U.S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-KSB

          Annual Report pursuant to Section 13 or 15(d)
             of the Securities Exchange Act of 1934

  [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

                      EXCHANGE ACT OF 1934

             For the fiscal year ended MAY 31, 2004
                                       ------------

TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934

   For the transition period from ___________ To _________________

                  Commission File No.000-17058

                EPICUS COMMUNICATIONS GROUP, INC.
 ----------------------------------------------------------------
 Exact name of small business issuer as specified in its charter,

                             FLORIDA
  --------------------------------------------------------------
  (State or Other Jurisdiction of incorporation or organization)

                           59-2564162
                ---------------------------------
                (IRS Employer Identification No.)

         1750 OSCEOLA DR. WEST PALM BEACH, FLORIDA 33409
         -----------------------------------------------
            (Address of Principal Executive Offices)

                          561-688-0440
       --------------------------------------------------
       (Issuer's telephone - number, including area code)

  Check whether the issuer (1) filed all reports required  to  be
filed by Section  13 or 15(d) of the Exchange Act during the past
12  months  (or  for such shorter period that the registrant  was
required to file such reports), and (2) has been subject to  such
filing requirements for the past 90 days.

            Yes [ ]                         No [X]

State  the  number of shares outstanding of each of the  issuer's
classes  of common equity as of the latest practicable date:   as
of  July  12, 2004 was 296,391,134 shares of the issuer's  Common
Stock, $.001 par value, outstanding.

          Transitional Small Business Disclosure Format

            Yes [ ]                         No [X]

                  Common Stock, $.001 par value

<PAGE>


                EPICUS COMMUNICATIONS GROUP, INC.
       (Formally)  PHOENIX INTERNATIONAL INDUSTRIES, INC.
                         INDEX TO 10-KSB

                             PART I

ITEM I   DESCRIPTION OF BUSINESS
ITEM 2   DESCRIPTION OF PROPERTY
ITEM 3   LEGAL PROCEEDINGS
ITEM 4   RESULTS OF VOTES OF SECURITY HOLDERS

                             PART II

ITEM 5   MARKET  FOR  COMMON  EQUITY AND  RELATED  STOCKHOLDERS
         MATTERS
ITEM 6   MANAGEMENT'S DISCUSSIONS AND DISCONTINUED OPERATIONS

ITEM 7   FINANCIAL STATEMENTS
ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

                            PART III

ITEM 9   MANAGEMENT AND DIRECTORS
ITEM 10  EXECUTIVE COMPENSATION
ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT
ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13  EXHIBITS AND REPORTS



<PAGE>


                             PART I

ITEM 1   DESCRIPTION OF BUSINESS

Epicus Communications Group, Inc. (herinafter also referred to as
"Epicus Group"), (fka) Phoenix International Industries, Inc., is
a holding company, with primary interests in the telecommunications
industry.  During the year ending on May 31, 2002, the Company
consisted of Epicus Communications Group, Inc. (fka) Phoenix
International Industries, Inc. , the parent company and three
wholly owned subsidiaries, EPICUS, Inc., which is the primary, and
only active subsidiary, Moye & Associates ("TheBest.Net"), and
Mic-Mac Investments, Inc. which are currently inactive. For fiscal
2003 our total income was derived from Telecommunication and the
sale of Epicus Group common stock.

HISTORICAL DEVELOPMENT

We were incorporated on July 22 1985, pursuant to the laws of the
State of Florida under the name "Hydrobac, Inc. On July 7, 1986,
the company's name was changed to "ProBac, Inc." and on October
5, 1994, its name was changed to Trident Environmental Systems,
Inc. During those periods our primary business was in various
types of products and systems for use in the environmental clean-
up industry.

On October 2, 1996 our name was changed to Phoenix International
Industries, Inc. and our common stock was reverse split 15 to 1.
Our shareholders approved Amendments to the Articles of
Incorporation, changing the authorized capital to 20,000,000
shares of common stock, par value $.001 per share, and up to
5,000 shares of Preferred Stock for use as needed. From January
1996 through May 31, 1997, we sought acquisitions as we wound
down and closed our original environmental clean-up business. We,
therefore, treat all matters relating to the environmental clean-
up business as discontinued operations.

On June 13, 1998, we acquired 100% of the stock of Intuitive
Technology Consultants, Inc. ("ITC") of Atlanta, Georgia. ITC was
engaged in the business of computer system design and computer
related (MIS) employee placement. As of June 1999, we sold
Intuitive Technology Consultants Inc to a group headed by the
current management of ITC. We recognized a total gain of $479,583
on the sale of this business.

On July 21, 1997 we acquired 100% of the stock of HDX 9000, Inc.
("HDX"), a company specializing in compliance methodology for the
Y2K problem and for the various types of "ISO" compliance
certification.

Since the demand for HDX's primary product, a compliance
methodology to solve the Year 2000 date change problem, has
become understandably non-existent, and due to HDX's inability to
establish a new marketable product in a timely fashion, on March
20, 2000, it was the decision of our Board of Directors, in
concert with the previous shareholder of 100% of HDX's stock, to
rescind the agreement by which HDX was acquired by Phoenix. This
was done and the stock of each company which was originally
exchanged to effect the acquisition was returned to the original
holder or issuer. We recognized a total loss of $99,140 in
connection with this transaction.

On April 9, 1998, we acquired 100% of the outstanding stock of
Mic Mac Investments, Inc., a long distance telephone service
"reseller" specializing in the hospitality industry. Mic-Mac
ceased to operate late in the third quarter of fiscal 1999, and
had no remaining assets or liabilities as of May 31, 1999, and
Phoenix wrote off its remaining investment in them in that fiscal
year. We recognized a gain of $13,417 in connection with the
write off this investment. Although it has ceased to operate, Mic-
Mac, Inc., remains the property of the Company until a decision
is made as to its future.

<PAGE>

Based on an agreement entered into on December 14, 1998, we
acquired 100% of the stock of Cambridge Gas Transport Corporation
(CGTC), a Cayman Islands Corporation, in the business of owning
and operating specialized chemical/fuel tanker transport ships.
Due to unspecified disagreements, an agreement to rescind the
acquisition has been executed by the parties. We did not
recognize any gain or loss on this transaction. We filed
litigation to recoup our payments to CTCG, resulting in an out of
court settlement on December 15, 2000.

