UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q




xQUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For
the quarterly period ended June 30, 2010




 ̈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.  Yesx
  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  x(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 ̈ Nox





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 18, 2010, the registrant had 521,649,985shares of its $0.001 par value
common stock issued and outstanding. There are no shares of Series A and B
preferred stock, and 14,287 shares of Series C 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.





EGPI
FIRECREEK, INC


f/k/a
Energy Producers, Inc.


10-Q


June
30, 2010





TABLE
OF CONTENTS





PAGEPART
      1:
                
                FINANCIAL
      INFORMATIONItem
      1.
                
                Financial
      Statements - UnauditedConsolidated
      Balance Sheets
                
                3Consolidated
      Statements of Operations
                
                4Consolidated
      Statements of Cash Flows
                
                5Consolidated
      Statements of Changes in Shareholders' Deficit
                
                6Notes
      to the Unaudited Consolidated Financial Statements
                
                7Item
      2.
                
                Management's
      Discussion and Analysis or Plan of Operation
                
                21Item
      3.
                
                Quantitative
      and Qualitative Disclosures About Market Risk
                
                26Item
      4(T)
                
                Controls
      and Procedures
                
                26PART
      II:
                
                OTHER
      INFORMATIONItem
      1.
                
                Legal
      Proceedings
                
                27Item
      1A.
                
                Risk
      Factors
                
                27Item
      2.
                
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                
                27Item
      3.
                
                Defaults
      upon Senior Securities
                
                28Item
      4.
                
                Removed
      and Reserved
                
                28Item
      5.
                
                Other
      Information
                
                28Item
      6.
                
                Exhibits
                
                29CertificationsSignature
                
                30




2


PART
I FINANCIAL INFORMATION


ITEM 1 –
FINANCIAL STATEMENTS


EGPI
FIRECREEK, INC.


CONSOLIDATED
BALANCE SHEETS


AS
OF JUNE 30, 2010 AND DECEMBER 31, 2009





Unaudited30-Jun-10
                  
                  
                  31-Dec-09ASSETSCurrent
      assets:Cash
                  
                  $
                  44,294
                  
                  
                  $
                  17,625Accounts
      receivable, net of allowance
                  
                  
                  452,929
                  
                  
                  
                  739,166Inventory
                  
                  
                  3,794
                  
                  
                  
                  66,290Prepaid
      expenses
                  
                  
                  68,060
                  
                  
                  
                  47,566Total
      current assets
                  
                  
                  569,077
                  
                  
                  
                  870,647Other
      assets:Trade
      name, net of amortization
                  
                  
                  623,914
                  
                  
                  
                  653,921Customer
      list, net of amortization
                  
                  
                  178,176
                  
                  
                  
                  158,939Goodwill
                  
                  
                  2,012,518
                  
                  
                  
                  2,001,840Non-compete
                  
                  
                  7,000
                  
                  
                  
                  -Oil
      and natural gas properties (successful efforts method of
      accounting):Proved,
      net of accumulated depletion, depreciation, and
    amortization
                  
                  
                  225,000
                  
                  
                  
                  225,000Fixed
      Assets, net
                  
                  
                  260,440
                  
                  
                  
                  49,319Total
      long term assets
                  
                  
                  3,307,048
                  
                  
                  
                  3,089,019Total
      assets
                  
                  $
                  3,876,125
                  
                  
                  $
                  3,959,666LIABILITIES
      AND SHAREHOLDERS' EQUITY (DEFICIT)Current
      liabilities:Accounts
      payable & accrued expenses
                  
                  $
                  3,268,914
                  
                  
                  $
                  2,729,515Notes
      payable and convertible notes
                  
                  
                  4,003,747
                  
                  
                  
                  941,990Advances
      & notes payable to shareholders
                  
                  
                  141,018
                  
                  
                  
                  240,918Total
      current liabilities
                  
                  
                  7,413,679
                  
                  
                  
                  3,912,423Total
      liabilities
                  
                  
                  7,413,679
                  
                  
                  
                  3,912,423Shareholders'
      equity (deficit):Series
      A preferred stock, 20 million authorized, par value $0.001, one share
      convertible to one common share, no stated dividend, none
      outstanding
                  
                  
                  0
                  
                  
                  
                  0Series
      B preferred stock, 20 million authorized, par value $0.001, one share
      convertible to one common share, no stated dividend, none
      outstanding
                  
                  
                  0
                  
                  
                  
                  0Series
      C preferred stock, 20 million authorized, par value $.001, each share has
      21, 200 votes per share, are not convertible, have no stated dividend. 5
      thousand shares outstanding
                  
                  
                  0
                  
                  
                  
                  0Common
      stock- $0.001 par value, authorized 1,300,000,000 shares, issued and
      outstanding, 246,060,953 at June 30, 2010 and 51,455,743 at December 31,
      2009
                  
                  
                  1,624,004
                  
                  
                  
                  1,429,499Additional
      paid in capital
                  
                  
                  23,127,251
                  
                  
                  
                  25,283,090Other
      comprehensive income
                  
                  
                  421,475
                  
                  
                  
                  0Common
      stock subscribed
                  
                  
                  974,281
                  
                  
                  
                  0Contingent
      holdback
                  
                  
                  12,285
                  
                  
                  
                  0Accumulated
      deficit
                  
                  
                  (29,696,800
                  )
                  
                  
                  (26,665,346
                  )Total
      shareholders' equity (deficit)
                  
                  
                  (3,537,554
                  )
                  
                  
                  47,243Total
      liabilities & shareholders' equity (deficit)
                  
                  $
                  3,876,125
                  
                  
                  $
                  3,959,666




See the
notes to the unaudited consolidated financial statements.


3





EGPI
FIRECREEK, INC.


UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS


FOR
THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 2010 AND JUNE 30, 2009


(Unaudited)




Six
      Mos.
                                30-Jun-10
                              
                              
                              Six
      Mos.
                                30-Jun-09
                              
                              
                              Three
      Mos.
                                30-Jun-10
                              
                              
                              Three
      Mos.
                                31-Jun-09RevenuesGross
      revenues from sales
                              
                              $
                              916,298
                              
                              
                              $
                              0
                              
                              
                              $
                              407,638
                              
                              
                              $
                              0Cost
      of sales
                              
                              
                              784,463
                              
                              
                              
                              0
                              
                              
                              
                              351,135
                              
                              
                              
                              0Net
      revenues from sales
                              
                              
                              131,835
                              
                              
                              
                              0
                              
                              
                              
                              56,503
                              
                              
                              
                              0General
      and administrative expenses:General
      administration
                              
                              
                              2,135,624
                              
                              
                              
                              497,103
                              
                              
                              
                              1,250,575
                              
                              
                              
                              309,485Total
      general & administrative expenses
                              
                              
                              2,135,624
                              
                              
                              
                              497,103
                              
                              
                              
                              1,250,575
                              
                              
                              
                              309,485Net
      loss from operations
                              
                              
                              (2,003,789
                              )
                              
                              
                              (497,103
                              )
                              
                              
                              (1,194,072
                              )
                              
                              
                              (309,485
                              )Other
      revenues and expenses:Gain
      (loss) on asset disposal
                              
                              
                              1,673
                              
                              
                              
                              0
                              
                              
                              
                              
                              
                              
                              
                              0Loss
      on Retirement of debt
                              
                              
                              (859,204
                              )
                              
                              
                              0
                              
                              
                              
                              (580,467
                              )
                              
                              
                              0Gain
      (loss) on derivatives
                              
                              
                              28,085
                              
                              
                              
                              0
                              
                              
                              
                              (40,716
                              )
                              
                              
                              0Interest
      expense
                              
                              
                              (198,219
                              )
                              
                              
                              (2,097
                              )
                              
                              
                              (85,668
                              )
                              
                              
                              (5,118
                              )Net
      income (loss) before provision for income taxes
                              
                              
                              (3,031,454
                              )
                              
                              
                              (499,200
                              )
                              
                              
                              (1,900,923
                              )
                              
                              
                              (304,367
                              )Provision
      for income taxes
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0Net
      income (loss)
                              
                              $
                              (2,609,978
                              )
                              
                              $
                              (499,200
                              )
                              
                              $
                              (1,900,923
                              )
                              
                              $
                              (194,833
                              )Other
      comprehensive income (loss)Gain
      on disposal of discontinued component
                              
                              
                              
                              
                              
                              
                              322,307
                              
                              
                              
                              
                              
                              
                              
                              322,307Gain
      (loss) from Foreign exchange translation
                              
                              
                              (421,476
                              )
                              
                              
                              0
                              
                              
                              
                              (354,197
                              )
                              
                              
                              0Total
      comprehensive income (loss)
                              
                              $
                              (3,072,930
                              )
                              
                              $
                              (176,893
                              )
                              
                              $
                              (2,255,120
                              )
                              
                              $
                              17,940Basic
      and fully diluted net loss per common share:Net
      loss per share - continuing operations
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.01
                              )
                              
                              $
                              (0.02
                              )Net
      loss per share
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.01
                              )
                              
                              $
                              (0.02
                              )Weighted
      average of common shares outstanding:Basic
      and fully diluted
                              
                              
                              115,845,476
                              
                              
                              
                              8,459,884
                              
                              
                              
                              167,854,714
                              
                              
                              
                              15,911,096




See the
notes to the unaudited consolidated financial statements.


