UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM 10-Q



|S QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|-----------------------------------------------------------------------------------



For the quarterly
period ended June 30, 2012



|£ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|-----------------------------------------------------------------



For the transition
period from ____________ to____________



Commission
File No. 000-32507



EGPI FIRECREEK,
INC.

(Exact name of
Registrant as specified in its charter)



|Nevada                                                                                 | 88-0345961                              
|-------------------------------------------------------------------------------------- | ----------------------------------------
|(State
        or Other Jurisdiction of
        Incorporation
        or organization) | (I.R.S. Employer Identification
    No.)



6564
Smoke Tree Lane

Scottsdale,
Arizona 85253

(Address
of Principal Executive Offices)



(480)
948-6581

(Registrant’s
Telephone Number)



N/A

(Former
name, former address and former fiscal year,

if
changed since last report)



Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes S   No
£



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes
£   No £



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.:



|Large
    Accelerated Filer£ |  | Accelerated Filer  £        
|---------------------------- |  | ----------------------------
|                             |  |                             
|Non-Accelerated
    Filer£   |  | Smaller Reporting Company  T

(Do
not check if a smaller reporting company)



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



State
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



As
of August 19, 2012, the registrant had 3,633,761,705 shares of its $0.001 par value common stock issued and outstanding. There
are no shares of Series A and B preferred stock, and 87,412 shares of Series C, and 2,484 share of its Series D preferred
stock issued and outstanding, at $0.001 par value for each of the Series of Preferred, and no shares of non-voting common
stock issued and outstanding.





(1)


Table of Contents








EGPI FIRECREEK, INC

f/k/a
Energy Producers, Inc.

10-Q

June
30, 2012



TABLE
OF CONTENTS





|          |                                                                                        | PAGE #
|--------- | -------------------------------------------------------------------------------------- | ------
|PART I    | FINANCIAL INFORMATION                                                                  |       
|          |                                                                                        |       
|ITEM 1    | FINANCIAL STATEMENTS                                                                   |       
|          | CONSOLIDATED
BALANCE SHEETS                                                            | 3     
|          |                                                                                        |       
|          | UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS                                        | 4     
|          |                                                                                        |       
|          | UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS                                        | 5     
|          |                                                                                        |       
|          | UNAUDITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT                   | 6     
|          |                                                                                        |       
|          | NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS                               | 7-17  
|          |                                                                                        |       
|ITEM 2    | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  | 18    
|          |                                                                                        |       
|ITEM 3    | QUANTITATIVE AND QUALITATIVE ANALYSIS OF MARKET RISKS                                  | 22    
|          |                                                                                        |       
|ITEM 4(T) | CONTROLS
                                                               AND PROCEDURES | 22    
|          |                                                                                        |       
|PART II   | OTHER INFORMATION                                                                      |       
|          |                                                                                        |       
|ITEM 1    | LEGAL
PROCEEDINGS                                                                      | 23    
|          |                                                                                        |       
|ITEM 1A   | RISK FACTORS                                                                           | 23    
|          |                                                                                        |       
|ITEM 2    | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                            | 24    
|          |                                                                                        |       
|ITEM 3    | DEFAULTS
UPON SENIOR SECURITIES                                                        | 24    
|          |                                                                                        |       
|ITEM 4    | (REMOVED AND RESERVED)                                                                 | 24    
|          |                                                                                        |       
|ITEM 5    | OTHER INFORMATION                                                                      | 24    
|          |                                                                                        |       
|ITEM 6    | EXHIBITS                                                                               | 24    
|          |                                                                                        |       







(2)


Table of Contents






PART
I FINANCIAL INFORMATION

ITEM 1 – FINANCIAL
STATEMENTS

EGPI FIRECREEK,
INC.

CONSOLIDATED
BALANCE SHEETS

AS OF JUNE
30, 2012 AND DECEMBER 31, 2011



|                                                                                                                                                                                                                                                         |  | Unaudited |              | Audited   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------------ | ----------
|                                                                                                                                                                                                                                                         |  | 6/30/2012 |              | 12/31/2011
|ASSETS                                                                                                                                                                                                                                                   |  |           |              |           
|Current assets:                                                                                                                                                                                                                                          |  |           |              |           
|Cash                                                                                                                                                                                                                                                     |  | $         | 296          |           
|Current assets related
    to discontinued operations                                                                                                                                                                                                    |  |           |              |           
|Cash                                                                                                                                                                                                                                                     |  |           | 43           |           
|Total
    current assets related to discontinued operations                                                                                                                                                                                              |  |           | 43           |           
|Total current assets                                                                                                                                                                                                                                     |  |           | 339          |           
|                                                                                                                                                                                                                                                         |  |           |              |           
|Other assets:                                                                                                                                                                                                                                            |  |           |              |           
|Fixed assets – net                                                                                                                                                                                                                                       |  |           | 515,675      |           
|Oil and natural gas properties
    – proved reserves - net                                                                                                                                                                                               |  |           | 1,780,936    |           
|Other assets related to
    discontinued operations                                                                                                                                                                                                      |  |           |              |           
|Fixed assets – net                                                                                                                                                                                                                                       |  |           | 10,976       |           
|Oil
    and natural gas properties – proved reserves - net                                                                                                                                                                                               |  |           | 266,117      |           
|Total
    other assets related to discontinued operations                                                                                                                                                                                                |  |           | 277,093      |           
|Total other assets                                                                                                                                                                                                                                       |  |           | 2,573,704    |           
|                                                                                                                                                                                                                                                         |  |           |              |           
|Total assets                                                                                                                                                                                                                                             |  | $         | 2,574,043    |           
|                                                                                                                                                                                                                                                         |  |           |              |           
|LIABILITIES AND SHAREHOLDERS' DEFICIT                                                                                                                                                                                                                    |  |           |              |           
|                                                                                                                                                                                                                                                         |  |           |              |           
|Current liabilities:                                                                                                                                                                                                                                     |  |           |              |           
|Accounts payable &
    accrued expenses                                                                                                                                                                                                                  |  | $         | 1,674,085    |           
|Notes payable                                                                                                                                                                                                                                            |  |           | 2,400,242    |           
|Convertible notes, net
    of discount                                                                                                                                                                                                                   |  |           | 797,869      |           
|Capital lease obligation                                                                                                                                                                                                                                 |  |           | 56,872       |           
|Advances & notes payable
    - related parties                                                                                                                                                                                                           |  |           | 815,816      |           
|Derivative liabilities                                                                                                                                                                                                                                   |  |           | 445,645      |           
|Asset retirement obligation                                                                                                                                                                                                                              |  |           | 11,537       |           
|Current liabilities related
    to discontinued operations                                                                                                                                                                                               |  |           |              |           
|Accounts payable &
    accrued expenses                                                                                                                                                                                                                  |  |           | 114,945      |           
|Notes payable                                                                                                                                                                                                                                            |  |           | 96,390       |           
|Asset
    retirement obligation                                                                                                                                                                                                                          |  |           | 11,537       |           
|Total
    current liabilities related to discontinued operations                                                                                                                                                                                         |  |           | 222,872      |           
|Total current liabilities                                                                                                                                                                                                                                |  |           | 6,424,938    |           
|                                                                                                                                                                                                                                                         |  |           |              |           
|Commitments and contingencies:                                                                                                                                                                                                                           |  |           |              |           
|Series D preferred stock, 2.5 million authorized,
    par value $0.001, convertible into common shares, 2,484 and 2,490 shares issued at June 30, 2012 and December 31, 2011, respectively                                                               |  |           | 1,867,913    |           
|                                                                                                                                                                                                                                                         |  |           |              |           
|Shareholders' deficit:                                                                                                                                                                                                                                   |  |           |              |           
|Series A preferred stock, 20 million authorized,
    par value $0.001,one share convertible to one common share, no stated dividend, none outstanding                                                                                                    |  |           |              |           
|Series B preferred stock, 20 million authorized,
    par value $0.001,one share convertible to one common share, no stated dividend, none outstanding                                                                                                    |  |           |              |           
|Series C preferred stock, 20 million authorized,
    par value $.001, each share has 21,200 votes per share, are not convertible, have no stated dividend; 87,142 and 87,142 shares
    outstanding at June 30, 2012 and December 31, 2011, respectively |  |           | 87           |           
|Common stock- $0.001 par value, authorized
    5,000,000,000 shares, issued and outstanding, 2,635,786,879  at June 30, 2012 and 99,648,493 at December 31, 2011, respectively                                                                           |  |           | 2,635,787    |           
|Additional paid in capital                                                                                                                                                                                                                               |  |           | 28,229,903   |           
|Other comprehensive income                                                                                                                                                                                                                               |  |           | 232,896      |           
|Common stock subscribed                                                                                                                                                                                                                                  |  |           | 1,470,866    |           
|Contingent holdback                                                                                                                                                                                                                                      |  |           | 2,000        |           
|Accumulated
    deficit                                                                                                                                                                                                                                  |  |           | (38,290,347) |           
|Total shareholders' deficit                                                                                                                                                                                                                              |  |           | (5,718,808)  |           
|Total liabilities &
    shareholders' deficit                                                                                                                                                                                                            |  | $         | 2,574,043    |           



See the notes
to the unaudited consolidated financial statements.



(3)


Table of Contents






EGPI FIRECREEK,
INC.

UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE
AND SIX MONTHS ENDED JUNE 30, 2012 AND JUNE 30, 2011

(Unaudited)









| |  |  | For the six  |           | For the three
| |  |  | ------------ | --------- | -------------
| |  |  | months ended |           | months ended 
| |  |  |              |           |              
| |  |  | 6/30/2012    | 6/30/2011 |              





|Revenues                                                                 |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|------------------------------------------------------------------------ |  | - | ----------- | - |  | - | ----------- |  |  | - | ------------- |  | - | --------- | 
|Gross
    revenue from sales                                             |  | $ | —           |   |  | $ | 12,320      |  |  | $ | —             |  | $ | —         | 
|Gross
    revenues from oil and gas sales                                |  |   | 31,604      |   |  |   | 53,825      |  |  |   | 12,734        |  |   | 36,267    | 
|Total
    revenue                                                        |  |   | 31,604      |   |  |   | 66,145      |  |  |   | 12,734        |  |   | 36,267    | 
|Cost of sales                                                            |  |   |             |   |  |   | (40,011)    |  |  |   |               |  |   | (20,949)  | 
|Well
    operation costs                                                 |  |   | (216,179)   |   |  |   | (46,391)    |  |  |   | (181,511)     |  |   | (24,837)  | 
|Gross
    margin                                                         |  |   | (184,575)   |   |  |   | (20,257)    |  |  |   | (168,777)     |  |   | (9,519)   | 
|                                                                         |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|General and administrative
    expenses:                                 |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|General administration                                                   |  |   | (708,868)   |   |  |   | (588,334)   |  |  |   | (477,922)     |  |   | (330,602) | 
|Total
    general & administrative expenses                              |  |   | (708,868)   |   |  |   | (588,334)   |  |  |   | (477,922)     |  |   | (330,602) | 
|Net loss from operations                                                 |  |   | (893,443    | ) |  |   | (608,591)   |  |  |   | (646,699)     |  |   | (340,121) | 
|Other revenues and expenses:                                             |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|Interest
    expense                                                     |  |   | (844,990)   |   |  |   | (295,030)   |  |  |   | (489,402)     |  |   | (177,689) | 
|Gain (loss)
    on settlement of debt                                    |  |   | (334,162    | ) |  |   | (1,011,209) |  |  |   | (193,840)     |  |   | (344,572) | 
|Other
    income                                                         |  |   | 35,653      |   |  |   | —           |  |  |   | 980           |  |   | —         | 
|Gain (loss)
    on asset disposal                                        |  |   | —           |   |  |   | 31,970      |  |  |   | —             |  |   | —         | 
|Gain
    (loss) on derivatives                                           |  |   | 148,214     |   |  |   | 321,659     |  |  |   | 237,172       |  |   | 533,331   | 
|Net loss before provision
    for income taxes                           |  |   | (1,888,728) |   |  |   | (1,561,201) |  |  |   | (1,091,789)   |  |   | (329,051) | 
|Provision
    for income taxes                                           |  |   | —           |   |  |   | —           |  |  |   | —             |  |   | —         | 
|Loss from continuing operations                                          |  |   | (1,888,728) |   |  |   | (1,561,201) |  |  |   | (1,091,789)   |  |   | (329,051) | 
|Loss from discontinued operations
    net of tax                         |  |   | (271,536)   |   |  |   | (792,415)   |  |  |   | (227,854)     |  |   | (134,169) | 
|                                                                         |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|Net
    loss                                                             |  | $ | (2,160,264) |   |  | $ | (2,353,616) |  |  | $ | (1,319,643)   |  | $ | (463,220) | 
|                                                                         |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|Foreign currency translation                                             |  |   | (18,397)    |   |  |   | 117,609     |  |  |   | 6,474         |  |   | 194,468   | 
|Net comprehensive loss                                                   |  |   | (2,141,867) |   |  |   | (2,471,225) |  |  |   | 1,313,169     |  |   | (657,688) | 
|Basic and diluted net loss
    per common share:                         |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|Basic and diluted loss per
    common share from continuing operations   |  | $ | (0.00)      |   |  | $ | (0.99)      |  |  | $ | (0.00)        |  | $ | (0.12)    | 
|Basic and diluted loss per
    common share from discontinued operations |  | $ | (0.00)      |   |  | $ | (0.50)      |  |  | $ | (0.00)        |  | $ | (0.05)    | 
|Basic and diluted net loss
    per common share                          |  | $ | (0.00)      |   |  | $ | (1.49)      |  |  | $ | (0.00)        |  | $ | (0.17)    | 
|Weighted average of common shares outstanding:                           |  |   |             |   |  |   |             |  |  |   |               |  |   |           | 
|Basic and fully diluted                                                  |  |   | 841,934,723 |   |  |   | 1,581,675   |  |  |   | 1,471,725,622 |  |   | 2,803,839 | 



See the notes
to the unaudited consolidated financial statements.





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Table of Contents






EGPI FIRECREEK,
INC.

UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX
MONTHS ENDED JUNE 30, 2012 AND JUNE 30, 2011









| |  | For six months ended
| |  | --------------------
| |  | 6/30/2012           



|Operating Activities:                                                    |  |   |             |  |   |             |  
|------------------------------------------------------------------------ |  | - | ----------- |  | - | ----------- | -
|Net income (loss)                                                        |  | $ | (2,160,264) |  | $ | (2,353,616) |  
|Adjustments to reconcile net loss items not requiring the use of cash:   |  |   |             |  |   |             |  
|Accretion of asset retirement obligation                                 |  |   | 1,213       |  |   | 979         |  
|Preferred shares issued for services                                     |  |   | —           |  |   | 75,000      |  
|Common shares issued for services                                        |  |   | —           |  |   | 20,148      |  
|Promissory notes issued for services                                     |  |   | 120,000     |  |   | 150,000     |  
|Imputed interest                                                         |  |   | 35,688      |  |   | —           |  
|Loss on disposition of SATCO                                             |  |   | —           |  |   | 586,924     |  
|Gain on issuance of common shares to shareholders of Terra Telecom, Inc. |  |   | —           |  |   | (31,970)    |  
|Bad debt expense                                                         |  |   | —           |  |   | 100,000     |  
|Loss (Gain) on change in derivative                                      |  |   | (148,214)   |  |   | (321,659)   |  
|Loss on settlement or conversion of debt                                 |  |   | 334,162     |  |   | 1,011,211   |  
|Depletion                                                                |  |   | 76,720      |  |   | 73,268      |  
|Depreciation                                                             |  |   | 51,308      |  |   | 43,157      |  
|Amortization of intangibles                                              |  |   | —           |  |   | 48,878      |  
|Amortization of debt discount                                            |  |   | 512,264     |  |   | 406,882     |  
|Changes in other operating assets and liabilities:                       |  |   |             |  |   |             |  
|Accounts receivable                                                      |  |   | —           |  |   | 93,723      |  
|Inventory                                                                |  |   | —           |  |   | 11,493      |  
|Accounts payable and accrued expenses                                    |  |   | 743,579     |  |   | (98,276     | )
|Accounts payable and accrued expenses - related party                    |  |   | 15,250      |  |   | 42,670      |  
|Prepaid expenses                                                         |  |   | —           |  |   | 336         |  
|Net cash provided by (used by) operations                                |  |   | (418,294)   |  |   | (140,853)   |  
|Investing Activities:                                                    |  |   |             |  |   |             |  
|Cash paid for development costs of oil and gas properties                |  |   | —           |  |   | (165,162)   |  
|Cash acquired in acquisition of Arctic Solar Engineering                 |  |   | —           |  |   | 538         |  
|Net cash used by investing activities                                    |  |   | —           |  |   | (165,700)   |  
|Financing Activities:                                                    |  |   |             |  |   |             |  
|Principal payments on debt-related parties                               |  |   | —           |  |   | (5,823)     |  
|Principal payments on debt                                               |  |   | (50,000)    |  |   | —           |  
|Borrowings on debt – related parties                                     |  |   | 322,690     |  |   | 210,000     |  
|Borrowings on debt                                                       |  |   | 124,850     |  |   | 251,292     |  
|Net cash provided by financing activities                                |  |   | 397,540     |  |   | 455,469     |  
|                                                                         |  |   |             |  |   |             |  
|Foreign currency translation                                             |  |   | 18,397      |  |   | (101,600)   |  
|Net increase (decrease) in cash during the period                        |  |   | (2,357)     |  |   | 48,393      |  
|Cash balance at January 1st                                              |  |   | 2,696       |  |   | 9,930       |  
|Cash balance at June 30th                                                |  | $ | 339         |  | $ | 58,323      |  
|                                                                         |  |   |             |  |   |             |  
|Supplemental disclosures of cash flow information:                       |  |   |             |  |   |             |  
|Interest paid during the year                                            |  | $ | 13,354      |  | $ | 12,450      |  
|Income taxes paid during the year                                        |  |   |             |  |   |             |  
|Non-cash activities:                                                     |  |   |             |  |   |             |  
|Common stock issued for:                                                 |  |   |             |  |   |             |  
|Debt conversion and settlement                                           |  |   | 373,944     |  |   | 2,251,244   |  
|Services expensed in the prior period (common stock subscribed)          |  |   | 25,000      |  |   | —           |  
|Redquartz  acquisition                                                   |  |   | —           |  |   | 30,876      |  
|Preferred stock conversion                                               |  |   | 4,642       |  |   | —           |  
|Preferred shares subscribed to acquire oil and gas lease                 |  |   | —           |  |   | 3,736,387   |  
|Adjustment to derivative liability due to debt conversion                |  |   | 328,998     |  |   | —           |  
|Accounts payable converted to promissory notes                           |  |   | —           |  |   | 385,581     |  
|Adjustment to asset retirement obligation                                |  |   | —           |  |   | 8,051       |  
|Debt discount                                                            |  |   | 282,998     |  |   | 350,864     |  
|                                                                         |  |   |             |  |   |             |  





See the
notes to the unaudited consolidated financial statements.