During fiscal 2000 we acquired 100% of the stock of Telephone
Company of Central Florida, Inc. ("TCCF"). TCCF is a "competitive
local exchange carrier" ("CLEC") telephone company and a reseller
of other telecommunications services. TCCF was at that time
operating under the protection of "Chapter 11"of the federal
bankruptcy laws. The effective date of the closing was ten days
after the Order of Confirmation was issued by the Bankruptcy
court. The Order of Confirmation was issued on June 9, 1999 and
TCCF began operating as a reorganized debtor on that date. We
acquired TCCF within ten days of the Confirmation Order. On
January 17, 2001 the name of TCCF was changed to EPICUS, Inc.

On July 28, 2000, we acquired 100% of the stock of Moye &
Associates, Inc. of St. Simons Island Georgia. Moye & Associate's
primary business was that of an Internet Service Provider (ISP)
known as TheBest.Net. This move was seen by the company as
synergetic with, and a possible future merger into TCCF.


BUSINESS OF AFFILIATES

EPICUS, Inc.

Our primary and currently only active subsidiary, EPICUS, Inc.,
is a multi-service telecommunications company with approximately
30,000 active accounts incorporating approximately 50,000 lines,
in both the residential and business markets. We focus on
developing integrated telephone service in the Competitive Local
Exchange Carrier area of the telecommunications industry. Like
many other emerging Competitive Local Exchange Carriers, our
entry in this industry was facilitated by the passing of the
Telecommunications Act of 1996 which allows Competitive Local
Exchange Carriers to lease various elements of the networks of
the Incumbent Local Exchange Carriers that are necessary to
provide local telephone service in a cost-effective manner. We
offer small businesses and residential consumers an integrated
set of telecommunications products and services, including local
exchange, local access, domestic and international long distance
telephone, data and dial up access to the Internet. We are
certified to offer long distance and internet services in the 48
contiguous states. We are currently supplying local and long
distance service to customers in 7 of the 9 states in the
BellSouth System. Additionally, we have long distance customers
in 40 of the 48 states in which we are certified.

We have built our company by primarily focusing on being in the
vanguard of new telecommunication products and services such as
our "Freedom Rings(TM) and AccessNOW(TM) voice and data services
brands, and creating software systems and processes to deliver
telecommunication services over leased networks, instead of
concentrating on buying switches and hardware to build a very
expensive network, which could be severely under-utilized for a
potentially long period of time. In our opinion, it is that major
expense which has led to the demise of many emerging telephone
companies. Instead, we have built a scalable operating platform
that can provision a local phone line, read usage records, rate
phone calls for billing purposes, and prepare monthly invoices to
customers. We can bill all of a customers telecommunication
services on one itemized bill.

<PAGE>

Because of the expense and complexity of the business, we have
focused on improving our performance through automation. We
believe one of the greatest accomplishments in building our
business over the past three years was the development of our own
operational support systems ("OSS"). It is these systems that
allow us to rapidly execute our customers orders, for example:
orders for new service and repair orders, plus real time
information on billing and collections. It is more economic, more
efficient and more accurate than being totally dependant upon
outside sources and clerical performance.

MOYE & ASSOCIATES, INC. (TheBest.Net)

A Georgia Corporation, Moye & Associates, dba "TheBest.Net" was
primarily an Internet Service Provider (ISP). To raise additional
operating capital, in July 2001, Epicus Group sold the customers
of The Best.Net. for $200,000 to another Internet Service
Provider. Epicus Group plans to keep the corporation current, but
inactive, until a suitable use can be found for it.

MIC-MAC INVESTMENTS, INC. ("Mic-Mac")

Mic-Mac Investments, Inc. and Hospitality Telecom (together
"Hospitality") were acquired on April 1, 1998. For the period
from the date of acquisition through May 31, 1998, Hospitality
had revenues of $15,634 and expenses of $30,404.

Hospitality ceased to operate late in the third quarter of fiscal
1999, claiming they could not meet their business plan
projections or continue without Phoenix acquiring a long distance
telephone company, and since it had no remaining assets or
liabilities as of May 31, 1999, we wrote off our remaining
investment in them in that fiscal year. Although it has ceased to
operate, Mic- Mac, Inc., remains the property of the Company
until a decision is made as to its future.

ITEM 2

DESCRIPTION OF PROPERTY

Our principal executive offices are located at 1750 Osceola
Drive, West Palm Beach, Florida 33409 and our telephone number is
(561) 688-0440. This space is approximately 1,500 square feet
including three offices and a conference room. The annual lease
cost is $3,500.00 per month, plus expenses and expired in August
2002. The property is now owned by a corporation owned by an
affiliate of the Company and the Company continues to occupy the
property on a month to month basis.

ITEM 3

LEGAL PROCEEDINGS

One of our subsidiaries, EPICUS, has been involved in a dispute
with one of its former carriers, Sprint Florida, regarding a
default in payment for services. On August 23, 2000, Sprint filed
suit in the Circuit Court of the Ninth Judicial Circuit in and
for Orange County Florida. We believed that the accusation was
incorrect, however after obtaining advice from legal counsel, we
decided not to litigate the matter and on December 21, 2000, the
carrier was awarded by that court, a default judgment against
EPICUS in the amount of $321,587.52. In accordance with a
Judgment Payment Agreement dated February 15, 2001, EPICUS agreed
to pay Sprint as follows: Principal payments of $10,000 each were
be due commencing March 15, 2001 through September 15, 2002 (18
months). The final balloon payment of $142,000 was payable on
October 15, 2002.  That payment has not yet been made and Epicus
plans to attempt to negotiate a modified agreement.

