture with One
Nation Energy Solutions (a private oil and gas marketing and trading company)
based in Houston Texas. Under the Joint Venture the Company has provided, on a
confidential basis, technical, operational, environmental and due-diligence
consulting services supporting One Nation in its efforts to acquire Texas based
power generation facilities. Both companies are pursuing acquisitions that
include both power generation and associated oil and gas producing reserves. A
press release detailing the Company's relationship with One Nation is scheduled
for release in April 2007.


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<PAGE>

        On March 7, 2007, the Company withdrew its registration statement (Form
S-8) dated January 29, 2007 that provided Common Stock issuable pursuant to an
Incentive Stock Option Plan, Common Stock issuable pursuant to Non-Qualified
Stock Option Plan, and Common Stock issuable pursuant to Stock Bonus Plan. The
reason for the withdrawal was to avoid potential negative impact on investors.

      On March 12, 2007 Rex Doyle (Chief Executive Officer) and John Ippolito
(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.

Change in Accountants

      Effective February 21, 2007 the Company replaced (i.e. dismissed) Comiskey
& Company with Malone & Bailey, PC as the Company's independent certified public
accountants. Comiskey & Company audited the Company's financial statements for
the fiscal years ended December 31, 2004 and 2005. During the Company'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.

      During the two most recent fiscal years and subsequent interim period
ended February 21, 2007, the Company 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 the Company'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 Company has authorized Comiskey & Company to discuss any matter
relating to the Company and its operations with Malone & Bailey.

      The change in the Company's auditors was recommended and approved by the
directors of the Company. The company does not currently have an audit
committee.

Principal Areas of Operation

     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.

     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 does not know if
the plant will reopen and is currently  looking for an  alternate  buyer for the
gas. The acreage and wells were acquired for $100,000 in cash, a $2,500,000 loan
from the sellers of the prospect  and  3,100,000  shares of Epic's  common stock


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<PAGE>

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.

      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. Epic estimated
that it will cost approximately $7,000 (with Epic being responsible for its 50%
share) to rework each shut-in well and place the wells back on production. Epic
plans to begin reworking the six shut-in wells in the next few months. 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.


                                  RISK FACTORS

      Any investment in our common stock involves a high degree of risk.
Investors should carefully consider the risks described below and all of the
information contained in this report before deciding whether to purchase our
common stock. Our business, financial condition or results of operations could
be materially adversely affected by these risks if any of them actually occur.
The trading price of our common stock could decline due to any of these risks,
and an investor may lose all or part of his or her investment. Some of these
factors have affected our financial condition and operating results in the past
or are currently affecting us. This report also contains forward-looking
statements that involve risks and uncertainties.

      Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including the risks
faced by us described below and elsewhere in this report. With respect to this
discussion, the terms "EPIC," "Company", "we," "us," and "our" refer to EPIC
Energy Resources, Inc.

Risks Related to Business

The  Company  is in the  Development  Stage  and has  Conducted  Only  Limited
Operations.   As of December 31, 2006 the Company:

o           Has generated  minimal revenue from both oil and gas production and
            consulting
o           Has just begun to established its Engineering and Infrastructure
            Management division and has completed two consulting projects.

      The Company has never earned a profit. As of December 31, 2006 the
Company's accumulated deficit was approximately ($4,068,000). The Company
expects to incur additional losses during the foreseeable future. There can be
no assurance that the Company can implement its business plan, or that it will
be profitable.

If the Company cannot obtain additional capital, the Company may have to delay
or postpone exploitation and development activities. The Company needs
additional capital to fund its development operations, and additional
acquisitions The Company estimates that it will need $4,000,000 to establish its
Engineering and Infrastructure Management division. The failure of the Company



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<PAGE>

to obtain additional capital on terms acceptable to it, or at all, may
significantly restrict the Company's proposed operations. There can be no
assurance that the Company will be able to obtain the funding which it requires.

The Company's operations will be dependent upon the continued services of its
officers. The loss of any of these officers, whether as a result of death,
disability or otherwise, may have a material adverse effect upon the business of
the Company.

The Company may need the services of additional skilled professionals. The
Company's Engineering and Construction Management division and its Engineering
Staffing division will require the services of a large number of engineers and
other oil professionals skilled in most aspects of the oil and gas industry. The
Company's Engineering and Construction Management division and its Engineering
Staffing division will not be successful if the Company is unable to retain the
services of the number of professionals it will need for these divisions.

Oil and gas exploration and development is not an exact science, and involves a
high degree of risk. The primary risk lies in the drilling of dry holes or
drilling and completing wells which, though productive, do not produce gas
and/or oil in sufficient amounts to return the amounts expended and produce a
profit. Hazards, such as unusual or unexpected formation pressures, downhole
fires, blowouts, loss of circulation of drilling fluids and other conditions are
involved in drilling and completing oil and gas wells and, if such hazards are
encountered, completion of any well may be substantially delayed or prevented.
In addition, adverse weather conditions can hinder or delay operations, as can
shortages of equipment and materials or unavailability of drilling, completion,
and/or work-over rigs. Even though a well is completed and is found to be
productive, water and/or other substances may be encountered in the well, which
may impair or prevent production or marketing of oil or gas from the well.

      Exploratory drilling involves substantially greater economic risks than
development drilling because the percentage of wells completed as producing
wells is usually less than in development drilling. Exploratory drilling itself
can be of varying degrees of risk and can generally be divided into higher risk
attempts to discover a reservoir in a completely unproven area or relatively
lower risk efforts in areas not too distant from existing reservoirs. While
exploration adjacent to or near existing reservoirs may be more likely to result
in the discovery of oil and gas than in completely unproven areas, exploratory
efforts are nevertheless high risk activities.

      Although a workover, a recompletion of oil and gas wells is, to a certain
extent, less risky than drilling for oil and gas, the process of completing an
oil or gas well is nevertheless associated with considerable risk. In addition,
even if a well is completed as a producer, the well for a variety of reasons may
not produce sufficient oil or gas in order to repay the Company's investment in
the well.

The acquisition, exploitation and development of oil and gas reserves, and the
production and sale of oil and gas are subject to many factors which are outside
the Company's control. These factors include, among others, general economic
conditions, proximity to pipelines, oil import quotas, supply, demand, and price
of other fuels and the regulation of production, refining, transportation,
pricing, marketing and taxation by Federal, state, and local governmental
authorities.


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<PAGE>

Buyers of the Company's gas, if any, may refuse to purchase gas from the Company
in the event of oversupply. Hence, even if wells which may be drilled by the
Company are productive, the quantities of gas that the Company may be able to
sell may be too small to pay for the expenses of operating the wells. In such a
case, the wells would be "shut-in" until such time, if ever, that economic
conditions permit the sale of gas in quantities which would be profitable.

Interests that the Company will acquire in oil and gas properties may be subject
to royalty and overriding royalty interests, liens incident to operating
agreements, liens for current taxes and other burdens and encumbrances,
easements and other restrictions, any of which may subject the Company to future
undetermined expenses. The Company does not intend to purchase title insurance,
title memos, or title certificates for any leasehold interests it will acquire.
It is possible that at some point the Company will have to undertake title work
involving substantial costs. In addition, it is possible that the Company may
suffer title failures resulting in significant losses to the Company.

The drilling of oil and gas wells involves hazards such as blowouts, unusual or
unexpected formations, pressures or other conditions which could result in
substantial losses or liabilities to third parties. Although the Company intends
to acquire adequate insurance, or to be named as an insured under coverage
acquired by others (e.g., the driller or operator), the Company may not be
insured against all such losses because such insurance may not be available,
premium costs may be deemed unduly high, or for other reasons. Accordingly,
uninsured liabilities to third parties could result in the loss of Company funds
or property.

The Company's operations may be affected from time to time and in varying
degrees by the price for oil or gas. The price of oil and gas is often volatile
and influenced by political developments and Federal and state laws and
regulations regarding the development, production and sale of crude oil and
natural gas. These regulations require permits for drilling of wells and also
cover the spacing of wells, the prevention of waste, and other matters. Rates of
production of oil and gas have for many years been subject to Federal and state
conservation laws and regulations and the petroleum industry is subject to
Federal tax laws. In addition, the production of oil or gas may be interrupted
or terminated by governmental authorities due to ecological and other
considerations. Compliance with these regulations may require a significant
capital commitment by and expense to the Company and may delay or otherwise
adversely affect the Company's proposed operations.

      From time to time legislation has been proposed relating to various
conservation and other measures designed to decrease dependence on foreign oil.
No prediction can be made as to what additional legislation may be proposed or
enacted. Oil and gas producers may face increasingly stringent regulation in the
years ahead and a general hostility towards the oil and gas industry on the part
of a portion of the public and of some public officials. Future regulation will
probably be determined by a number of economic and political factors beyond the
control of the Company or the oil and gas industry.

The Company's activities will be subject to existing federal and state laws and
regulations governing environmental quality and pollution control. Compliance
with environmental requirements and reclamation laws imposed by Federal, state,
and local governmental authorities may necessitate significant capital outlays
and may materially affect the earnings of the Company. It is impossible to


                                       11
<PAGE>

predict the impact of environmental legislation and regulations (including
regulations restricting access and surface use) on the Company's operations in
the future although compliance may necessitate significant capital outlays,
materially affect the Company's earning power or cause material changes in its
intended business. In addition, the Company may be exposed to potential
liability for pollution and other damages.

There is, at present, only a limited market for the Company's common stock and
there is no assurance that a market will continue. As of December 31, 2006 there
was only a limited market for the Company's common stock. Trades in the
Company's common stock are subject to Rule 15g-9 of the Securities and Exchange
Commission, which rule imposes certain requirements on broker/dealers who sell
securities subject to the rule to persons other than established customers and
accredited investors. For transactions covered by the rule, brokers/dealers must
make a special suitability determination for purchasers of the securities and
receive the purchaser's written agreement to the transaction prior to sale. The
Securities and Exchange Commission also has rules that regulate broker/dealer
practices in connection with transactions in "penny stocks". Penny stocks
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ system, provided that current price and volume information with respect
to transactions in that security is provided by the exchange or system). The
penny stock rules require a broker/ dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker/dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker/dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker/dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. These disclosure requirements have the effect
of reducing the level of trading activity in the secondary market for the
Company's common stock. As a result of these rules, investors may find it
difficult to sell their shares.