(5)


Table of Contents








EGPI FIRECREEK,
INC.

UNAUDITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE SIX
MONTHS ENDED JUNE 30, 2012





|                                                           |  |  | Preferred   Shares |  | Preferred   Value |  |  | Common     Shares |  |  | Common  Value |  |  | Paid In  Capital |  |  | Accumulated Deficit |  |  | Other Conprehensive Loss |  |  | Common Stock Subscribed |  |  |  |   |  | Other |  |   |  |  | Total      | 
|---------------------------------------------------------- |  |  | ------------------ |  | ----------------- |  |  | ----------------- |  |  | ------------- |  |  | ---------------- |  |  | ------------------- |  |  | ------------------------ |  |  | ----------------------- |  |  |  | - |  | ----- |  | - |  |  | ---------- | 
|Balance at December 31, 2011                               |  |  | 87,142             |  | 87                |  |  | 99,648,493        |  |  | 99,648        |  |  | 29,668,977       |  |  | -36,130,083         |  |  | 214,499                  |  |  | 1,466,364               |  |  |  |   |  | 2,000 |  |   |  |  | -4,678,508 | 
|                                                           |  |  |                    |  |                   |  |  |                   |  |  |               |  |  |                  |  |  |                     |  |  |                          |  |  |                         |  |  |  |   |  |       |  |   |  |  |            | 
|Issued common shares for services                          |  |  |                    |  |                   |  |  | 224,735,714       |  |  | 224,736       |  |  | -161,724         |  |  |                     |  |  |                          |  |  |                         |  |  |  |   |  |       |  |   |  |  | 63,012     | 
|Issued common shares for  conversion or settlement of debt |  |  |                    |  |                   |  |  | 2,295,152,672     |  |  | 2,295,153     |  |  | -1,631,559       |  |  |                     |  |  |                          |  |  | 4.502                   |  |  |  |   |  |       |  |   |  |  | 668,096    | 
|Issued common shares for conversion of preferred stock     |  |  |                    |  |                   |  |  | 16,250,000        |  |  | 16,250        |  |  | -10,477          |  |  |                     |  |  |                          |  |  |                         |  |  |  |   |  |       |  |   |  |  | 5,773      | 
|Imputed interest                                           |  |  |                    |  |                   |  |  |                   |  |  |               |  |  | 35,688           |  |  |                     |  |  |                          |  |  |                         |  |  |  |   |  |       |  |   |  |  | 35,688     | 
|Adjustment to derivative liability due to debt conversion  |  |  |                    |  |                   |  |  |                   |  |  |               |  |  | 328,998          |  |  |                     |  |  |                          |  |  |                         |  |  |  |   |  |       |  |   |  |  | 328,998    | 
|Other comprehensive loss                                   |  |  |                    |  |                   |  |  |                   |  |  |               |  |  |                  |  |  |                     |  |  | 18,397                   |  |  |                         |  |  |  |   |  |       |  |   |  |  | 18,397     | 
|Net loss for the six months ended                          |  |  |                    |  |                   |  |  |                   |  |  |               |  |  |                  |  |  | -2,160,264          |  |  |                          |  |  |                         |  |  |  |   |  |       |  |   |  |  | -2,160,264 | 
|Balance at June 30, 2012                                   |  |  | 87,142             |  | 87                |  |  | 2,635,786,879     |  |  | 2,635,787     |  |  | 28,229,903       |  |  | -38,290,347         |  |  | 232,896                  |  |  | 1,470,866               |  |  |  | $ |  | 2,000 |  | $ |  |  | -5,718,808 | 







See the notes to the unaudited
consolidated financial statements.





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EGPI FIRECREEK,
INC.

NOTES TO
THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTERS
ENDED JUNE 30, 2012 AND JUNE 30, 2011





| | 1. | Organization of the Company
                                                                  and Significant Accounting Principles
| | -- | -----------------------------------------------------------------------------------------------------------------------------------



The Company was
incorporated in the State of Nevada October 1995. Effective October 13, 2004 the Company, previously known as Energy Producers
Inc., changed its name to EGPI Firecreek, Inc.



Prior to December
2008, the Company held interests in various gas & oil wells located in the Wyoming and Texas area. In December 2008, the Company’s
major creditor, Dutchess Private Equities Ltd. (Dutchess), foreclosed on the assets of the Company.  As a result, all
of the Company’s oil and gas properties were transferred to Dutchess in satisfaction of debt owed.



In October 2008,
the Company effected a 1 share for 200 shares reverse split of its common stock and all amounts have been retroactively adjusted.



In May 2009 the
Company acquired M3 Lighting, Inc. (“M3”) as a wholly owned subsidiary via reverse triangular merger. The Company
was determined to be the acquirer in the transaction for accounting purposes. M3 is a distributor of commercial and decorative
lighting to the trade and direct to retailers.  As part of the Merger the Company effected a name change for its wholly owned
subsidiary Malibu Holding, Inc. to Energy Producers, Inc. (“EPI”) as a conduit for its oil and gas activities.



In November 2009
the Company acquired all of the issued and outstanding capital stock of South Atlantic Traffic Corporation, a Florida corporation
(“SATCO”). SATCO has been in business since 2001 and has several offices throughout the Southeast United States.
SATCO carries a variety of products and inventory geared primarily towards the transportation industry.  SATCO offers
transportation products ranging from loop sealant, traffic signal equipment, traffic and light poles, data/video systems and Intelligent
Traffic Systems (ITS) surveillance systems. SATCO works closely with Department of Transportation (DOT) agencies, local traffic
engineers, contractors, and consultants to customize high quality traffic control systems.



In December 2009,
the Company’s wholly owned subsidiary Energy Producers, Inc. acquired 50% working interests and corresponding 32% net revenue
interests in oil and gas leases, reserves, and equipment located in West Central Texas. The Company entered into a turnkey
work program included for three wells located on the leases.



On March 3, 2010,
the Company executed a Stock Purchase Agreement with the stockholders of Redquartz LTD (“Sellers” or “RQTZ”),
a company formed and existing under the laws of the country of Ireland, whereas the Company agreed to issue 100,000 shares of
its restricted common stock valued at USD $2,500 in exchange for 100% of the issued and outstanding shares of common stock, par
value $0.01 per share, of RQTZ. All assets and liabilities, other than the Shareholder Notes Payable, of the RQTZ were transferred
to the prior owners of Redquartz. The Notes Payable represent a debt burden to RQTZ of USD $4,464,262. This obligation is based
in Euros and converted to our functional currency the dollar. Redquartz LTD was inactive in the first and second quarter of 2010
and had no income and expense that would affect the financial statements of the Company and therefore no pro-forma is necessary.



On June 11, 2010,
the Company acquired all of the issued and outstanding stock of Chanwest Resources, Inc., (“Chanwest or CWR”) a Texas
corporation. In the course of this acquisition, Chanwest stockholders exchanged all outstanding common shares for the Company’s
common shares and other provisions. Chanwest Resources, Inc. was formed in 2009 and has been engaged in ramping up operations
including acquiring assets related to the servicing and construction, and activities related to the acquisition, production and
development for oil and gas. Chanwest has formed strategic alliances and brought key management with over 40 years experience
in all facets of the oil and gas industry, to be implemented on day one of our acquisition thereof. Chanwests’ first phase
of operations include Construction and Trucking, services for drill site preparation to clear and lay pipeline (gathering systems)
for operators. Chanwest operations can provide for services to maintain lease roads, set power poles and clean up oilfield spills.
Chanwest works with operators or lease owners by purchase order or contract with major oil fields.



On October 1,
2010 EGPI Firecreek, Inc. the Company entered into a Definitive Securities Purchase/Exchange Agreement with Terra Telecom, LLC.
(“Terra"). Terra is considered recognized as a leading provider of state-of-the-art communication technologies and
a premier Alcatel-Lucent partner. They currently serve various sized companies and organizations that use and deploy communications
systems, sales, service, and training while consolidating and optimizing the end user experience. Its goal is to provide customers
value and integrity in each of these opportunities. Since 1980, Terra has focused on delivering enterprise solutions while leading
with voice services and offering full turn-key solutions that consist of voice, data, video and associated applications.  As
of December 31, 2010, the Company has not assumed control of this acquisition.  As a result, this company is not consolidated
in the financial statements as of December 31, 2010.  On March 14, 2011, the Company sold its interest in Terra to Distressed
Asset Acquisitions, Inc.



On October 18,
2010, the Company filed a Certificate of Amendment to its Articles of Incorporation, increasing its authorized common stock, par
value $0.001 per share, to 3,000,000,000 from 1,300,000,000 and is authorized to issue 60,000,000 shares of preferred stock that
has a par value of $0.001 per share.



On November 9,
2010, the Company affected a 1 share for 50 shares reverse split of its common stock and all amounts have been retroactively adjusted
for all periods presented.



On February 4,
2011, the Company entered into an Agreement to acquire all 100% of Arctic Solar Engineering LLC, a Missouri limited liability
company located at PO Box 4391, Chesterfield, MO 63006 and the owners of Membership Interests of the Arctic Solar Engineering
LLC; The FATM Partnership, a Missouri Partnership, The Frederic Sussman Living Trust. Arctic Solar Engineering, LLC, is an integrator
of Solar Thermal Energy technology. For further information please see our Current Report on Form 8-K filed on February 10, 2011,
and in the section on “The Business”, and “Overview” to the Management Discussion and Analysis sections,
and elsewhere listed in this document.



On March 2, 2011
the Company obtained a consent from the majority shareholders of the Company to amend the Articles of Incorporation to i) authorize
the issuance of 2,500 shares of a new D Series Preferred Stock, and ii) for the Board of Directors to be able to authorize any
and all capitalization of the Company going forward without the need for shareholder approval, and further authorized for the
Board of Directors to set all rights, preferences, and designations, for and in behalf of any class of the Company’s common
of preferred stock, and as may be required or as necessary in the best interest of the Company.



On March 14,
2011, the Company entered into and completed the closing of a Stock Purchase Agreement involving the sale of South Atlantic Traffic
Corporation to Distressed Asset Acquisitions, Inc. For further information please see our Current Report on Form 8-K filed on
March 18, 2011 and in the section on The Business”, and Overview” to the Management Discussion and Analysis sections,
and elsewhere listed in this document.



On March 14,
2011, the Company entered into and completed the closing of a Stock Purchase Agreement involving the sale of Oklahoma Telecom
Holdings, Inc. an Oklahoma corporation, formerly known as Terra Telecom, LLC., an Oklahoma limited liability company and Terra
Telecom, Inc. (TTI”), to Distressed Asset Acquisitions, Inc. For further information please see our Current Report on Form
8-K filed on March 18, 2011 and in the section on The Business”, and Overview” to the Management Discussion and Analysis
sections, and elsewhere listed in this document.



On July 7, 2011,
the Company filed a Certificate of Amendment to its Articles of Incorporation, increasing its authorized common stock, par value
$0.001 per share, to 5,000,000,000 from 3,000,000,000 and is authorized to issue 60,000,000 shares of preferred stock that has
a par value of $0.001 per share.



On July 7, 2011,
the Company affected a 1 share for 500 shares reverse split of its common stock and all amounts have been retroactively adjusted
for all periods presented.



Consolidation - the accompanying
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.  All significant
inter-company balances have been eliminated.



The financial
information included in this quarterly report should be read in conjunction with the consolidated financial statements and related
notes thereto in our Form 10-K for the year ended December 31, 2011.



Use of Estimates- The preparation
of the financial statements in conformity with generally accepted accounting principles requires management to make reasonable
estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and
liabilities and the reported amounts of revenues and expenses at the date of the consolidated financial statements and for the
period they include.  Actual results may differ from these estimates.





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Revenue and Cost Recognition-



| | - | Oil and gas:  Revenue is recognized from oil and gas sales
    in the period of delivery.  Settlement on sales occurs anywhere from two weeks to two months after the delivery
    date.  The Company recognizes revenue when an arrangement exists, the product has been delivered, the sales price
    is fixed or determinable, and collectability is reasonably assured.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Oilfield services:  Revenue from services is recognized when
    an arrangement exists, the services are rendered, the sales price is fixed or determinable, and collectability is reasonably
    assured.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | Product sales/installation:  Revenue from product sales or
    installation pertaining to solar panels and equipment are recognized when an arrangement exists, the product is delivered
    or installed, the sales price is fixed or determinable, and collectability is reasonably assured.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





Cash Equivalents -The Company
considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. There were
no cash equivalents as of June 30, 2012 or December 31, 2011.



Accounts Receivable -The
Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers,
maintaining allowances for potential credit losses which, when realized, have been within management's expectations. The allowance
method is used to account for uncollectible amounts. The evaluation is inherently subjective, as it requires estimates that are
susceptible to significant revision as more information becomes available.Allowance for doubtful accounts was $118,473
at June 30, 2012 and $118,473 at December 31, 2011.



Inventory - Inventories consist
of merchandise purchased for resale and are stated at the lower of cost or market using the first-in, first-out (FIFO) method.



Prepaid Expenses - Prepaid
expenses are recorded at cost for payments for goods and services purchased during an accounting period but not used or consumed
during that accounting period. The costs are amortized over time as the benefit is received onto the income statement.



Oil and Gas Activities - The
Company uses the successful efforts method of accounting for oil and gas producing activities. Under this method, acquisition
costs for proved and unproved properties are capitalized when incurred. Exploration costs, including geological and geophysical
costs, the costs of carrying and retaining unproved properties and exploratory dry hole drilling costs, are expensed. Development
costs, including the costs to drill and equip development wells, and successful exploratory drilling costs to locate proved reserves
are capitalized.



Exploratory drilling
costs are capitalized when incurred pending the determination of whether a well has found proved reserves. A determination of
whether a well has found proved reserves is made shortly after drilling is completed. The determination is based on a process
which relies on interpretations of available geologic, geophysic, and engineering data. If a well is determined to be successful,
the capitalized drilling costs will be reclassified as part of the cost of the well. If a well is determined to be unsuccessful,
the capitalized drilling costs will be charged to expense in the period the determination is made. If an exploratory well requires
a major capital expenditure before production can begin, the cost of drilling the exploratory well will continue to be carried
as an asset pending determination of whether proved reserves have been found only as long as: i) the well has found a sufficient
quantity of reserves to justify its completion as a producing well if the required capital expenditure is made and ii) drilling
of the additional exploratory wells is under way or firmly planned for the near future. If drilling in the area is not under way
or firmly planned, or if the well has not found a commercially producible quantity of reserves, the exploratory well is assumed
to be impaired, and its costs are charged to expense.



In the absence
of a determination as to whether the reserves that have been found can be classified as proved, the costs of drilling such an
exploratory well is not carried as an asset for more than one year following completion of drilling. If, after that year has passed,
a determination that proved reserves exist cannot be made, the well is assumed to be impaired, and its costs are charged to expense.
Its costs can, however, continue to be capitalized if a sufficient quantity of reserves is discovered in the well to justify its
completion as a producing well and sufficient progress is made in assessing the reserves and the well’s economic and operating
feasibility.



The impairment
of unamortized capital costs is measured at a lease level and is reduced to fair value if it is determined that the sum of expected
future net cash flows is less than the net book value. The Company determines if impairment has occurred through either adverse
changes or as a result of the annual review of all fields. During 2011 after conducting an impairment analysis, the Company did
not record impairment as the fair value of our reserves exceeded our net book value.



Asset Retirement Obligations (“ARO”).  The
estimated costs of restoration and removal of facilities are accrued. The fair value of a liability for an asset's retirement
obligation is recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying
amount of the related long-lived asset. The liability is accreted to its then present value each period, and the capitalized cost
is depreciated with the related long-lived asset. If the liability is settled for an amount other than the recorded amount, a
gain or loss is recognized. For all periods presented, estimated future costs of abandonment and dismantlement are included in
the full cost amortization base and are amortized as a component of depletion expense. At June 30, 2012 and December 31, 2011,
the ARO of $23,074 and $21,861 is included in liabilities and fixed assets.



Development costs
of proved oil and gas properties, including estimated dismantlement, restoration and abandonment costs and acquisition costs,
are depreciated and depleted on a field basis by the units-of-production method using proved developed and proved reserves, respectively.
The costs of unproved oil and gas properties are generally combined and impaired over a period that is based on the average holding
period for such properties and the Company's experience of successful drilling.



Costs of retired,
sold or abandoned properties that make up a part of an amortization base (partial field) are charged to accumulated depreciation,
depletion and amortization if the units-of-production rate is not significantly affected. Accordingly, a gain or loss, if any,
is recognized only when a group of proved properties (entire field) that make up the amortization base has been retired, abandoned
or sold.