<PAGE>

On June 22, 2000, EXL Information of Vancouver, BC, Canada filed
suit in the Supreme Court of British Columbia, Canada, for
payment of "royalty fees" it claims were owed by EPICUS for the
use of their billing program. EPICUS denies owing EXL any money
maintaining that the program was supposed to be adapted by EXL to
meet EPICUS's needs, which they never did, thereby nullifying the
agreement. EXL is seeking relief in the amount of US$184,761. The
matter is still being litigated. The outcome of this litigation
is not determinable at this time. There has been no further
action in this matter and Epicus plans to file a motion to
dismiss due to lack of prosecution.  Epicus believes that motion
will be well received by the court and this matter will then be
resolved in their favor.

On March 11, 2004 in the U.S. Bankruptcy Court, Southern
District, Judge Arthur Briskin ruled in favor of the IRS allowing
them to amend their claim of past due excise taxes to a total of
$2,849,469.98  This motion was made by the IRS in October of 1997
during the bankruptcy hearings of Epicus, Inc.'s predecessor The
Telephone Company of Central Florida.  Epicus Communications
Group, Inc.'s plan of re-organization was approved and accepted
by Judge Briskin, and in that plan of re-organization Epicus
Communications Group agreed to pay a maximum of $300,000 in past
due excise taxes.  Epicus Communications Group would never have
agreed to a debt of this size in its plan of re-organization.
Epicus Communications Group is examining is legal options in this
matter and a course of action has yet to be decided.

ITEM 4    RESULTS OF VOTES OF SECURITY HOLDERS

The following items were passed by a majority vote of the
shareholders at the corporations annual meeting held February  3,
2004 in West Palm Beach, Florida.

The re-election of the current Board of Directors,  Messers.
Gerard Haryman, Thomas Donaldson, and Timothy Palmer, and

The ratification of Scott W. Hatfield, CPA as the company's
auditors for 2003 and for 2004, and

The increase of the company's authorized common stock to from
200,000,000 to 800,000,000 shares, and

The approval of the previous actions taken by the Board of
Directors on behalf of the Corporation.

                        PART II


ITEM 5    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

Our common stock is quoted on the Nasdaq OTC Bulletin Board under
the symbol "EPUC.OB". During the past two years through July 12,
2004 there has been no established trading market for the shares
of our common stock over an exchange, however the stock has been
trading over-the-counter in small quantities. Currently there is
only limited trading activity in our common stock and the
quotations set forth below reflect such activity. There can be no
assurance that quotations will not fluctuate greatly in the
future in the event trading activity increases or decreases. The
information contained in the following table was obtained from
the NASD and from various broker-dealers and shows the range of
representative bid prices for our common stock for the periods
indicated. The prices represent quotations between dealers and
do not include retail mark, mark-down or commission and do not
necessarily represent actual transactions:

<PAGE>


<TABLE>
<CAPTION>

                                                  BID
                                         ------------------------
                    QUARTER ENDING        HIGH       LOW
                    ---------------------------------------------
<S>                 <C>                  <C>        <C>

                    2002
                    March 31              .05        .04
                    June 30               .05        .03
                    September 30          .06        .01
                    December 31           .05        .01

                    2003
                    March 31              .03        .01
                    June 30               .13        .02
                    September 30          .12        .05
                    December 31           .07        .03

                    2004
                    March 31              .05        .02
                    June 30               .03        .01
</TABLE>


Dividends

The Company has paid no dividends during the past five fiscal years
on any class of its issued and outstanding securities.

The payment by the Company of dividends, if any, in the future
rests within the discretion of its Board of Directors and will
depend, among other tier things, upon the Company's earnings, its
capital requirements and its financial  condition, as well;  as
other relevant factors. By reason of the Company's present
financial condition, the Company does not contemplate or anticipate
paying any dividends on, the Common Stock in the foreseeable
future.

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

RESULTS OF OPERATIONS

Years ending May 31, 2003 and May 31, 2002

For the year ending May 31, 2003, the Company reported revenues
of $10,412,586, with a gross profit of $4,370,190 with operating
expenses of $5,883,333 and an operating loss of $(1,513,143)
versus the year ending May 31, 2004 with revenues of $25,190,543
and a gross profit of $7,681,243 with operating expenses of
$10,616,797 and an operating loss of $(2,955,554).  These
revenues were solely derived from telecommunication service sales
generated by Epicus Group's operating subsidiary, Epicus, Inc.,
as disclosed in the combined financial statement which is
included in this filing.

<PAGE>

The year 2004's increase in gross profit was primarily
attributable to an increase in revenue coupled with lower cost of
sales resulting from more favorable pricing from several
suppliers.  The increase in our net loss was primarily the result
of writing down an unusually large amount of bad debt.  However,
we believe if we can maintain the current revenue growth and
favorable profit ratios, we anticipate the net loss to be
eliminated and to earn a net profit for the year ending May 31,
2005.

Our current profit ratio is a direct result of our computerized
billing and provisioning, plus increased independent agent sales
which are only commissioned.  Our "in house" sales staff has also
been greatly reduced as more emphasis is placed on developing our
independent agent sales network and outsourced telemarketing.

During the year ended May 31, 2004, we incurred a net loss of
$(3,286,562) compared to net losses of $(1,630,372) for the
preceding year. A significant portion of our net loss for the
year ended May 31, 2004, continues to be the result of paying
down previously incurred long and short term debts and the debt
service associated with those debts.

Also continuing to contribute to our loss during the period are
the  expenses associated with continuing to operate and maintain
Epicus Group's offices, professional fees, including legal and
accounting plus other expenses associated with being a reporting
public company.  We also incurred non-cash expenses associated
with the issuance of 17,384,592 shares of stock to the holders of
our convertible debenture.

In order for us to pay our operating expenses, including office
rents, communication expenses, accounting and bookkeeping fees,
printing and EDGAR preparation costs, publication costs, and
other general and administrative expenses, we have been dependent
upon the funds provided by non-interest bearing loans from our
executive officers, directors and  shareholders, and the sale of
stock in prior periods under the terms and conditions of
Regulation S of the Securities Act of 1933.

We still continue to be dependent upon the willingness of our
executive officers/directors and consultants to accept shares
and/or defer all or partial compensation for continued services
to us, which services we consider to be valuable and necessary to
our continued operations.