4




EGPI
FIRECREEK, INC.


UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR
THE QUARTERS ENDED JUNE 30, 2010 AND JUNE 30, 2009





Unaudited
                    
                    
                    Unaudited31-Jun-10
                    
                    
                    31-Jun-09Operating
      Activities:Net
      loss
                    
                    $
                    (2,609,978
                    )
                    
                    $
                    (176,893
                    )Adjustments
      to reconcile net loss items not requiring the use of cash:Capital
      stock issued for services
                    
                    
                    686,063
                    
                    
                    
                    0Net
      change in derivative
                    
                    
                    110,774
                    
                    
                    
                    0Depreciation
      of intangibles
                    
                    
                    34,770
                    
                    
                    
                    0Depreciation  and
      amortization PPE
                    
                    
                    12,813
                    
                    
                    
                    0Impairment
      expense
                    
                    
                    0
                    
                    
                    
                    278,532Gain/Loss
      on disposal of debt
                    
                    
                    859,204
                    
                    
                    
                    0Gain/Loss
      on disposal of fixed assets
                    
                    
                    (1,673
                    )
                    
                    
                    (322,307
                    )Changes
      in other operating assets and
      liabilities:Accounts
      receivable
                    
                    
                    284,737
                    
                    
                    
                    0Inventory
                    
                    
                    62,4996
                    
                    
                    
                    0Accounts
      payable and accrued expenses
                    
                    
                    361,158
                    
                    
                    
                    218,676Prepaid
      expenses
                    
                    
                    (18,994
                    )
                    
                    
                    0Net
      cash  used by operations
                    
                    
                    (218,630
                    )
                    
                    
                    (1,992
                    )Investing
      activities:Cash
      acquired in purchase of M3 Lighting
                    
                    
                    0
                    
                    
                    
                    46,133Net
      cash provided by investing activities
                    
                    
                    0
                    
                    
                    
                    46,133Financing
      Activities:Proceeds
      from sale of stock
                    
                    
                    61,004
                    
                    
                    
                    0Borrowings
      on debt
                    
                    
                    1,618,204
                    
                    
                    
                    0Principal
      payments on debt
                    
                    
                    (1,012,433
                    )Net
      cash provided by financing activities
                    
                    
                    666,775
                    
                    
                    
                    0Gain
      due to foreign currency translation
                    
                    
                    421,476
                    
                    
                    
                    0Net
      increase in cash during the period
                    
                    $
                    26,669
                    
                    
                    $
                    44,141Cash
      balance at January 1st
                    
                    
                    17,625
                    
                    
                    
                    2,230Cash
      balance at June 30
                    
                    $
                    44,294
                    
                    
                    $
                    46,371Supplemental
      disclosures of cash flow information:Interest
      paid during the year
                    
                    $
                    0
                    
                    
                    $
                    2,097Income
      taxes paid during the year
                    
                    $
                    0
                    
                    
                    $
                    0Non-cash
      activities:Common
      stock issued for:Debt
      conversion
                    
                    
                    1,634,431
                    
                    
                    
                    -M3
      acquisitionSATCO acquisition
                    
                    
                    4,464,400
                    
                    
                    
                    -Chanwest
      AcquisitionM3 acquisition
                    
                    
                    268,276
                    
                    
                    
                    -Exchange
      of PP&E for loan payable
                    
                    
                    
                    
                    
                    
                    -Net
      asset value of subsidiary spin-off
                    
                    
                    
                    
                    
                    
                    -




See
the notes to the unaudited consolidated financial statements.


5





EGPI
FIRECREEK, INC.


UNAUDITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT


FOR
THE QUARTERS ENDED JUNE 30, 2010 AND JUNE 30, 2009





Other
                  
                  
                  CommonCommon
                  
                  
                  Par
                  
                  
                  Paid
      in
                  
                  
                  Accumulated
                  
                  
                  Comprehensive
                  
                  
                  StockShares
                  
                  
                  Value
                  
                  
                  Capital
                  
                  
                  Deficit
                  
                  
                  Loss
                  
                  
                  Subscribed
                  
                  
                  Other
                  
                  
                  TotalBalance
      at December 31,2009
                  
                  
                  51,455,743
                  
                  
                  
                  1,429,499
                  
                  
                  
                  25,283,090
                  
                  
                  
                  (26,665,346
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  47,243Issued
      shares for services
                  
                  
                  10,650,000
                  
                  
                  
                  10,650
                  
                  
                  
                  260,800
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  271,450Stock
      subscriptions paid
                  
                  
                  2,333,467
                  
                  
                  
                  2,333
                  
                  
                  
                  58,671
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  61,004Issued
      shares for debt
                  
                  
                  181,621,743
                  
                  
                  
                  181,622
                  
                  
                  
                  1,989,090
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,170,712Other
      comprehensive loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  421,475
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  421,475Acquisition
      of RedQuartz
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,464,400
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,500
                  
                  
                  
                  -
                  
                  
                  
                  (4,464,400
                  )Commons
      stock subscribed
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  845,811
                  
                  
                  
                  -
                  
                  
                  
                  974,182Acquisition
      of Chanwest
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  125,871
                  
                  
                  
                  -
                  
                  
                  
                  125,871Holdback
      provision
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  12,234
                  
                  
                  
                  12,234Net
      loss for the period
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,031,454
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,031,454
                  )Balance
      at June 30, 2010
                  
                  
                  249,423,606
                  
                  
                  
                  1,624,104
                  
                  
                  
                  23,127,251
                  
                  
                  
                  (29,696,800
                  )
                  
                  
                  421,475
                  
                  
                  
                  974,182
                  
                  
                  
                  12,234
                  
                  
                  
                  (3,537,554
                  )




6





EGPI
FIRECREEK, INC.


NOTES
TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE QUARTERS ENDED JUNE 30, 2010 AND JUNE 30, 2009




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, LLC, (“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.





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, 2009.





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.





Revenue and Cost Recognition
- Revenue is recognized from oil & gas sales at such time as the oil
& gas is delivered to the buyer. For its producing activities, the Company
uses successful efforts costing.


7





Sales
from South Atlantic Traffic Company revenues are recognized at the time product
has been delivered to the customer. Sales are recorded net of discounts or other
adjustments which may be applied to the gross sales price. Customer sales are
specialty orders drop-shipped from the
manufacturer.   Accordingly, all sales are final upon delivery to
the customer under the terms of the sales order.  The Company’s policy
is not to grant customer refunds. Customer deposits received upon execution of a
sales order are recorded as revenue upon completion of the sale.




The
Company records commission revenue, usually 3% of the amount invoiced, based on
contracts with suppliers, once the purchase order is placed with the supplier
and the customer is invoiced. The Company, in turn, sends an invoice to the
supplier for 3% of the total order amount. Commission sales are specialty orders
drop-shipped from the manufacturer. Accordingly, all sales are final upon
delivery to the customer under the terms of the sales order.





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, 2010 or December 31, 2009.





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 $687,269 at June 30, 2010 and $651,913 at
December 31, 2009.




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 2009 after conducting an impairment analysis, the Company
did not record impairment as the PV 10 value as our reserves exceeded our
cost.





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, 2010, the ARO
of $4,337 is included in accrued expenses and fixed assets.


8





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.





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.





Non-Recurring
fair value metrics:





Level 1 –
None





Level 2 –
None





Level 3 –
Intangible assets –


Trade
Name $661,000, Customer List $187,000, Goodwill $2,012,518, Non-Compete
$7,000  = Total $2,867,518





The
Company has goodwill and intangible assets as a result of the 2009 business
combinations discussed throughout this form 10Q. These assets were valued with
the help 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:


9





Office
      equipment
                  
                  3
      yearsComputer
      hardware & software
                  
                  3
      yearsImprovements
      & furniture
                  
                  5
      yearsWell
      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.  The
Company’s evaluation of goodwill completed during the year ended December 31,
2009 resulted in no impairment.





As of
June 30, 2010, amortizable intangible assets consist 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 period ended June 30, 2010 the Company recorded amortization of our
intangibles of $45,910, and amortization of $11,140 at December 31,
2009.





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.





Foreign Currency Translation and
Transactionand
translation-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 Red Quartz 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.


10





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
April 2008, the FASB issued ASC 350-10, "Determination of the Useful Life of
Intangible Assets." ASC 350-10 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under ASC 350-10, "Goodwill and Other Intangible
Assets." ASC No. 350-10 is effective for fiscal years beginning after
December 15, 2008. The adoption of this ASC did not have a material impact
on our consolidated financial statements.