Stock-Based Compensation -The
Company estimates the fair value of share-based payment awards made to employees and directors, including stock options, restricted
stock and employee stock purchases related to employee stock purchase plans, on the date of grant using an option-pricing model.  The
value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service
periods.  We estimate the fair value of each share-based award using the Black-Scholes option pricing model. The Black-Scholes
model is highly complex and dependent on key estimates by management. The estimates with the greatest degree of subjective judgment
are the estimated lives of the stock-based awards and the estimated volatility of our stock price. The Black-Scholes model is
also used for our valuation of warrants.



Earnings Per Common Share -
Basic earnings per common share is calculated based upon the weighted average number of common shares outstanding for the period.
Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and dilutive
common share equivalents (convertible notes and interest on the notes, stock awards and stock options) outstanding during the
period. Dilutive earnings per common share reflects the potential dilution that could occur if options to purchase common stock
were exercised for shares of common stock.  Basic and diluted EPS are the same as the effect of our potential common stock
equivalents would be anti-dilutive.







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Fair Value Measurements -On January 1, 2008, the Company adopted guidance which defines fair value, establishes a framework for using fair
value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements.
Beginning on January 1, 2009, the Company also applied the guidance to non-financial assets and liabilities measured at fair value
on a non-recurring basis, which includes goodwill and intangible assets. The guidance establishes a hierarchy for inputs used
in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring
that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing
the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are
inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed
based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability
of the inputs as follows:



Level 1 -
Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in active markets that the Company
has the ability to access.



Level 2
- Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar
assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.



Level 3
- Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect the Company's own
assumptions about the inputs that market participants would use.



The
following table presents assets and liabilities that are measured and recognized at fair value as of June 30, 2012 on a recurring
and non-recurring basis:



|                            |  |         |   |  |         |   |   |         |  |   | Gains    | 
|--------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | -------- | 
|Description                 |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | (Losses) | 
|Intangibles (non-recurring) |  | $       | - |  |         | $ | - |         |  | $ | -        | 
|Goodwill (non-recurring)    |  | $       | - |  |         | $ | - |         |  | $ | -        | 
|Derivatives (recurring)     |  | $       | - |  |         | $ | - |         |  | $ | 445,645  | 



The
Company has goodwill and intangible assets as a result of the 2011 business combinations discussed throughout this form 10-Q.
These assets were valued with the assistance of a valuation consultant and consisted of level 3 valuation techniques.



The following
table presents assets and liabilities that are measured and recognized at fair value as of December 31, 2011 on a recurring and
non-recurring basis:



|                            |  |         |   |  |         |   |   |         |  |   | Gains    | 
|--------------------------- |  | ------- | - |  | ------- | - | - | ------- |  | - | -------- | 
|Description                 |  | Level 1 |   |  | Level 2 |   |   | Level 3 |  |   | (Losses) | 
|Intangibles (non-recurring) |  | $       | - |  |         | $ | - |         |  | $ | -        | 
|Goodwill (non-recurring)    |  | $       | - |  |         | $ | - |         |  | $ | -        | 
|Derivatives (recurring)     |  | $       | - |  |         | $ | - |         |  | $ | 639,859  | 



The Company has
derivative liabilities as a result of 2010 convertible promissory notes that include embedded derivatives.  These liabilities
were valued with the assistance of a valuation consultant and consisted of level 3 valuation techniques.



The Company’s
financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and
long-term debt. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their
carrying amounts due to the short-term nature of these instruments. The carrying value of long-term debt also approximates
fair value since their terms are similar to those in the lending market for comparable loans with comparable risks. None of these
instruments are held for trading purposes.



Fixed Assets- Fixed
assets are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful life of the
asset. The following is a summary of the estimated useful lives used in computing depreciation expense:



|Office equipment             |  | 3 years
|---------------------------- |  | -------
|Computer hardware & software |  | 3 years
|Improvements & furniture     |  | 5 years
|Well equipment               |  | 7 years



Expenditures
for major repairs and renewals that extend the useful life of the asset are capitalized.  Minor repair expenditures are charged
to expense as incurred.



Impairment of Long-Lived Assets
- The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment ("ASC 360-10").
ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company
evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to
recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability
to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets
based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets
will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset.
ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs
to sell.



Goodwill and Other Intangible
Assets- The Company periodically reviews the carrying value of intangible assets not subject to amortization, including
goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain
triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change
in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant
portion of the business, or other factors.  Specifically, goodwill impairment is determined using a two-step process.
The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting
unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate
the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including
assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates
are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk
inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the
reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of
a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of
impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s
goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the
implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value
of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair
value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible
assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the
purchase price paid to acquire the reporting unit.





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As of June 30,
2012 there were no intangible assets and in 2011, amortizable intangible assets consisted of trade names and customer contracts.  These
intangibles are being amortized on a straight-line basis over their estimated useful lives of 12 and 10 years, respectively. For
the three and six months ending June 30, 2012 the Company recorded no amortization, and amortization of $29,249 and $48,878 for
the three and six months ending June 30, 2011.  The useful lives pertaining to the intangible assets amortized are as
follows:



Intangibles acquired in
Arctic Solar Engineering, Inc.

|              |  | Useful
    life | 
|------------- |  | --------------- | 
|Patents       |  | 5               | 
|Customer Base |  | 5               | 
|Trademarks    |  | 5               | 
|Non-Compete   |  | 3               | 



Foreign Currency Translation and
Transaction- The financial position at present for the Company’s foreign subsidiary Redquartz, LLC, established under
the laws of the Country of Ireland are determined using (U.S. dollars) reporting currency as the functional currency. All exchange
gains and losses from remeasurement of monetary assets and liabilities that are not denominated in U.S. dollars are recognized
currently in other comprehensive income. All transactional gains and losses are part of income or loss from operations (if and
when incurred) will be pursuant to current accounting literature. The Company’s functional currency is the U.S dollar. We
have an obligation related to our acquisition of Redquartz as discussed in Note 7 which is denominated in Euro’s. The change
in currency valuation from our reporting this obligation in U.S dollars is reported as a component of other comprehensive income
consistent with the relevant accounting literature.



Income taxes - The Company
accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities
for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities
at enacted tax rates expected to be in effect when such amounts are realized or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  A valuation
allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred
tax liabilities, tax planning strategies, and projected future taxable income.



The Company uses
a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. The guidance requires the Company to recognize tax benefits only for tax positions that
are more likely than not to be sustained upon examination by tax authorities.  The amount recognized is measured as
the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.  A liability for
“unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition
and measurement standards.



Derivative Financial Instruments
-The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Derivative
financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for
as liabilities, the derivative instrument is initially recorded at its fair value and is then re−valued at each reporting
date, with changes in the fair value reported as charges or credits to income. For option−based derivative financial instruments,
the Company uses the Black−Scholes model to value the derivative instruments. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting
period. Derivative instrument liabilities are classified in the balance sheet as current or non−current based on whether
or not net−cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.



Recently Adopted and Recently
Enacted Accounting Pronouncements



In January 2010,
the FASB issued FASB ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements,” which is now codified
under FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” This ASU will require additional disclosures
regarding transfers in and out of Levels 1 and 2 of the fair value hierarchy, as well as a reconciliation of activity in Level
3 on a gross basis (rather than as one net number). The ASU also provides clarification on disclosures about the level of disaggregation
for each class of assets and liabilities and on disclosures about the valuation techniques and inputs used to measure fair value
for both recurring and nonrecurring fair value measurements. FASB ASU No. 2010-06 is effective for interim and annual periods
beginning after December 15, 2009, except for the disclosures requiring a reconciliation of activity in Level 3. Those disclosures
will be effective for interim and annual periods beginning after December 15, 2010. The adoption of the portion of this ASU effective
after December 15, 2009, as well as the portion of the ASU effective after December 15, 2010, did not have an impact on our consolidated
financial position, results of operations or cash flows.



In April 2010,
the FASB issued FASB ASU No. 2010-17, “Milestone Method of Revenue Recognition,” which is now codified under FASB
ASC Topic 605, “Revenue Recognition.” This ASU provides guidance on defining a milestone and determining when it may
be appropriate to apply the milestone method of revenue recognition for research and development transactions. Consideration which
is contingent upon achievement of a milestone in its entirety can be recognized as revenue in the period in which the milestone
is achieved only if the milestone meets all criteria to be considered substantive. A milestone should be considered substantive
in its entirety, and an individual milestone may not be bifurcated. An arrangement may include more than one milestone, and each
milestone should be evaluated individually to determine if it is substantive. FASB ASU No. 2010-17 was effective on a prospective
basis for milestones achieved in fiscal years (and interim periods within those years) beginning on or after June 15, 2010, with
early adoption permitted.



If an entity
elects early adoption, and the period of adoption is not the beginning of its fiscal year, the entity should apply this ASU retrospectively
from the beginning of the year of adoption. This ASU did not have any effect on the timing of revenue recognition and our consolidated
results of operations or cash flows.



In December 2010,
the FASB issued FASB ASU No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero
or Negative Carrying Amounts,” which is now codified under FASB ASC Topic 350, “Intangibles — Goodwill and Other.”
This ASU provides amendments to Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts.
For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not
a goodwill impairment exists. When determining whether it is more likely than not an impairment exists, an entity should consider
whether there are any adverse qualitative factors, such as a significant deterioration in market conditions, indicating an impairment
may exist. FASB ASU No. 2010-28 is effective for fiscal years (and interim periods within those years) beginning after December
15, 2010. Early adoption is not permitted. Upon adoption of the amendments, an entity with reporting units having carrying amounts
which are zero or negative is required to assess whether is it more likely than not the reporting units’ goodwill is impaired.
If the entity determines impairment exists, the entity must perform Step 2 of the goodwill impairment test for that reporting
unit or units. Step 2 involves allocating the fair value of the reporting unit to each asset and liability, with the excess being
implied goodwill. An impairment loss results if the amount of recorded goodwill exceeds the implied goodwill. Any resulting goodwill
impairment should be recorded as a cumulative-effect adjustment to beginning retained earnings in the period of adoption. This
ASU is did not have an impact on our consolidated financial position, results of operations or cash flows.





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| | 2. | Going Concern
| | -- | -------------



The accompanying
consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of
operations, realization of assets and liabilities and commitments in the normal course of business.  The accompanying consolidated
financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern.
 The Company has experienced substantial losses, maintains a negative working capital and capital deficits, which raise substantial
doubt about the Company's ability to continue as a going concern.



The Company is
working to manage its current liabilities while it continues to make changes in operations to improve its cash flow and liquidity
position. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent
upon the Company’s ability to generate revenue from the sale of its services and the cooperation of the Company’s
note holders to assist with obtaining working capital to meet operating costs in addition to our ability to raise funds.



| | 3. | Common and Preferred Stock
                                                                  Transactions
| | -- | ---------------------------------------------------------------------------------------------------------



During the six
months ended June 30, 2012, the Company issued 224,735,714 shares of common stock valued at $63,012 for services. The value of
these services, $25,000 was expensed in the prior year and recorded in accounts payable.  The transaction resulted in
a loss on settlement of debt totaling $38,012 All shares issued were valued based upon the closing price of the Company’s
common stock at the date of grant.



During the six
months ended June 30, 2012, the Company issued 2,295,152,672 shares of common stock with a value of $668,096 and recorded common
stock subscriptions in the amount of $4,502 to extinguish debt of $373,944 resulting in a loss on extinguishment of debt of $294,152
based upon the closing price of the Company’s common stock at the grant date less the carrying value of the debt that was
exchanged. For all debts that were converted within the terms of the related promissory notes, no gain or loss was recorded. Any
debts converted outside of the terms resulted in a gain or loss based on the fair value of the stock on the date of conversion.



During the six
months ended June 30, 2012, 6 shares of Series D preferred stock were converted into common shares of the Company. The shares
were converted in accordance with the conversion terms of the preferred stock and no gain or loss was recorded on the transaction.
A total of 16,250,000 shares of common stock were issued pursuant to this conversion.



During the six
months ended June 30, 2012, the Company recorded an additional amount of $328,998 to additional paid in capital related to the
fair market value of the conversion of debts that were included in the derivative liability on the conversion date. The Company
also recorded $35,688 in imputed interest as an increase to additional paid in capital related to loans that did not carry a market
rate of interest or were non-interest bearing.



| | 4. | Preferred Stock Series
| | -- | ----------------------



Series A preferred stock:
Series A preferred stock has a par value of $0.001 per share and no stated dividend preference.  The Series A is convertible
into common stock at a conversion ratio of one preferred share for one common share.   Preferred A has liquidation preference
over Preferred B stock and common stock.



Series B preferred stock:
Series B preferred stock has a par value of $0.001 per share and no stated dividend preference.  The Series B is convertible
into common stock at a conversion ratio of one preferred share for one common share.  The Series B has liquidation preference
over Preferred C stock and common stock.



Series C preferred stock:
The Preferred C stock has a stated value of $.001 and no stated dividend rate and is non-participatory.   The Series
C has liquidation preference over common stock. Effective May 20, 2009 i) Voting Rights for each share of Series C Preferred Stock
shall have 21,200 votes on the election of directors of the Company and for all other purposes, and, ii) regarding Conversion
to Common Shares, Series C have no right to convert to common or any other series of authorized shares of the Company.



Series D preferred stock:
Effective March 2, 2011 EGPI Firecreek, Inc. (the “Company”) obtained consent from the majority shareholders of the
Company to amend the Articles of Incorporation to i) authorize the issuance of 2,500 shares of a new D Series Preferred Stock.
The Series D preferred stock include 2.5 million shares authorized, par value $.001, and each share of Series D Preferred Stock
is convertible into common shares, where such number of shares shall be equal to the greater of the number calculated by dividing
the Purchase Commitment per share ($1,000) by 1) $0.003 per share, or 2) one hundred and ten percent (110%) of the lowest VWAP
for the three (3) days immediately preceding a Conversion Date.



During the six
months ended June 30, 2012, 6 shares of Series D preferred stock were converted into common shares of the Company. The shares
were converted in accordance with the conversion terms of the preferred stock and no gain or loss was recorded on the transaction.
A total of 16,250,000 shares of common stock were issued pursuant to this conversion.



| | 5. | Fixed Assets
| | -- | ------------



The following
is a detailed list of fixed assets:



|                         |  | 6/30/2012 |           |  | 12/31/2011
|------------------------ |  | --------- | --------- |  | ----------
|Property and equipment   |  | 540,307   |           |  | 540,307   
|Well equipment           |  |           | 174,825   |  |           
|Accumulated depreciation |  |           | (188,481) |  |           
|                         |  |           |           |  |           
|Fixed assets - net       |  | $         | 526,651   |  |           



Depreciation expense was $51,308
and $43,157 for the six months ended June 30, 2012 and June 30, 2011.



| | 6. | Oil
                                                                                                    and Gas
| | -- | ---------------------------------------------------------------------------------------------------------------



|Oil
    and Gas Properties:                  | June
    30, 2012 |           | December
    31, 2011
|-------------------------------------------- | ----------------- | --------- | ---------------------
|Oil
    and gas properties – proved reserves | $                 | 2,066,367 |                      
|Development costs                            |                   | 165,162   |                      
|Accumulated depletion                        |                   | (184,476) |                      
|                                             |                   |           |                      
|Oil and gas properties
    - net             | $                 | 2,047,052 |                      



Depletion expense
was $76,720 and $73,268 for six months ended June 30, 2012 and June 30, 2011, respectively.



| | 7. | Options & Warrants
                                                                  Outstanding
| | -- | ------------------------------------------------------------------------------------------------

All options and
warrants granted are recorded at fair value using a Black-Scholes model at the date of the grant.   There is no formal stock
option plan for employees.



A listing of
options and warrants outstanding at June 30, 2012 is as follows.  Option and warrants outstanding and their attendant
exercise prices have been adjusted for the 1 for 200 reverse split and the 1 for 50 reverse split of the common stock discussed
in Note 1.



|                                 |  | Amount |     |  | Weighted Average
    Exercise Price |   |            | Weighted Average
    Years to Maturity | 
|-------------------------------- |  | ------ | --- |  | ----------------------------------- | - | ---------- | -------------------------------------- | 
|Outstanding at December 31, 2011 |  |        | 240 |  |                                     | $ | 28.125000  |                                        | 
|                                 |  |        |     |  |                                     |   |            |                                        | 
|Issued                           |  |        | 0   |  |                                     |   |            |                                        | 
|Exercised                        |  |        | 0   |  |                                     |   |            |                                        | 
|Expired                          |  |        | 0   |  |                                     |   |            |                                        | 
|                                 |  |        |     |  |                                     |   |            |                                        | 
|Outstanding at June 30, 2012     |  |        | 240 |  |                                     |   | 28,125.000 |                                        | 



There was no
warrant activity during the six months ended June 30, 2012. The value of these warrants are included in the derivative liability
at June 30, 2012 and December 31, 2011 due to the fact that the equity environment is tainted.





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| | 8. | Note Receivable
| | -- | ---------------



On March 14,
2011, the company received a promissory note from the sale of its interest in Terra to a third party.  The value of
this promissory note is $50,000 and is due 1 year from the date of issuance, along with accrued interest at the rate of 9%.  The
note includes an optional provision to extend for one additional twelve month period. An Allowance for Doubtful Accounts of $50,000
has been established for this receivable.



On March 14,
2011, the company received a promissory note from the sale of a subsidiary, SATCO, to a third party.  The value of this
promissory note is $50,000 and is due 1 year from the date of issuance, along with accrued interest at the rate of 9%.  The
note includes an optional provision to extend for one additional twelve month period. An allowance for doubtful accounts of $50,000
has been established for this receivable.



| | 9. | Income Tax
                                                                  Provision
| | -- | --------------------------------------------------------------------------------------



Deferred income
tax assets and liabilities consist of the following at June 30, 2012:



|Deferred Tax asset      |  | $ | 3,265,805  
|----------------------- |  | - | -----------
|Valuation allowance     |  |   | (3,265,805)
|Net deferred tax assets |  |   | -          



The Company estimates
that it has an NOL carryfoward of approximately $9,330,871 that begins to expire in 2027.