In Fiscal 2000, under the Bankruptcy "Plan of Reorganization", we
purchased and acquired 100% of the common stock of Epicus, Inc.,
and as the "Reorganized Debtor" we operate Epicus, Inc's.
business.  In addition to the payment of $570,000 ten days after
the Plan of Reorganization was approved by the Court; a
"Creditors Trust" was established for all "Allowed Unsecured
Claims in excess of $1,000, into which we paid an initial deposit
of $100,000 and are to continue to make semi-annual deposits of
$100,000 each to a maximum of $500,000.  In July of 2001 an
agreement was made with the Creditors Committee to reduce the
semi-annual payment to $50,000, on which the company is currently
in arrears.  There remains a balance due to the Creditors Trust
of $350,000.  For "Priority Claims" we agreed to pay a maximum of
$300,000 over a 6 year period plus 8% simple interest with an


<PAGE>

initial deposit of $25,000.  There is no structured payment
amount scheduled for the priority claims.  There is a balance
remaining for Priority Claims of $275,000 plus interest of 8%.
The total balance due on the purchase of EPICUS is $625,000 plus
applicable interest.

Discontinued Operations

In addition to EPICUS, we plan to continue to increase our
presence in the telecommunications industry. With that plan in
mind on August 8,2000, we announced the purchase of Moye &
Associates, Inc., of St. Simons, Georgia, the owner/operator of
"The Best Net" an Internet Service Provider, Web Site Host and E-
commerce Company.

On July 27, 2001 in order to solve a need for additional
operating capital, The Best Net's customer base was sold, the
balance of its assets were merged into EPICUS, and it became a
discontinued operation. Although it has ceased to operate, Moye &
Associates, Inc. remains the property of the Company until a
decision is made as to its future.

Mic-Mac Investments, Inc. and Hospitality Telecom (together
"Hospitality") were acquired on April 1, 1998. For the period
from the date of acquisition through May 31, 1998, Hospitality
had revenues of $15,634 and expenses of $30,404.

Hospitality ceased to operate late in the third quarter of fiscal
1999, claiming they could not meet their business plan
projections or continue without Epicus capitalizing them far
above the initial plan.  Hospitality Telecom had no remaining
assets or liabilities as of May 31, 1999, and Epicus Group wrote
off its remaining investment in them in that fiscal year.
Although it has ceased to operate, Mic-Mac, Inc., remains the
property of the Company until a decision is made as to its
future.

LIQUIDITY AND CAPITAL RESOURCES

As of May 31, 2004, Epicus Group had $921,740 in cash in its
operating account.  To assist us in our cash flow requirements we
may determine, depending upon the prevailing stock price of our
shares, to seek subscriptions from the sale of securities to
private investors, although there can be no assurance that we will
be successful in securing any investment from private investors at
terms and conditions satisfactory to us, if at all.

During the years ending May 31, 2004 and 2003, respectively, we
issued 146,991,064  and 39,485,244 shares of common stock to
settle acquisitions, various financial and business consulting
services, exercise of options granted under our employee stock
option plan, executive and employee compensation, an offshore
investment under "Regulation S", and conversion of our
outstanding convertible debenture and payment of accrued interest
thereon.

<PAGE>

Previously, the Company has funded its capital requirements for
operating cash flow, by loans against its accounts receivable,
loans from shareholders, sales of equity securities and the
issuance of equity securities in exchange for assets acquired and
services rendered.  During the 12 months ended May 31, 2003, the
Company has been and is continuing to attempt to attract new
investment capital, which the Company believes will be necessary
to sustain its ongoing operations and to facilitate growth.

To that end on July 11, 2001, the Company sold $2,000,000 in
convertible debentures.  On May 1, 2003, as reported on Form 8-K,
filed with the SEC on May 7, 2003, the Company entered into a
"Debenture Redemption Agreement" with the holders of the
convertible debentures.  This was done in order to extend the
"due date" of the loans backed by the debentures and to obtain a
more favorable method of paying off the notes. Additional detail
on the "Debenture Redemption Agreement" is presented below.

The Company continues to explore opportunities to raise private
equity capital and, in conjunction therewith, to provide credit
support for the Company's operations and potential acquisitions.
Although the Company has in the past been, and continues to be,
in discussions with potential investors, there can be no
assurance that its efforts to raise any substantial amount of
private capital will be successful.  Any substantial private
equity investment in the Company will result in voting dilution
of the Company's existing stockholders and could also result in
economic dilution.  If the Company is unable to obtain new
capital, the Company will be unable to carry out its strategy of
growth through acquisitions and the long-term ability of the
Company to continue its operations may be in doubt.

Our monthly operating expenses reflect the accrual of salaries
due to Gerard Haryman and Thomas  Donaldson, our executive
officers, at the rate of $29,917 and $10,833 per month
respectively, which have not been paid. We do not contemplate
commencing full salary payments to Messrs. Haryman and Donaldson
unless and until we begin to generate positive cash flow from
operations.

COMPETITION

We have many competitors ranging from the very large like McLeod
Communications of with over 500,000 lines and ICG Communications
with over 700,000 lines to the very small who have less than
10,000 lines. Those companies, both large and small, offer
similar services as we and our subsidiaries offer.  The Company
believes that the competitive factors affecting its markets
include features such as functionality, adaptability, ease of
use, quality, performance, price, customer service and support,
effectiveness of sales and marketing efforts and Company
reputation.  Although the Company believes that it currently
competes favorably with respect to such factors, there can be no
assurance that the Company can maintain its competitive position
against current and potential competitors, especially those with
greater financial marketing support and other resources than the
Company.

<PAGE>

We believe that our "Alternative Sales" approach of using utility
companies gives us a distinct marketing identity, as does our
almost total automation in provisioning of new services and all
of our billing, which is very rare for a CLEC.  These factors we
believe, give us the competitive edge we need to continue our
growth.  However, there can be no assurance that we can maintain
our competitive position against current and potential
competitors, especially those with greater financial resources
than we have.

RISKS RELATED TO OUR BUSINESS

Our auditors have expressed doubt about our ability to continue
as a going concern.