In
April 2009, the FASB issued ASC 805-10, "Accounting for Assets Acquired and
Liabilities assumed in a Business Combination That Arise from Contingencies—an
amendment of FASB Statement No. 141 (Revised December 2007), Business
Combinations". ASC 805-10 addresses application issues raised by preparers,
auditors and members of the legal profession on initial recognition and
measurement, subsequent measurement and accounting and disclosure of assets and
liabilities arising from contingencies in a business combination. ASC 805-10 is
effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
ASC 805-10 will have an impact on our accounting for any future
acquisitions and its consolidated financial statements.





In
May 2009, the FASB issued ASC Topic 855, “Subsequent Events”. ASC Topic 855
established principles and requirements for evaluating and reporting subsequent
events and distinguishes which subsequent events should be recognized in the
financial statements versus which subsequent events should be disclosed in the
financial statements. ASC Topic 855 also requires disclosure of the date through
which subsequent events are evaluated by management. ASC Topic 855 was effective
for interim periods ending after June 15, 2009 and applies prospectively.
Because ASC Topic 855 impacts the disclosure requirements, and not the
accounting treatment for subsequent events, the adoption of ASC Topic 855 did
not impact our consolidated results of operations or financial condition. See
Note 10 for disclosures regarding our subsequent events.





Effective
July 1, 2009, we adopted the Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 105-10, Generally Accepted Accounting
Principles—Overall ("ASC 105-10"). ASC 105-10 establishes the FASB Accounting
Standards Codification (the "Codification") as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with
U.S. GAAP. Rules and interpretive releases of the SEC under authority of
federal securities laws are also sources of authoritative U.S. GAAP for SEC
registrants. All guidance contained in the Codification carries an equal level
of authority. The Codification superseded all existing non-SEC accounting and
reporting standards. All other non-grandfathered, non-SEC accounting literature
not included in the Codification is non-authoritative. The FASB will not issue
new standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates
("ASUs"). The FASB will not consider ASUs as authoritative in their own right.
ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout these consolidated
financials have been updated for the Codification.





In
August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair
Value, which provides additional guidance on how companies should measure
liabilities at fair value under ASC 820. The ASU clarifies that the quoted price
for an identical liability should be used. However, if such information is not
available, an entity may use the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
traded as assets, or another valuation technique (such as the market or income
approach). The ASU also indicates that the fair value of a liability is not
adjusted to reflect the impact of contractual restrictions that prevent its
transfer and indicates circumstances in which quoted prices for an identical
liability or quoted price for an identical liability traded as an asset may be
considered level 1 fair value measurements. This ASU is effective
October 1, 2009. We are currently evaluating the impact of this standard,
but would not expect it to have a material impact on the our consolidated
results of operations or financial condition.





In
October 2009, the Financial Accounting Standards Board (“FASB”) issued new
revenue recognition standards for arrangements with multiple deliverables, where
certain of those deliverables are non-software related. The new standards permit
entities to initially use management’s best estimate of selling price to value
individual deliverables when those deliverables do not have Vendor Specific
Objective Evidence (“VSOE”) of fair value or when third-party evidence is not
available. Additionally, these new standards modify the manner in which the
transaction consideration is allocated across the separately identified
deliverables by no longer permitting the residual method of allocating
arrangement consideration. These new standards are effective for annual periods
ending after June 15, 2010 and early adoption is permitted. The Company is
currently evaluating the impact of adopting this standard on the Company’s
consolidated financial position, results of operations and cash
flows.


11




In
June 2009, the FASB issued guidance establishing the Codification as the source
of authoritative U.S. Generally Accepted Accounting Principles (“U. S. GAAP”)
recognized by the FASB to be applied by non-governmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (“SEC”) under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. The Codification supersedes all existing non-SEC accounting
and reporting standards. All other non-grandfathered non-SEC accounting
literature not included in the Codification will become non-authoritative. The
FASB will no longer issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts. Instead, the FASB will issue
Accounting Standards Updates, which will serve only to update the Codification,
provide background information about the guidance and provide the bases for
conclusions on changes in the Codification. All content in the Codification
carries the same level of authority, and the U.S. GAAP hierarchy was modified to
include only two levels of U.S. GAAP: authoritative and non-authoritative. The
Codification is effective for the Company’s interim and annual periods beginning
with the Company’s year ending December 31, 2009. Adoption of the Codification
affected disclosures in the Consolidated Financial Statements by eliminating
references to previously issued accounting literature, such as SFASs, EITFs and
FSPs.






In
June 2009, the FASB issued amended standards for determining whether to
consolidate a variable interest entity. These new standards amend the
evaluation criteria to identify the primary beneficiary of a variable interest
entity and require ongoing reassessment of whether an enterprise is the primary
beneficiary of the variable interest entity. The provisions of the new standards
are effective for annual reporting periods beginning after November 15, 2009 and
interim periods within those fiscal years. The adoption of the new standards
will not have an impact on the Company’s consolidated financial position,
results of operations and cash flows.






In
May 2009, the FASB issued guidance establishing general standards for accounting
for and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued and shall be
applied to subsequent events not addressed in other applicable generally
accepted accounting principles. This guidance, among other things, sets forth
the period after the balance sheet date during which management should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements and the disclosures an entity should make about events or
transactions that occurred after the balance sheet date. The adoption of this
guidance had no impact on the Company’s consolidated financial position, results
of operations and cash flows.





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





In the
first six months of 2010, the Company issued 10,650,000 shares of common stock
for services valued at $271,450. Additional shares have been authorized but not
yet issued amounting to a stock payable of $414,613.The shares were issued (or
authorized) to various business consultants, advisors, and legal consultants for
assisting the Company’s growth plan. We used the closing share price on the date
of grant for valuation of the expense.





In the
first six months of 2010, the Company issued 181,621,743 shares of common stock
to extinguish debt of $1,634,431.





In the
first six months of 2010, the Company issued 2,333,467 shares of common stock
for subscription price of $61,004.





In the
first quarter of 2010, 100,000  shares were agreed to be issued to Red
Quartz in conjunction with the acquisition.





Common
stock subscribed consists of shares that are agreed to be issued for debt and
the Red Quartz acquisition. The balances consist of 41,706,300 debt, 88,852,243
services, 20,652,673 for Chanwest, shares not yet issued for debt forgiveness
and 100,000 shares to be issued to Red Quartz.




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.


12




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.





5.
Fixed Assets and Oil and Gas Properties





The
following is a detailed list of fixed assets:




30-Jun-10
                  
                  
                  31-Dec-09Property
      and Equipment
                  
                  $
                  331,739
                  
                  
                  $
                  109,488Well
      leases
                  
                  
                  150,263
                  
                  
                  
                  163,500Well
      equipment
                  
                  
                  74,737
                  
                  
                  
                  61,500Accumulated
      depreciation & depletion
                  
                  
                  (71,299
                  )
                  
                  
                  (64,506
                  )Fixed
      assets- net
                  
                  $
                  485,440
                  
                  
                  $
                  274,319




6.
 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, 2010 is as
follows.  Option and warrants outstanding and their attendant exercise
prices have been adjusted for the 1 for 200 reverse split of the common stock
discussed in Note 1.




Amount
                  
                  
                  Weighted
                    Average
                    Exercise
                    Price
                  
                  
                  Weighted
                    Average
                    Years to
                    MaturityOutstanding
      at December 31, 2009
                  
                  
                  6,566,310
                  
                  
                  $
                  1.18533
                  
                  
                  
                  2.89Issued
                  
                  
                  0Exercised
                  
                  
                  0Expired
                  
                  
                  (66,310
                  )Outstanding
      at June 30, 2010
                  
                  
                  6,500,000
                  
                  
                  $
                  1.11539
                  
                  
                  
                  2.41





There
were no options or warrants granted during the six months ended June 30, 2010,
and 66,310 have expired. During 2009 we granted 6,500,000 warrants. 500,000
warrants were granted to a consultant pursuant to an advisory agreement with an
exercise price of $1.00 per share, 3 year term, an estimated 95% volatility and
an estimated fair value of $7,934.





During
2009 we granted 6,000,000 to continue to try and improve our relationship with
our debt holders. There were two issuances of 3,000,000. The first issuance
included an exercise price of $1.00 per share, 3 year term, an estimated 95%
volatility and an estimated fair value of $25,550. The second issuance included
an exercise price of $1.25 per share, 3 year term, an estimated 95% volatility
and an estimated fair value of $20,553.







The
estimated total value of the above warrants was $54,037 and this value was
expensed during 2009.





7.
Acquisition of M3 Lighting, Inc. (M3), South Atlantic Traffic Corporation
(SATCO), Redquartz LTD (RQTZ), and Chanwest Resources, LLC (CWR).




2010





i)
            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 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. The transaction value was recorded to APIC due to
      the related party nature of this
Agreement.


13





ii)
            On
      On June 11, 2010, the Company executed a Stock Purchase Agreement with the
      stockholders of Chanwest Resources, LLC, (“Chanwest or CWR”) a Texas
      corporation, whereas the Company agreed to issue 20,000,000 shares of its
      restricted common stock valued at USD $95,000, in exchange for 100% of the
      issued and outstanding shares of common stock, with a no par value
      designation per share, of CWR. All assets and liabilities, other than
      the Shareholder Notes Payable, of the CWR were retained by the Company via
      ownership of the subsidiary unit in the initial amount of
      $252,161. Chanwest Resources, LLC was essentially inactive in the
      first and second quarter of 2010 having a minor amount of income and
      expense that would substantially affect the financial statements of the
      Company, however we have elected to include a pro form result with this
      report for the six month period ended June 30, 2010, and none for 2009 as
      Chanwest was just then incorporated in November
  2009.