After evaluating
any potential tax consequence from our former subsidiary and our own potential tax uncertainties, the Company has determined that
there are no material uncertain tax positions that have a greater than 50% likelihood of reversal if the Company were to be audited.
The Company believes that it is current with all payroll and other statutory taxes. Our tax return for the years ended December
31, 2003 to December 31, 2011 may be subject to IRS audit.



| | 10. | Related Party Transactions
| | --- | --------------------------



Through May 31,
2009 the Secretary of EGPI Firecreek, Inc provided office space for the Company’s Scottsdale office free of charge. June
1, 2009 Energy Producers, Inc, a 100% owned subsidiary of the Company entered into a month to month lease for the same office
space at a rate of $1,400 per month. There remains an unpaid balance of $7,450 at June 30, 2012 and $6,700 December 31, 2011.



In addition Energy
Producers Inc. also has an Administrative Service Agreement with Melvena Alexander, CPA , which is 100% owned by Melvena Alexander,
officer and shareholder of the Company, to provide services to the Company. The agreement is an open-ended, annually renewable
contract for payments of $4,600 per month. The contract is currently in force with a balance due of $68,070 and $45,870 at June
30, 2012 and December 31, 2011.



The Company had
a Service Agreement with Global Media Network USA, Inc. a company 100% owned By Dennis Alexander, to provide the services of Dennis
Alexander to the Company. The contract terminated May 31, 2009 and there is an outstanding balance of $0 at December 31, 2011.



The above referenced
contract was superseded by a month-to-month contract between Energy Producers, Inc., a 100% owned subsidiary of the Company, and
Dennis Alexander, an officer and director of the Company, at a monthly payment of $15,000. There was a balance due on this contract
of $338,025and $279,950 at June 30, 2012 and December 31, 2011.



The Company had
a Service Agreement with Tirion Group, Inc., which was owned by Rupert C. Johnson, a former director of the Company. The contract
was terminated in 2007 and Mr. Johnson severed his connection to the Company in 2008. However, there is unpaid balance of $55,000
remaining at June 30, 2012 and December 31, 2011.



During 2010,
Robert Miller, a director of the Company, made unsecured, non-interest bearing advances to M3 Lighting, Inc. a 100% owned subsidiary
of the Company, for working capital of $1,500 which remains unpaid at June 30, 2012 and December 31, 2011.



April 1, 2010
the Company signed a 9% unsecured note with Bob Joyner a former officer and shareholder, for $27,000. The note matures June 30,
2011, and the unpaid balance at June 30, 2012 and December 31, 2011 was $21,700.



Chanwest Resources,
Inc, a 100% owned subsidiary of the Company billed Petrolind Drilling, Inc a company in which David Taylor, a director and share
holder of the Company, has a substantial interest. The invoice of $9,635 was still outstanding at June 30, 2012 and December 31,
2011 and a full valuation allowance was recorded for this receivable.



Willoil Consulting,
LLC also gave unsecured non-interest bearing advances to Chanwest Resources, Inc. of $17,825. Willoil Consulting LLC is a company
in which David Taylor is a managing member with 80% control. The funds have not been repaid as of June 30, 2012.



Relative to the
May 21, 2009 acquisition of M3 Lighting, Inc. the Company approved an Administrative Services Agreement (ASA), and amended terms
thereof, with Strategic Partners Consulting, LLC (SPC).Two of the Company’s officers, directors and shareholders, David
H. Ray, Director and Executive Vice President and Treasurer of the Company since May 21, 2009 and Brandon D. Ray Director and
Executive Vice President of Finance of the Company, are also owners and managers of SPC. Information is listed in Exhibit 10.1
to a Current Report on form 8-K, Amendment No. 1, filed on June 23, 3009. The ASA initiated on November 4, 2009, in accordance
with its terms thereof, and was billed at the rate of $20,833.33 per month. The ASA contract was canceled June 8, 2010. During
the six months ending June 30, 2012, the Company made no payment to SPC, with a balance payable due in the amount of approximately
$ 46,958.



Effective May
9, 2011 the Company entered into a Promissory Note with a company controlled by a director of the Company in the amount of $210,000,
and amended December 9, 2011 to $315,625 and again in the six months ended June 30, 2012 to $641,816. The terms of the note are
for 14% interest, with principal and interest all due on or before May 9, 2013. The loan is collateralized with the oil and gas
leases held in our subsidiary Energy Producers, Inc.



The Company’s
subsidiary Arctic Solar Engineers issued promissory notes to various individuals for working capital, all maturing in 2020 at
an interest rate of 2%. Additional interest expense was imputed on these loans due to the fact that the interest rate was below
market. Of these loans, $5,000 was owed to the former CEO of Arctic Solar Engineering, LLC, who is currently a director of the
Company.



| | 11. | Notes Payable
| | --- | -------------



At June 30, 2012,
the Company was liable on the following Promissory notes:

(see notes to
the accompanying table)



|Date of              |  |       |    | Date Obligation |                 | Interest |  |    | Balance Due | 
|-------------------- |  | ----- | -- | --------------- | --------------- | -------- |  | -- | ----------- | 
|Obligation           |  | Notes |    | Matures         |                 | Rate (%) |  |    | 6/30/12 ($) | 
|9/17/2009            |  |       | 4  |                 | 9/17/2010       |          |  | 12 |             | 
|5/29/2009            |  |       | 4  |                 | 9/17/2010       |          |  | 12 | *           | 
|9/17/2009            |  |       | 4  |                 | 9/17/2010       |          |  | 18 | *           | 
|3/25/2012            |  |       | 4  |                 | 4/1/2012        |          |  | 18 |             | 
|5/5/2012             |  |       | 4  |                 | 5/12/2012       |          |  | 12 | *           | 
|5/21/2012            |  |       | 4  |                 | 5/28/2012       |          |  | 12 | *           | 
|11/4/2009            |  |       | 11 |                 | 11/4/2012       |          |  | 9  |             | 
|11/4/2009            |  |       | 11 |                 | 11/4/2012       |          |  | 9  |             | 
|11/4/2009            |  |       | 11 |                 | 11/4/2012       |          |  | 9  |             | 
|5/30/2010            |  |       | 2  |                 | 12/31/2011      |          |  | 8  |             | 
|3/1/2010             |  |       | 9  |                 | See footnote 10 |          |  | 0  |             | 
|4/1/2010             |  |       | 3  |                 | 6/30/2011       |          |  | 9  |             | 
|7/26/2010            |  |       | 5  |                 | 7/26/2012       |          |  | 10 |             | 
|8/10/2010            |  |       | 6  |                 | 8/10/2012       |          |  | 10 |             | 
|8/31/2011            |  |       | 7  |                 | 5/31/2012       |          |  | 8  |             | 
|7/1/2011             |  |       | 1  |                 | 7/1/2013        |          |  | 18 |             | 
|2/18/2010            |  |       | 3  |                 | 12/1/2010       |          |  | 4  |             | 
|2/15/2010            |  |       | 3  |                 | 2/15/2010       |          |  | 8  |             | 
|3/3/2010             |  |       | 10 |                 | 3/31/12         |          |  | 10 |             | 
|3/4/2011             |  |       | 12 |                 | 9/8/2011        |          |  | 14 |             | 
|3/4/2011             |  |       | 12 |                 | 9/22/2011       |          |  | 14 |             | 
|8/1/2010             |  |       | 13 |                 | 12/3/2020       |          |  | 2  |             | 
|3/24/2010            |  |       | 13 |                 | 12/31/2020      |          |  | 2  |             | 
|8/1/2010             |  |       | 13 |                 | 12/31/2020      |          |  | 2  |             | 
|8/1/2010             |  |       | 13 |                 | 12/31/2020      |          |  | 2  |             | 
|5/31/2011            |  |       | 14 |                 | 5/31/2013       |          |  | 8  |             | 
|6/9/2011             |  |       | 15 |                 | 5/9/2011        |          |  | 14 |             | 
|6/1/2011             |  |       | 16 |                 | 12/1/2011       |          |  | 8  |             | 
|8/11/2011            |  |       | 17 |                 | 4/11/2012       |          |  | 12 |             | 
|8/12/2011            |  |       | 19 |                 | 2/12/2012       |          |  | 10 |             | 
|9/12/2011            |  |       | 20 |                 | 3/12/2012       |          |  | 8  |             | 
|9/3/2011             |  |       | 21 |                 | 3/3/2012        |          |  | 8  |             | 
|10/1/2011            |  |       | 22 |                 | 6/30/2012       |          |  | 6  |             | 
|11/15/2011           |  |       | 8  |                 | 8/17/2012       |          |  | 8  |             | 
|1/27/2012            |  |       | 23 |                 | 7/27/2012       |          |  | 8  |             | 
|3/1/2012             |  |       | 23 |                 | 9/1/2012        |          |  | 8  |             | 
|3/15/2012            |  |       | 23 |                 | 9/5/2012        |          |  | 8  |             | 
|1/25/2012            |  |       | 24 |                 | 1/25/2013       |          |  | 12 |             | 
|3/28/2012            |  |       | 22 |                 | 3/28/2013       |          |  | 15 |             | 
|3/30/2012            |  |       | 8  |                 | On Demand       |          |  | 10 |             | 
|Unamortized Discount |  |       |    |                 |                 |          |  |    |             | 
|Total                |  |       |    |                 |                 |          |  |    |             | 





|* | Compounded
|- | ----------





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Table of Contents




Notes:



Other than as
described at Notes 1, 6, 7, 8, 9, 17, 18, 19, 22, 23, and 24 none of the other notes had conversion options.



Note 1: On January 15, 2010, the
Company issued an $86,000 Convertible Promissory Note (“Convertible Note”) and a registration rights agreement (“RRA”)
to an investor for making a $1,000,000 cash loan.  The Convertible Note has no specified interest rate and was scheduled
to mature six months from the closing date.  At the investor’s option, the outstanding principal amount, including
all accrued and unpaid interest and fees, may be converted into shares of common stock at the conversion price, which is 75% of
the lower of (a) $0.08 per share; or (b) the lowest three-day common stock volume weighted average price during the prior twenty
business days. In addition, if the Company sells common shares or securities convertible into common shares, the Conversion Price
shall become the lower of: (a) the conversion price in effect immediately prior to the sale of securities; or (b) the conversion
price of the securities sold.



The RRA provides
both mandatory and piggyback registration rights.  The Company was obligated to (a) file a registration statement for
40,000 common shares (subject to adjustment) no later than 14 days after the closing date, and (b) have it declared effective
no later than the earlier of (i) five days after the SEC notifies the Company that it may be declared effective or (ii) 90 days
from the closing date.  The Company was obligated to pay the investor a penalty of $100 for each day that it is late
in meeting these obligations. The Company’s registration statement was filed late and on March 18, 2010 it was withdrawn.



Upon occurrence
of an Event of Default (various specified events), the Lender may (a) declare the unpaid principal balance and all accrued and
unpaid interest thereon immediately due and payable; (b) at anytime after January 31, 2010, immediately draw on the LOC to satisfy
EGPI’s obligations; and (c) interest will accrue at the rate of 18%.



Upon occurrence
of a Trigger event: (a) the outstanding principal amount will increase by 25%; and (b) interest will accrue at the rate of 18%.
The Trigger Event effects shall not be applied more than two times. There are various Trigger Events, including (a) the five-day
common stock VWAP declines below $0.04; (b) the ten-day average daily trading volume declines below $5,000; (c) a judgment against
EGPI in excess of $100,000; (d) failure to file a registration statement on time; (e) failure to cause a registration statement
to become effective on time; (f) events of default; and (g) insufficient authorized common shares.



During the first
quarter of 2010, the Company tripped two trigger events and incurred resulting penalties and incremental debt obligation. These
events increased the outstanding principal amount of the Convertible Note by approximately $22,000 and $27,000 of trigger penalties.



It was determined
that the Convertible Note’s conversion option, plus other existing equity instruments (warrants outstanding; see Notes 2
and 7 below) of the Company, were required to be (re)classified as derivative liabilities as of January 15, 2010, because (a)
the Convertible Note provides conversion price protection; and (b) the quantity of shares issuable pursuant to the conversion
option is indeterminate.  The conversion option and the related instruments were initially valued at $63,080 (expected
term of 0.5 years; risk-free rate of 0.15%; and volatility of 95%) and this amount was recorded as a note discount and derivative
liability. The derivative liabilities were then marked to the market to an aggregate value of $16,158 (expected term of 0.3 years;
risk-free rate of 0.16%; and volatility of 95%) at December 31, 2010.



On May 12, 2010,
the parties to the Convertible Note executed a Waiver of Trigger Event, which stipulated: (1) the principal outstanding on the
Convertible Note was fixed at $147,500 as of May 12, 2010; (2) the remaining impact of the trigger events and failure to register
the shares was waived; (3) the interest rate was reset at 9%; (4) the number of shares issuable under the conversion option was
capped at 150 million shares; (5) the repricing provision of the conversion option was eliminated; and (6) the maturity date of
the note was revised to August 15, 2010.  In addition, if the market price of the Company’s common stock declines
such that the conversion option would be capped at the agreed 150 million shares, the repayment date is accelerated and the outstanding
balance on the note is immediately due and payable.  As a result of the above, the conversion option and related instruments
were revalued as of May 12, 2010 and were reclassified to paid-in-capital (equity) in the amount of $50,303 (expected term of
0.3 years; risk-free rate of 0.16%; and volatility of 95%).



Effective August
3, 2010 the Company entered into a Promissory Note in the amount of $153,046 with an entity that had acquired and then exchanged
the Debt described above. The terms of the Promissory Note are for 8% interest, with principal and interest all due on or before
August 3, 2012. In July 2011 a judgment was issued for $202,000 to be paid over two years with no interest, except if there is
a default, then interest of 18% will accrue. As a result of defaults by the Company under the agreed upon settlement terms, another
settlement agreement was entered into on January 31, 2012. This settlement required the payment of monthly amounts of $10,000
by the Company over 18 months and no default interest is owed until the Company defaults on a payment under these newly agreed
upon terms. Default interest of 18% will accrue in the event of default. A total of $50,000 in payments in cash and $6,000 payments
in stock were issued during the six months ended June 30, 2012, reducing the balance of the amount due to $133,000.



Note 2: For the three months ended
June 30, 2012, we have received no cash proceeds for these debt obligations, settled $45,800 in debt for common stock, yielding
a balance of $118,620 at the period end.



Note 3: For the six months ended
June 30, 2012 the Company has a debt obligation of $21,700 for which no payments were made during the period.   The
company also had a promissory note of $201,500 for which no payments were made during the period.  The company also
had a promissory note of $133,550 for which no payments were made during the period and included $3,900 in accrued interest added
to the principal value of the note.



Note 4:  During 2009 we
received cash proceeds for the aggregate amount of $41,307, which is payable in principal and interest with rates ranging from
12-18%. During the six months ended June 30, 2012 we received additional cash proceeds of $ 39,500 which is payable in principal
and interest at 12%.



Note 5: On July 26, 2010, we issued
a $165,000 secured convertible promissory note that is convertible at the election of the holder any time after issuance, or upon
an Event of Default, or when due in 24 months on July 26, 2012. While the notes have not yet become due or repaid, there was no
Event of Default as of June 30, 2012, or thereafter. The Company evaluated the note and determined that the shares issuable pursuant
to the conversion option were indeterminate and therefore this conversion option and all other dilutive securities would be classified
as a derivative liability as of July 26, 2010. This note also contains conversion price reset provisions which also factor into
the derivative value.  The July 26, 2010 value of the conversion option of $165,000 was recorded as a note discount,
to be amortized over the life of the note, and derivative liability.  For the six months ended June 30, 2012, the Company
recognized note discount amortization of $71,669.  The discount is amortized using the effective interest method.



Note 6: On August 10, 2010, we issued
a $35,000 convertible promissory note that is convertible at the election of the holder any time after issuance, or upon an Event
of Default, or when due in 24 months on August 10, 2012. While the notes have not yet become due or repaid, there was no Event
of Default as of June 30, 2012, or thereafter. The Company evaluated the note and determined that, because the shares issuable
pursuant to the July 26, 2010 convertible note are indeterminate, the conversion option associated with this note is deemed to
be a derivative liability.  This note also contains conversion price reset provisions which also factor into the derivative
value.  The August 10, 2010 value of the note of $35,000 was recorded as a note discount, to be amortized over the life
of the note, and derivative liability.  For the six months ended June 30, 2012, the Company recognized note discount amortization
of $25,996.  The discount is amortized using the effective interest method.



Note 7: On August 31, 2011, we issued
a $25,000 convertible promissory note that is convertible at the election of the holder any time after issuance, or upon an Event
of Default, or when due in 9 months on May 31, 2012. The notes are currently past due.  The Company evaluated the note
and determined that, because the shares issuable pursuant to the convertible note are indeterminate, the conversion option associated
with this note is deemed to be a derivative liability. This note also contains conversion price reset provisions which also factor
into the derivative value.  The August 31, 2011 value of the note of $25,000 was recorded as a note discount, to be
amortized over the life of the note, and derivative liability.  For the six months ended June 30, 2012, the Company recognized
note discount amortization of $9,621.



Note 8: On November 15, 2011, we
issued a $25,000 convertible promissory note that is convertible at the election of the holder any time after issuance, or upon
an Event of Default, or when due in 9 months on August 17, 2012. While the notes have not yet become due or repaid, there was
no Event of Default as of June 30, 2012, or thereafter.  The Company evaluated the note and determined that, because
the shares issuable pursuant to the convertible note are indeterminate, the conversion option associated with this note is deemed
to be a derivative liability. This note also contains conversion price reset provisions which also factor into the derivative
value.  The November 15, 2011 value of the note of $25,000 was recorded as a note discount, to be amortized over the
life of the note, and derivative liability.  For the six months ended June 30, 2012, the Company recognized note discount
amortization of $6,289  The discount is amortized using the effective interest method. In March of 2012, the Company entered
into an additional note for $25,000 with the same terms, except the new note was due on demand. The $25,000 was recorded as a
note discount and expensed immediately due to the fact that the note is due on demand. The remaining balance due on this second
note was $10,800 as of June 30, 2012.