Our independent auditors have issued their report dated July 23,
2004 on our consolidated financial statements as of May 31, 2004,
which includes an explanatory paragraph expressing substantial
doubt about our ability to continue as a going concern.  Among
the reasons cited by the independent auditors as raising
substantial doubt as to our ability to continue as a going
concern are the following: we have experienced cumulative
operating losses for the previous four-year period of
approximately $18,600,000 and has used cash in operating
activities for the same period of approximately $5,996,000, have
sufficient working capital and will continue to incur selling,
general and administrative expenses.  Additionally, realization
of certain assets is dependent upon our ability to meet our
future financing requirements, the success of future operations
and our continued funding by our CEO and the sale of common
stock.

These conditions raise substantial doubt about our ability
continue as a going concern.  We have a history of operating
losses and may continue to incur operating losses.  We will most
likely require additional financing and, if we are unable to
raise such funds, our operations may be adversely affected.

At May 31, 2004, we had current assets of $6,646,176 and total
assets of $7,768,803.  To assist us in our cash flow requirements
we may determine, depending upon the prevailing stock price of
our shares, to seek subscriptions from the sale of securities to
private investors, although there can be no assurance that we
will be successful in securing any investment from private
investors at terms and conditions satisfactory to us, if at all.
Based upon our present liquid resources, our present operating
expenses, and the commitment of our executive officers to
continue to defer most or all of their salaries, and if no
increased revenues are generated from operations or other
sources, we believe we will be able to operate for a minimum of
twelve months.  If additional funds are required, but cannot be
raised, it will have an adverse effect upon our operations.  To
the extent that additional funds are obtained by the sale of
equity securities, our stockholders may sustain significant
dilution.

CONVERTIBLE DEBENTURES

On September 28, 2001, a consortium of four (4) separate
investment entities under common management purchased 12%


<PAGE>

convertible debentures from the Company and were issued the right
to receive warrants to purchase an aggregate of 3,500,000 shares
of common stock from the Company in a future private placement
transaction.

As of May 31, 2003, the Company has issued and outstanding
approximately $1,255,128 in 12.0% convertible debentures
(Debentures).  Interest on the debentures is payable on a
quarterly basis on March 31, June 30, September 30 and December
31 of each year while such Debentures are outstanding and on each
Conversion Date, whichever occurs earlier.  Interest may be paid,
at the Company's option, in either cash or restricted,
unregistered common stock.  The Debentures must be prepaid if an
event of default occurs under the Debentures and at the Company's
option may be prepaid within thirty days of the original issue
date of the Debentures.  Management is of the opinion that the
Company has sufficient authorized common shares to cover the
conversions.  In the event that the Company does not have
adequate authorized and unissued shares of common stock to effect
the maximum shares needed to effect the conversion, the Company
may need to seek shareholder consent to increase our amount of
authorized shares.  If we do not have enough authorized shares to
cover the conversions and are unable to obtain shareholder
approval to increase our authorized shares, such failure would be
considered a breach of certain relevant provisions and
representations and warranties under the Debenture documents and
could result in the acceleration of all amounts due under the
Debentures.

On May 1, 2003, the Company and the Debenture Holders entered
into a Debenture Redemption Agreement (Redemption Agreement).
The Redemption Agreement sets forth the following terms and
conditions related to the Debentures on an ongoing basis:

  a. Redemption Schedule; Payment of Net Redemption Amount: The
     Company shall pay the Net Redemption Price to the Debenture
     Holders in monthly installments in the amount of $40,000
     (the "Monthly Redemption Payment"), with the first
     installment thereof due on July 1, 2003 and subsequen
     installments thereof due on the first business day of each
     succeeding month (each, a "Payment Date") until the Net
     Redemption Amount has been paid in full. The Company shall
     pay the Debenture Holders by wire transfer of immediately
     available funds pursuant to the Debenture Holders' written
     instructions.  The Monthly Redemption Payment shall be
     applied with respect to the Debenture Holders in the
     following order: (i) Accrued Interest, (ii) Redemption
     Premium, and (iii) outstanding principal balance of the
     Owned Debentures.

  b. Prohibited Conversions: The Debenture Holders shall not
     convert the Owned Debentures into shares of the Company's
     common stock, par value $0.001 per share (the "Shares")
     during the period commencing on the date hereof and ending


<PAGE>

     on June 30, 2003 (the "Prohibited Period").

  c. Permitted Conversions: Following the Prohibited Period, the
     Debenture Holders shall be permitted to convert its Owned
     Debentures, to the extent such Owned Debentures have not
     been previously redeemed hereunder, into Shares in
     accordance with the terms and subject to the conditions of
     the Owned Debentures, subject to the following restrictions:

       (1)  If the last reported sale price of the Shares on the
            Over-the-Counter Bulletin Board as reported by
            Bloomberg (the "Price") is less than $.10 per Share,
            then the Debenture Holders shall have the right to
            convert their Owned Debentures into not more than an
            aggregate of 300,000 Shares every thirty (30) days
            during the period in which the Price remains less
            than $.10 per Share,

       (2)  If the Price is equal to or exceeds $.10 per Share but
            is less than $.20 per Share, then the Debenture Holders
            shall have the right to convert their Owned Debentures
            into not more than an aggregate of 500,000 Shares
            every thirty (30) days during the period that the Price
            is equal to or exceeds $.10 per Share but is less than
            $.20 per Share,

       (3)  If the Price is equal to or exceeds $.20 per Share but
            is less than $.30 per Share, then the Debenture Holders
            shall have the right to convert their Owned Debentures
            into not more than an aggregate of 750,000 Shares
            every thirty (30) days during the period that the Price
            is equal to or exceeds $.20 per Share but is less than
            $.30 per Share, and

       (4)  If the Price is equal to or exceeds $.30 per Share, then
            the Debenture Holders shall not be restricted by the
            Company hereunder with respect to the number of Shares
            into which the Debentures may be converted during the
            period that the Price is equal to or exceeds $.30 per
            Share, provided, however, that if the Company fails to
            (i) make the Monthly Redemption Payment pursuant to
            Section 2 hereof within five (5) business days
            following the Payment Date or (ii) pay any delinquent