                       RISKS RELATED TO CAPITAL STRUCTURE

There is no assurance of an established public trading market, which would
adversely affect the ability of our investors to sell their securities in the
public market.

     Although our common stock is listed on the OTC Bulletin  Board, it has only
recently traded and is very thinly traded. As such, a regular trading market for
the  securities  does not yet  exist and may not  exist or be  sustained  in the
future.  The NASD has enacted  recent  changes that limit  quotations on the OTC
Bulletin  Board to securities of issuers that are current in their reports filed
with the  Securities  and  Exchange  Commission.  The effect on the OTC Bulletin
Board of these rule changes and other  proposed  changes cannot be determined at
this time. The OTC Bulletin Board is an  inter-dealer,  over-the-counter  market
that provides  significantly less liquidity than the NASD's automated  quotation
system  (the  "NASDAQ  Stock  Market").  Quotes for stocks  included  on the OTC
Bulletin  Board are not listed in the  financial  sections of  newspapers as are
those for the NASDAQ  Stock  Market.  Therefore,  prices for  securities  traded
solely on the OTC  Bulletin  Board may be  difficult  to obtain  and  holders of


                                       12
<PAGE>

common stock may be unable to resell their  securities at or near their original
offering  price or at any price.  Market  prices  for our  common  stock will be
influenced by a number of factors, including:

o    the  issuance  of  new  equity  securities  pursuant  to  past  and  future
     offerings;
o    changes in interest rates;
o    competitive  developments,  including  announcements  by competitors of new
     products or  services or  significant  contracts,  acquisitions,  strategic
     partnerships, joint ventures or capital commitments;
o    variations in quarterly  operating results;
o    change in financial estimates by  securities  analysts;
o    the depth and  liquidity of the market for our common stock;
o    investor  perceptions of our company and the medical device
     industry generally; and
o    general economic and other national conditions.

Shares eligible for future sale may adversely affect the market price of our
common stock, as the future sale of a substantial amount of outstanding stock in
the public marketplace could reduce the price of our common stock.

Our common stock is considered a "penny stock" and may be difficult to sell.

      Our common stock is considered to be a "penny stock" since it meets one or
more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section
15(g) of the Exchange Act. These include but are not limited to the following:
(i) the stock trades at a price less than $5.00 per share; (ii) it is NOT traded
on a "recognized" national exchange; (iii) it is NOT quoted on the NASDAQ Stock
Market, or even if so, has a price less than $5.00 per share; or (iv) it is
issued by a company with net tangible assets less than $2.0 million, if in
business more than a continuous three years, or with average revenues of less
than $6.0 million for the past three years. The principal result or effect of
being designated a "penny stock" is that securities broker-dealers cannot
recommend the stock but must trade in it on an unsolicited basis.

      Additionally, Section 15(g) of the Exchange Act and Rule 15g-2 promulgated
thereunder by the SEC require broker-dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and to
obtain a manually signed and dated written receipt of the document before
effecting any transaction in a penny stock for the investor's account.

     Potential  investors  in our common stock are urged to obtain and read such
disclosure  carefully before  purchasing any shares that are deemed to be "penny
stock." Moreover,  Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for  transactions  in such stocks before selling any
penny stock to that investor.  This procedure  requires the broker-dealer to (i)
obtain from the investor information  concerning his or her financial situation,
investment  experience and investment  objectives;  (ii)  reasonably  determine,
based on that  information,  that  transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written  statement  setting forth the basis on which
the  broker-dealer  made the  determination  in (ii) above;  and (iv)  receive a
signed and dated copy of such  statement from the investor,  confirming  that it
accurately reflects the investor's  financial situation,  investment  experience


                                       13
<PAGE>

and investment  objectives.  Compliance with these requirements may make it more
difficult  for  holders  of our  common  stock to resell  their  shares to third
parties or to otherwise dispose of them in the market or otherwise.

If we fail to maintain effective internal controls over financial reporting, the
price of our common stock may be adversely affected.

      Our internal control over financial reporting may have weaknesses and
conditions that need to be addressed, the disclosure of which may have an
adverse impact on the price of our common stock. We are required to establish
and maintain appropriate internal controls over financial reporting. Failure to
establish those controls, or any failure of those controls once established,
could adversely impact our public disclosures regarding our business, financial
condition or results of operations. In addition, management's assessment of
internal controls over financial reporting may identify weaknesses and
conditions that need to be addressed in our internal controls over financial
reporting or other matters that may raise concerns for investors. Any actual or
perceived weaknesses and conditions that need to be addressed in our internal
control over financial reporting, disclosure of management's assessment of our
internal controls over financial reporting or disclosure of our public
accounting firm's attestation to or report on management's assessment of our
internal controls over financial reporting may have an adverse impact on the
price of our common stock.

Standards for compliance  with Section 404 of the  Sarbanes-Oxley  Act of 2002
are  uncertain,  and if we fail to comply  in a timely  manner,  our  business
could be harmed and our stock price could decline.

      Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act
of 2002 require annual assessment of our internal control over financial
reporting, and attestation of our assessment by our independent registered
public accountants. This requirement will apply to our annual report for fiscal
2007. The standards that must be met for management to assess the internal
control over financial reporting as effective are new and complex, and require
significant documentation, testing and possible remediation to meet the detailed
standards. We may encounter problems or delays in completing activities
necessary to make an assessment of our internal control over financial
reporting. In addition, the attestation process by our independent registered
public accountants is new and we may encounter problems or delays in completing
the implementation of any requested improvements and receiving an attestation of
our assessment by our independent registered public accountants. If we cannot
assess our internal control over financial reporting as effective, or our
independent registered public accountants are unable to provide an unqualified
attestation report on such assessment, investor confidence and share value may
be negatively impacted.

We do not foresee paying cash dividends in the foreseeable future.

      We have not paid cash dividends on our stock and do not plan to pay cash
dividends on our common stock in the future.

ITEM 2. DESCRIPTION OF PROPERTIES

     Our  executive  offices are located in The  Woodlands,  Texas,  in a leased
facility  consisting of approximately 1,500 square feet requiring lease payments


                                       14
<PAGE>

of $2,400 per month.  The lease for our offices  expires on December  31,  2007,
however  we can extend  the lease for a  subsequent  period of 12 months at that
time. All of our facilities are in good repair.


      Effective December 1, 2006 the Company acquired a natural gas producing
asset in Rush County, Kansas. At the time of purchase the asset was producing
approximately 780 mcf per day from 56 wells. In January of 2007 production was
curtailed in the area by the gas purchaser or midstream company due to problems
associated with their gas processing facility. In addition to the Company's
production other producers in the area were curtailed affecting approximately 5
mmcf per day of third party production. The Company is currently working with a
midstream company pursuing alternative options for the sale of its gas. The
Company considers the curtailment a temporary issue and is actively negotiating
with other producers in the area to acquire additional production to enhance its
position in the area.

ITEM 3. LEGAL PROCEEDINGS

      We are not a party to any legal proceedings.

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

        There were no matters submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Our common stock is approved for quotation on the Over-the-Counter
Bulleting Board under the trading symbol "EPCC." The following table sets forth
the high and low bid prices for our common stock on a post-split basis for the
periods noted, as reported by the National Daily Quotation Service and the
Over-The-Counter Bulletin Board. Quotations reflect inter-dealer prices, without
retail mark-up, markdown or commission and may not represent actual
transactions.

                                          High        Low
2006:
           October 27, 2006               1.65        1.25
           December 31, 2006              2.78        2.78

      We have not declared or paid any cash dividends on our common stock, and
we currently intend to retain future earnings, if any, to finance the expansion
of our business, and we do not expect to pay any cash dividends in the
foreseeable future. The decision whether to pay cash dividends on our common
stock will be made by our board of directors, in their discretion, and will
depend on our financial condition, operating results, capital requirements and
other factors that the board of directors considers significant.


                                       15
<PAGE>

ITEM 6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
         RESULTS OF OPERATIONS

      The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes, and the other financial information included in Form 10-KSB. With
respect to this discussion, the terms "EPIC," "Company", "we," "us," and "our"
refer to EPIC Energy Resources, Inc. The forward-looking comments contained in
this discussion involve risks and uncertainties. Our actual results may differ
materially from those discussed here due to factors such as, among others,
limited operating history, difficulty in developing, exploiting and protecting
proprietary technologies, intense competition and substantial regulation in the
healthcare industry. Additional factors that could cause or contribute to such
differences can be found in the following discussion, as well as in the section
entitled "Risks Factors."

Liquidity and Capital Resources

      As of December 31, 2006, we had approximately $590,172 of unrestricted
cash.

      Cash flow used by our operating activities was $595,807 for the twelve
months ended December 31, 2006, as compared to $17,386 used during the fiscal
year ended December 31, 2005. The operating activities cash flow resulted from
adjustments related to depletion, impairment of oil and gas properties,
accretion of ARO, and changes in operating assets and liabilities related to
accounts payable, accounts receivable, prepaid expenses and shares issued for
compensation. See the consolidated statements of cash flows and related
footnotes for more detailed information.

      Cash flow used in investing activities was $102,100 for the twelve months
ended December 31, 2006. The investing activities cash flow resulted from the
acquisition of the Kansas properties. See the consolidated statements of cash
flows and related footnotes for more detailed information.

      Cash flow provided by financing activities was $1,288,079 for the twelve
months ended December 31, 2006. The financing activities cash flow resulted from
proceeds from the issuance of common stock from a private placement offering and
expenses paid by stakeholders. See the consolidated statements of cash flows and
related footnotes for more detailed information.


      We continue to look for additional sources of funding to support various
projects in the pipeline including general and administrative expenses. We
expect the Oklahoma joint venture will provide cash flow starting in the second
quarter of 2007. We also believe the Reichel field in Kansas will start
providing cash flow again starting in the third quarter of 2007.

      As shown in the accompanying financial statements, Epic incurred recurring
net losses chargeable to common shareholders of 3,970,214 and $20,000 in fiscal
2006 and 2005, respectively, and has an accumulated deficit of $ 4,068,526 as of
December 31, 2006. These conditions create an uncertainty as to Epic's ability
to continue as a going concern. Management is trying to raise additional capital
through various funding arrangements. The financial statements did not include
any adjustment that might be necessary if Epic is unable to continue as a going
concern.