The
Agreement calls for the following material terms:





I.
              Purchase
      of Stock and Purchase Price





1.
              The
      Company agreed to pay to the Sellers aggregate consideration delivery
      of:


(a) 20,652,673
shares of the Company’s common stock issued to the Sellers pro rata based on
their ownership in Chanwest representing $95,000 in value.





II.
            Purchase
      Price Adjustment Mechanism





1.
              Of
      the shares to be issued to Sellers by the Company, ten percent (10%), or
      2,294,686 shares shall be held back and not issued for a period of one
      hundred twenty (120) days from Closing (the “holdback period”) and shall
      thereafter be issued to Seller subject to the following conditions having
      been met within the holdback
period.




(a) The
generation of gross revenues to Chanwest of a minimum of $24,000 per week during
the holdback period ($384,000 revenue target in total) with such revenues being
derived from and produced by the activities of Mr. David Killian pursuant to the
Employment Agreement described in Section 6.3 of this
Agreement.





III.
            Working
      Capital Requirement




1.
              The
      Purchaser shall further provide working capital in the amount of One
      Hundred Twenty Five Thousand $125,000 with $70,000 due upon execution of
      the Agreement and $55,000 due within 30 days thereof or as mutually
      agreeable in writing signed by the parties hereto.





IV.
            Employee
      Bonus Pool





1.
              A
      pool of shares of the Registrants common stock, the amount to be agreed
      upon by both the Purchaser and Seller but not to exceed 500,000 shares or
      more than .5% (one half of one percent) of the Purchasers stock, whichever
      is lesser, shall be made available for distribution to employees of the
      Corporation at the first anniversary of the Closing in an incentive stock
      option plan for the benefit of certain employees of the Companies
      designated by the Sellers, with an exercise price not to exceed one
      hundred and ten percent market price on date of issuance. The pool of
      shares will be determined to be available based on the Corporations
      ability to earn a minimum of $300,000 before interest, taxes, depreciation
      and amortization.





A
breakdown of the purchase price for Chanwest (CWR) is as
follows:


Common
      stock issuance
                  
                  $
                  125,871Contingent
      holdback shares
                  
                  
                  10,234Contingent
      employee bonus pool
                  
                  
                  2,000Total
      purchase price
                  
                  
                  138,105




Final
Purchase Price Allocation:




Current
      assets
                  
                  $
                  423Property,
      plant and equipment
                  
                  
                  226,598Customer
      base
                  
                  
                  24,000Non-Compete
                  
                  
                  7,000Assumed
      liabilities
                  
                  
                  (130,594
                  )Goodwill
                  
                  
                  10,678Total
      purchase price
                  
                  $
                  138,105




14




The
following unaudited pro-forma assumes the transaction occurred as of the
beginning of the periods presented as if it would have been reported during the
six-month periods below.






EGPI
                                
                                
                                ChanwestFirecreek,
                                
                                
                                Resources,Inc.
                                
                                
                                LLCSix Months
                                
                                
                                Six MonthsEnding
                                
                                
                                Ending30-Jun-10
                                
                                
                                30-Jun-10
                                
                                
                                Adj.
                                
                                
                                CombinedRevenuesSales
                                
                                $
                                916,298
                                
                                
                                $
                                2,000
                                
                                
                                $
                                -
                                
                                
                                $
                                918,298Cost
      of goods sold
                                
                                
                                784,463
                                
                                
                                
                                1,700
                                
                                
                                
                                -
                                
                                
                                
                                786,163Gross
      profit
                                
                                
                                131,835
                                
                                
                                
                                300
                                
                                
                                
                                -
                                
                                
                                
                                132,135Operating
      expensesSelling,
      general and administrative
                                
                                
                                2,135,624
                                
                                
                                
                                31,293
                                
                                
                                
                                -
                                
                                
                                
                                2,166,917Depreciation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Total
      operating expenses
                                
                                
                                2,135,624
                                
                                
                                
                                31,293
                                
                                
                                
                                -
                                
                                
                                
                                2,166,917Net
      income {loss) from operations
                                
                                
                                (2,003,789
                                )
                                
                                
                                (30,993
                                )
                                
                                
                                -
                                
                                
                                
                                (2,034,782
                                )Other
      income (expenses):Other
      income
                                
                                
                                -
                                
                                
                                
                                30,000
                                
                                
                                
                                -
                                
                                
                                
                                30,000Gain
      or loss on asset disposal
                                
                                
                                1,673
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                1,673Loss
      on retirement of debt
                                
                                
                                (859,204
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (859,204
                                )Gain
      (loss) on derivatives
                                
                                
                                28,085
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                28,085Interest
      expense, net
                                
                                
                                (198,219
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (198,219Total
      other income (expenses)
                                
                                
                                (1,027,665
                                )
                                
                                
                                30,000
                                
                                
                                
                                
                                
                                
                                
                                (997,665
                                )Net
      income (loss) before provision for income taxes
                                
                                
                                (3,031,454
                                )
                                
                                
                                (993
                                )
                                
                                
                                -
                                
                                
                                
                                (3,032,447
                                )Provision
      for income taxes
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Gain
      (loss) from Foreign exchange translation
                                
                                
                                421,476
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                421,476Net
      income (loss) from continuing operation
                                
                                
                                (2,609,978
                                )
                                
                                
                                (993
                                )
                                
                                
                                -
                                
                                
                                
                                (2,610,971
                                )Net
      income (loss)
                                
                                $
                                (2,609,978
                                )
                                
                                $
                                (993
                                )
                                
                                $
                                -
                                
                                
                                $
                                (2,610,971
                                )Basic
      & fully diluted loss per shareBasic
      income (loss) per share –continuing operations
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                $
                                (0.03
                                )Basic
      income (loss) per share
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                $
                                (0.03
                                )Weighted
      average of common shares outstanding:Basic
      & fully diluted
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                167,854,714




15





2009





i)
            On
      May 21, 2009, The Company, 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 Company. The acquisition has
      been accounted for at cost basis with no step up in purchase price
      due to M3 no having ongoing operations as a development stage company and
      no meeting the definition of a business. We gave 14,320,808 shares of our
      commons stock to acquire M3. No pro-forma is necessary as given the
      development stage nature of this Company the results of our operations
      would not materially change had the acquisition occurred at the beginning
      of the prior year.




ii)
            On
      November 4, 2009, the Company, Bob Joyner, a Florida resident
      ("Joyner"), Stewart Hall, a North Carolina resident ("Hall"), Hunter
      Intelligent Traffic Systems, LLC, a Georgia limited liability company
      (“Hunter”) and South Atlantic Traffic Corporation, a Florida corporation (
      “SATCO”), executed a Stock Purchase Agreement (the "Agreement") whereas
      the Registrant acquired all of the outstanding stock and interests held in
      SATCO. A copy of the Agreement was attached as an exhibit to our Current
      Report filed with the Commission on November 12, 2009. The acquisition has
      been accounted for as a purchase under accounting principles generally
      accepted in the United States (GAAP). Under the purchase method of
      accounting, in accordance with ARC 805,  the
      assets and liabilities of SATCO are recorded as of the acquisition date at
      their respective fair values, and consolidated with the Company’s assets
      and liabilities.




The
Agreement calls for the following material terms:





I.
Purchase of Stock, Purchase Price:





1. The
Registrant agreed to pay to the Sellers aggregate consideration of $2,326,300
(the "PURCHASE PRICE"), adjusted to $2,058,373 as a result of the estimated make
whole provision below by delivery of:





(a) Cash
in available funds equal to the greater of: (i) sum of Fifty Percent (50%) of
SATCO’s available cash balance at Closing plus Twenty-Five Percent (25%) of
SATCO’s trade accounts receivables aged less than Ninety (90) days past due at
Closing with an additional amount to be negotiated for the outstanding retainage
and imminent collections of receivables over 90 days old as negotiated prior to
Closing; which was (ii) $600,000.





(b)
Promissory notes issued to each Seller in the aggregate principal amount of Five
Hundred Sixty Three Thousand One Hundred US Dollars ($563,100.00) (the
“PROMISSORY NOTES”). The Promissory Notes will accrue interest at a rate of Nine
Percent (9%) per annum and will amortize with a principal and interest payment
at the First Anniversary Date of the Transaction of Twenty-Five Percent (25%) of
the Promissory Notes plus accrued interest, a principal and interest payment at
the Second Anniversary Date of the Transaction of Twenty-Five Percent (25%) of
the Promissory Notes plus accrued interest and a Final Payment of the
Outstanding Balance of the Promissory Notes plus any unpaid interest on the
Third Anniversary Date of the Transaction.