<PAGE>

            amounts that are due and owing under this Agreement,
            then the foregoing restrictions on the Debenture
            Holders' right to convert their Owned Debentures into
            Shares shall be suspended until the first day of the
            next month following the date that the Monthly Redemption
            Payment is received in full by the Debenture Holders.

  d. Issuance of Additional Shares: The Company shall issue and
     deliver to the Debenture Holders shares of common stock
     representing, in the aggregate, one percent (1%) of the
     outstanding shares of the Company on the earlier to occur of:
     (i) the date of full conversion by the Debenture Holders of all
     of the Owned Debentures and (ii) the date of payment by the
     Company of the total Aggregate Redemption Price (collectively, the
     "Additional Shares").

  e. Interest: Interest on the outstanding balance of the Owned
     Debentures shall continue to accrue following the date hereof as
     specified in the respective Owned Debenture and shall be payable
     in cash or Shares in accordance with the terms thereof.

  f. Effectiveness of the Registration Statement: The Company shall
     take all necessary actions, including the preparing and filing
     of one or more registration statements of the Company and any
     amendments or supplements thereto (the "Registration Statement")
     required under the Securities Act of 1933, as amended, and the
     rules and regulation thereunder, to cause the Shares issuable
     upon conversion of the Owned Debentures to be registered for
     resale pursuant to an effective Registration Statement.  If (i)
     the Company fails to respond to all comments made by the
     Securities and Exchange Commission (the "SEC") in connection
     with the Registration Statement within ten (10) business days
     of receipt from the SEC or (ii) the SEC has not declared the
     Registration Statement effective on or before July 10, 2003,
     then the Company shall immediately pay to each Debenture


<PAGE>

     Holders an amount equal to five percent (5%) of the sum of
     (a) the outstanding balance of the Debenture Holders's Owned
     Debentures, (b) accrued interest on the Debenture Holders's Owned
     Debentures and (c) a premium equal to thirty percent (30%) of the
     sum of (a) and (b) (the "Registration Penalty").  The Registration
     Penalty shall be payable either in cash or Shares, the number of
     which shall be based on the conversion price set forth in the
     Owned Debentures, at each Debenture Holders's option.  If a
     Debenture Holders elects to receive the Registration Penalty in
     cash, then the full amount of the Registration Penalty shall be
     paid to such Debenture Holders by wire transfer of immediately
     available funds in accordance with the instructions set forth on
     attached Schedule II.

  g. Effect of Breach:  In the event of a breach by the Company of any
     of the provisions of this Agreement, either by a failure to
     timely make any payment or failure to effect any conversion by
     the Debenture Holders or otherwise, in addition to any other
     remedies available to the Debenture Holders in law or equity with
     respect to such breach, the applicable discount to the market
     price of the Owned Debentures shall permanently be amended from
     fifty percent (50%) to seventy-five percent (75%).

In conjunction with the issuance of the convertible debentures,
the debentures were issued with an equivalent per share value of
common stock below the ending quoted market price of the
Company's common stock on the issue date.  This difference
created a Beneficial Conversion Feature Discount of approximately
$300,000.  This discount was then amortized over the unexpired
time period between the date of issue of the eligible shares and
the maturity date of the underlying debentures.  Approximately
$141,177 and $158,823 was amortized to operations during the
years ended May 31, 2003 and 2002, respectively.


ITEM 7 - FINANCIAL STATEMENTS

The required financial statements begin on page F-1 of this
document.


<PAGE>


ITEM 8 - CHANGES IN, AND DISAGREEMENT WITH, ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

The Company's financial statements for the fiscal years ended May
31, 2001, 2000 and 1999 were audited by the firm of Wieseneck,
Andres and Company, P.A. (Wieseneck) of North Palm Beach,
Florida.

On July 15, 2002, the Company's Board of Directors made a
decision to terminate the services of Wieseneck as the Company's
independent auditors.  The termination of Wieseneck resulted from
a business decision made by the Board of Directors.

The Company informally notified Wieseneck of the Board's
decision, concurrent with the Board action.  The Company
confirmed the dismissal of Wieseneck in writing on August 7,
2002.  The Company furnished Wieseneck with a copies of the Form
8-K and Form 8-K/A, as filed by the Company and requested
Wieseneck to provide a letter addressed to the SEC stating that
it agrees with the statements in the immediately preceding
paragraph.

Wieseneck's audit opinion on the financial statements for either
of the past two (2) years contained an adverse opinion or a
disclaimer of opinion or was qualified or modified as to
uncertainty, audit scope or accounting principles, except for a
going concern opinion expressing substantial doubt about the
ability of the Company to continue as a going concern.

During the Company's fiscal years ended May 31, 2001 and 2000 and
from May 31, 2001 to the date of the filing of the respective
Form 8-K or Form 8-K/A, there were no disagreements with
Wieseneck on any matter of accounting principles or practices,
financial disclosure, or auditing scope or procedure.
Additionally, there were no reportable events, as described in
Item 304(a)(1)(v) of Regulation S-K, during the Company's fiscal
years ended May 31, 2001 and 2000 and from May 31, 2001 to the
date of the filing of the respective Form 8-K or Form 8-K/A.

On July 16, 2002, the Company's Board of Directors approved the
retention of the accounting firm of S. W. Hatfield, CPA of
Dallas, Texas as its independent auditors for the fiscal year
ending May 31,2002 and subsequent periods.  During the Company's
fiscal years ended May 31, 2002, and the subsequent interim
periods through the date of the filing of the respective Form 8-K
or Form 8-K/A, the Company did not consult with S. W. Hatfield,
CPA regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.

As a result of the change in independent accountants, the Company
found it necessary to file a Form 12b-25, Notice of Late Filing,
dated August 28, 2002.  At that time the Company believed its
form 10-KSB would have been successfully completed and filed
within the 15 day extension period as required.  However,
Wieseneck did not respond to our successor auditor's inquiries,
made in accordance with Statement of Auditing Standards No. 84,
nor did they fully cooperate with the Company in transmitting
copies of all requested workpapers and schedules prepared by them
that could be construed as Company records necessary for S. W.
Hatfield, CPA to complete the 2002 audit, resulting in the


<PAGE>

Company not being able to file its 10-KSB within the additional
allocated time period.  This change in the Company's independent
auditors, and the lack of cooperation caused delay in the filing
of its 2002 Annual Report.