                                       16
<PAGE>

Plan of Operation

The Company plans to have two divisions which will operate in the following
areas:

     o    Oil and Gas Exploration and Development - This division will evaluate,
          review and acquire existing low risk oil and gas producing properties.

     o    Engineering and Infrastructure Management - This division will consist
          of 3 main business  units.  The Company  estimates  that this division
          will require the services of 100 or more professionals.

          o    Engineering  and  Construction  Management.  This  division  will
               provide  planning,  engineering,  and  construction  services  to
               improve or develop the infrastructure  needed to more effectively
               produce oil and natural gas in the domestic market

          o    Professional  Staffing - This division  will provide  experienced
               engineers  and  technicians  on a temporary  or project  basis to
               firms in the energy sector.

          o    Energy and  Consulting  Services  - This  division  will  provide
               consulting  services  relative to optimizing  the  performance of
               both conventional and alternative  energy services and assets for
               both private and public entities.

Acquisition, Optimization and Development of Oil and Gas Producing Properties

      The Company plans to acquire producing oil and gas properties which have
the potential to support additional oil and gas wells.

     The Company will be dependent upon its ability to  economically  acquire or
find oil and gas  reserves  since,  in general,  the volume of  production  from
natural gas and oil properties will decline as reserves are depleted.  Except to
the extent the Company acquires additional properties containing proved reserves
or conducts  successful  exploration  and development  activities,  or both, the
proved reserves of the Company will decline as reserves are produced.

      Fluctuations in crude oil and natural gas prices will significantly affect
the Company's operations. Cash flow from oil and gas production depends upon the
quantity of production and the price obtained for such production. An increase
in prices will permit the Company to finance its operations to a greater extent
with internally generated funds, may allow the Company to obtain equity
financing more easily or on better terms, and lessens the difficulty of
attracting financing from industry partners and non-industry investors. However,
price increases heighten the competition for leases increase the costs of
production and development activities and, because of potential price declines,
increase the risks associated with the purchase of producing properties during
times that prices are at higher levels.

     A decline  in oil and gas prices  will (i) reduce the cash flow  internally
generated  by the  Company  which in turn will  reduce the funds  available  for
servicing  debt and  exploring  for and  replacing  oil and gas  reserves,  (ii)
increase the  difficulty of obtaining  equity and debt financing and worsens the
terms on which such financing may be obtained, (iii) reduce the number of leases
which have reasonable economic terms, (iv) may cause the Company to allow leases


                                       17
<PAGE>

to expire based upon the value of potential  oil and gas reserves in relation to
the costs of exploration,  (v) result in marginally productive oil and gas wells
being  abandoned  as  non-commercial,   and  (vi)  increase  the  difficulty  of
attracting financing from industry partners and non-industry investors.

     The Company needs to raise the funds required to workover or drill oil and
gas wells and acquire oil and gas prospects. The Company may not be successful
in raising the capital needed to workover and drill oil or gas wells and future
wells may not be productive of oil or gas.

      It is anticipated that capital will be obtained principally through
borrowings from institutional and private lenders (although such additional
financing has not been arranged) and the sale of the Company's common stock or
other equity securities. However, there can be no assurance that additional
capital will be available to the Company on a timely basis, or if available, on
acceptable terms.

Engineering and Construction Management

      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!).

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


                                       18
<PAGE>

      Because of 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.

      The Company's Engineering and Construction Management division will focus
on developing new and cost effective production systems and processes for oil
and gas producers.

      This division will provide services to optimize drilling, completion,
field level work processes, physical plant construction, processing and
transportation. The Company considers the integration of construction,
operations, and financing to be critical for older fields with outdated systems
and for new projects which lack an experienced team of professionals dedicated
to the project.

      The Company estimates that this division will require the services of 75
professionals.

Professional Staffing

      The Company's Engineering Staffing division will provide to the industry,
on a contract basis, both short term and long term, experienced and skilled
engineers, geologists, and other technicians. The availability of skilled
professionals is quickly becoming the limiting resource for the oil and gas
industry. Both large and small oil and gas companies do not have the available
human talent to analyze, plan, engineer and execute projects. Of concern is the
growing number of college graduates who opt for careers outside the oil and gas
industry. Enrollment in petroleum related disciplines at major U.S. universities
has only recently started to increase but is not near the enrollment of the
1980's. In most oil and gas companies, the average age continues to climb toward
50 years old, with some studies estimating that less than 30% of the workforce
is younger than 40 years old. The Company intends to address this talent
shortage with its Engineering Staffing division.

      The Company estimates that this division will require the services of 20
professionals.

Energy Consulting Services

      The Company's Energy Consulting Services division will focus on providing
professional consulting services to assist clients in optimizing energy related
infrastructure. As the energy infrastructure in the United Stares ages, the
management of energy infrastructure for public and private entities becomes
critical for the efficient and effective distribution and consumption of all
types of energy. Due to rising energy costs, private corporations and public
entities are looking for alternatives to "on-the-grid" energy and major users
are searching for methods to reduce dependence on traditional energy sources.
Alternatives being considered include co-generation plants, private power
generation, wind and solar power, waster-to-energy conversion plants, renewable
energy solutions, and other unconventional energy sources.

      The Company estimates that this division will require the services of 15
professionals.


                                       19
<PAGE>

Government Regulation

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

       Under the Natural Gas Act of 1938, 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.

      Effective January 1, 1993, however, the Natural Gas Wellhead Decontrol Act
(the "Decontrol Act") deregulated natural gas prices for all "first sales" of
natural gas. Because "first sales" include typical wellhead sales by producers,
all natural gas produced from the Company's natural gas properties is sold at
market prices, subject to the terms of any private contracts which may be in
effect. The FERC's jurisdiction over natural gas transportation is not affected
by the Decontrol Act.

       The Company'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.

     More  recently,  the FERC has pursued  other policy  initiatives  that have
affected natural gas marketing. Most notable are (1) the large-scale divestiture
of  interstate   pipeline-owned  gas  gathering   facilities  to  affiliated  or
non-affiliated  companies;  (2)  further  development  of  rules  governing  the
relationship  of  the  pipelines  with  their  marketing  affiliates;   (3)  the
publication of standards  relating to the use of electronic  bulletin boards and
electronic  data  exchange by the  pipelines  to make  available  transportation
information  on a timely basis and to enable  transactions  to occur on a purely
electronic  basis;  (4) further  review of the role of the secondary  market for
released  pipeline  capacity and its  relationship to open access service in the
primary  market;  and (5)  development  of  policy  and  promulgation  of orders
pertaining to its  authorization of market-based  rates (rather than traditional
cost-of-service  based  rates)  for  transportation  or   transportation-related
services  upon the  pipeline's  demonstration  of lack of market  control in the
relevant service market.  The Company does not know what effect the FERC's other
activities will have on the access to markets,  the fostering of competition and
the cost of doing business.


                                       20
<PAGE>

      As a result of these changes, sellers and buyers of natural gas have
gained direct access to the particular pipeline services they need and are
better able to conduct business with a larger number of counter parties. The
Company believes these changes generally have improved the access to markets for
natural gas while, at the same time, substantially increasing competition in the
natural gas marketplace. The Company cannot predict what new or different
regulations the FERC and other regulatory agencies may adopt or what effect
subsequent regulations may have on production and marketing of natural gas from
the Company's properties.

      In the past, Congress has been very active in the area of natural gas
regulation. However, as discussed above, the more recent trend has been in favor
of deregulation and the promotion of competition in the natural gas industry.
Thus, in addition to "first sales" deregulation, Congress also repealed
incremental pricing requirements and natural gas use restraints previously
applicable. There are other legislative proposals pending in the Federal and
State legislatures which, if enacted, would significantly affect the petroleum
industry. At the present time, it is impossible to predict what proposals, if
any, might actually be enacted by Congress or the various state legislatures and
what effect, if any, these proposals might have on the production and marketing
of natural gas by the Company. Similarly, and despite the trend toward federal
deregulation of the natural gas industry, whether or to what extent that trend
will continue or what the ultimate effect will be on the production and
marketing of natural gas by the Company cannot be predicted.

      Federal, state, and local agencies have promulgated extensive rules and
regulations applicable to the Company's oil and natural 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 the Company's properties. The federal and
state regulatory burden on the oil and natural gas industry increases the
Company's cost of doing business and affects its profitability. Because these
rules and regulations are amended or reinterpreted frequently, the Company is
unable to predict the future cost or impact of complying with those laws.

Competition and Marketing

      The Company 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. The Company 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.

      The Company does not refine or otherwise process crude oil and condensate
production. Substantially all of the crude oil and condensate production of the
Company's wells are sold at posted prices under short-term contracts, which is
customary in the industry.


                                       21
<PAGE>

      The market for oil and gas is dependent upon a number of factors beyond
the Company'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
production quotas among themselves for petroleum products from time to time with
the intent of controlling the current global supply and
      consequently price levels. The Company 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 the Company'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.

Results of Operations

        Fiscal year ended December 31, 2006 compared to fiscal year ended
December 31, 2005.

Revenues:

      Our revenues were $106,263 in fiscal year 2006, compared to revenue of $0
in fiscal year 2005. $73,073 of the revenue resulted from December's gas
production from the Kansas property. The remaining $33,190 of revenue resulted
from consulting revenue related to power generation acquisition and
reconfiguring consulting provided to One Nation in addition to drilling
facilities analysis for Pecton Energy.



                                       22
<PAGE>

Cost of Operations:

General and administrative expenses (G&A expense)

      G&A expense for 2006 was $926,301. The G&A related expenses include
salaries, travel & expense, legal, accounting, rent and other costs related to
being a publicly-traded company.

Lease operating expense (LOE)

      Lease operating expense for 2006 resulted from costs related to the Rush
County field in Kansas.

Depletion, Depreciation and Amortization (DD&A).

      DD&A expenses are recorded on the full cost method of accounting.
Depletion and depreciation of oil and gas properties is on a unit of production
basis. The depletion expense of $30,814 was for properties in Rush County,
Kansas.

Impairment of oil and gas properties

      In 2006, we incurred an impairment expense of $3,062,265. The impairment
is based upon the ceiling test required under the full cost method of
accounting. Net capitalized costs of oil and gas properties less related
deferred taxes are limited to the sum of (a) future net revenues (using prices
and cost rates as of the balance sheet date) from proved reserves at 10 percent
per annum plus (b) costs not being amortized less (c) related income tax
effects. Excess costs are charged to proved property impairment expense.