Note 9:  On March 1, 2010,
we issued non-interest bearing, convertible notes for services, renewable annually until paid through conversions.  The
total debt owing under these agreements is $180,000, which is composed of two $90,000 debts owed to two professional service firms.  During
the six months ended June 30, 2012, an additional $120,000 in promissory notes were issued to these firms for services provided.  These
notes can be converted at 50% of the closing price of the stock on the day preceding the conversion date.  The Company
evaluated the note and determined that the conversion option associated with this note is deemed to be a derivative liability.  During
the six months ended June 30, 2012, $15,500 of these notes were settled by the issuance of common stock.



Note 10:  For the period
ended June 30, 2012 we have balance on debt obligations owed totaling $795,128, related to the acquisition of a subsidiary in
March 2010.  A total of $28,875 of this debt was settled by the issuance of stock during the six months ended June 30,
2012.



Note 11:  Promissory notes
totaling $295,173, which were issued in conjunction with the acquisition of SATCO.



Note 12:  Accounts Payable
of $133,247 due to Contegra Construction by Energy Ventures One, Inc, a Company subsidiary was converted to a Note Payable in
March 2011.  Energy Ventures One also has a Line of Credit with Masters Equipment, Inc. with a balance due of $100,000
at June 30, 2012.



Note 13:  The Company’s
subsidiary Arctic Solar Engineering, LLC issued promissory notes to various individuals for working capital, all maturing in 2020
at an interest rate of 2%.  Additional interest expense was imputed on these balances.



Note 14: The balance owed under these
debt obligations is $172,190 as of June 30, 2012.



Note 15: Effective May 9, 2011 the
Company entered into a Promissory Note in the amount of $210,000, and amended December 9, 2011 to $315,625. The note was further
amended in June 2012 to $641,816. The terms of the note are for 14% interest, with principal and interest all due on or before
May 9, 2013. The loan is collateralized with the oil and gas leases held in our subsidiary Energy Producers, Inc.



Note 16: Effective June 1, 2011 the
Company entered into a Promissory Note in the amount of $39,000. The terms of the note are for 8% interest only, with principal
and interest all due on or before December 1, 2011. Effective September 2, 2011, the Company entered into an additional Promissory
Note in the amount $20,500 with same terms due on or before March 2 2012. Also on September 28, 2011, the Company entered into
an additional Promissory Note in the amount of $8,000, same terms, due on or before March 28, 2012. A fourth Promissory Note of
$17,500 entered into on October 24, 2011 under the same terms, brings the total owed to $85,000 at December 31, 2011. In the six
months ended June 30, 2012, the Company settled $17,648 on this note by issuing common stock, leaving a balance of $67,352 at
June 30, 2012.



Note 17: Effective August 11, 2011,
the Company entered into a Convertible Promissory Note in the amount of $10,000. The terms of the note are 12% interest, with
principal and interest all due on or before August 11, 2012. October 28, 2011, the Company entered into a Convertible Promissory
Note in the amount of $17,000. The terms of the note are 12% interest, with principal and interest all due on or before June 11,
2012. On or after the maturity date, the notes may be converted based on the outstanding and unpaid principal and interest amount
into fully paid and non-assessable shares of common stock at a 50% discount to the fair market value of the stock price at the
time of conversion. The Company evaluated the notes and determined that the conversion option associated with this note is deemed
a derivative liability. This note also contains conversion price reset provisions which factor into the derivative value. The
August 11, 2011 and October 28, 2011 values of the notes of $10,000 and $17,000 were recorded as a note discount, to be amortized
over the life of the note, and derivative liability. For the six months ended June 30, 2012, the Company recognized note discount
amortization of $12,467. The discount is amortized using the effective interest method.





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Note 18: Effective October 28, 2011,
the Company entered into a Convertible Promissory Note in the amount of $50,000. The terms of the note are 12% interest, with
principal and interest all due on or before October 28, 2012. On or after the maturity date, the note may be converted based on
the outstanding and unpaid principal and interest amount into fully paid and non-assessable shares of common stock at a 50% discount
to the fair market value of the stock price at the time of conversion. The Company evaluated the note, and determined that because
the shares issuable are indeterminate, the conversion option associated with this note is deemed a derivative liability. The October
28, 2011 value of the note of $50,000 was recorded as a note discount to be amortized over the life of the note and derivative
liability. For the quarter ended March 31, 2012, the Company recognized note discount amortization of $4,484. The discount is
amortized using the effective interest method. The note was paid in full as of June 30,2012.



Note 19: Effective August 12, 2011
the Company entered into a Convertible Promissory Note in the amount of $50,000. The terms of the note are for 10% interest, with
principal and interest all due on or before February 12, 2012. On, or after, the maturity date, the note may be converted based
on the outstanding and unpaid principal and interest amount into fully paid and non-assessable shares of common stock at a 50%
discount to the fair market value of the stock price at the time of conversion. The Company evaluated the note, and determined
that because the shares issuable are indeterminate, the conversion option associated with this note is deemed a derivative liability.
The August 12, 2011 value of the note of $50,000 was recorded as a note discount to be amortized over the life of the note, and
derivative liability. The balance owing at June 30, 2012 is $26,000. For the six months ended June 30, 2012, the Company recognized
note discount amortization of $8,819. The discount is amortized using the effective interest method.



Note 20: Effective September 12,
2011 the Company entered into a Convertible Promissory Note in the amount of $25,000. The terms of the note are for 8% interest,
with principal and interest all due on or before March 12, 2012. On or after the maturity date, the note may be converted based
on the outstanding and unpaid principal and interest amount into fully paid and non-assessable shares of common stock at a 50%
discount to the fair market value of the stock price at the time of conversion. The Company evaluated the note and determined
that because issuable shares are indeterminate, the conversion option associated with this note is deemed a derivative liability.
For the six months ended June 30, 2012, the Company recognized note discount amortization of $8,473. The discount is amortized
using the effective interest method.



Note 21: Effective September 3, 2011
the Company entered into an Unsecured Promissory Note in the amount of $20,000. The terms of the note are for 8% per annum interest.
During the six months ended June 30, 2012 the Company settled $11,025 of the debt, leaving a balance of $8,975 at June 30, 2012.



Note 22: Effective October 1, 2011,
the Company entered into a Convertible Promissory Note in the amount of $11,250. The terms of the note are for 6% interest with
principal and interest due on demand. The note may be converted based on the outstanding and unpaid principal and interest amount
into fully paid and non-assessable shares of common stock at a 50% discount to the fair market value of the stock price at the
time of conversion. The Company evaluated the note and determined that because the shares issuable are indeterminate, the conversion
option associated with this note is deemed a derivative liability. The October 1, 2011 value of the note of $11,250 was recorded
as a note discount to be amortized over the life of the note and derivative liability. In March 2012 an additional note for $20,000
was issued bearing the same terms. For the six months ended June30, 2012, the Company recognized no note discount amortization
as the note was satisfied in the second quarter.



Note 23: Effective January 27, 2012,
the Company entered into a Promissory Note in the amount of $13,700. The terms of the note are for 8% interest, with principal
and interest all due on or before July 27, 2012. Effective March 1, 2012 the Company entered into an additional Promissory Note
in the amount of $10,000 with the same terms due on or before September 1, 2012 Effective March 5, 2012, the Company entered into
an additional Promissory Note in the amount of $19,000 with the same terms due on or before September 5, 2012.



Note 24: Effective January 25, 2012,
the Company entered into a Convertible Promissory Note in the amount of $50,000. The terms of the note are for interest of 12%
with principal and interest due on or before January 25, 2013. The note may be converted based on the outstanding and unpaid principal
and interest amount into fully paid and non-assessable shares of common stock at a 60% discount to the fair market value of the
stock at the time of conversion. The Company evaluated the note and determined that because the shares issuable are indeterminate,
the conversion option associated with this note is deemed a derivative liability. The January 25, 2012 value of the note for $50,000
was recorded as a note discount to be amortized over the life of the note and derivative liability. On March 28, 2012 an additional
note for $20,000 was issued bearing the same terms. For the six months ended June 30, 2012, the Company recognized note discount
of $34,915. The discount is amortized using the effective interest rate.



Although a portion
of our debt is not due within 12 months, given our working capital deficit and cash positions and our ability to service the debt
on a long term basis is questionable, the notes are all effectively in default and treated as current liabilities.





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| | 12. | Capital Lease Obligation
| | --- | ------------------------



During the year
ended December 31, 2010, the Company entered into a lease for equipment which included the promise to make monthly payments of
$5,000 for 12 months with a bargain purchase option at the end of the lease.  This lease is accounted for as a capital
lease in which the present value of the future payments is recorded as a liability of $56,872.  The discount rate is
10%.  As of June 30, 2012, there were no payments made on this lease and the entire balance is classified as a current
liability.



| | 13. | Derivative Liability
| | --- | --------------------



The Company evaluated
the conversion feature embedded in the convertible notes to determine if such conversion feature should be bifurcated from its
host instrument and accounted for as a freestanding derivative. Due to the note not meeting the definition of a conventional debt
instrument because it contained a diluted issuance provision, the convertible notes were accounted for in accordance with ASC
815. According to ASC 815, the derivatives associated with the convertible notes were recognized as a discount to the debt instrument,
and the discount is being amortized over the life of the note and any excess of the derivative value over the note payable value
is recognized as additional expense at issuance date.



The Company also
issued 2,500 series D convertible preferred stock which included reset provisions which are considered derivatives in accordance
with ASC 815. The fair market value of these reset provisions were bifurcated and recorded as derivative liabilities.



Further, and
in accordance with ASC 815, the embedded derivatives are revalued at each balance sheet date and marked to fair value with the
corresponding adjustment as a “gain or loss on change in fair value of derivatives” in the consolidated statement
of operations.  As of June 30, 2012, the fair value of the embedded derivatives included on the accompanying consolidated
balance sheet was $445,645.  During the three and six months ended June 30, 2012, the Company
recognized a gain on change in fair value of derivative liability totaling $237,712 and $148,214, respectively. Key assumptions
used in the valuation of derivative liabilities associated with the convertible notes at June 30, 2012 were as follows:



| | Ø | The
                                                                                                                  stock price
                                                                                                                  would fluctuate
                                                                                                                  with an annual
                                                                                                                  volatility ranging
                                                                                                                  from 264% to
                                                                                                                  520% based on
                                                                                                                  the historical
                                                                                                                  volatility for
                                                                                                                  the company.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ø | An
                                                                                                                  event of default
                                                                                                                  would occur
                                                                                                                  5% of the time,
                                                                                                                  increasing 0.10%
                                                                                                                  per quarter
                                                                                                                  to a maximum
                                                                                                                  of 25%.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ø | Alternative
                                                                                                                  financing for
                                                                                                                  the convertible
                                                                                                                  notes would
                                                                                                                  be initially
                                                                                                                  available to
                                                                                                                  redeem the note
                                                                                                                  0% of the time
                                                                                                                  and increase
                                                                                                                  quarterly by
                                                                                                                  1% to a maximum
                                                                                                                  of 20%.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ø | The
                                                                                                                  trading volume
                                                                                                                  would average
                                                                                                                  $265,308 to
                                                                                                                  $291,990 and
                                                                                                                  would increase
                                                                                                                  at 1% per quarter.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ø | The
                                                                                                                  holder would
                                                                                                                  automatically
                                                                                                                  convert the
                                                                                                                  notes at a stock
                                                                                                                  price of the
                                                                                                                  greater of the
                                                                                                                  initial exercise
                                                                                                                  price multiplied
                                                                                                                  by two and the
                                                                                                                  market price
                                                                                                                  for the convertible
                                                                                                                  notes if the
                                                                                                                  registration
                                                                                                                  was effective
                                                                                                                  and the company
                                                                                                                  was not in default.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | Key
                                                                                                                  assumptions
                                                                                                                  used in the
                                                                                                                  valuation of
                                                                                                                  derivative liabilities
                                                                                                                  associated with
                                                                                                                  the reset provisions
                                                                                                                  of the series
                                                                                                                  D preferred
                                                                                                                  stock at December
                                                                                                                  31, 2011 were
                                                                                                                  as follows:
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | The
                                                                                                                  stock price
                                                                                                                  would fluctuate
                                                                                                                  with an annual
                                                                                                                  volatility ranging
                                                                                                                  from 258% to
                                                                                                                  615% based on
                                                                                                                  the historical
                                                                                                                  volatility for
                                                                                                                  the company.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ø | An
                                                                                                                  event of default
                                                                                                                  that requires
                                                                                                                  the Company
                                                                                                                  to redeem the
                                                                                                                  stock would
                                                                                                                  be 0% increasing
                                                                                                                  2% per period
                                                                                                                  to a maximum
                                                                                                                  of 20% at maturity.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ø | The
                                                                                                                  Holder would
                                                                                                                  automatically
                                                                                                                  convert at a
                                                                                                                  stock price
                                                                                                                  of $0.0045 if
                                                                                                                  the Company
                                                                                                                  was not in default.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company classifies
the fair value of these securities under level three of the fair value hierarchy of financial instruments. The fair value of the
derivative liability was calculated using a lattice model that values the compound embedded derivatives based on a probability
weighted discounted cash flow model. This model is based on future projections of the various potential outcomes. The embedded
derivatives that were analyzed and incorporated into the model included the conversion feature with the full ratchet reset, and
the redemption options.



The components
of the derivative liability on the Company’s balance sheet at June 30, 2012 and December 31, 2011 are as follows:



|                                                            |  | June 30, 2012 |         |  | December 31, 2011 |  
|----------------------------------------------------------- |  | ------------- | ------- |  | ----------------- | -
|Embedded conversion features - convertible promissory notes |  | $             | 432,405 |  |                   | $
|Common stock warrants                                       |  |               | -       |  |                   |  
|Anti-dilution provisions of series D preferred stock        |  |               | 13,240  |  |                   |  
|                                                            |  | $             | 445,645 |  |                   | $



The
Company had the following changes in the derivative liability:



|                                                           |  |   |          
|---------------------------------------------------------- |  | - | ---------
|Balance at December 31, 2011                               |  | $ | 639,859  
|Issuance of securities with embedded derivatives           |  |   | 449,125  
|Debt and preferred stock conversions                       |  |   | (328,998)
|Derivative (gain) or loss due to mark to market adjustment |  |   | (314,341)
|Balance at June 30, 2012                                   |  | $ | 445,645  



| | 14. | Intangible
                                                                   Assets
| | --- | ------------------------------------------------------------------------------------



The company had
$0 of intangible assets recorded as of June 30, 2012 and December 31, 2011. In the year ended December 31, 2011, all intangible
assets were fully impaired.



| | 15. | Asset
                                                                   Retirement Obligation (ARO)
| | --- | ----------------------------------------------------------------------------------------------------



The ARO is recorded
at fair value and accretion expense is recognized as the discounted liability is accreted to its expected settlement value. The
fair value of the ARO liability is measured by using expected future cash outflows discounted at the Company’s credit adjusted
risk free interest rate.



Amounts incurred
to settle plugging and abandonment obligations that are either less than or greater than amounts accrued are recorded as a gain
or loss in current operations.  Revisions to previous estimates, such as the estimated cost to plug a well or the estimated
future economic life of a well, may require adjustments to the ARO and are capitalized as part of the costs of proved oil and
natural gas property.



The following
table is a reconciliation of the ARO liability for continuing operations for the three months ended June 30, 2012 and December
31, 2011:



|                                                       |  | 6/30/2011 |        |  | 12/31/2011 | 
|------------------------------------------------------ |  | --------- | ------ |  | ---------- | 
|Asset retirement obligation at the beginning of period |  |           | 21,861 |  |            | 
|Liabilities incurred                                   |  |           |        |  |            | 
|Revisions to previous estimates                        |  |           |        |  |            | 
|Dispositions                                           |  |           |        |  |            | 
|Accretion expense                                      |  |           | 1,213  |  |            | 
|Asset retirement obligation at the end of period       |  |           | 23,074 |  |            | 





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Table of Contents




| | 16. | Discontinued
                                                                   Operations
| | --- | ------------------------------------------------------------------------------------------



On March 14,
2011, the Company entered into and completed a definitive Stock Purchase Agreement whereby EGPI Firecreek, Inc. would sell 100%
of the common shares of SATCO to Distressed Asset Acquisitions, Inc.



The consideration
being paid by Distressed Asset Acquisitions, Inc. consists of a $50,000 in the form of a promissory note (the Purchase Price”).
The promissory note is to be paid to the Company on or before March 14, 2012 in lawful money of the United States of America and
in immediately available funds the principal sum of $50,000, together with interest on the unpaid principal of this Note from
the date hereof at the interest rate of Nine Percent (9%). The Note can be extended for one additional twelve month period. The
loss on disposal is $586,924 and is recognized in the financial statements on the disposal date. Please refer to the Form 8-K
filed with the SEC on March 18, 2011.



On February 29,
2012, the Company entered into a Linear Short Form Agreement (the “AGREEMENT”), with Success Oil Co., Inc. located
at 8306 Wilshire Blvd. #566 Beverly Hills, Ca. 90211, (“Success” or “Operator”) and CUBO Energy, PLC and
or its assignee, a public limited corporation organized under the laws of Great Britain (“CUBO”, “Assignee”,
or “Participant”), whereas the Company will sell 50% of its interests in certain oil and gas properties and interests
to CUBO known as the North 40 Interests of the A.J. Tubb Leasehold Estate located in Ward County Texas to CUBO as approved by
Operator, along with granting certain participation rights in further Option Rights for new proposed Drilling and Development
in the South 40 of the A.J. Tubb Leasehold Estate. The total consideration to be given is $1.15 million in CUBO stock reduced
by any liabilities assumed by CUBO that are collateralized by the North 40 Interests. For further information please see our Current
Report on Form 8-K filed on March 7, 2012, incorporated herein by reference. As of the date of this filing, this transaction has
not closed. The Company included the assets and liabilities of the portion of the interests that may be sold in assets and liabilities
available for sale and discontinued operations.