Additionally, as of this date, Wieseneck has not yet provided a
letter, as is required, to be included as an exhibit on our Form
8-K/A dated August 7, 2002, stating that they agree or disagree
with the Company's statement that of during the period Wieseneck,
Andres & Company, P.A., were acting as our independent
accountants, there were no disagreement(s) with them on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.  The Company will
file a further amendment to that Form 8-K/A upon receipt of that
letter  As of the date of this filing, Wieseneck has not complied
with the requirements of the SEC.


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

The following table sets forth certain information with respect
to our executive officers and directors. Each director serves a
term of one year or until a successor is elected.

<TABLE>
<CAPTION>
NAME                  AGE        OFFICES HELD
-----                 ---        ------------
<S>                   <C>        <C>
Gerard Haryman        60         Chairman, President, Chief Executive Officer
                                 and Director
Thomas Donaldson      61         Vice President, Secretary and Director
Timothy Palmer        59         Director
</TABLE>


Gerard Haryman, has served as our Chairman of the Board,
President and Chief Executive Officer since January of 1996.
Previously and concurrently, since 1981 to the present, Mr.
Haryman has been President and Chief Executive Officer of SA,
Sitmo, developers and builders of commercial and residential
properties throughout Europe, with corporate offices in Paris,
France. Mr. Haryman has also been involved in the development of
residential property in the Palm Beach area since 1988, and
during that period has also served on the Board of Directors of
several other companies, both public and private . Mr. Haryman
attended the "Institute General de Finance" in Paris, France
majoring in finance and administration.

Thomas N. Donaldson, since February of 1993, Mr. Donaldson has
been and officer and director of Epicus Group (fka) Phoenix
International Industries, Inc., and of Trident Environmental


<PAGE>

Systems, Phoenix's predecessor.   Prior to his entering the public
company arena, he had an extremely successful background in the
electronic media, both television and radio.  Before being promoted
to executive level management, he was an award winning Producer/
Director at both the local and network levels. Additionally, he
was a majority partner in the television production company,
"American Televent", which produced commercials and syndicated
programming. Mr. Donaldson attended both the University of Miami
and the University of Paris.

Timothy Palmer, since October 1993 Mr. Palmer has been President
of HDX 9000, Inc., of New York and West Palm Beach, Florida, a
computer and business consulting firm.  He has been  a Director
of the Company since July 1997.  From March 1997 to the present,
he has been President of Quality Advantage, Ltd. of Kingston,
Jamaica, a computer and business consulting firm. Prior to
October 1993, he was manager of the Palmer Family Trust in
London, England.  Mr. Palmer holds a Bachelor of Commerce Degree
from McGill University in Montreal, Canada.


ITEM 10 - EXECUTIVE COMPENSATION

The following table sets forth the cash compensation of our
executive officers and directors during each of the last three
fiscal years. The remuneration described in the table does not
include the cost we incurred in furnishing benefits to the named
executive officers, including premiums for health insurance and
other benefits provided to such individual that are extended in
connection with the conduct of  our business. The value of such
benefits cannot be precisely determined, but the executive
officers named below did not receive other compensation in excess
of the lesser of

EXECUTIVE COMPENSATION

         The following table shows all the cash compensation paid
or to be paid by us or our subsidiaries, as well as certain other
compensation paid or accrued, during the fiscal years indicated,
to our chief executive officer and all other executive officers
whose total annual salary and bonus exceeded $100,000 in all
capacities in which the person served.


<PAGE>


                     Summary Compensation Table
                     --------------------------
<TABLE>
<CAPTION>


Name and All                                         Annual         Restricted   Options/  All Other
Principle Positions     Year     Salary      Bonus   Compensation      Stock     SARs(#)   Compensation
-------------------     ----     ------      -----   ------------   ----------   --------  ------------
<S>                     <C>      <C>         <C>     <C>            <C>          <C>       <C>

Gerard Haryman          2004     250,000(1)   -0-         -0-                      -0-         -0-
President, CEO,         2003     250,000(1)   -0-         -0-                      -0-         -0-
acting CFO and          2002     250,000(1)   -0-         -0-             (2)      -0-         -0-
Chairman of the         2001     250,000(1)   -0-         -0-                      -0-         -0-
Board of Directors      2000     250,000(1)   -0-         -0-                      -0-         -0-


Thomas N. Donaldson     2004     104,000(1)   -0-         -0-                      -0-         -0-
Vice President, COO,    2003     104,000(1)   -0-                                  -0-                           -0-    -0-
and Director            2002     104,000(1)   -0-         -0-             (3)      -0-         -0-
                        2001     104,000(1)   -0-         -0-                      -0-         -0-
                        2000     104,000(1)   -0-         -0-                      -0-         -0-
</TABLE>


         (1)      Due to our cash position, Mr. Haryman and Mr.
Donaldson have deferred payment of all or part of their salaries
and bonuses.

         (2)      Mr. Haryman received a grant of 2,000,000
shares on February 1, 2001 valued at $538,000 and 300,000 shares
on July 16, 2001 valued at $21,000

         (3)      Mr. Donaldson received a grant of 300,000
shares on February 1, 2001 valued at $134,500 and 300,000 shares
on July 16, 2001 valued at $21,000.

         Directors are not compensated for acting in their
capacity as directors. Directors are reimbursed for their
accountable expenses incurred in attending meetings and
conducting their duties.

OPTIONS GRANTS IN LAST FISCAL YEAR

         There were no grants of stock options made during fiscal
2004 to our executive officers.

STOCK OPTIONS HELD AT END OF FISCAL 2004

         No Stock Options, stock appreciation rights or other
compensation were granted to our president or other officers
during fiscal 2004.