Other income (expense):

      Interest income was $3,519 for 2006 due primarily to interest received
from money market accounts.

Net loss:

      We reported a net loss of $3,970,214 for the fiscal year 2006. The major
issues contributing to this loss include:

     *   Epic was a startup company with no oil and gas revenue during the first
         eleven months of the year;
     *   Epic incurred general and administrative expenses as described above;
         and
     *   Epic incurred a significant impairment expense as described above.

Earnings/(loss) per share (EPS):

      For fiscal year 2006, basic and diluted EPS was ($0.10) per share compared
to $0 for 2005. EPS was calculated by dividing the net loss of $3,970,214 by the
weighted average number of common shares outstanding (38,045,590).


                                       23
<PAGE>

Critical Accounting Policies

      Our discussion and analysis of our financial condition and results of
operations are based on our financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities and expenses and related
disclosure of contingent assets and liabilities. We review our estimates on an
on going basis. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities. Actual results may differ from these estimates under
different assumptions or conditions. While our significant accounting policies
are described in more detail in the notes to our financial statements, we
believe the following accounting policies to be critical to the judgments and
estimates used in the preparation of our financial statements:

Development Stage Activities

      Epic Energy Resources Inc. entered the development stage in accordance
with Financial Accounting Standards Board Statements of Financial Accounting
Standards (SFAS) No. 7, "Accounting and Reporting by Development Stage
Enterprises" in 2000, upon commencement of activities. Epic's original business
plan was to operate as a mortgage banking and brokerage company over the
Internet. In 2004, Epic changed its focus to that of a "blank check" company,
whose purpose is to serve as a capital access corporation which will seek out
and acquire an operating company.

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.

Fair Value of Financial Instruments

      Financial instruments, including cash, receivables, accounts payable, and
notes payable are carried at amounts which reasonably approximate their fair
value due to the short-term nature of these amounts or due to variable rates of
interest which are consistent with market rates. No adjustments have been made
in the current period.

Credit Risk and Concentrations

        EPIC does not require collateral from its customers with respect to
accounts receivable but performs periodic credit evaluations of such customer's
financial conditions. EPIC determines any required allowance by considering a
number of factors including lengths of time accounts receivable are past due and
EPIC's previous loss history. EPIC provides reserves for accounts receivable
when they become uncollectible, and payments subsequently received on such
eceivables are credited to the allowance for doubtful accounts. As of December
31, 2006 and 2005, EPIC has determined that no allowance for doubtful accounts
is required.

                                       24
<PAGE>

Cash Equivalents

      For the purposes of the statements of cash flows, Epic considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

Revenue recognition

      Epic records oil and gas revenues following the entitlement method of
accounting for production, in which any excess amount received above Epic's
share is treated as a liability. If less than Epic's share is received, the
underproduction is treated as an asset. Epic did not have an imbalance position
in terms of volumes or values at December 31, 2006.

Oil and gas properties

      Epic follows the full cost accounting method to account for the costs
incurred in the acquisition, exploration, development and production of oil and
gas reserves. Under this method, all costs, including internal costs directly
related to acquisition, exploration and development activities are capitalizable
as oil and gas property costs. Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. Epic assesses the realizability
of unproved properties on at least an annual basis or when there has been an
indication that an impairment in value may have occurred. Impairment of unproved
properties is assessed based on management's intention with regard to future
exploration and development of individually significant properties and the
ability of Epic to obtain funds to finance such exploration and development. If
the results of an assessment indicate that the properties are impaired, the
amount of the impairment is added to the capitalized costs to be amortized.
There was no impairment of unproved properties during the years ended December
31, 2006 and 2005.

      On the sale or retirement of a complete unit of proved property, the cost
and related accumulated depreciation, depletion, and amortization are eliminated
from the property accounts, and the resultant gain or loss is recognized. On the
retirement or sale of a partial unit of proved property, the cost is charged to
accumulated depreciation, depletion, and amortization with a resulting gain or
loss recognized in income.

      On the sale of an entire interest in an unproved property for cash or cash
equivalent, gain or loss on the sale is recognized, taking into consideration
the amount of any recorded impairment if the property had been assessed
individually. If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.

      The fair value of an asset retirement obligation is recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The present value of the estimated asset retirement costs is capitalized
as part of the carrying amount of the long-lived asset. For Epic, asset
retirement obligations relate to the abandonment of oil and gas producing
facilities. The amounts recognized are based upon numerous estimates and
assumptions, including future retirement costs, future recoverable quantities of


                                       25
<PAGE>

oil and gas, future inflation rates and the credit-adjusted risk-free interest
rate.

      Costs of oil and gas properties are amortized using the units of
production method. Amortization expense per equivalent physical unit of
production amounted to $30,814 and $ 0, for the years ended December 31, 2006
and 2005, respectively.

      Under full cost accounting rules for each cost center, capitalized costs
of proved properties, less accumulated amortization and related deferred income
taxes, shall not exceed an amount (the "cost ceiling") equal to the sum of (a)
the present value of future net cash flows from estimated production of proved
oil and gas reserves, based on current economic and operating condition,
discounted at 10 percent, plus (b) the cost of properties not being amortized,
plus (c) the lower of cost or estimated fair value of any unproved properties
included in the costs being amortized, less (d) any income tax effects related
to differences between the book and tax basis of the properties involved. If
capitalized costs exceed this limit, the excess is charged as an impairment
expense. During the year ended December 31, 2006, the Company incurred a proved
property impairment expense of $3,062,265 which is reflected in the accompanying
Consolidated Statements of Operations.

Other mineral reserves

      Helium is a gas produced as part of the production stream from our oil and
gas properties in Kansas. Helium is a byproduct of the production process. We
have estimated that the net recoverable amount of helium is approximately
$783,474.

Long-lived assets

   Long-lived assets to be held and used or disposed of other than by sale are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. When required, impairment
losses on assets to be held and used or disposed of other than by sale are
recognized based on the fair value of the asset. Long-lived assets to be
disposed of by sale are reported at the lower of the asset's carrying amount or
fair value less cost to sell.

Income Taxes

      Epic uses the liability method in accounting for income taxes. Deferred
tax assets and liabilities are recognized for temporary Differences between
financial statement carrying amounts and the tax bases of assets and
liabilities, and are measured using the tax rates expected to be in effect when
the differences reverse. Deferred tax assets are also recognized for operating
loss and tax credit carry forwards. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the results of operations
in the period that includes the enactment date. A valuation allowance is used to
reduce deferred tax assets when uncertainty exists regarding their realization.



                                       26
<PAGE>


Loss per Common Share

      Basic and diluted net loss per share calculations are calculated on the
basis of the eighted average number of common shares outstanding during the
year. The per share amounts include the dilutive effect of common stock
equivalents in years with net income. Basic and diluted loss per share is the
same due to the absence of common stock equivalents as all potential common
stock equivalents are anti-dilutive.

Stock-based compensation

      In 2006, Epic began issuing options to purchase common stock to employees
as compensation. Epic records as compensation expense the fair value of such
shares as calculated pursuant to Statement of Financial Accounting Standard No.
123R, Accounting for Stock-Based Compensation ("SFAS No. 123R"), recognized over
the related requisite service period. Epic accounts for stock-based compensation
issued to non-employees in accordance with the provisions of SFAS No. 123R and
EITF No. 96-18, "Accounting for Equity Instruments That Are Issued to
Non-Employees for Acquiring, or in Conjunction with Selling Goods or Services".
For accounting purposes, the value of common stock issued to non-employees and
consultants is determined based on the fair value of the services received or
the fair value of the equity instruments issued, whichever value it more
reliably measurable. Epic utilizes a standard option pricing model, the
Black-Scholes model, to measure the fair value of stock options granted.


ITEM 7.  FINANCIAL STATEMENTS

      The Consolidated Financial Statements and schedules that constitute Item 7
are attached to the end of this Report.

        Reports of Independent Registered Public Accounting Firms

        Consolidated Balance Sheet as of December 31, 2006.

        Consolidated Statements of Operations for the years ended December 31,
2006 and 2005 and period from April 10, 2000 (inception) through December 31,
2006.

        Consolidated Statements of Changes In Stockholders' Equity (Deficit) for
the period from April 10, 2000 (inception) through December 31, 2006.

        Consolidated Statements of Cash Flows for the Twelve Months years ended
December 31, 2006 and 200 and period from April 10, 2000 (inception) through
December 31, 2006.



                                       27
<PAGE>


           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
 Epic Energy Resources, Inc.
(a development stage company)
 The Woodlands, Texas


We have audited the accompanying consolidated balance sheet of Epic Energy
Resources, Inc. as of December 31, 2006 and the related consolidated statements
of operations, stockholders' equity (deficit) and cash flows for the year then
ended and for the period from April 10, 2000 (inception) through December 31,
2006. The financial statements for the period April 10, 2000 (inception) through
December 31, 2005, were audited by other auditors whose reports expressed
unqualified opinions on those statements. The financial statements for the
period April 10, 2000 (inception) through December 31, 2005, include total
revenues and net loss of $0 and $98,312, respectively. Our opinion on the
statements of operations, stockholders' equity, and cash flows for the period
April 10, 2000 (inception) through December 31, 2006, insofar as it relates to
amounts for prior periods through December 31, 2005, is based solely on the
report of other auditors. These 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 the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes 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 financial statements referred to above present fairly, in
all material respects, the financial position of Epic as of December 31, 2006
and the results of its operations and cash flows for the periods described above
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying financial statements have been prepared assuming that Epic will
continue as a going concern. As discussed in Note 3 to the financial statements,
Epic has suffered recurring losses from operations which raises substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters also are described in Note 3. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

MALONE & BAILEY, PC

www.malone-bailey.com
Houston, Texas

April 16, 2007

                                       1

<PAGE>



                               COMISKEY & COMPANY
                            PROFESSIONAL CORPORATION


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We have audited the balance sheet of Epic Energy Resources, Inc. (formerly San
Juan Financial, Inc.) (not presented) as of December 31, 2005, and the related
statements of operations, cash flows, and stockholders' equity (deficit) for the
year ended December 31, 2005, and for the period from inception (April 10, 2000)
to December 31, 2005. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes 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 financial statements referred to above present fairly, in
all material respects, the financial position of Epic Energy Resources, Inc. as
of December 31, 2005, and the results of its operations, its cash flows, and its
changes in stockholders' equity for the year ended December 31, 2005, and for
the period from inception (April 10, 2000) to December 31, 2005, in conformity
with generally accepted accounting principles in the United States of America.