(c)
2,908,000 shares of the Registrant’s common stock issued to the Sellers pro rata
based on their ownership in SATCO representing $1,163,200.00 in value at a price
per share of $0.40 ("STOCK CONSIDERATION").





(d)
Principal and interest on the Promissory Notes will be allocated to the Sellers
pro rata based on their equity ownership SATCO. The Promissory Notes carry a
cumulative claw-back feature (the “Claw Back”) for the term of the Promissory
Notes listed in the agreement.





(e) Stock
consideration shall be issued at closing as follows: The Purchaser shall issue
to the Sellers an aggregate of 2,908,000 shares of its Common Stock (“the “STOCK
CONSIDERATION”) the total Stock Consideration to be paid to the Sellers based
upon a share price of Forty Cents ($0.40) per share.





(f) Stock
Consideration issued at Closing will carry a make whole provision (the “Make
Whole”). It is the parties’ intention that the Proposed Transaction will be
structured as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended. The Make Whole provides down-side protection
against a decline in the Registrant’s common share price. The Make Whole is
available only for shares held from the Stock Consideration by the Seller for a
period of one year following Closing. In the event that the Market Price
Per Share of the Stock Consideration during the thirty (30) consecutive trading
days immediately prior to the first anniversary of the Closing (the “Make Whole
Date”) is less than $.40, the Registrant would, at the Registrant’s option,
either issue to Sellers that number of additional shares of EGPI common stock
equal to (1) the number of shares of EGPI common stock comprising the Stock
Consideration held at the Make Whole Date, multiplied by $.40, less (2) the
number of shares of EGPI common stock comprising the Stock Consideration held at
the Make Whole Date, multiplied by the Market Price Per Share of the Stock
Consideration on the Make Whole Date. Notwithstanding the foregoing, the
Registrant’s obligation to make any adjustment pursuant to the preceding
sentence shall terminate in the event that, at any time prior to the Make Whole
Date, the aggregate Market Price Per Share of the Registrant’s common stock
during any twenty consecutive trading days exceeds $.75. The termination of the
Make Whole mechanism will only apply if the Sellers’ shares are registered
during the entire twenty consecutive trading days period, during which the
Market Price Per Share of the Registrant’s common stock exceeds $.75, by virtue
of eligibility and effectiveness of either i) 144 legend removal or
ii) self imposed registration process by the Registrant.


16


A
breakdown of the purchase price is as follows:





Cash
      consideration paid
                
                $
                600,000Promissory
      note to Sellers
                
                
                295,173Shares
      issued
                
                
                174,480Contingent
      consideration liability - make whole provision (accounted for in
      equity)
                
                
                988,720Contingent
      asset – claw back provision
                
                
                -Total
      purchase price
                
                
                2,058,373




Final
Purchase Price Allocation:




Current
      assets
                
                $
                1,425,881Property,
      plant and equipment
                
                
                85,530Trade
      name
                
                
                661,000Customer
      relationships
                
                
                163,000Assumed
      liabilities
                
                
                (2,278,878
                )Goodwill
                
                
                2,001,840Total
      purchase price
                
                $
                2,058,373




The
following unaudited pro-forma assumes the transaction occurred as of the
beginning of the periods presented as if it would have been reported during the
twelve month periods below.




EGPI
                    Firecreek,Inc.
                    SixMonths
                    Ending
                    30-Jun-09
                  
                  
                  SouthAtlantic
                    Traffic
                    Corporation
                    SixMonths
                    Ending
                    30-Jun-09
                  
                  
                  Adjustments
                  
                  
                  CombinedRevenuesSales
                  
                  $
                  -
                  
                  
                  $
                  5,194,397
                  
                  
                  $
                  -
                  
                  
                  $
                  5,194,397Cost
      of goods sold
                  
                  
                  -
                  
                  
                  
                  4,372,994
                  
                  
                  
                  -
                  
                  
                  
                  4,372,994Gross
      profit
                  
                  
                  -
                  
                  
                  
                  821,403
                  
                  
                  
                  -
                  
                  
                  
                  821,402Operating
      expensesSelling,
      general and administrative
                  
                  
                  497,103
                  
                  
                  
                  752,462
                  
                  
                  
                  -
                  
                  
                  
                  1,248,565Depreciation
                  
                  
                  -
                  
                  
                  
                  22,153
                  
                  
                  
                  -
                  
                  
                  
                  22,153Total
      operating expenses
                  
                  
                  497,103
                  
                  
                  
                  774,615
                  
                  
                  
                  -
                  
                  
                  
                  1,270,718Net
      income {loss) from operations
                  
                  
                  (497,103
                  )
                  
                  
                  47,788
                  
                  
                  
                  -
                  
                  
                  
                  (449,315
                  )Other
      income (expenses)Disposal
      of assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -Interest
      expense, net
                  
                  
                  (2,097
                  )
                  
                  
                  (13,520
                  )
                  
                  
                  
                  
                  
                  
                  (15,617
                  )Total
      other income (expenses)
                  
                  
                  (2,097
                  )
                  
                  
                  (13,520
                  )
                  
                  
                  -
                  
                  
                  
                  (15,617
                  )Net
      income (loss) before provision for income taxes
                  
                  
                  (499,200
                  )
                  
                  
                  33,268
                  
                  
                  
                  -
                  
                  
                  
                  (464,932
                  )Provision
      for income taxes
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      income (loss) from continuing operation
                  
                  
                  (499,200
                  )
                  
                  
                  34,268
                  
                  
                  
                  
                  
                  
                  
                  (464,932
                  )Discontinued
      operations:Gain
      on disposal of discontinued component (net of tax)
                  
                  
                  322,307
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  322,307Loss
      from operations and discontinued component (net of tax)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -Net
      income (loss)
                  
                  $
                  (176,893
                  )
                  
                  $
                  34,268
                  
                  
                  $
                  -
                  
                  
                  $
                  (142,625
                  )Basic
      & fully diluted loss per shareBasic
      income (loss) per share –continuing operations
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  (.04
                  )Basic
      income (loss) per share –discontinued operations
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  .03Basic
      income (loss) per share
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  (.01
                  )Weighted
      average of common shares outstanding:Basic
      & fully diluted
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  12,191,525


17


8.  Related
Party Transactions




During
fiscal year 2010, three shareholders had unsecured non-interest bearing advances
receivable from the Company. Imputed interest at a rate of 10% was immaterial on
these advances which total $141,018 at June 30, 2010 and $240,918 at December
31, 2009.





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 and M3 since May 21, 2009 and Brandon D. Ray
Director and Executive Vice President of Finance of the Company and M3 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 is being
currently billed at the rate of $20,833 per month. The ASA contract was canceled
June 8, 2010 with a remaining balance due of $85,058 as of June 30,
2010.





As
discussed in Note 7 On March 3, 2010, the Company acquired Redquartz LTD, a
company formed and existing under the laws of the country of Ireland, and
subscribed for issuance of  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 then represented
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 quarter of 2010. The transaction value was recorded to APIC due to the
related party nature of this Agreement.





9.
Notes Payable




At June
30, 2010, the Company was liable on the following Promissory notes:





(see
notes to the accompanying table)





Date of
                                
                                
                                
                                Date Obligation
                                
                                Interest
                                
                                
                                Balance DueObligation
                                
                                Notes
                                
                                Matures
                                
                                Rate(%)
                                
                                
                                06/30/10($)9/17/2009
                                
                                3
                                
                                9/17/2010
                                
                                12
                                
                                
                                $
                                11,6915/29/2009
                                
                                3
                                
                                9/17/2010
                                
                                12
                                *
                                
                                
                                24,4199/17/2009
                                
                                3
                                
                                9/17/2010
                                
                                18
                                *
                                
                                
                                3,31411/4/2009
                                
                                3
                                
                                11/4/2012
                                
                                9
                                
                                
                                
                                104,74311/4/2009
                                
                                3
                                
                                11/4/2012
                                
                                9
                                
                                
                                
                                104,74311/4/2009
                                
                                3
                                
                                11/4/2012
                                
                                9
                                
                                
                                
                                104,74312/22/2009
                                
                                2,3
                                
                                6/22/2010
                                
                                20
                                
                                
                                
                                55,00012/22/2009
                                
                                2,3
                                
                                6/22/2010
                                
                                20
                                
                                
                                
                                55,00012/22/2009
                                
                                2,3
                                
                                6/22/2010
                                
                                20
                                
                                
                                
                                55,00012/7/2009
                                
                                2
                                
                                12/7/2010
                                
                                9
                                
                                
                                
                                2,7502/8/2010
                                
                                3
                                
                                12/1/2010
                                
                                4
                                
                                
                                
                                128,0001/15/2010
                                
                                1,5
                                
                                7/15/2010
                                
                                18
                                
                                
                                
                                149,2872/15/2010
                                
                                4
                                
                                2/15/2012
                                
                                8
                                
                                
                                
                                590,7863/1/2009
                                
                                5
                                
                                3/31/12
                                
                                10
                                
                                
                                
                                2,733,5894/1/2010
                                
                                5
                                
                                6/30/2011
                                
                                9
                                
                                
                                
                                21,700$
                                4,144,765







*
Compounded




Notes:





Other
than as described at Notes 1 and 2, none of the other notes had conversion
options.