On March 12,
2012 the Company announced that it entered into a Letter of Intent to sell 51% majority interest in its Arctic Solar Engineering,
LLC ("ASE") to Canada based W2 Energy, Inc. (“W2”) via a Securities Exchange Agreement and subject to the
approvals of the Board of Directors of both the Company and W2. As of the date of this filing, this transaction has not closed.
The Company included the assets and liabilities of the portion of the interests that may be sold in assets and liabilities available
for sale and discontinued operations.



| | 17. | Professional Service Agreements
| | --- | -------------------------------



On March 1, 2010,
the Company entered into two professional service agreements (the Agreements”) which are intended to be automatically renewable
annually. Aggregate fees pursuant to the Agreements are comprised of (a) $20,000 in cash per month which has been accrued through
the period ended December 31, 2010; (b) a one-time issuance of 120,000 shares of restricted common stock; and (c) three-year warrants,
which vest six months from the grant date, to purchase for $20,000 the lower of (i) shares of common stock representing 1% of
the Company’s outstanding common stock; or (ii) shares of common stock representing a fair market value of $150,000. In
addition, the vendors are entitled to convert any unpaid cash fees into common stock at a 50% discount to the fair market value
of the stock on the date of conversion. On April 1, 2011 the contracts were renewed with aggregate fees of $30,000 per month which
have been accrued through the period ended December 31, 2011. In this renewal, the warrants were cancelled and are no longer exercisable.
All amounts accrued as part of the $30,000 monthly accrual are done so pursuant to convertible promissory notes due on demand.
They are convertible at a 50% discount to the fair market value of the stock on the date of conversion. April 1,2012 the agreements
were amended to aggregate fees of $10,000 monthly and the monthly accrual adjusted accordingly.



| | 18. | Concentrations
                                                                   and Risk
| | --- | ------------------------------------------------------------------------------------------



Customers

During the three
and six months ended June 30, 2012 and June 30, 2011, revenue generated under the top five customers accounted for 100% of the
Company’s total revenue. Concentration with a single or a few customers may expose the Company to the risk of substantial
losses if a single dominant customer stops conducting business with the Company.  Moreover, the Company may be subject
to the risks faced by these major customers to the extent that such risks impede such customers’ ability to stay in business
and make timely payments.



| | 19. | Contingencies
| | --- | -------------



The Company is
subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business
activities. Management believes that any liability that may ultimately result from the resolution of these matters will not have
a material adverse effect on the financial condition or results of operations of the Company.



In October 2010
we received notice of a lawsuit filed against the Company by St. George Investments LLC relating to certain Agreements entered
on January 15th, 2010 by EGPI Firecreek Inc. and St. George Investments LLC which include: i) Note Purchase Agreement, ii) Convertible
Promissory Note, iii) Judgment by Confession and iv) Registration Rights Agreement. St. George Investments LLC believes that EGPI
Firecreek is in breach of terms agreed upon pursuant to the aforementioned agreements and sought damages totaling $262,585 (includes
principal, interest and all penalties/fees pursuant to plaintiff's initial disclosures dated 3/28/11). In July 2011, the Company
and St. George Investments LLC entered into a settlement agreement where the Company agreed to pay $202,000 on various payment
terms beginning with $10,000 on signing of agreement, followed by five payments beginning August through December 2011, and thereafter
payments for 18 months in the amount of $6,158. St. George now claims EGPI defaulted on the payment schedule and entered a Confession
of Judgment. On September 23, 2011, EGPI Firecreek, Inc. received notice that St. George Investments LLC had filed a second lawsuit
arising out of the same claims. The Company is moving to set aside the Confession of Judgment on this basis and is answering and
vigorously defending the second lawsuit. As of January 31, 2012, the Company entered into a Settlement Agreement with St. George
Investments, LLC whereas among other terms due the Company agreed to two principal options for settlement with summary terms as
follows: 1. A settlement payment in the total aggregate amount of $200,000 with $20,000 due January 21, 2012, and $10,000 per
month thereafter on the 21st of each month thereafter going forward until paid or 2. A payment balloon of $100,000
paid by April 21, 2012 less $30,000 in payments as credited or $70,000 total upon which the Company or its parties shall have
no further obligation to make settlement payments or pay any other amounts to St. George Investments, LLC thereafter. The Company
is current in its payment through April 20, 2012 and negotiated a stock payment during the quarter ended June 30, 2012. We are
further in discussions on negotiations to make our payments.The entire amount owed is accrued in notes payable in the financial
statements.



In November 2010,
EGPI Firecreek, Inc. and South Atlantic Traffic Corp. received a lawsuit notice from two of the former owners of SATCO, Mr. Jesse
Joyner and Mr. James Stewart Hall. Mr. Joyner and Mr. Hall have subsequently resigned from their positions with the company.   The
former owners of SATCO are suing for payment of promissory notes that are currently recorded in the financial statements, along
with accrued interest and penalties and seeking damages for breach of their employment contracts.  On December 17, 2010,
EGPI Firecreek, Inc. filed its answer to the claim and filed a counterclaim against Mr. Joyner and Mr. Hall. It is management's
position that the Company is not liable and is currently exploring all defense and counter-suit options, and the Company will
vigorously defend its position.



In May 2011 the
Company received a lawsuit by Edelweiss Enterprises Inc. dba The Small Business Money Store (“SMBS”) seeking a judgment
to collect amounts allegedly owed it relating to an account receivable factoring agreement, to the former subsidiary SATCO, in
the total aggregate amount of $48,032. The Company believes that it is not liable, and will vigorously defend its position.



In August 2011,
the Company received a lawsuit notice on behalf of our wholly owned subsidiary Energy Ventures One Inc whereas Contegra Construction
Company LLC (“CCC”) is seeking a judgment to collect amounts owed it relating to a promissory note in the amount of
$157,767, which includes interest and late fees. The amount is recorded as a liability in the financial statements.



In August 2011,
the Company received a lawsuit notice on behalf of itself and our wholly owned subsidiary Energy Ventures One Inc. and Arctic
Solar, LLC by Masters Equipment Services, Inc. (“Masters”) seeking a judgment to collect amounts allegedly owed it
relating to a promissory note in the amount of $110,153, including interest and late fees. The Company is one of several parties
named in the proceeding and is prepared to vigorously defend its position. The promissory note is recorded as a liability in the
financial statements.



In February 2012
the Company received a lawsuit notice on behalf of itself by Morrell Saffa Craige, PC (“Morrell”) seeking the recovery
of legal fees in the approximate sum of $25,000 owed to the Plaintiff in connection with its successful defense of a lawsuit styled
Thermo Credit, LLC v. EGPI, et al. The Company owes the above fees and intends on paying the bill in full. The amount is recorded
in the financial statements in accounts payable.



In May, 2012
a lawsuit was filed in the Clark County, Nevada District Court by Lakeview Consulting, LLC (“Lakeview”), against the
Company and other various Does 1-V and Roes corporations V1-X. Lakeview alleges the Company failed or refused to convert shares
on a Convertible Note in the amount of $35,000 and therefore the sum plus interest, damages, etc. The Company is one of several
parties named in the proceeding and is prepared to vigorously defend its position. The amount is recorded as a liability in the
financial statements.



As noted in our
business combination footnote our SATCO acquisition contained certain make whole provisions that may impact us in the future.  In
accordance with the make whole provision of the acquisition agreement pertaining to SATCO, $988,720 has been recorded in common
stock subscribed for additional contingent consideration that is owed as of December 31, 2009.  The make whole provision
provided that the owners of SATCO would be protected from decreases in the stock price of the Company for 1 year subsequent to
the acquisition date.  The one year anniversary of the acquisition is November 4, 2010.  As of this date,
the total fair value of the amount of contingent consideration owed in common shares is $1,119,580.  In accordance with
ASC 805-30-35 pertaining to subsequent measurement of contingent consideration pursuant to a business combination, the additional
$130,860 is not recorded due to the fact that this consideration is recorded in equity.  This amount will be recognized
upon issuance of the shares in settlement of the amount owed.



As discussed
in Note 11 above, we have certain notes that may become convertible in the future and potential result in further dilution to
our common shareholders.



In July 2010
our Chanwest Resources, Inc. subsidiary operation (“CWR”) entered into a purchase lease agreement with Circle D Trucking
of Texas which includes a right to purchase the leased equipment valued at $164,500.





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Table of Contents




| | 20. | Subsequent Events
| | --- | -----------------



I.



On February 29, 2012, the we entered
into a Linear Short Form Agreement (the “AGREEMENT”), with Success Oil Co., Inc. located at 8306 Wilshire Blvd. #566
Beverly Hills, Ca. 90211, and ii) CUBO Energy, PLC and or its assignee, a public limited corporation organized under the laws
of Great Britain with its principal place of business located at Thames House, Portsmouth Road Esher Surrey, KT10 9AD United Kingdom.



Whereas, a linear short form Agreement
was agreed by the parties to be developed into the final long form agreement (“LFA”) to be completed and signed off
by the parties by no later than March 15, 2012.



Whereas the
Parties as i) entered into a Stock Purchase Agreement (the “Agreement”) as of July 31, 2012, the Effective Date (“Effective
Date”), by and among CUBO Energy, PLC’s assignee, Mondial Ventures Inc., (“Mondial”) a public limited
corporation organized under the state of Nevada, USA, with its principal place of business located at 4625 West Nevso Drive, Suite
2 Las Vegas NV, 89103 (collectively, the “Company”), and itself, and EGPI Firecreek, Inc. (“the Registrant”)
listed on Schedule 1 attached thereto (collectively referred to as the “Investor”), and, ii) entered into an assignment
and,



Whereas, contemporaneously
with the execution and delivery of the Agreement, the parties hereto executed and delivered i) an Assignment and Bill of Sale
(the “Assignment and Bill of Sale Agreement”) pursuant to which EGPI Firecreek, Inc., the Investor, and its wholly-owned
subsidiary, Energy Producers, Inc., agree to sell to Mondial Ventures, Inc., oil and gas interests for the J.B. Tubb Leasehold
Estate listed in the Assignment and Bill of Sale Agreement of Energy Producers, Inc., a wholly owned subsidiary of EGPI Firecreek,
Inc. as described in the Assignment and Bill of Sale attached on Exhibit “A” thereto, and, ii) Participation Agreement(Turnkey Drilling, Re Entry, and Multiple Wells) granting certain rights in and to interests
for additional development in the J.B. Tubb Leasehold Estate.



For more information please see our
Current Report on Form 8-K filed on August 3, 2012.



II.



Effective July 1, 2012 EGPI Firecreek,
Inc. and it wholly owned subsidiary Energy Producers, Inc. (individually and collectively, the “Company” or
“Companies”, entered into an Agreement (the “Agreement”) with TWL Investments a LLC, an Arizona
limited liability company (“Holder” or “TWL”), each a “Party” and collectively
(the “Parties”). The Agreement pertains to a certain Promissory Note of May 9, 2011 (hereinafter, the “TWL
Note”) and other obligations of the Companies that have been assigned to TWL by their holders. This Agreement shall be effective
as of July 1, 2012.



For more information please see our
Current Report on Form 8-K filed on August 3, 2012.



In August 2012 the Company issued
370,750,000 shares of common stock, as reclassified, to reduce debt owed to a debt holder.



In August 2012 the Company issued
627,222,222 shares of common stock, as reclassified, to reduce debt on promissory notes and convertible promissory notes.





| | 21. | Segment Reporting
| | --- | -----------------



We classify our
operations into two main business lines: (1) Solar Thermal Energy, and (2) Oil and Gas. This segmentation best describes our business
activities and how we assess our performance. Information about the nature of these segment services, geographic operating areas
and customers is described in the Company’s 2010 Annual Report. Summarized financial information by business segment for
the three months ending June 30, 2012 is presented below. All segment revenues were derived from external customers. As more fully
disclosed in the Company’s fiscal year 2011 Annual Report, we had no operations in these business segments until our acquisitions
of Arctic Solar Engineering, LLC on February 4, 2011 (Solar Thermal Energy), and the beginning operations of Energy Producers,
Inc. (Oil and Gas).



For the six months
ending June 30, 2012,



|                              | Discontinued
        Operations | Solar
        Thermal
        Energy | Oil &
        Gas | All Other
        (a) | Totals   
|----------------------------- | ------------------------------- | ------------------------------------ | ----------------- | --------------------- | ---------
|Revenues                      | 31,604                          |                                      |                   |                       | 31,604   
|Depreciation & amortization   | 47,868                          |                                      |                   |                       | 81,693   
|Income (loss) from operations | (271,536)                       |                                      | 34,376            |                       | (305,913)
|Interest expense              |                                 |                                      | 463               |                       |          
|Segment assets                | 177,136                         |                                      | 210               |                       | 2,047,053



For the six months
ending June 30, 2012,





The following
are reconciliations of reportable segment revenues, results of operations, assets and other significant items to the Company’s
consolidated totals (amounts stated in thousands):



|                               |  | Six Months Ended June 30, 2012
|------------------------------ |  | ------------------------------
|Net revenues:                  |  |                               
|Total for reportable segments  |  |                               
|Corporate                      |  |                               
|                               |  |                               
|Depreciation and amortization: |  |                               
|Total for reportable segments  |  |                               
|Corporate                      |  |                               
|                               |  |                               
|Income (loss) from operations: |  |                               
|Total for reportable segments  |  |                               
|Corporate                      |  |                               
|                               |  |                               
|Interest expense:              |  |                               
|Total for reportable segments  |  |                               
|Corporate                      |  |                               
|                               |  |                               
|Segment assets:                |  |                               
|Total for reportable segments  |  |                               
|Corporate                      |  |                               
|                               |  |                               



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ITEM 2 –MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.



You should read
the following discussion and analysis in conjunction with the Consolidated Financial Statements in Form 10-K, as amended, and
the other financial data appearing elsewhere in this Form 10-Q Report.



The information
set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995,
including, among others (i) expected changes in the Company’s revenues and profitability, (ii) prospective business opportunities
and (iii) the Company’s strategy for financing its business. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”,
“anticipates”, “intends” or “expects”. These forward-looking statements relate to the plans,
objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect
to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and
operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements
in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the
Company will be achieved. In light of these risks and uncertainties, there can be no assurance that actual results, performance
or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied
by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company
undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.



The Company has
been focused on oil and gas activities for development of interests held that were acquired in Texas and Wyoming for the production
of oil and natural gas through December 2, 2008.  The Company throughout 2008 was seeking to continue expansion and
growth for oil and gas development in its core projects. EGPI Firecreek Inc. was formerly known as Energy Producers, Inc., an
oil and gas production company focusing on the recovery and development of oil and natural gas. This strategy is centered on rehabilitation
and production enhancement techniques, utilizing modern management and technology applications in upgrading certain proven reserves.
Historically in its 2005 fiscal year, the Company initiated a program to review domestic oil and gas prospects and targets.  As
a result, EGPI acquired non-operating oil and gas interests in a project titled Ten Mile Draw (“TMD”) located in Sweetwater
County, Wyoming USA for the development and production of natural gas. In July, 2007, the Company acquired and began production
of oil at the 2,000 plus acre Fant Ranch Unit in Knox County, Texas. This was followed by the acquisition and commencement in
March, 2008 of oil and gas production at the J.B. Tubb Leasehold Estate located in the Amoco Crawar Field in Ward County, Texas.
The Company as a result, successfully increased oil and gas production and revenues derived from its properties.



In early 2009,
based on the economic downturn, struggling financial markets and the implementation of the federal stimulus package for infrastructure
projects, the Company embarked on a transition from an emphasis on the oil and gas focused business to that of an acquisition
strategy focused on the transportation industry serving federal DOT and state/local DOT agencies. In addition, the acquisition
targets being reviewed by the Company also had a presence in the telecommunications and general construction industries. The acquisition
strategy focuses on vertically integrating manufacturing entities, distributors and construction groups. In May 2009, the Company
acquired M3 Lighting Inc. (M3) as the flagship subsidiary with key additional management team to begin this process, and as a
result on November 4, 2009, the Company acquired all of the capital stock of South Atlantic Traffic Corporation, a Florida corporation,
which distributes a variety of products geared primarily towards the transportation industry where it derives its revenues.



Through 2009
and in addition to activities discussed above, we continued our previous decisions to limit and wind down the historical pursuit
of our oil and gas projects overseas in Central Asian and European countries and sold off our then oil and gas subsidiary unit
Firecreek Petroleum, Inc., but did retain certain first right of refusal to overseas projects (see discussion further in this
report). In late 2009 and in 2010, the Company began pursuing a reentry to the oil and gas industry on a domestic basis as the
Company’s second line of business and which was part of our ongoing strategic plans. The Company became a party to a pending
agreement to acquire an entity that owns approximately 2,100 miles of a pipeline system initially used as a crude oil transportation
system by Koch Industries, As of December 31, 2010 we have not concluded this transaction and have not received notice of termination
or other correspondence. In addition, on December 31, 2009, the Company, through its wholly-owned subsidiary, Energy Producers,
Inc., effectively acquired a 50% working interest and corresponding 32% revenue interest in certain oil and gas leases, reserves
and equipment located in West Central Texas. As of December 31, 2010 we have not yet produced commercial oil or gas through these
non operated interests. The turnkey manager, partner, and project operator encountered an abundance of weather related and non
reported down hole maintenance issues in its attempts in 2010 to bring one or more wells on line. For 2011 both the operator and
Company are in agreement and are currently moving forward for the recompletion of the McWhorter and Boyette proven zones in their
respective wells. Additionally, plans are to have the Young #1 well, which adjoins the McWhorter, convert into a salt water disposal
well to support the McWhorter production operations and economics. We are planning in-depth technical evaluations to be conducted
on the two undeveloped Barnett Shale locations situated on the Boyette lease at the 5,500 ft. depth.  Recent successes in
the local Barnett wells have encouraged both management and its operator, to advance the timing on the Barnett evaluation.