Denver, Colorado
April 3, 2006

                                                        /s/ COMISKEY & COMPANY
PROFESSIONAL CORPORATION
















                  Certified Public Accountants & Consultants
              789 Sherman Street - Suite 385 - Denver, CO 80203
  (303) 830-2255 - Fax (303) 830-0876 - info@comiskey.com - www.comiskey.com

                                       2

<PAGE>

                            EPIC ENERGY RESOURCES INC
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEET
                                December 31, 2006

                            Assets
Current assets:
   Cash and cash equivalents                        $    590,172
   Accounts receivable                                     4,600
   Prepaid expenses and other current assets             120,219
                                                      ----------
         Total current assets                            714,991

   Oil and gas properties (full-cost method),
 net of depletion
        Proved developed                               7,354,511
        Unproved                                          60,000
   Other mineral reserves                                783,474
                                                      ----------
         Total assets                               $  8,912,976
                                                      ==========

              Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                 $     97,630
   Accrued liabilities                                     7,346
   Current portion of long-term debt                     872,990
                                                    ------------
         Total current liabilities                       977,966
Long-term liabilities:
   Asset Retirement Obligation                           142,343
   Long-term debt                                      1,707,676
                                                    ------------

         Total liabilities                             2,827,985
                                                    ------------
Stockholders' Equity
   Preferred stock, no par value; 10,000,000
     shares authorized; no shares issued and
     Outstanding                                               -
   Common stock, no par value; 750,000,000
     shares authorized; 53,441,061 shares
     issued and outstanding at December 31, 2006       9,822,605
   Additional paid-in capital                            330,912
   Deficit accumulated during development stage       (4,068,526)
                                                    ------------
         Total stockholders' equity                    6,084,991
                                                    ------------
                                                    $  8,912,976
                                                    ============


         See accompanying notes to consolidated financial statements.

                                       3

<PAGE>

                           EPIC ENERGY RESOURCES INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

          Years ended December 31, 2006 and 2005 and Period from April
                 10, 2000 (inception) through December 31, 2006

                                                                For the period
                                                                from inception
                                                                (April 10, 2000)
                                                                To December 31,
                                           2006         2005         2006
                                        ----------   ---------- ----------------

Revenue from operations:
   Oil & gas revenue                    $   73,073   $       --    $   73,073
   Consulting revenue                       33,190           --        33,190
                                        ----------   ----------    ----------

Revenue from operations                    106,263           --       106,263
Cost of operations:
   General and administrative expenses     926,301       20,000     1,024,613
   Lease operating expense                  59,460           --        59,460
   Depletion expense                        30,814           --        30,814
   Accretion expense                           725           --           725
   Impairment of oil and gas properties  3,062,265           --     3,062,265
                                        ----------   ----------    ----------
Cost of operations                       4,079,565       20,000     4,177,877
                                        ----------   ----------    ----------
   Loss from operations                 (3,973,302)     (20,000)   (4,071,614)

Other income (expense):
   Interest and other income                 3,519           --         3,519
   Interest expense                           (431)          --          (431)
                                        ----------   ----------    ----------
   Net loss                            $(3,970,214)  $  (20,000)  $(4,068,526)
                                       ============  ===========  ============

Loss per common share -
  Basic and Diluted:                   $     (0.10)  $   ($0.00)
                                       ============  ===========
Weighted average number of common
  shares outstanding                    38,045,590     5,260,000
                                       ============  ===========


                                       4

         See accompanying notes to consolidated financial statements.

<PAGE>


                           EPIC ENERGY RESOURCES INC.
                          (A Development Stage Company)
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
       For the Period from Inception (April 10, 2000) to December 31, 2006



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

                                                                                   Deficit
                                                                                  Accumulated
                                                      Additional     During the  Stockholders'
                                     Common Stock       Paid-in      Development    Equity
                                  Shares      Amount    Capital        Stage       (Deficit)
----------------------------------------------------------------------------------------------

Issuance of common stock
for cash at $0.05 per share    1,260,000   $   63,000   $       -     $      -     $  63,000

Issuance of common stock
no consideration received    100,000,000            -           -            -             -

Net loss for the period
from inception (April 10,
2000) to December 31, 2000             -            -           -      (56,711)      (56,711)
                             ------------  ----------- ----------- ------------  ------------

Balance, December 31, 2000   101,260,000       63,000           -      (56,711)        6,289

Cancellation of stock for
consideration not received  (100,000,000)           -           -            -             -

Net loss for the year
ended December 31, 2001                -            -           -       (5,825)       (5,825)
                             ------------  ----------- ----------- ------------  ------------

Balance, December 31, 2001     1,260,000       63,000           -      (62,536)          464

Net loss for the year ended
December 31, 2002                      -            -           -         (464)         (464)
                             ------------  ----------- ----------- ------------  ------------

Balance, December 31, 2002     1,260,000       63,000           -      (63,000)            -

Net loss for the year ended
December 31, 2002                      -            -           -            -             -
                             ------------  ----------- ----------- ------------  ------------

Balance, December 31, 2003     1,260,000       63,000           -      (63,000)            -

</TABLE>



   The accompanying notes are an integral part of the financial statements.

                                       5


<PAGE>

                           EPIC ENERGY RESOURCES INC.
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                                    CONTINUED
       For the Period From Inception (April 10, 2000) to December 31, 2006


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

                                                                                   Deficit
                                                                                  Accumulated
                                                      Additional     During the  Stockholders'
                                     Common Stock       Paid-in      Development    Equity
                                  Shares      Amount    Capital        Stage       (Deficit)
----------------------------------------------------------------------------------------------

Shares issued for
compensation                   4,000,000        5,000           -            -         5,000

Expenses paid by shareholders          -            -       9,305            -         9,305

Net loss for the year ended
December 31, 2003                      -            -           -      (15,312)      (20,000)
                             ------------  ----------- ----------- ------------  ------------
Balance, December 31, 2004     5,260,000       68,000       9,305      (78,312)       (1,007)

Expenses paid by shareholders          -            -      17,386            -        17,386

Net loss for the year ended
December 31, 2005                      -            -           -      (20,000)      (20,000)
                             ------------  ----------- ----------- ------------  ------------

Balance, December 31, 2005     5,260,000   $   68,000  $   26,691  $   (98,312)  $    (3,621)

Shares issued for cash        44,902,755      903,195           -            -       903,195

Shares issued for services        75,000       57,094           -            -        57,094

Shares issued for Oil and Gas
property (Kansas field)        3,200,000    8,480,000           -            -     8,490,000

Shares issued for un-proved
properties (Oklahoma)              3,846       10,000           -            -        10,000

Expenses paid by shareholders          -            -     304,221            -       304,221

SFAS 123R stock option 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
                             ============  =========== =========== ============  ============

</TABLE>



         See accompanying notes to consolidated financial statements.


                                       6

<PAGE>


                            EPIC ENERGY RESOURCES INC
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         Years ended December 31, 2006 and 2005 and For the period from
               April 10, 2000(inception) through December 31, 2006

                                                                 For the period
                                   For the year   For the year   from inception
                                       ended         ended      (April 10, 2000)
                                   December 31,   December 31,   to December 31,
                                      2006           2005              2006
                                   ------------   ------------  ----------------
CASH FLOWS FROM OPERATING
   ACTIVITIES
   Net                  loss       $(3,970,214)   $   (20,000)  $  (4,068,526)
    Adjustments to reconcile net
    loss to net cash flows from
    operating activities:
      Depletion                         30,814              -          30,814
      Impairment of oil and gas
       Properties                    3,062,265              -       3,062,265
      Accretion of ARO                     725              -             725
      Shares issued for compensation   361,410              -         366,410
   Changes in operating assets
    and liabilities:
        Accounts payable                44,012          2,614          47,633
        Accounts receivable             (4,600)             -          (4,600)
        Prepaid expenses              (120,219)             -        (120,219)
                                   ------------   ------------   ---------------
   Net cash flows from operating
     activities                       (595,807)       (17,386)       (685,498)

CASH FLOWS FROM INVESTING
 ACTIVITIES
     Acquisition of properties        (102,100)             -        (102,100)
                                   ------------   ------------  ----------------
CASH FLOWS FROM FINANCING
 ACTIVITIES
    Debt service                       (24,089)             -         (24,089)
    Proceeds from debt                 104,752              -         104,752
    Proceeds from the issuance
     of common stock                   903,195              -         966,195
    Capital donated by shareholders    304,221         17,386         330,912
                                   ------------   ------------  ----------------

  Net cash flows from financing
    activities                       1,288,079         17,386       1,377,770

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                  590,172              -         590,172
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                         -              -               -
                                   ------------   ------------  ----------------
CASH AND CASH EQUIVALENTS,
 END OF PERIOD                     $   590,172    $         -   $     590,172
                                   ============   ============  ================

Additional cash flow disclosures:
  Non-cash investing and financing
  activities:
   Oil and gas properties acquired
    with stock                      $8,480,000              -
   Note payable for Oil and
    Gas properties                  $1,707,673              -

See accompanying notes to consolidated financial statements.

                                       7

<PAGE>


                            EPIC ENERGY RESOURCES INC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Organization and Operations

Background

      San Juan Financial, Inc. was incorporated under the laws of Colorado on
June 6, 1989. Following incorporation, San Juan remained an inactive shell
company. Effective April 10, 2000, San Juan entered the development stage in
accordance with SFAS No. 7. San Juan's principal activities since April 10, 2000
have consisted of organizational matters and the sale of its no par value common
stock. This changed in April 2006 when the name changed to Epic Capital Group
Inc. During this time, Epic refocused its business plan to oil and gas
activities. 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. Mark W. Moniak, Epic's President and only director, appointed Rex Doyle,
John Ippolito and David Reynolds as directors of Epic. Following these
appointments Mr. Moniak, resigned as an officer and director of Epic. Epic's new
directors then appointed the following persons to be officers of Epic:

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

            Rex Doyle          Chief Executive and Principal Financial Officer
            John Ippolito      President
            David Reynolds     Executive Vice President and Secretary

Amendment to Articles

      On April 10, 2000, San Juan filed amended articles of incorporation with
the State of Colorado, at which time San Juan revised Article XI, Board of
Directors. The Board consists of one director who is also the President of San
Juan. On September 15, 2004, Troy Fullmer, Epic's only officer and director,
appointed Mark W. Moniak as a director of Epic and as Epic's President and Chief
Executive Officer. Following the appointment of Mr. Moniak, Mr. Fullmer resigned
as an officer and director Epic. Mr. Moniak resigned as an officer and director
of Epic on April 4, 2006.