18


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 (see Note 10, under the heading “Professional Service
Agreements”).  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 2,000,000 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 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 derivative liabilities were then marked
to the market at March 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, all of the derivative liabilities were revalued as of May
12, 2010 and were reclassified to paid-in-capital (equity) in the amount of
$117,648.





The
initial values of the conversion option (expected term of 0.5 years; risk-free
rate of 0.15%; and volatility of 95%) of approximately $65,565 were recorded as
a note discount and classified as a derivative liability.  For the
three and six months ended June 30, 2010, the Company has originally recorded a
$32,643 charge and a $15,262 benefit on the statement of operations,
respectively, associated with the change in the value of the derivative
liabilities over the time periods indicated.  The May 12, 2010 value
of the conversion option of $50,303 was reclassified from derivative liabilities
to paid-in-capital (equity). The note discount is being amortized using the
interest method over the duration of the Convertible Note (initially six months
and amended to seven months) and interest expense of $28,575 and $49,773 was
recognized during the three and six months ended June 30, 2010, respectively. No
beneficial conversion feature or derivative existed as of June 30,
2010.





Note 2:
On December 22, 2009, we also issued $150,000 of notes that will become
convertible only upon an Event of Default. The Company evaluated these notes and
determined that: (1) the conversion option was eligible for a scope exception
for bifurcation from the note; and (2) since the note is contingently
convertible and not currently substantive, the beneficial conversion feature
would not be recognized unless the conversion option was triggered. While the
notes weren’t repaid until July 2010, there was no Event of Default as of June
30, 2010, or thereafter July 2010 forward.





The
Company also granted warrants to these note holders as noted previously in these
footnotes. Initially, the warrants received equity
treatment.  However, because the shares issuable pursuant to the
conversion option on the January 15, 2010 Convertible Note were indeterminate
from January 15, 2010 until May 12, 2010, these warrants must be reclassified
from equity to derivative liabilities as of January 15, 2010 and back to equity
as of May 12, 2010.





The
December 22, 2009 values of the warrants (expected term of 3.0 years; risk-free
rate of 1.48%; and volatility of 95%) were $45,413 and, after adjusting for the
relative fair values of the notes and the warrants, a $34,859 note discount was
recorded and classified as paid-in-capital (equity).  The note
discount is being amortized using the interest method over the six month
duration of the Convertible Note and interest expense of $17,043 and $33,343 was
recognized during the three and six months ended June 30, 2010,
respectively.


19


The
January 15, 2010 values of the warrants (expected term of 2.9 years; risk-free
rate of 1.44%; and volatility of 95%) of $20,384 was reclassified from
paid-in-capital (equity) to derivative liabilities.  For the three and
six months ended June 30, 2010, the Company recorded a $48 charge and a $20,222
benefit on the statement of operations, respectively, associated with the change
in the value of the derivative liabilities.  The May 12, 2010 value of
the warrants of $162 was reclassified from derivative liabilities to
paid-in-capital (equity).





Note 3:
During 2009 we received cash proceeds for debt obligations of
$933,133.





Note 4:
For the period ended June 30, 2010 we have received cash proceeds for debt
obligations of $590,786.





Note 5:
For the period ended June 30, 2010 we have additional debt obligations totaling
$2,894,741.




Note 6:
General Note: 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 treated as current
liabilities.





Note 7:
General Note:  Other previously issued warrants to purchase 566,310
shares of common stock were reclassified from equity to derivative liabilities
upon the issuance of the January 15, 2010 Convertible Note, on account of the
indeterminate nature of the number of shares to be issued pursuant to the
conversion option.  Those same warrants were reclassified back to
equity from derivative liabilities upon the execution of the Waiver of Trigger
Event.   The value of the warrants on each of those dates was
negligible.





Note 8:
In the first six months of 2010, the Company issued 181,621,743 shares of common
stock to extinguish debt of $1,634,431.





10.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
June 30, 2010; (b) a one-time issuance of 6,000,000 shares of restricted common
stock; and (c) three-year options, 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.  The options and the conversion option associated with the
cash fees were determined to be derivative liabilities as of March 31, 2010, due
to the indeterminate potential share issuance associated with the securities
issued pursuant to the January 15, 2010 financing. On May 12, 2010, these
derivative liabilities were revalued and reclassified to equity because the
Waiver of Trigger Event resulted in the potential share issuance becoming
determinate.





On March
31, 2010, the derivatives were initially valued at $25,597 using the Black
Scholes Model (expected term of 1.4 years for the cash fees and 2.9 years for
the options; risk-free rates ranging from 1.02% to 2.55%; and volatility of
95%) and that amount was recognized immediately as general administration
expense in the statement of operations and a derivative liability on the balance
sheet.





As of May
12, 2010, the derivatives were revalued at $67,182 using the Black Scholes Model
(expected term of 1.3 years for the cash fees and 2.8 years for the options;
risk-free rates ranging from 0.52% to 1.27%; and volatility of 95%) and the
incremental $41,585 was recognized immediately as general administration expense
in the statement of operations and a derivative liability on the balance
sheet.  The $67,182 value of the derivative liability was then
reclassified to paid-in-capital (equity) on the balance sheet.





As of
June 30, 2010, the unvested options were revalued, pursuant to the accounting
treatment for non-employee options, at $13,358 using the Black Scholes Model
(expected term of 2.7 years; risk-free rate of 0.90%; and volatility of
95%) and the incremental $4,290 was recognized immediately as general
administration expense in the statement of operations and paid-in-capital on the
balance sheet.





For the
three and six months ended June 30, 2010, the Company also recognized $41,250
and $55,000 of general administration expense, respectively, with a
corresponding credit to paid-in-capital, which represents amortization of the
$165,000 grant date value of the 6,000,000 shares of restricted common stock
over the expected one year service period.





11.
Concentrations and Risk





Customers





During
the year ended December 31, 2009, and for the six months ended June 30, 2010,
revenue generated under the top five customers accounted for 45% and 70% of the
Company’s total revenue. For the year ended December 31, 2009, and for the six
months ended June 30, 2010 three customers accounted for 29% and 57% of the
total outstanding accounts receivable. 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.


20


Suppliers





The
Company obtained approximately 23% of its products from one manufacturer in the
United States and for the six months ending June 30, 2010. Management believes
this poses no business risk as the Company believes alternative product sources
are readily available if needed.




12.
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 April
2010 we received a lawsuit on behalf of our SATCO subsidiary whereas Acuity
Brands Lighting Inc. (“Acuity”) is seeking a judgment to collect amounts owed to
Acuity by SATCO. Acuity is seeking an amount of $156,000 plus accrued interest
of $19,000, which has been accrued and properly recorded as a liability and
interest payable to Acuity.




In May
2010 we received a lawsuit on behalf of our SATCO subsidiary whereas Targetti
Poulsen USA Inc. (“Poulsen”) is seeking a judgment to collect amounts owed to
Poulsen by SATCO. Southeast Underground Utilities Corp. (“SE Underground”) was
also named on the lawsuit as SE Underground is a customer of SATCO and had
failed to pay SATCO for materials ordered from Poulsen.Management is
confident that this matter will be resolved ultimately in SATCO’s favor and
since we do not believe we are at fault or liable, we intend to vigorously
defend our position.




As noted
in our business combination footnote our SATCO acquisition contained certain
make whole provisions that may impact us in the future.





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





13.
Subsequent Events





In July
2010, the Company issued 149,436,643 shares of common stock to various entities
to reduce debt owed to debt holders.





In July
2010, the Company issued 88,002,843 shares of common stock to a consultants and
advisors for services rendered.





In July
2010, the Company issued 250,000 shares of common stock in consideration for a
loan provided to the Company’s subsidiary operations.





In July
2010, the Company issued 100,000 shares of common stock in behalf of the
acquisition of Redquartz Ltd.





In July
2010, the Company issued a secured convertible promissory note
receiving a cash amount of $165,000 and repaid certain notes
owing in the same amount, in full. Upon outcome of completion of
ongoing negotiations this convertible note may be considered a derivative in the
third quarter of operations. The oil leases held by Energy Producers, Inc, a
wholly owned subsidiary of the Company, are pledged as collateral.





In August
2010 the Company issued 8,400,000 shares of common stock to a consultants and
advisors for services rendered.





In August
2010, the Company issued 25,899,546 shares of common stock to various entities
to reduce debt owed to debt holders.





In August
2010, the Company issued 3,500,000 shares of common stock to an investor as
consideration for granting forbearance on convertible notes held.





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.


21


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.