Moving forward,
in early 2010 again as a part of our business strategy for a line of business focusing on the transportation industry serving
federal DOT and state/local DOT agencies the Company entered into a pending agreement to acquire all of the issued and outstanding
capital stock of Southwest Signal, Inc., a Florida corporation. Southwest Signal, Inc. was established in 2000 and is engaged
in all facets of the United States Intelligent Traffic Systems (ITS) / Department of Transportation (DOT) Industry activities.
Ultimately this acquisition was never consummated due to a failed financial arrangement. In addition, working side by side at
the time of SWSC to implement our strategy for SATCO and pair the activities of the two units due the similar nature of business,
on March 3, 2010, the Company executed a Stock Purchase Agreement with the stockholders of Redquartz LTD, a company formed and
existing under the laws of the country of Ireland.  Redquartz LTD business had been active for 45 years, is known internationally
and we sought this acquisition as our entrance into the European markets with respect to Intelligent Traffic Systems (ITS) and
the transportation industry as well as expanding our relationship recently established with an overseas entity business relationship
with the principals of Redquartz, known as Cordil, Inc., to assist for the products sold by South Atlantic Traffic Corporation
(SATCO), a wholly owned subsidiary of the Company. For further information please see our Current Report on Form 8-K filed on
March 11, 2010,  and as provided elsewhere in this document. The Redquartz LTD business unit purchased by the Company
had no assets and resulted in additional debt burden to the Company.



Toward further
development of our oil and gas line of business, in June 2010, the Company acquired all of the issued and outstanding stock of
Chanwest Resources, Inc., (“Chanwest or CWR”) a Texas corporation. In the course of this acquisition, Chanwest stockholders
exchanged all outstanding common shares for the Company’s common shares. Chanwest will provide services for drill site preparation
to clear and lay pipeline (gathering systems) for operators. Chanwest operations can provide for services to maintain lease roads,
set power poles and clean up oilfield spills. Chanwest works with operators or lease owners by purchase order or contract with
major oil fields. The Company will continue to work with Chanwest to develop its plans for new growth for 2011. For further information
please see our Current Report on Form 8-K filed on June 16, 2010, and information contained in our Form 10-Q filed November 22,
2010.



In October 2010,
the Company (“Purchaser”) executed a Securities Purchase / Exchange Agreement (“SPA”) with the owners
(“Sellers”) of Terra Telecom, LLC, an Oklahoma limited liability company, located at 4510 South 86th East Ave, Tulsa,
Oklahoma, 74145 ( “Terra”) to acquire all of the outstanding stock of Terra, and 100% of the total LLC membership
units existing thereof. For more information on Terra, please see our Current Report on Form 8-K and Exhibit 10.1 thereto filed
on August 7, 2010, as amended.







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Terra Telecom
was considered recognized as a leading provider of state-of-the-art communication technologies and a premier Alcatel-Lucent partner.
They served various sized companies and organizations that use and deploy communications systems, sales, service, and training
while consolidating and optimizing the end user experience. In 2006 Terra relocated its company headquarters to a 25,000 square
foot facility in Tulsa, Oklahoma. This facility provides Terra the space to continue growth and the ability to manage operations
throughout the nation. Terra Telecom worked with the United Nations delivering Alcatel voice products to several countries and
the Texas Dept. of Transportation, which will bring opportunities to the Company’s SATCO and M3 units and other current
or future planned ITS/DOT related activities. Terra’s various ITS/DOT opportunities in place with Alcatel products. Terra
employed approximately 50.  The acquisition of Terra ultimately failed due to lack of a completed funding which was
to be concluded on or about February 24th, 2011. The funding that was in process for its initial order was stopped due to the
actions of IRS seizure of escrow deposit funds in transit from the former Principals of Terra to the deposit account of the lender
which was the requirements for the initial funding to begin. Because the funding did not begin, Terra was not able to maintain
its dealership guarantees for product delivery which were pulled from clients’ orders.



Further regarding
Terra, the Company from the time of execution of the Agreement did not have or assume control of the Terra entity’s assets,
including bank accounts, nor did it establish or have effective or permanent management control of the entity. Since the economic
downturn lenders have become intensely difficult to satisfy which in many cases can jeopardize transaction completions, due the
time loss of substantial and excessive due diligence processes, including backing out of signed closing processes.



Overall due to
economic factors we entered extreme financial turbulence in the latter half to end of Q4 2010 for our new business strategy. Some
of these economic factors included our subsidiary operations for SATCO being on hold numerous times (unable to complete or take
on new sales) with the inability to make some or all product deliveries and installations (jobs), not being able to pay suppliers
for order deliveries, and other obstacles including some suppliers backing down on agreements negotiated with negotiated terms
being met by SATCO. These issues over time eventually generated an unstable environment for both South Atlantic Traffic Corporation
and all entities or pending acquisitions or activities related to Intelligent Traffic Systems (ITS) / Department of Transportation
(DOT) Industry serving federal DOT and state/local DOT agencies, and telecommunications industries for deployment of communications
systems, sales, and/or service. The Company management and advisors reached the conclusion in late February 2011, that it was
unlikely that SATCO or Terra would be able to continue operations and on March 14, 2011 sold its interests in both entities to
Distressed Asset Acquisitions, Inc. We believe that if the financing established for Terra would have closed, it would have improved
the cash flow status of the Company that could also have also directly and indirectly assisted our SATCO unit to rebuild and quickly
re-structure and solve many of its problems and renewed growth potential. As delays were incurred time and time again from potential
lenders and financial entities, realizing the potential of SATCO became less and less of a possibility. For more information please
see our Current Report on Form 8-K filed on March 18, 2011.



In an effort
to establish an alternative energy division, in February 2011, the Company entered into an Agreement to acquire all 100%  of
Arctic Solar Engineering LLC, a Missouri limited liability company located at PO Box 4391, Chesterfield, MO 63006 (the “Company”),
and the owners of Membership Interests of the Arctic Solar Engineering LLC; The FATM Partnership, a Missouri Partnership, The
Frederic Sussman Living Trust. Arctic Solar Engineering, LLC, is an integrator of Solar Thermal Energy technology. Solar Thermal
Energy (“STE”) is believed to be the most efficient and economical method of capturing and using renewable thermal
energy created by the sun every day of the year. The solar collectors that are used capture all visible and non-visible wave lengths
of sun light and covert the light into energy at a 90% efficiency. Energy created by ASE’s STE Systems store that energy
in water (or other similarly inexpensive storage mediums) and then use that energy in its direct form to heat water, heat space
and cool spaces. According to the US Department of Energy, this accounts for 70% of all energy used in commercial and residential
structures in the United States.



In September
2010 the Company entered into a term sheet and subsequently later in March of 2011, entered into a Series D Stock Purchase Agreement
(“SPA”) with Dutchess Private Equities Fund, Ltd. (“Investors”) pursuant to which the Investors and its
wholly-owned subsidiary Ginzoil, Inc, (GZI) agreed to sell to the Company’s wholly owned subsidiary unit Energy Producers,
Inc. (“EPI”) a majority 75% Working Interest and 56.25% corresponding Net Revenue Interest in the North 40 acres of
the J.B. Tubb Leasehold Estate/Amoco Crawar field and oil and gas interests, including all related assets, fixtures, equipment,
three well heads, three well bores, and pro rata oil & gas revenue and reserves for all depths below the surface to 8,500
ft. The field is located in the Permian Basin and the Crawar Field in Ward County, Texas (12 miles west of Monahans & 30 miles
west of Odessa in West Texas). Included in the transaction, EPI will also acquire 75% Working Interest and 56.25% corresponding
Net Revenue Interest in the Highland Production Company No. 2 well-bore located in the South 40 acres of the J.B. Tubb Leasehold
Estate/Amoco Crawar field, oil and gas interests, pro rata oil & gas revenues and reserves with depth of ownership 4700 ft.
to 4900 ft.



The Company has
been making presentations to asset-based lenders and other financial institutions for the purpose of (i) expanding and supporting
our growth potential by i) to a lesser extent rebuilding for the time being, the development of its line of business operations
similar to it former activities related to ITS/DOT and telecommunications industries, and (ii) building new infrastructure for
its oil and gas operations in 2011. The Company throughout its first quarter of operations for 2011 has been pursuing projects
for acquisition and development of select targeted oil and gas proved producing properties with revenues, having upside potential
and prospects for enhancement, rehabilitation, and future development. These prospects are primarily located in Eastern Texas,
and in other core areas of the Permian Basin.



The Company’s
goal is to rebuild our revenue base and cash flow; however, the Company makes no guarantees and can provide no assurances that
it will be successful in these endeavors.



One of the ways
our plans for growth could be altered if current opportunities now available become unavailable:



The Company would
need to identify, locate, or address replacing current potential acquisitions or strategic alliances with new prospects or initiate
other existing available projects that may have been planned for later stages of growth and the Company may therefore not be ready
to activate. This process can place a strain on the Company. New acquisitions, business opportunities, and alliances, take time
for review, analysis, inspections and negotiations. The time taken in the review activities is an unknown factor, including the
business structuring of the project and related specific due diligence factors.





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General



The Company historically
derived its revenues primarily from retail sales of oil and gas field inventory equipment, service, and supply items primarily
in the southern Arkansas area, and from acquired interests owned in revenue producing oil wells, leases, and equipment located
in Olney, Young County, Texas. The Company disposed of these two segments of operations in 2003. The Company acquired a marine
vessel sales brokerage and charter business, International Yacht Sales Group, Ltd. of Great Britain in December 2003 later disposing
of its operations in late 2005. The Company focused on oil and gas activities for development of interests held that were acquired
in Wyoming (the Ten Mile Draw (TMD) prospect) and two programs in Texas, (the Fant Ranch unit, and J.B. Tubb Leasehold Estate)
for the production of oil and natural gas through October 30 and December 2, 2008 the dates of disposal respectively. In 2009
we disposed of our wholly owned subsidiary Firecreek Petroleum, Inc. (see further information in this report and in our current
Report on Form 8-K filed May 20, 2009, incorporated herein by reference). We account for or have accounted for these segments
as discontinued operations in the consolidated statements of operations for the related fiscal year.



Sale/Assignment of 100% Stock
of FPI Subsidiary



Having disposed
of all of the assets of FPI, on May 18, 2009, the Company and Firecreek Global, Inc., entered into a Stock Acquisition Agreement
effective the 18th day of May, 2009, relating to the Assignee’s acquisition of all of the issued and outstanding shares
of the capital stock of Firecreek Petroleum, Inc., a Delaware corporation. Moreover, included and inherent in the Assignment was
all of the Company’s debt held in the FPI subsidiary. In addition, the Company, and Assignee executed a right of first refusal
agreement attached as Exhibit to the Agreement, granting to the Company the right of first refusal, for a period of two (2) years
after Closing, to participate in certain overseas projects in which Assignee may have or obtain rights related to Assignors’
previous activities in certain areas of the world. For further information please see our current Report on Form 8-K filed on
May 20, 2009, incorporated herein by reference.



2009 Merger Acquisition with
M3 Lighting, Inc.



On May 21, 2009,
EGPI Firecreek, Inc., a Nevada corporation (the “Company” or “Registrant”), Asian Ventures Corp., a Nevada
corporation (the “Subsidiary”), M3 Lighting, Inc., a Nevada corporation (“M3”), and Strategic Partners
Consulting, L.L.C., a Georgia limited liability company (“Strategic Partners”) executed and closed a Plan and Agreement
of Triangular Merger (the “Plan of Merger”), whereby M3 merged into the Subsidiary, a wholly-owned subsidiary of the
registrant (the “Merger”).  Further information can be found along with copy of the Plan of Merger attached
as an exhibit to our Current Report on Form 8-K, filed with the Commission on May 27, 2009, as amended. Amendment No. 1 and No.
2 to the May 27, 2009 current Report on Form 8-K were filed on June 24 and August 4, 2009, respectively, and additional information
can be found in our Form 10-K annual report filed on April 15, 2010, and incorporated herein by reference.



Completion of South Atlantic
Traffic Corporation (SATCO) Acquisition



Effective as
of November 4, 2009, the Company acquired all of the issued and outstanding capital stock of South Atlantic Traffic Corporation,
a Florida corporation (“SATCO”). In the course of this acquisition, SATCO stockholders exchanged all outstanding
common shares for cash consideration, the Company’s common shares and sellers’ notes. SATCO has been in business since
2001 and has several offices throughout the Southeast United States. Please see further discussion and information listed in “The
Business”, “Description of Properties”, and “Overview” to the Management Discussion and Analysis
sections, and elsewhere in this document.



Completion of Acquisition of
50% Oil and Gas Working Interests, Callahan, Stephens, and Shakelford Counties, Texas, Three Well Program



Effective December
31, 2009, the Company through its wholly owned subsidiary Energy Producers, Inc. closed an Acquisition Agreement including an
Assignment of Interests in Oil and Gas Leases (the “Assignment”), with Whitt Oil & Gas, Inc., (“Whitt”)
a Texas corporation acquiring 50% working interests and corresponding 32% net revenue interests in oil and gas leases representing
the aggregate total of 240 acre leases, reserves, three wells, and equipment located in Callahan, Stephens, and Shakelford Counties,
West Central Texas. Please see further discussion and information listed in “The Business” and “Description
of Properties” and the “Overview” to the Management Discussion and Analysis sections of this report.



Completion of Redquartz LTD
Acquisition



On March 3, 2010,
the Company acquired Redquartz LTD, a company formed and existing under the laws of the country of Ireland.  Redquartz
LTD has been in business for 45 years, is known internationally and is our entrance into the European markets with respect to
Intelligent Traffic Systems (ITS) and the transportation industry as well as expanding our relationship recently established with
Cordil, Inc. for the products sold by South Atlantic Traffic Corporation (SATCO), a wholly owned subsidiary of the Company. For
further information please see our Current Report on Form 8-K filed on March 11, 2010,  and in the section on “The
Business”, and “Overview” to the Management Discussion and Analysis sections, and elsewhere listed in this document.



Completion of Chanwest Resources,
Inc. Acquisition



On June 11, 2010,
the Company acquired all of the issued and outstanding stock of Chanwest Resources, Inc., (“Chanwest or CWR”) a Texas
corporation. Chanwest Resources, Inc. was formed in 2009 and has been engaged in ramping up operations including acquiring assets
related to the servicing, construction, production and development for oil and gas. For further information please see our Current
Report on Form 8-K filed on June 16, 2010, and in the section on “The Business”, and “Overview” to the
Management Discussion and Analysis sections, and elsewhere listed in this document.



Completion and Entry into a
Definitive Agreement with Terra Telecom, LLC



On October 1,
2010, EGPI Firecreek, Inc. (“Purchaser”) executed a Securities Purchase / Exchange Agreement (“SPA”) with
the owners (“Sellers”) of Terra Telecom, LLC, an Oklahoma limited liability company, located at 4510 South 86th
East Ave, Tulsa, Oklahoma, 74145 ( “Terra”) to acquire all of the outstanding stock of Terra, and 100% of the total
LLC membership units existing thereof. All assets and liabilities of Terra, other than information listed in the SPA are
considered to be transferred to the Purchaser. For more information on Terra, please see our Current Report on Form 8-K, Form
8-K/A (amendment no. 1), and Form 8-K/A (amendment no. 2) filed on October 7, 2010, December 7, 2010, and March 22, 2011, respectively,
and in the section on “The Business”, and “Overview” to the Management Discussion and Analysis sections,
and elsewhere listed in this document.  On March 14, 2011, the Company’s interest in Terra was sold.



Completion and Entry into a
Definitive Agreement with Arctic Solar Engineering, LLC



On February 4,
2011, the Company entered into an Agreement to acquire all 100%  of Arctic Solar Engineering LLC, a Missouri limited
liability company located at PO Box 4391, Chesterfield, MO 63006 (the “Company”), and the owners of Membership Interests
of the Arctic Solar Engineering LLC; The FATM Partnership, a Missouri Partnership, The Frederic Sussman Living Trust. Arctic Solar
Engineering, LLC, is an integrator of Solar Thermal Energy technology. For further information please see our Current Report on
Form 8-K filed on February 10, 2011, and in the section on “The Business”, and “Overview” to the Management
Discussion and Analysis sections, and elsewhere listed in this document.



Completion and Entry into a
Definitive Agreement with Dutchess Private Equities Fund, Ltd.



On March 1, 2011,
the Company entered into a Series D Stock Purchase Agreement (“SPA”) with Dutchess Private Equities Fund, Ltd. (“Investors”)
pursuant to which the Investors and its wholly-owned subsidiary Ginzoil, Inc, (GZI) agreed to sell to the Company’s wholly
owned subsidiary unit Energy Producers, Inc. (“EPI”), a majority 75% Working Interest and 56.25% corresponding Net
Revenue Interest in the North 40 acres of the J.B. Tubb Leasehold Estate/Amoco Crawar field and oil and gas interests, including
all related assets, fixtures, equipment. For further information please see our Current Report on Form 8-K filed on March 7, 2011,
and in the section on “The Business”, and “Overview” to the Management Discussion and Analysis sections,
and elsewhere listed in this document.



The Company expects
to incur an increase in operating expenses during the next year from commencing activities related to its plans for the Company’s
oil and gas business through EPI, oil and gas services business through CWR, alternative energy business division through Arctic
Solar Engineering, LLC, and including any new or pending acquisitions discussed herein, and those business activities and developments
whether ongoing or to be concluded, as related to our M3, SATCO, and Terra strategy and operations, and ongoing potential acquisitions,
including new or pending acquisitions related to signalization and lighting geared to the transportation industry. The amount
of net losses and the time required for the Company to reach and maintain profitability are uncertain at this time. There is a
likelihood that the Company will encounter difficulties and delays encountered with business subsidiary operations, including,
but not limited to uncertainty as to development and the time and timing required for the Company’s plans to be fully implemented,
governmental regulatory responses to the Company’s plans, fluctuating markets and corresponding spikes, or dips in our products
demand, currency exchange rates between countries, acquisition and development pricing, related costs, expenses, offsets, increases,
and adjustments. There can be no assurance that the Company will ever generate significant revenues or achieve profitability at
all or on any substantial basis.