Operations

      Epic is engaged primarily in the acquisition, exploration, development,
production, and sales of, oil, gas and natural gas liquids.

      The  shareholders  of Epic  approved an amendment to Epic's  Articles of
Incorporation  in May 2006 which changed the name of the corporation  from San
Juan  Financial  Inc.  to  Epic  Capital  Group  Inc.  In  December  2006  the
shareholders  approved an amendment to change the name of the corporation from
Epic Capital Group Inc. to Epic Energy Resources Inc. (Epic)


<PAGE>

2. Summary of Significant Accounting Policies

Development Stage Activities

      Epic Energy Resources Inc. entered the development stage in accordance
with Financial Accounting Standards Board Statements of Financial Accounting
Standards (SFAS) No. 7, "Accounting and Reporting by Development Stage
Enterprises" in 2000, upon commencement of activities. Epic's original business
plan was to operate as a mortgage banking and brokerage company over the
Internet. In 2006, Epic changed its focus to that of an oil and gas company.

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.

Fair Value of Financial Instruments

      Financial instruments, including cash, receivables, accounts payable, and
notes payable are carried at amounts which reasonably approximate their fair
value due to the short-term nature of these amounts.

Credit Risk and Concentrations

        Epic does not require collateral from its customers with respect to
accounts receivable but performs periodic credit evaluations of such customer's
financial conditions. Epic determines any required allowance by considering a
number of factors including lengths of time accounts receivable are past due and
Epic's previous loss history. Epic provides an allowance to reserve for accounts
receivable when they become uncollectible. As of December 31, 2006 and 2005,
Epic has determined that no allowance for doubtful accounts is required.

Cash Equivalents

      Epic considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.

Revenue recognition

      Epic records oil and gas revenues following the entitlement method of
accounting for production, in which any excess amount received above Epic's
share is treated as a liability. If less than Epic's share is received, the
underproduction is treated as an asset. Epic did not have an imbalance position
in terms of volumes or values at December 31, 2006.

<PAGE>

Oil and gas properties

      Epic follows the full cost accounting method to account for the costs
incurred in the acquisition, exploration, development and production of oil and
gas reserves. Under this method, all costs, including internal costs directly
related to acquisition, exploration and development activities are capitalizable
as oil and gas property costs. Properties not subject to amortization consist of
exploration and development costs which are evaluated on a property-by-property
basis. Amortization of these unproved property costs begins when the properties
become proved or their values become impaired. Epic assesses the realizability
of unproved properties on at least an annual basis or when there has been an
indication that an impairment in value may have occurred. Impairment of unproved
properties is assessed based on management's intention with regard to future
exploration and development of individually significant properties and the
ability of Epic to obtain funds to finance such exploration and development. If
the results of an assessment indicate that the properties are impaired, the
amount of the impairment is added to the capitalized costs to be amortized.
There was no impairment of unproved properties during the years ended December
31, 2006 and 2005.

      On the sale or retirement of a complete unit of proved property, the cost
and related accumulated depreciation, depletion, and amortization are eliminated
from the property accounts, and the resultant gain or loss is recognized. On the
retirement or sale of a partial unit of proved property, the cost is charged to
accumulated depreciation, depletion, and amortization with a resulting gain or
loss recognized in income.

      On the sale of an entire interest in an unproved property for cash or cash
equivalent, gain or loss on the sale is recognized, taking into consideration
the amount of any recorded impairment if the property had been assessed
individually. If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.

      The fair value of an asset retirement obligation is recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The present value of the estimated asset retirement costs is capitalized
as part of the carrying amount of the long-lived asset. For Epic, asset
retirement obligations relate to the abandonment of oil and gas producing
facilities. The amounts recognized are based upon numerous estimates and
assumptions, including future retirement costs, future recoverable quantities of
oil and gas, future inflation rates and the credit-adjusted risk-free interest
rate.

      Costs of oil and gas properties are amortized using the units of
production method. Depletion expense per equivalent physical unit of production
amounted to $30,814 and $ 0, for the years ended December 31, 2006 and 2005,
respectively.

      Under full cost accounting rules for each cost center, capitalized costs
of proved properties, less accumulated amortization and related deferred income
taxes, shall not exceed an amount (the "cost ceiling") equal to the sum of (a)
the present value of future net cash flows from estimated production of proved
oil and gas reserves, based on current economic and operating condition,
discounted at 10 percent, plus (b) the cost of properties not being amortized,
plus (c) the lower of cost or estimated fair value of any unproved properties

<PAGE>

included in the costs being amortized, less (d) any income tax effects related
to differences between the book and tax basis of the properties involved. If
capitalized costs exceed this limit, the excess is charged as an impairment
expense. During the year ended December 31, 2006, the Company incurred a proved
property impairment expense of $3,062,265 which is reflected in the accompanying
Consolidated Statement of Operations.

Other mineral reserves

      Helium is a gas produced as part of the production stream from our oil and
gas properties in Kansas. Helium is a byproduct of the production process. We
have estimated that the net recoverable amount of helium is approximately
$783,474.

Long-lived assets

      Long-lived assets to be held and used or disposed of other than by sale
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. When required, impairment
losses on assets to be held and used or disposed of other than by sale are
recognized based on the fair value of the asset. Long-lived assets to be
disposed of by sale are reported at the lower of the asset's carrying amount or
fair value less cost to sell.

Income Taxes

      Epic uses the liability method in accounting for income taxes. Deferred
tax assets and liabilities are recognized for temporary differences between
financial statement carrying amounts and the tax bases of assets and
liabilities, and are measured using the tax rates expected to be in effect when
the differences reverse. Deferred tax assets are also recognized for operating
loss and tax credit carry forwards. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the results of operations
in the period that includes the enactment date. A valuation allowance is used to
reduce deferred tax assets when uncertainty exists regarding their realization.

Loss per Common Share

      Basic and diluted net loss per share calculations are calculated on the
basis of the weighted average number of common shares outstanding during the
year. The per share amounts include the dilutive effect of common stock
equivalents in years with net income. Basic and diluted loss per share is the
same due to the absence of common stock equivalents as all potential common
stock equivalents are anti-dilutive.

Stock-based compensation

      In 2006, Epic began issuing options to purchase common stock to employees
as compensation. Epic records as compensation expense the fair value of such
shares as calculated pursuant to Statement of Financial Accounting Standard No.
123R, Accounting for Stock-Based Compensation ("SFAS No. 123R"), recognized over
the related requisite service period. Epic accounts for stock-based compensation
<PAGE>

issued to non-employees in accordance with the provisions of SFAS No. 123R and
EITF No. 96-18, "Accounting for Equity Instruments That Are Issued to
Non-Employees for Acquiring, or in Conjunction with Selling Goods or Services".
For accounting purposes, the value of common stock issued to non-employees and
consultants is determined based on the fair value of the services received or
the fair value of the equity instruments issued, whichever value it more
reliably measurable. Epic utilizes a standard option pricing model, the
Black-Scholes model, to measure the fair value of stock options granted.

3. Going Concern

      As shown in the accompanying financial statements, Epic incurred recurring
net losses chargeable to common shareholders of $3,970,214 and $20,000 in fiscal
2006 and 2005, respectively, and has an accumulated deficit of $ 4,068,526 as of
December 31, 2006. These conditions create an uncertainty as to Epic's ability
to continue as a going concern. Management is trying to raise additional capital
through various funding arrangements. The financial statements did not include
any adjustment that might be necessary if Epic is unable to continue as a going
concern.

4.    Prepaid Expenses and Other Current Assets

      Prepaid expenses and other current assets consisted of the following at
December 31, 2006.

      Workers' Compensation & Liability Insurance $86,886
      Directors' and Officers' Insurance           33,333
                                                 --------
            Total                                $120,219
                                                 ========

5.   Acquisition of 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.

     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.  Epic  estimated
that it will cost approximately  $7,000 (with Epic being responsible for its 50%
share) to rework each shut-in well and place the wells back on production.  Epic
plans to begin  reworking the six shut-in wells in the next few months.  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 Rush County, Kansas contain a Helium
reserve estimated between 1% and 2% of our proved gas reserves of the property.
Our engineers engaged to perform an analysis of our Oil and Gas reserves
estimate that our average proved Helium reserve gross of extraction costs is
approximately $1,566,947. We are currently in negotiations with a third party

<PAGE>

that would extract our Helium reserves for a cost of approximately half of our
estimated a reserve. As a result we have stated our net other mineral reserves
at an estimated net value of $783,474 at December 31, 2006.

7.    Asset Retirement Obligations

      Epic records depreciation of the capitalized asset retirement cost and
accretion of the asset retirement obligation over time. The depreciation will
generally be determined on a straight line basis, while the accretion to be
recognized will escalate over the life of the producing assets, typically as
production declines. The following table indicates the changes to Epic's ARO
account:

     Balance at December 31, 2005                   $0
     Liabilities Incurred                     $148,964
     Accretion Expense                             725
                                          ------------
           Balance at December 31, 2006       $149,689
                                              ========

     Current asset retirement obligation    $    7,346
     Long-term asset retirement obligation    $142,343
                                              --------
                                              $149,689

8.   Long-Term 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
$71,000.

      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.

      Long-term debt at December 31, 2006 consists of the following:

      Note payable secured by property acquired             $2,486,386
      Note payable General Liability Insurance                  65,480
      Note payable Director & Officers Insurance                28,800
      Less current maturities                                 (872,990)
                                                            -----------
                                                            $1,707,676
                                                            ===========
<PAGE>

      The long-term debt is scheduled to mature as follows, subject to
production payments:

               Year ending
              December 31st,                              Amount

                  2007                                   $872,990
                  2008                                    849,504
                  2009                                    849,504
                  2010                                      8,668
                  2011                                          -
                  Thereafter                                    -
                                                       -----------
                                                        2,580,666
         Less: current portion of long-term debt         (872,990)
                                                       -----------
         Total long-term debt, net of current
          maturities                                   $1,707,676
                                                       ===========

9.  Stockholders' Equity

      Following its original incorporation in June 1989, Epic had issued
100,000,000 shares of its no par value common stock to an officer as payment for
services related to the organization and start-up of the Company. The value of
the transaction could not be objectively measured as a related party rendered
the services. The transaction has been recorded at no value since the Board of
Directors determined that the rendered services for which these shares had been
issued were incomplete. On November 2, 2001, the Board of Directors authorized
the cancellation of the original 100,000,000 shares of common stock, as a result
of the incomplete performance.