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 of oil and gas production at the J.B. Tubb Leasehold Estate located
in the Amoco Crawar Field in Ward County, Texas in March, 2008. The Company
successfully increased production and revenues derived from its properties and
in late 2008, the Company was able to retire over 90% of its debt through the
disposition of those improved 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,
(SATCO) which distributes a variety of products geared primarily towards the
transportation industry where it derives its revenues. Recently in July 2010,
the Company entered into a Definitive Agreement with E-Views Safety Systems,
Inc. ("E-Views") to be operated through its new subsidiary unit EGPI Firecreek
Acquisition Company, Inc. Initially the Company has a “Dealer Agreement” with
rights to acquire up to 51% of E-Views. The Stock Purchase Agreement provides
for up to a 51% interest in E-Views and exclusive distribution and sales rights
in various states. The Company has initially solidified rights for the states of
Alabama, Florida, Louisiana and North Carolina. They have also obtained
international rights in the countries of Ireland and the United
Kingdom. These states were initially chosen because of our subsidiary
Southern Atlantic Traffic Corporation's, established clientele, and therefore
potential abilities to penetrate these markets with E-Views patented technology
and state-of-the-art products (see further discussion this
Section).





Through
2009 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. In late 2009 and in 2010, the Company began pursuing a reentry to the
oil and gas industry and again as part of our strategic plans. The Company is
currently 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 and, on December 31, 2009, the Company,
through its wholly-owned subsidiary, Energy Producers, Inc., (EPI) 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, and the Company in its second quarter of operations 2010, acquired all
the stock of Chanwest Resources, LLC, (“Chanwest or CWR”) a Texas corporation,
engaged in the oil and gas servicing business, including construction, and
activities related to acquisition for the production and development for oil and
gas (see further discussion this Section).





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 development of its new line of operations for M3, SATCO, EPI, CWR,
and E-Views, or acquisitions by the Company that are vertically related to M3,
SATCO, EPI, CWR, and E-Views such as Redquartz and E-Views for SATCO and
Chanwest for EPI, and (ii) building new infrastructure for its oil and gas
operations in 2009. The Company throughout its first quarter of operations for
2010 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:


22


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. 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 Assignees 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.





Completion
of Recent 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 incorporated herein by reference.




In
accordance with the Company’s plans and strategy we are currently developing two
lines of business, one line of business for our historical oil and gas
operations now reorganized into the Company’s wholly owned subsidiary unit,
Energy Producers, Inc. F/K/A Malibu Holding, Inc., this replacing Firecreek
Petroleum, Inc., and one for M3 Lighting, Inc., F/K/A Asian Ventures, Corp.
which is involved in distribution of commercial and decorative lighting to the
trade, and to direct retailers.  M3 specializes in the areas of
lighting industry sales, design, product development, and sourcing, contracting
and capital markets.   M3 has a presence in the U.S. and Asia.
With a sales representative in China and offices in the U.S., the M3 team
through this footprint, as required, can effectively monitor price competition,
expediting product shipments and grow the business through sales.  M3
can import both finished goods and sub-assemblies for domestic final assembly.
Through its experience, knowledge and contacts in the lighting and DOT industry,
M3 created a business plan to create a vertical rollup and stream of
acquisitions targeted strategically for the Company that included manufactures,
distributors and contractors. This change in strategy allowed the management and
key decision makers at M3 more time to focus on potential acquisitions who they
had done business with for numerous years. Focusing on the Obama Infrastructure
Stimulus funding that is being released for roadwork throughout the country; M3
is pursing companies that are involved in the lighting, traffic signs/signals
and ITS components of the industry.  M3 is also actively pursuing
federal contracts to provide lighting and contracting through our partnership
with CST Federal who are a disabled veteran’s agency that bids government
contracts.  Future acquisitions in the DOT construction industry are
expected to provide a labor force for the maintenance and remediation services
the Company plans on providing.





Completion
of South Atlantic Traffic, Inc. (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” and “Description of Properties” in our
Report on Form 10-K filed on April 15, 2010, 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” listed in our Report on Form 10-K filed on April 15, 2010 and
elsewhere in this report.


23


Completion
of Redquartz LTD Acquisition





On March
3, 2010, the Company acquired all of the issued and outstanding stock of
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, Inc. (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”,
listed in our Report on Form 10-K filed on April 15, 2010 and elsewhere in
this report..





Completion
of Completion of Chanwest Resources, LLC Acquisition





On June
11, 2010, the Company acquired all of the issued and outstanding stock of
Chanwest Resources, LLC, (“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 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. 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 through one or more of its segments include Construction and
Trucking, with a complement of assets which will be deployed providing related
services used for hauling equipment, delivery and spreading of rock, iron ore,
dirt and gravel, used in lease roads, firewall’s, tank pads, and drill sites.
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. For further information please see our Current Report on Form
8-K filed on June 16, 2010.





Completion
and Entry into a Definitive Agreement with E-Views Safety Systems,
Inc.





On July
22, 2010 EGPI Firecreek, Inc. the Company entered into a Definitive Stock
Purchase Agreement with E-Views Safety Systems, Inc. ("E-Views") to be operated
through its new subsidiary unit EGPI Firecreek Acquisition Company, Inc.
Initially the Company has a “Dealer Agreement” with rights to acquire up to 51%
of E-Views (see Exhibit 10.1 and 10.2 filed herewith).





The Stock
Purchase Agreement provides for up to a 51% interest in E-Views and exclusive
distribution and sales rights in various states. The Company has initially
solidified rights for the states of Alabama, Florida, Louisiana and North
Carolina. They have also obtained international rights in the countries of
Ireland and the United Kingdom. These states were initially chosen because
of our subsidiary Southern Atlantic Traffic Corporation's, established
clientele, and therefore potential abilities to penetrate these markets with
E-Views patented technology and state-of-the-art products.





Founded
in 1998, E-Views is a leading edge innovator and provider of patented advanced
wireless "smart infrastructure" technologies that incorporate intelligent
traffic, transit, and light rail systems with messaging and communications that
enable municipalities worldwide to provide first responder prioritization,
traffic congestion mitigation, emergency evacuation coordination, multi-agency
communications interoperability, nuclear/biological/chemical detection and data
reporting.





Additionally,
the California Institute of Technology ("CalTech") holds an equity position in
E-Views. The Technology Affiliates Agreement between E-Views and CalTech/Jet
Propulsion Laboratories ("JPL") is designed to commercialize leading-edge space
technology focused on public transportation and safety. Currently, CalTech
provides extensive resources to E-Views through JPL in the areas of advanced
Global Positioning Systems, Bio-Chemical Hazard Sensors, next generation
detection and warning technologies for railroad crossings, solar systems for
remote equipment on urban roadways, and extreme environment electronics for very
hot and cold climates. These technologies can be integrated into future products
to provide significant enhancements to public transportation and safety systems
and give E-Views a tremendous competitive advantage.





E-Views
currently owns 7 patents with an additional 6 patent pendings giving them an
Intelligent Transportation Systems ("ITS") product that is one of the most
advanced Intersection Infrastructure Technologies available today. In 2006
E-Views received approval from Houston Transtar and implemented its first
multi-million dollar contract with the 3rd largest county in the U.S., Harris
County, Texas, for its EVP System. As a result of its success in Texas, E-Views
is quickly becoming the standard in ITS Systems for progressive municipalities
throughout North America. The company's sales are beginning to enjoy significant
growth as initial purchase orders have been received from as far north as
Montreal, Canada to Henderson, Nevada.





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, and including any new or pending acquisitions discussed
herein, and those business activities and developments related to our newest M3,
SATCO, EPI, CWR, RQTZ, and E-Views strategy and operations, and new
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  in connection 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.




General
Statement:  Factors that may affect future results:


24


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 quarters ended June 30, 2010 and June 30, 2009.




Results
of Operations




Six
months ended June 30, 2010 compared to the six months ended June 30,
2009.





There was
$916,298 in revenues generated from the Company’s sales activities in the six
months ended June 30, 2010 compared to no revenues in same period of 2009. Cost
of goods sold in the six months ended June 30, 2010 was $784,463 and $0 in the
same period of 2009, producing gross profits of $131,835 for the first six
months of 2010 and $0 for the same period in 2009.




General
administrative expenses were $2,135,624 in for the six months ended June 30,
2010 compared to $497,103 for the six months ended June 30, 2009.  The
increase in these expenses is due to the additional subsidiaries.




Following
is a breakdown of general and administrative costs for this period versus a year
ago:





Detail
of general & administrative expenses:




30-Jun-10
                
                
                30-Jun-09Advertising
      & promotion
                
                $
                9,019
                
                
                $
                45,302Administration
                
                
                209,524
                
                
                
                20,471Consulting
                
                
                592,679
                
                
                
                66,038Investor
      incentives/commissions
                
                
                201,212
                
                
                
                9,000Professional
      fees
                
                
                633,925
                
                
                
                62,760Rent/Utilities
                
                
                39,573
                
                
                
                0Salaries
                
                
                305,327
                
                
                
                15,000Impairment
      expense
                
                
                0
                
                
                
                278,532Misc.
                
                
                144,365
                
                
                
                0Total
                
                $
                2,135,624
                
                
                $
                497,103




Promotional
fees of $9,019 were incurred in stock promotional activities.





Consulting
fees of $592,679 were incurred for business advisory services.