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General Statement:  Factors
that may affect future results:



With the exception
of historical information, the matters discussed in Management’s Discussion and Analysis or Plan of Operation contain forward
looking statements under the 1995 Private Securities Litigation Reform Act that involve various risks and uncertainties.  Typically,
these statements are indicated by words such as “anticipates”, “expects”, “believes”, “plans”,
“could”, and similar words and phrases.  Factors that could cause the company’s actual results to differ
materially from management’s projections, forecasts, estimates and expectations include but are not limited to the following:



- Inability of the company to secure additional financing.



- Unexpected economic changes in the United States.



- The imposition of new restrictions or regulations by government agencies that
affect the Company’s business activities.



To the extent
possible, the following discussion will highlight the Company’s business activities for the three and six months ended June
30, 2012 and June 30, 2011.



Results of Operations



Three months ended June 30, 2012
compared to the three months ended June 30, 2011.



Total revenue
for sales of oil and gas during the three months ended June 30, 2012 as compared to June 30, 2011 was $12,734 and $36,267, respectively.
An additional and equal amount of revenue related to sales of oil and gas during the three months ended June 30, 2012 and 2011
were included in discontinued operations. Income declined the first six months due to oil field related problems first in its
two fracing jobs which included defective gel pack sand from the manufacturer causing sand blockage, second from production interference
due to necessary maintenance and repairs to its heater treater, water tank, and separator, and more recently having to shut down
several weeks due to a pipe leak on pipeline owned by the gas purchaser running through the properties which shut down operations
for nearly a month.



Total revenue
for the sale and installation of solar equipment for the three months ended June 30, 2012 as compared to June 30, 2011 was $0
and $22,220, respectively. A portion of the overhead costs, 51%, pertaining to the subsidiary that is engaged in this business,
Arctic Solar Engineering, LLC, has been classified in discontinuing operations due to the potential sale of this subsidiary.



Total general
and administrative expenses increased to $477,922 as of June 30, 2012 from $330,602 as of June 30, 2012 due to increased professional
expenses during the period.



The loss from
discontinued operations for the three months ended June 30, 2012 and June 30, 2011 was $227,854 and $134,169, respectively. For
the three months ended June 30, 2012 and June 30, 2011, the items composing discontinued operations included 51% of Arctic Solar
Engineering, LLC and 50% of the operations of the oil and gas interests pertaining to the North 40 Interests of the Tubb Leasehold
Interests. For the three months ended June 30, 2011, the loss from discontinued operations also included the operations of SATCO
which was sold in the prior period.



Interest expense
for the three months ended June 30, 2012 was $489,402 compared with $177,689 for the same period last year.



Fully diluted
income (loss) per share was ($0.00) per share for the three months ended June 30, 2012, for continuing operations, compared to
a loss of ($0.12) per share for the three months ended June 30, 2011.



Six months ended June 30, 2012
compared to the six months ended June 30, 2011.



Total revenue
for sales of oil and gas during the six months ended June 30, 2012 as compared to June 30, 2011 was $31,604 and $107,649, respectively.
An additional and equal amount of revenue related to sales of oil and gas during the three months ended June 30, 2012 and 2011
were included in discontinued operations.



Total revenue
for the sale and installation of solar equipment for the six months ended June 30, 2012 as compared to June 30, 2011 was $0 and
$25,142, respectively. A portion of the overhead costs, 51%, pertaining to the subsidiary that is engaged in this business, Arctic
Solar Engineering, LLC, has been classified in discontinuing operations due to the potential sale of this subsidiary.



Total general
and administrative expenses increased to $708,868 as of June 30, 2012 from $588,334 as of June 30, 2011 due to increased professional
expenses during the period.



After deducting
general and administrative expenses, the Company experienced a loss from operations of $893,443 for the six months ended June
30, 2012 compared to a loss of $608,591 for the same period last year.



The loss from
discontinued operations for the six months ended June 30, 2012 and June 30, 2011 was $271,536 and $792,415, respectively. For
the six months ended June 30, 2012 and June 30, 2011, the items composing discontinued operations included 51% of Arctic Solar
Engineering, LLC and 50% of the operations of the oil and gas interests pertaining to the North 40 Interests of the Tubb Leasehold
Interests. For the six months ended June 30, 2011, the loss from discontinued operations also included the operations of SATCO
which was sold in the prior period.



Interest expense
for the six months ended June 30, 2012 was $844,990 compared with $295,030 for the same period last year.



Fully diluted
income (loss) per share was ($0.00) per share for the six months ended June 30, 2012, for continuing operations, compared to a
loss of ($0.99) per share for the six months ended June 30, 2011.



Discussion of Financial
Condition:  Liquidity and Capital Resources



Cash on hand
at June 30, 2012 was $339 compared to $2,696 at December 31, 2011. The Company had working capital deficit of $6,424,599 at June
30, 2012 compared to a working capital deficit of $5,607,092 at December 31, 2011.



Total assets
decreased to $2,574,043 at June 30, 2012 compared to $2,704,748 at December 31, 2011 mainly as a result of depreciation and
depletion.



Shareholders’
equity increased to a deficit of $ 5,718,808 at June 30, 2012 from $4,678,508 at December 31, 2011. During the six months ended
June 30, 2012, the Company issued 224,735,714 shares to consultants for services rendered. In addition, the Company issued 2,295,152,672
shares to pay debt of $373,944.



The Company must
generally undertake certain ongoing expenditures in connection with rebuilding, expanding and developing its oil and gas business
and related acquisition activity and its business acquisition activities, and for various past and present legal, accounting,
consulting, and technical review, and to perform due diligence for the acquisition and development programs for both lines of
business; furthering research for new and ongoing business prospects, and in pursuing capital financing for its existing available
rights and proposed operations.



Management has
estimated that cost for initially paying down certain of the Company’s recent debt, providing necessary working capital,
and activating development of its current plans for domestic oil and gas segment operations, alternative energy division, acquisition
and development, and its rebuilding proposed for Telecom, ITS / DOT business operations and activities, acquisition and developments,
will initially require a very minimum of $3,500,000 to $7,500,000 to a maximum of $8,000,000 to $10 million during the first six
to twelve months of fiscal 2012.



Financing our
full expansion and development plans for our oil and gas operations could require up to $50,000,000 or more. The Company may elect
to reduce or increase its requirement as circumstances dictate. We may elect to revise these plans and requirements for funds
depending on factors including; changes in acquisition and development estimates; interim corporate and project finance requirements;
unexpected timing of markets as to cyclical aspects as a whole; currency and exchange rates; project availability with respect
to interest and timing factors indicated from parties representing potential sources of capital; structure and status of our strategic
alliances, potential joint venture partners, and or our targeted acquisitions and or interests.



The Company cannot
predict that it will be successful in obtaining funding for its plans or that it will achieve profitability in fiscal 2012.



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ITEM 3 – QUANTITATIVE
AND QUALITATIVE ANALYSIS OF MARKET RISKS



There
are no material changes in the market risks faced by us from those reported in our Annual Report on Form 10-K for the year
ended December 31, 2011.



ITEM 4(T) –
CONTROLS AND PROCEDURES



|(a) | Evaluation of Disclosure and Procedures
|--- | ---------------------------------------



Our Chief Executive
Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of June 30, 2012. This evaluation was carried
out under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer. Based on this evaluation, these officers have concluded that there are material weaknesses in our disclosure
controls and procedures and they were not effective for the following reasons:



| | ● | In connection with the preparation of the Original Report, we identified
    a deficiency in our disclosure controls and procedures related to communication with the appropriate personnel involved with
    our 2011 audit.  We are utilizing additional accounting consultants to assist us in improving our controls and procedures.
    We believe these measures will benefit us by reducing the likelihood of a similar event occurring in the future.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ● | Due to our relatively small size and not having present operations, we do not have segregation
    of duties which is a deficiency in our disclosure controls. We do not presently have the resources to cure this deficiency.                                                                                                                                                                                                                               



Disclosure controls
and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated
to management, including our Principal Executive Officer and Principal Accounting Officer, to allow timely decisions regarding
required disclosure.



All internal
control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore,
even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability
and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods
are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the
policies or procedures may deteriorate.



|(b) | Changes in Internal Controls over financial reporting
|--- | -----------------------------------------------------



There have been
no changes in our internal controls over financial reporting during our last fiscal quarter, which has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.





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PART
II.  OTHER INFORMATION

ITEM 1 – LEGAL
PROCEEDINGS



The
Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course
of its business activities. Management believes that any liability that may ultimately result from the resolution of these matters
will not have a material adverse effect on the financial condition or results of operations of the Company.



In October 2010
we received notice of a lawsuit filed against the Company by St. George Investments LLC relating to certain Agreements entered
on January 15th, 2010 by EGPI Firecreek Inc. and St. George Investments LLC which include: i) Note Purchase Agreement, ii) Convertible
Promissory Note, iii) Judgment by Confession and iv) Registration Rights Agreement. St. George Investments LLC believes that EGPI
Firecreek is in breach of terms agreed upon pursuant to the aforementioned agreements and sought damages totaling $262,585 (includes
principal, interest and all penalties/fees pursuant to plaintiff's initial disclosures dated 3/28/11). In July 2011, the Company
and St. George Investments LLC entered into a settlement agreement where the Company agreed to pay $202,000 on various payment
terms beginning with $10,000 on signing of agreement, followed by five payments beginning August through December 2011, and thereafter
payments for 18 months in the amount of $6,158. St. George now claims EGPI defaulted on the payment schedule and entered a Confession
of Judgment. On September 23, 2011, EGPI Firecreek, Inc. received notice that St. George Investments LLC had filed a second lawsuit
arising out of the same claims. The Company is moving to set aside the Confession of Judgment on this basis and is answering and
vigorously defending the second lawsuit. As of January 31, 2012, the Company entered into a Settlement Agreement with St. George
Investments, LLC whereas among other terms due the Company agreed to two principal options for settlement with summary terms as
follows: 1. A settlement payment in the total aggregate amount of $200,000 with $20,000 due January 21, 2012, and $10,000 per
month thereafter on the 21st of each month thereafter going forward until paid or 2. A payment balloon of $100,000
paid by April 21, 2012 less $30,000 in payments as credited or $70,000 total upon which the Company or its parties shall have
no further obligation to make settlement payments or pay any other amounts to St. George Investments, LLC thereafter. The Company
is current in its payment through April 20, 2012 and negotiated a stock payment during the quarter ended June 30, 2012. We are
further in discussions on negotiations to make our payments.The entire amount owed is accrued in notes payable in the financial
statements.



In November 2010,
EGPI Firecreek, Inc. and South Atlantic Traffic Corp. received a lawsuit notice from two of the former owners of SATCO, Mr. Jesse
Joyner and Mr. James Stewart Hall. Mr. Joyner and Mr. Hall have subsequently resigned from their positions with the company.   The
former owners of SATCO are suing for payment of promissory notes that are currently recorded in the financial statements, along
with accrued interest and penalties and seeking damages for breach of their employment contracts.  On December 17, 2010,
EGPI Firecreek, Inc. filed its answer to the claim and filed a counterclaim against Mr. Joyner and Mr. Hall. It is management's
position that the Company is not liable and is currently exploring all defense and counter-suit options, and the Company will
vigorously defend its position.



In May 2011 the
Company received a lawsuit by Edelweiss Enterprises Inc. dba The Small Business Money Store (“SMBS”) seeking a judgment
to collect amounts allegedly owed it relating to an account receivable factoring agreement, to the former subsidiary SATCO, in
the total aggregate amount of $48,032. The Company believes that it is not liable, and will vigorously defend its position.



In August 2011,
the Company received a lawsuit notice on behalf of our wholly owned subsidiary Energy Ventures One Inc whereas Contegra Construction
Company LLC (“CCC”) is seeking a judgment to collect amounts owed it relating to a promissory note in the amount of
$157,767, which includes interest and late fees. The amount is recorded as a liability in the financial statements.



In August 2011,
the Company received a lawsuit notice on behalf of itself and our wholly owned subsidiary Energy Ventures One Inc. and Arctic
Solar, LLC by Masters Equipment Services, Inc. (“Masters”) seeking a judgment to collect amounts allegedly owed it
relating to a promissory note in the amount of $110,153, including interest and late fees. The Company is one of several parties
named in the proceeding and is prepared to vigorously defend its position. The promissory note is recorded as a liability in the
financial statements.



In February 2012
the Company received a lawsuit notice on behalf of itself by Morrell Saffa Craige, PC (“Morrell”) seeking the recovery
of legal fees in the approximate sum of $25,000 owed to the Plaintiff in connection with its successful defense of a lawsuit styled
Thermo Credit, LLC v. EGPI, et al. The Company owes the above fees and intends on paying the bill in full. The amount is recorded
in the financial statements in accounts payable.



In May, 2012
a lawsuit was filed in the Clark County, Nevada District Court by Lakeview Consulting, LLC (“Lakeview”), against the
Company and other various Does 1-V and Roes corporations V1-X. Lakeview alleges the Company failed or refused to convert shares
on a Convertible Note in the amount of $35,000 and therefore the sum plus interest, damages, etc. The Company is one of several
parties named in the proceeding and is prepared to vigorously defend its position. The amount is recorded as a liability in the
financial statements.



ITEM 1A. RISK FACTORS.



There
have been no material changes to the risk factors disclosed in the “Risk Factors” section of our Annual Report on
Form 10-K for the year ended December 31, 2011, as updated by our subsequent filings on Form 10-Q (and otherwise) with the SEC.







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ITEM 2 – UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



Required information
has been furnished in current Report(s) on Form 8-K filings and other reports, as amended, during the period covered by this Report
and additionally as listed and following:



Please see additional
information listed in the Part II, Item 5, under the sub heading Recent Sales of Unregistered Securities, contained in our Annual
Report on Form 10-K, filed on May 8, 2012, incorporated herein by reference.



I. (*)(**) On
February 4, 2011, by majority consent of the Board of Directors, the Registrant approved the following issuances of its restricted
common stock, par value $0.001 per share, to the following persons for and behalf of consideration for the Acquisition of Arctic
Solar Engineering, LLC membership interests.



|Name                                                                                                                                                               |  | Date   |  | Share
        Amount |  | Type of Consideration                                                                                         |  | Fair Market
        Value of
        Consideration |       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------ |  | -------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------- | ------
|Daniel Mark O’Neal  (***)/(1)
        15316 Chesterfield Pines
        Lane
        Chesterfield, MO 63017                                                         |  | 2/4/11 |  | 2,870,400            |  | In consideration of Acquisition
        of Arctic
        Solar Engineering, LLC Membership
        Interests |  | $                                                  | 14,064
|                                                                                                                                                                   |  |        |  |                      |  |                                                                                                               |  |                                                    |       
|Alvie M. Smith  (***)/(2)
        15316 Chesterfield Pines
        Lane
        Chesterfield, MO 63017                                                             |  | 2/4/11 |  | 1,435,200            |  | In consideration of Acquisition
        of Arctic
        Solar Engineering, LLC Membership
        Interests |  | $                                                  | 23,824
|                                                                                                                                                                   |  |        |  |                      |  |                                                                                                               |  |                                                    |       
|The Frederic Sussman Living
        Trust  (***)/()
        Frederic Sussman, Trustee
        15316 Chesterfield Pines
        Lane
        Chesterfield, MO 63017 |  | 2/4/11 |  | 1,694,400            |  | In consideration of Acquisition
        of Arctic
        Solar Engineering, LLC Membership
        Interests |  | $                                                  | 11.912







|(*) | Issuances are approved, subject to such persons agreeing in writing to
    i) comply with applicable securities laws and regulations and make required disclosures; and ii) be solely and entirely responsible
    for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(**) | $49,800 worth of common stock in the immediately preceding table was
    used primarily in consideration of Acquisition of Sierra Pipeline, LLC Membership Interests.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(1) | Daniel Mark O’Neal is a shareholder, and not currently an affiliate,
    director, or officer of the Registrant. He provides business and consulting services to Arctic Solar Engineering, LLC.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Alvie M. Smith is a shareholder, and not currently an affiliate, director,
    or officer of the Registrant. He provides business and consulting services to Arctic Solar Engineering, LLC.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | The Frederic Sussman Living Trust, Frederic Sussman, Trustee is a shareholder,
    and not currently an affiliate, director, or officer of the Registrant. Frederic Sussman manages day to day operations for
    Arctic Solar Engineering, LLC.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(***) | The shares of common stock were issued pursuant to an exemption from
    registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such
    certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting
    resale.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 3
– DEFAULTS UPON SENIOR SECURITIES



None



ITEM 4
– (REMOVED AND RESERVED)



ITEM 5
– OTHER INFORMATION



Please
see information listed under Item 9B, “Other Information”, and under “Recent Developments”, and “Subsequent
Events” contained in our Annual Report on Form 10-K, filed on May 8, 2012, incorporated herein by reference.



The
Company and its Firecreek unit are presently in different stages of review and discussion, gathering data and information, and
any available reports on other potential acquisitions in Texas, and other productive regions and areas in the U.S.



From
time to time Management will examine oil and gas operations in other geographical areas for potential acquisition and joint venture
development.



ITEM 6 – EXHIBITS



|Exhibit No. |  | Description                                                                
|----------- |  | ---------------------------------------------------------------------------
|31.1        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (3)
|            |  |                                                                            
|32.1        |  | Certification Pursuant to 18 U.S.C. SECTION 1350 (3)                       





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SIGNATURE



Pursuant to
the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.



Date:  August 20, 2012



| | EGPI FIRECREEK, INC. |                                         
| | -------------------- | ----------------------------------------
| |                      |                                         
| | By:                  | /s/ Dennis Alexander                    
| |                      | Name Dennis Alexander                   
| |                      | Title: Chairman, CEO, President, and CFO