      On April 7, 2000, the Board of Directors authorized a 1-to-8 reverse split
of Epic's no par value common stock, effective on that date. All share and per
share amounts reflect this reverse split.

      In May 2000, Epic conducted a private placement offering whereby it sold
1,260,000 shares of its no par value common stock for $0.05 per share pursuant
to an exemption from registration claimed under Sections 4(2) and 4(6) of the
Securities Act of 1933, as amended, and Regulation D promulgated hereunder. Epic
received net proceeds of $63,000.

      On September 15, 2004, Mark W. Moniak was appointed as Director,
President, and Chief Executive Officer of Epic. Epic does not have an employment
agreement with Mr. Moniak. Epic issued 4,000,000 shares of its common stock,
valued at $5,000, to Mr. Moniak in return for Mr. Moniak serving as Epic's
President until September 15, 2005.

      During the year ended December 31, 2004, Epic incurred $9,305 of expenses
which were paid by stockholders and recorded as additional paid-in capital.

      On March 11, 2005, Epic held a special meeting of its shareholders. At
this meeting, the shareholders of Epic held a 20-for-1 forward stock split of
Epic's common stock. All share and per share data has been retroactively
restated to reflect this forward stock split.

<PAGE>

      During the year ended December 31, 2005, Epic incurred $17,386 of expenses
which were paid by stockholders and recorded as additional paid-in capital.

      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. Mark
W. Moniak, Epic's President and only director, appointed Rex Doyle, John
Ippolito and David Reynolds as directors of Epic. Following these appointments
Mr. Moniak, resigned as an officer and director of Epic. Epic's new directors
then appointed the following persons to be officers of Epic:

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

            Rex Doyle         Chief Executive and Principal Financial Officer
            John Ippolito     President
            David Reynolds    Executive Vice President and Secretary

      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. There were no registration rights penalties associated
with this issuance. The shares issued were restricted shares in accordance with
SEC section 144.

      In December 2006, 45,000 shares of common stock were issued to directors
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 $65,254 of which $13,594 has been recorded as compensation
expense. 30,000 shares of common stock were issued to key employees for services
previously rendered. The fair market value of the services rendered for the
common stock was approximately $43,500 using the closing price of Epic's stock
on the measurement date and is included as component of compensation expense.

      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
un-proved 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.

      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.

10. Income Taxes

     During 2006 and 2005, EPIC incurred net losses and,  therefore,  had no tax
liability.  The net deferred tax asset generated by the loss  carry-forward  has
been  fully  reserved.  The  cumulative  net  operating  loss  carry-forward  is
approximately  $645,000 at December 31, 2006,  and will expire in the years 2019
through 2026.

<PAGE>

   At December 31, 2006, deferred tax assets consisted of the following:

                       Deferred tax assets
                         Net operating losses             $225,700
                         Less:  valuation allowance       (225,700)
                                                         ----------
                       Net deferred tax asset                   $0
                                                         ----------

11.   Commitments and Contingencies

   Epic is not currently involved in any pending legal proceedings. In the
future, Epic may become involved in various legal proceedings from time to time,
either as a plaintiff or as a defendant. and either in or outside the normal
course of business. Epic is not now in the position to determine when, if ever,
such legal proceedings may arise. If Epic becomes involved in legal proceedings,
Epic's financial condition, operations, or cash flows could be materially
adversely affected, depending on the facts and circumstances related to such
proceedings.

12.   Lease Agreement

      Our executive offices are located in The Woodlands, Texas, in a leased
facility consisting of approximately 1,500 square feet requiring lease payments
of $2,400 per month. The lease for our offices expires on December 31, 2006,
however we can extend the lease for a subsequent period of 12 months at that
time. All of our facilities are in good repair.

13.   Stock Options and Warrants

      There were no stock options issued or outstanding prior to 2006. A summary
of changes in outstanding options is as follows:

                                          Weighted         Weighted
                                          Average           Average
                                          Options         Share Price
                                          --------        -----------
Outstanding at December 31, 2005                --                --

Changes during the year:
      Granted                              600,000             $1.75
      Exercised                                 --                --
      Forfeited                                 --                --
                                      ------------        ----------

Outstanding at December 31, 2006           600,000             $1.75

<PAGE>

Options outstanding and exercisable as of December 31, 2006:

                                                  Exercisable
                                                   Remaining
                                     Outstanding    Number
                     Exercise Price     Life      of Shares
                     -----------     -----------  -----------
                        $.50           2 years      300,000
                       $3.00           2 years      300,000

Epic has determined, based upon the Black-Scholes model, that the fair value of
the warrants on the date of grant was approximately $335,619, using an expected
life of two years, volatility of 47% and a risk-free interest rate of 4.9%.

14.   Subsequent Events

      On March 12, 2007 Rex Doyle (Chief Executive Officer) and John Ippolito
(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.

   In January 2007 the Rush County gas wells were shut in due to the closure of
the plant which was purchasing the gas produced from Epic's wells. Epic does not
know if the plant will reopen and is currently looking for an alternate buyer
for the gas. The acreage and wells were acquired for $100,000 in cash, a
$2,500,000 loan from the sellers of the prospect and 3,100,000 shares of Epic's
common stock. The $2,500,000 loan bears interest at 10% per year and is payable
in 42 equal monthly installments of $72,000.


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

         December 31,                                2006
                                                 -----------
         Proved oil and gas properties           $ 10,447,59
         Unproved oil and gas properties              60,000
                                                 -----------
         Total capitalized costs                  10,507,590
         Less impairment allowance                (3,062,265)
         Less accumulated depreciation
         and amortization                            (30,814)
                                                 -----------
         Net Capitalized Costs                   $ 7,414,511
                                                 ===========

<PAGE>

         Costs Incurred in Oil and Gas Producing Activities

         For the Fiscal Years Ended December 31,                2006
                                                             ----------
         Acquisition of proved properties                   $10,296,526
         Acquisition of unproved properties                      60,000
         Development costs                                        2,100
         Exploration costs                                            -
         Asset retirement costs recognized according
          to SFAS No. 143                                       148,964
                                                             ----------
         Total Costs Incurred                               $10,507,590
                                                             ==========

      Results of Operations from Oil and Gas Producing Activities

         For the Fiscal Years Ended December 31,                2006
                                                             ----------
         Oil and gas revenues                                $   73,073
         Production costs and taxes                             (59,460)
         Depreciation and amortization and ARO accretion        (31,539)
                                                             ----------
         Results of operations before income taxes              (17,926)
         Provision for income taxes                                  --
                                                             ----------
         Results of Oil and Gas Producing Operations        $  (17,926)
                                                             ==========

      The Company has presented the reserve estimates utilizing 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.

   The Company's reserve information was prepared by independent petroleum
engineering consultants as of December 31, 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
                                       ------------           ----------------
                                     BBL          MCF          BBL         MCF
                                     ---          ---          ---         ---
Reserves as of January 1, 2006         -            -            -           -
Purchase 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 as of December 31, 2006   3,717    4,970,318        3,717   2,778,131
                                  =======  ===========      =======  ==========

<PAGE>

      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
Statement of Financial Accounting Standards No. 69, Disclosures about Oil and
Gas Producing Activities (SFAS No. 69). 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
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


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

        Future cash inflows                                    $  25,156,646

        Future costs:
          Production and development costs                       (9,993,835)
          Future income taxes                                    (1,807,558)
                                                                 -----------
          Future net cash flows                                  13,355,253
          10% annual discount for estimated timing of
           cash flows                                            (6,000,742)
                                                                 -----------
          Standardized measure of discounted future net
           cash flows                                          $  7,354,511
                                                               =============

ITEM 8.  CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

      None.

ITEM 8A. CONTROLS AND PROCEDURES

      The Company's chief executive officer has evaluated the Company's
disclosure controls and procedures as of December 31, 2006, the end of the
period covered by this report. Based upon that evaluation, the Company's chief

<PAGE>

executive officer concluded that the Company's disclosure controls and
procedures were not effective to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms. This conclusion is based upon the number and magnitude of the year end
adjusting entries and additional financial reporting disclosures identified by
our independent accountants.

      As a development stage company, the company has used outsourced
bookkeeping and part time accounting resources to help prepare the financial
statements. The company plans to hire a full time Chief Financial Officer as
soon as the necessary funding is secured. In the interim, the company will
continue to strive to improve the controls over the financial reporting
processes.

      There has been no change in our internal controls over financial reporting
that have occurred during the quarter ended December 31, 2006 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 8B.  OTHER INFORMATION

   None.



<PAGE>


                                    PART III

ITEM 9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND CONTROL  PERSONS:
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

      The directors and executive officers of the Company, their respective
positions and ages, and the year in which each director was first elected, are
set forth in the following table. Each director has been elected to hold office
until the next annual meeting of stockholders and thereafter until his successor
is elected and has qualified. Additional information concerning each of these
individuals follows the table.



                                                                  Director
Name                    Age    Position with the Company           Since
----                    ---    -------------------------          --------
Rex Doyle               48     Chief Executive Officer and
                                Chairman of the Board               2006
John Ippolito           47     President                            2006
Dave Reynolds           55     Executive Vice President             2006
John R. Sherwood        65     Director                             2006
Rob Eissler             54     Director                             2006
Dr. Robert Ferguson     63     Director                             2006

Rex P. Doyle, Chairman and CEO

      Mr. Doyle has over 25 years of diversified experience in oil and gas,
industrial distribution and energy services. For the last 5 years he has held
senior positions with Baker Energy, a major publicly traded oilfield services
company, and served as Senior Vice President-Global Operations responsible for a
workforce of over 2,300 professionals and technicians working in 12 countries
around the globe. Mr. Doyle began his career with Texaco USA, holding various
production engineering positions optimizing mature fields in the Gulf Coast
area. Mr. Doyle has also had a number of leadership positions outside the oil
and gas industry which include managing a division of a large diversified
manufacturing and distribution company. 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. He graduated with an MBA,
with Distinction, from the University of Michigan, and also graduated from the
Harvard IPAA Program for Owners and Executives.