Professional
fees of $633,925 were incurred in regards to management advisory, legal costs,
and accounting, for new subsidiaries.





Investor
incentive fees of $201,212 were incurred in regards to funding
activities.




After
deducting general and administrative expenses, the Company experienced a loss
from operations of $2,003,789 for the six months ended June 30, 2010 compared to
a loss of $497,103 for the same period last year.





Interest
expense for the six months ended June 30, 2010 was $198,219 compared with $2,097
for the same period last year.





The
Company incurred a net loss of $2,609,978 for the first six months ended June
30, 2010 compared to a loss of $176,896 for Q2 2009.





Fully
diluted income (loss) per share was ($0.03) per share for six months 2010
compared to a loss of ($0.02) per share for six months 2009.





Professional
fees increased approximately $571,165 to $633,925 for six months 2010 from
$62,760 for six months 2009.




Net loss
for six months 2010 was $2,609,978 or ($0.01) per share compared to a loss of
$176,893, or ($0.02) per share for six months 2009.


25


Three
months ended June 30, 2010 compared to the three months ended June 30,
2009.





There was
$407,638 in revenues generated from the Company’s sales activities in the
quarter ended June 30, 2010 compared to no revenues in same quarter of 2009.
Cost of goods sold in the quarter ended June 30, 2010 was $351,135 and $0 in the
same period of 2009, producing gross profits of $56,503 for the second quarter
of 2010 and $0 for the same period in 2009.




General
administrative expenses were $1,250,575 for the three months ended June 30, 2010
compared to $309,485 for the three months ended June 30, 2009.  The
increase in these expenses is due to expanding operations for the additional
subsidiaries and preparing for new growth, and costs for financing.





Discussion of Financial Condition:
 Liquidity and Capital Resources




At June
30, 2010 cash on hand was $44,294 as compared with $17,625 at December 31, 2009.




At June
30, 2010, the Company had working capital deficit of $6,844,602 compared to a
working capital deficit of $3,041,776 at December 31, 2009.  Working
capital decreased mainly as a result of operating losses and financing
costs.




Total
assets at June 30, 2010 were $3,876,125 as compared to $3,959,666 at December
31, 2009.




The
Company’s total stockholders’ deficit increased to $3,537,554 June 30, 2010 from
stockholders’ equity of $47,243 at December 31, 2009.





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, 2009.




ITEM
4(T) – CONTROLS AND PROCEDURES





(a)                 Evaluation
of Disclosure and Procedures




We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of June 30, 2010. This evaluation was carried out
under the supervision and with the participation of our Principal Executive
Officer and Principal Accounting Officer. Based upon that evaluation, our
Principal Executive Officer and Principal Accounting Officer concluded that, as
of June 30, 2010, 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 the
      communications the appropriate personnel involved with our 2008 and 2009
      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.





·
            Subsequent
      to the filing of the Original report, we determined that we needed to
      restate the financial statements contained in the Original Report and
      Quarterly Report on Form 10-Q that we filed for the quarterly period ended
      September 30, 2009.





·
            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.


26


PART II.  OTHER INFORMATION





ITEM
1 – LEGAL PROCEEDINGS




As of the
date hereof, there are no material legal proceedings threatened against
us.  In the ordinary course of our business we may become subject to
litigation regarding our products or our compliance with applicable laws, rules,
and regulations.




In April
2010 we received a lawsuit on behalf of our SATCO subsidiary whereas Acuity
Brands Lighting Inc. (“Acuity”) is seeking a judgment to collect amounts owed to
Acuity by SATCO. Bob Joyner, Stewart Hall and Michael Hunter were also named on
the lawsuit as each of the previous owners of SATCO had personal guarantees
contained in the agreement between Acuity and SATCO. The previous owners of
SATCO were indemnified for the personal guarantees in the Stock Purchase
Agreement between the Company and SATCO.




In May
2010 we received a lawsuit on behalf of our SATCO subsidiary whereas Targetti
Poulsen USA Inc. (“Poulsen”) is seeking a judgment to collect amounts owed to
Poulsen by SATCO. Southeast Underground Utilities Corp. (“SE Underground”) was
also named on the lawsuit as SE Underground is a customer of SATCO and had
failed to pay SATCO for materials ordered from Poulsen.Management is
confident that this matter will be resolved ultimately in SATCO’s favor and
since we do not believe we are at fault or liable, we intend to vigorously
defend our position.





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, 2009, as updated by our subsequent filings on Form 10-Q (and otherwise) with
the SEC.





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 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 April 15, 2010, in our Form 10Q filed on filed on May 24, 2010, in our
Form 8-K filed on June 16, 2010, and in our Form 8-K filed June 17, 2010,
incorporated herein by reference.





(*)(**)
On August 3, 2010, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following entity for and behalf of consideration as
follows:





NameandAddress(***)
                        
                        Date
                        
                        ShareAmount
                        
                        Type of
                          Consideration
                        
                        Fair Market
                          Value of
                          ConsiderationSt.
      George Investments, LLC (1)
                          303
      East Wacker Drive, Ste 311
                          Chicago,
      Illinois 60601
                        
                        8/3/2010
                        
                        
                        3,500,000
                        
                        Agreeing
      to forbearance on
                          note
      / stock conversion
                        
                        $
                        10,150







(*)
Issuances when approved, will be 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.




(**)
$10,150 worth of common stock in the immediately preceding table used primarily
in consideration of St. George Investment, LLC agreeing to forbearance on terms
of its convertible note held re stock conversions.





(1) The
above named entity is a shareholder of the Registrant and not an affiliate,
officer or director thereof.





(***) The
shares of common stock are to be 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.


27


(*)(**)
On August 1, 2010, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following entity for and behalf of consideration as
follows:





Name and Address (***)
                        
                        Date
                        
                        Share Amount
                        
                        Type of
                          Consideration
                        
                        Fair Market
                          Value of
                          ConsiderationJames
      Skalko (1)
                          3457
      Rockcliff Place
                          Longwood,
      FL 32779
                        
                        8/1/2010
                        
                        
                        8,400,000
                        
                        Consulting
      and
                          Advisory
      Services
                        
                        $
                        23,520







(*)
Issuances when approved, will be 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.




(**)
$23,520 worth of common stock in the immediately preceding table used primarily
in consideration of providing consulting and advisory services to the
Company.





(1) The
above named entity is a shareholder of the Registrant and not an affiliate,
officer or director thereof.





(***) The
shares of common stock are to be 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.







(*)(**)
On June 24, 2010, by majority consent of the Board of Directors, the Company
approved the following issuances of its restricted common stock, par value
$0.001 per share, to the following person for and behalf of consideration of
making a $27,000 loan to the Company’s wholly owned subsidiary South Atlantic
Traffic, Inc. (SATCO) as follows:





Name and Address (***)
                      
                      Date
                      
                      Share Amount
                      
                      Type
      of
                        Consideration
                      
                      Fair
      Market
                        Value
      of
                        ConsiderationBob
      Joyner (1)
                        409
      Brevard Ave., Suite 5
                        Cocoa,
      Florida 32922
                      
                      6/24/2010
                      
                      
                      250,000
                      
                      For
      providing loan to
                        SATCO
      for working capital
                      
                      $
                      1,125







(*)
Issuances when approved, will be 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.




(**)
$1,125 worth of common stock in the immediately preceding table used primarily
in consideration of advances / loan made for working capital requirements for
the Company’s wholly owned subsidiary SATCO.





(1) The
above named individual is a shareholder of the Registrant and Principle
Executive Officer of SATCO.




(***) The
shares of common stock are to be 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, contained in our Annual
Report on Form 10-K, filed on April 15, 2010, incorporated herein by
reference.





On July
22, 2010 EGPI Firecreek, Inc. the Company entered into a Definitive Stock
Purchase Agreement with E-Views Safety Systems, Inc. ("E-Views") to be operated
through its new subsidiary unit EGPI Firecreek Acquisition Company, Inc.
Initially the Company has a “Dealer Agreement” with rights to acquire up to 51%
of E-Views (see Exhibit 10.1 and 10.2 filed herewith).


28


Founded
in 1998, E-Views is a leading edge innovator and provider of patented advanced
wireless "smart infrastructure" technologies that incorporate intelligent
traffic, transit, and light rail systems with messaging and communications that
enable municipalities worldwide to provide first responder prioritization,
traffic congestion mitigation, emergency evacuation coordination, multi-agency
communications interoperability, nuclear/biological/chemical detection and data
reporting (see additional discussion in Item 2 – Management’s Discussion and
Analysis of Financial Condition and Results of Operations).




The
Company through its Energy Producers, Inc., and Chanwest Resources, LLC
subsidiary units 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.
              
              Description10.1
              
              Stock
      Purchase Agreement with E-Views Safety Systems, Inc. dated July 20,
      201010.2
              
              Dealer
      Agreement with E-Views Safety Systems, Inc. dated July 20,
      201031.1
              
              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)





29


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, 2010




EGPI
      FIRECREEK, INC.By:
              /s/ Dennis AlexanderName Dennis
      AlexanderTitle: Chairman,
      CEO, President, and CFO


30