John S. Ippolito, President

      Mr. Ippolito has over 25 years of experience in the oil and gas industry
including leadership positions with a number of large energy service companies
and participating in the successful start-up of 2 other companies. For the last
3 years he has held the position of Senior Executive Business Developer
responsible for the development, execution and management of "new market"
strategies producing over $55MM per year in new business and execution of over
$60MM per year in capital development. Mr. Ippolito began his career with
International Consulting Services, a start-up company, where he co-founded and
successfully managed its growth establishing regional service offices in
Louisiana, Texas and Oklahoma. Mr. Ippolito was a primary principle and founder
of another start-up company, American Downhole, Inc., successfully managing the
company for five years establishing offices in Houston, TX, and Lafayette, LA.

<PAGE>

Mr. Ippolito has also held senior management positions, with domestic and
international responsibilities, with notable companies such as Hunting
International, Operational Services Inc., Schlumberger Ltd., and Baker Energy.
Mr. Ippolito attended the University of Southeastern Louisiana specializing in
Marketing and Business Management.

David R. Reynolds, Executive Vice President

      Mr. Reynolds has over 30 years of experience in the oil and gas industry
with a focus on acquisitions and raising venture capital. After 10 years with
Amoco, Anadarko and The Superior Oil Company, he joined Union Texas Petroleum in
their Special Projects and Planning Group. While at Union Texas Mr. Reynolds
assisted in the management buyout facilitated by the investment group KKR. Mr.
Reynolds joined Norcen Explorer in 1991 to start up and manage an A&D Group
focusing on the Gulf of Mexico. Within four years, Norcen became a major
producer in the Gulf. In 1997 Mr. Reynolds formed Genesis Resources. Through
strategic acquisitions, within three years, Genesis had a substantial size
reserve base and in 2000 sold its oil and gas production to ERT, a subsidiary of
Cal Dive. Most recently Mr. Reynolds and two partners formed Orion Oil & Gas
focusing on acquiring oil and gas producing reserves in strategic geographically
areas. Within twelve months Orion had built a substantial proven reserve base
and in December 2005, Mr. Reynolds and Orion sold its producing reserve base to
a third party E&P company. Mr. Reynolds graduated with a BA degree from the
University of Oklahoma and has a MBA from Central State University.

      John R. Sherwood, Chief Executive Officer, Anglo-Suisse Offshore Partners
LLC Mr. Sherwood's management experience includes industry leaders such as Baker
Hughes E&P, Western Atlas E&P, Gulf Oil, Conoco and BP. During his 30+ years
exploring for and discovering oil and gas around the world, John has
successfully structured many domestic and international projects, including
important discoveries in the Gulf of Mexico.

     Rob Eissler, President, Eissler and Associates, Texas State Representative,
80th  Legislature  2007-2008  Mr.  Eissler is  currently  President of Eissler &
Associates,  an executive  recruiting  firm based in The Woodlands,  Texas.  Rob
received a B.A. in Architecture from Princeton  University,  and then served his
country as a carrier-based attack pilot on the USS John F. Kennedy in the United
States Navy.

     Dr. Robert Ferguson, President and Founder, Leadership Institute for Vision
& Ethics (LIVE) Dr. Ferguson has spent over twenty years equipping men and women
to be successful leaders in various businesses,  professions,  schools, churches
and other non-profit  organizations.  Dr. Ferguson's academic education includes
training in electrical engineering, classics, law, philosophy and theology, with
degrees from various universities and seminaries in both Australia and America.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange  Act"),  requires  the  Company's  directors,  executive  officers and
holders  of more  than  10% of the  Company's  common  stock  to file  with  the
Securities and Exchange  Commission  initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
Except as set forth  below,  the  Company  believes  that  during the year ended
December 31, 2006,  its officers,  directors and holders of more than 10% of the

<PAGE>

Company's common stock complied with all Section 16(a) filing  requirements.  In
making these statements, the Company has relied solely upon its review of copies
of the Section 16(a)  reports filed for the fiscal year ended  December 31, 2006
on behalf of the Company's  directors,  officers and holders of more than 10% of
the Company's common stock.

Employee  Code of  Conduct  and Code of Ethics  and  Reporting  of  Accounting
Concerns

      The Company has adopted an Employee Code of Conduct (the "Code of
Conduct"). We require all employees to adhere to the Code of Conduct in
addressing legal and ethical issues encountered in conducting their work. The
Code of Conduct requires that our employees avoid conflicts of interest, comply
with all laws and other legal requirements, conduct business in an honest and
ethical manner and otherwise act with integrity and in the Company's best
interest.

      The Company also has adopted a Code of Ethics for our Chief Executive
Officer, our Chief Financial Officer, and all other financial officers and
executives. This Code of Ethics supplements our Code of Conduct and is intended
to promote honest and ethical conduct, full and accurate reporting, and
compliance with laws as well as other matters. The Code of Conduct and Code of
Ethics are filed with the SEC.

Audit Committee Financial Expert

      The Company's Board of Directors has not elected an audit committee
financial expert as of December 31, 2006.

Identification of Audit Committee

      The Board of Directors currently does not have an Audit Committee.

      When an audit committee is established, the Audit Committee will be
responsible for the selection and retention of our independent auditors,
reviewing the scope of the audit functions of the independent auditor, and
reviewing audit reports rendered by our independent auditors. The Audit
Committee will oversee the Company's financial reporting process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements, accounting policies and procedures, and the reporting
process, including the systems of internal controls. In fulfilling its oversight
responsibilities, the Committee will review and discuss with management the
audited financial statements in the Annual Reports on Form 10-KSB and the
unaudited financial statements included in the Quarterly Reports on Form 10-QSB.


<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The table below summarizes all compensation awarded to, earned by, or paid to
our current executive officers for each of the last two completed fiscal years,
since inception.

Summary Compensation Table
<TABLE>

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

                      Annual Compensation                                     Long Term Compensation
------------------------------------------------------------- ---------------------------------------------------
                                                              Restricted
                                              Other Annual      Stock        Options/    LTIP         All Other
Name     Title    Year  Salary ($) Bonus ($) Compensation ($)  Awarded ($)  SARs (#)  Payouts($)  Compensation($)
----     -----    ----  ---------- --------  ---------------- ------------  --------  ----------  ---------------

Rex     CEO        2006  $118,750       0          0              0         200,000         0             0
Doyle   &          2005         0       0          0              0               0         0             0
        CFO

John    President 2006   $105,625       0          0              0         200,000         0             0
Ippolito          2005          0       0          0              0               0         0             0

Dave              2006    $75,000       0          0              0         200,000         0             0
Reynolds Executive2005    $75,000       0          0              0               0         0             0
         Vice
         President

</TABLE>

2006 Stock Incentive Plan

      In October 2006, the Company's 2006 Stock Incentive Plan (the "2006 Plan")
was adopted by the Board of Directors. The following lists, as of December 31,
2006, defines the options granted pursuant to the Plan. Each option represents
the right to purchase one share of the Company's common stock.

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

                                 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 Plans    2,000,000              --           N/A     2,000,000
Non-Qualified Stock Option
 Plans                          3,000,000         600,000           N/A     2,400,000
Stock Bonus Plans               1,000,000             N/A     1,000,000


</TABLE>

<PAGE>


ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table provides the names and addresses of each person known
to us to own more than 5% of our outstanding common stock as of December 31,
2006, and by the officers and directors, individually and as a group. All shares
are owned directly.


Title  of           Name  and  address           Amount  of         Percent
  class             of beneficial owner     beneficial ownership    of class
---------           -------------------     --------------------    --------

Common Stock       Rex Doyle - Officer          20,000,000           37.3%
                   30 Fernglen
                   The Woodlands, TX  77380

Common Stock       John Ippolito - Officer      20,000,000           37.3%
                   9007 Deerwick Ct.
                   Tomball, TX  77375

Common Stock       Dave Reynolds - Officer       2,000,000            3.7%
                   4311 Candlewood Park
                   Katy, TX 77494

Common Stock       Mark W. Moniak,               4,000,000            7.4%
                   Non-employee Shareholder
                   1240 India St #1907
                   San Diego, CA 92101

Common Stock       All Officers and Directors
                   as a group                   42,045,000           78.3%


ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      We have not been a party to any transaction, proposed transaction, or
series of transactions in which, to our knowledge, any of our directors,
officers, five percent beneficial security holder, or any member of the
immediate family of the foregoing persons has had or will have a direct or
indirect material interest.

ITEM 13 EXHIBITS

Exhibits required by Item 601 of Regulation S-B

Exhibit
Number  Description
------  -----------


(31)(32)Certification

  31.   Certification of Chief Executive Officer pursuant to Securities Exchange
        Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002

  32.   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
        2002
<PAGE>

ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

      Comiskey & Company PC, and Malone & Bailey PC, provided audit services to
the Company in connection with its quarterly and annual reports for the fiscal
years ended December 31, 2006 and 2005. The aggregate fees billed by Comiskey &
Company PC for the audits of the Company's annual financial statements and a
review of the Company's quarterly financial statements was $ 12,096. Epic
estimates the fees to complete the financial audit by Malone & Bailey PC will be
approximately $17,000.

Audit Related Fees
------------------
      None.

Tax Fees
--------

      None.

All Other Fees
--------------

      None

Audit Committee Pre-Approval
----------------------------

      The Company does not have a standing audit committee. Therefore, all
services provided to the Company by Comiskey & Company PC and Malone & Bailey,
PC as detailed above, were pre-approved by the Company's board of directors.



<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 17th day of April 2007.


                                    EPIC ENERGY RESOURCES, INC.



                                  By  /s/ Rex Doyle
                                     -----------------------------------------
                                      Rex  Doyle,  Chief  Executive  Officer
                                      and 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 Doyle__________           Director                April 17, 2007
Rex Doyle


_/s/ Robert Eissler_____           Director                April 17, 2007
Robert Eissler


_/s/ Robert Ferguson____           Director                April 17, 2007
Robert Ferguson








<PAGE>















                           EPIC ENERGY RESOURCES, INC.

                                   FORM 10-KSB

                                    EXHIBITS


<PAGE>