EMPLOYMENT AGREEMENTS

         On February 27, 2004, Gerard Haryman and Thomas
Donaldson entered into employment agreements with Epicus
Communications Group, Inc. pursuant to which Mr. Haryman has been
retained as the President and Chief Executive Officer of Epicus
Communications and Mr. Donaldson has been retained as the Vice
President of Epicus Communications. The term of each employment
agreement commenced on February 27, 2004 and continues for a term
of 5 years. Pursuant to the employment agreements, Mr. Haryman
and Mr. Donaldson will receive an annual salary of $275,000 and


<PAGE>


$130,000 respectively.  Mr. and Mr. Donaldson will also receive a
bonus of 3% and 2% respectively of the adjusted net profits of
Epicus Communications during each fiscal year during the term of
the agreements, which bonus may be payable in cash or common
stock of Epicus Communications or any combination thereof. Each
employment agreement also provides for additional compensation
and/or benefits to be paid or provided to Messrs. Haryman and
Donaldson as follows:

         o        The base salary shall be adjusted at the end of
each year of  employment to reflect any change in cost of living.

         o        Messrs. Haryman and Donaldson may elect to
accept partial payment of his base salary and/or bonus and defer
payment of the balance upon demand at a later date.

         o        Deferred compensation payments shall be made to
Messrs. Haryman and Donaldson for a period of twenty years after
retirement in an amount equal to base payments equal to 30% of
the average total salary (base salary plus incentive salary) due
to each employee.

         o        Reimbursement of all reasonable relocation
expenses should either Messrs. Haryman or Donaldson be
transferred and assigned to a new principal place of work located
more than fifty (50) miles from each employees place of
residence.

         o        Each of Messrs. Haryman and Donaldson is
entitled to receive reimbursement for all reasonable expenses
incurred by him in the course of his employment by Epicus
Communications.

         Each of Messrs. Haryman and Donaldson's employment
agreements may be terminated (i) by Epicus for cause upon 10 days
notice; (ii) at anytime by employee upon ninety (90) days notice;
or (iii) at anytime by Epicus Communications, without cause, by
paying to employee the amount of compensation due to the employee
for the remainder of the Term of employment.


COMPENSATION OF DIRECTORS

Each of our Directors is to receive 12,000 shares of common stock
for each year cumulative of service plus reimbursement of out-of-
pocket expenses.

OUTSIDE DIRECTORS

Currently, the Company has only one outside Director, Timothy
Palmer.



<PAGE>

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

PRINCIPAL STOCKHOLDERS

         The following table sets forth information as of July
12, 2004, with respect to any person known by us to own
beneficially more than 5% of our common stock, common stock
beneficially owned by each of our officers named in "Executive
Compensation," and each of our directors, and the amount of
common stock beneficially owned by our officers and directors as
a group.

<TABLE>
<CAPTION>
-----------------------------------------------------------
     NAME AND
    ADDRESS OF              AMOUNT OF
    BENEFICIAL              BENEFICIAL    PERCENT OF
      OWNER                 OWNERSHIP      CLASS(1)
-----------------------------------------------------------
<S>                         <C>           <C>
Gerard Haryman              52,000,000     17.5%

-----------------------------------------------------------

Thomas Donaldson             2,850,000       *

-----------------------------------------------------------

Timothy Palmer                 500,000       *

-----------------------------------------------------------

All Executive Officers      55,350,000     18.67%
and Directors as a
Group (3 persons)
-----------------------------------------------------------
</TABLE>

     *   Represents less than 1% of our outstanding common
         stock.

         (1)  Percentage of beneficial ownership is based upon
              the 296,391,134 shares of our common stock
              outstanding as of July 12, 2004.

(1)  Unless otherwise noted below, we believe that all persons
     named in the table have sole voting and investment power
     with respect to all shares of common stock beneficially
     owned by them.  For purposes hereof, a person is considered
     to be the beneficial owner of securities that can be
     acquired by such person within 60 days from the date hereof
     upon the exercise of warrants or options or the conversion
     of convertible debentures.  Each beneficial owner's
     percentage ownership is determined by assuming that any such
     warrants, options or convertible debentures that are held by
     such person (but not those held by any other person) and
     which are exercisable within 60 days from the date hereof,
     have been exercised.

(2)  Percentage based on 113,817,571 shares outstanding as of May
     31, 2003.


BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The following persons failed to file Form 5 for the fiscal year:

 Gerard Haryman
 Thomas Donaldson
 Timothy Palmer


<PAGE>


ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The company was a party to and has a direct or indirect material
interest in the following transactions during the years ended May
31, 2003 and 2002, respectively:

The Company leases it's executive offices in West Palm Beach,
Florida from a corporation owned by Gerard Haryman, the Company's
President and Chief Executive Officer.  The terms and conditions
of this arrangement are discussed in Item 2 - Description of
Property.

During Fiscal 2003 and 2002, respectively, the Company received
(repaid) interest bearing advances either directly from Gerard
Haryman, the Company's President and Chief Executive Officer or
entities affiliated with Gerard Haryman in the net amounts of
approximately $(105,715) and $469,718.


ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

Exhibits
---------

(3)  Articles of Incorporation and By-Laws

The Articles of Incorporation and Articles of Amendment to The
Articles of Incorporation and By-Laws of the Registrant were pre-
filed as Exhibits 3-1, 3.2, and 3.3, respectively, to the
registrant's Form I 0-KSB, for the fiscal year 1995, under the
Securities and Exchange Act of 1934, filed April 1, 1998, with
the Securities and Exchange Commission and are incorporated
herein by reference.

(10)    Material Contracts

Some of the Material Contracts of the Registrant were filed as
Exhibits 10.1, 10.2, 10.3, 10.4, and 10.5, respectively, to the
Registrant's Form 10-KSB as of May 31, 195 under the Securities
and Exchange Ad: of 1934, filed April 1, 1998 with the Securities
and Exchange Commission - The Contracts for the sale of ITC and
the purchases of Hospitality Telecom Corp (formerly Mic Mac
Investments, Inc.)and Cambridge Gas Transport Corporation, were
included in Epicus Group's (formerly Phoenix International
Industries, Inc.'s) 10-KSB for the year ended May 31, 1998 and
are incorporated herein by reference.


23.1  Consent of Independent Certified Public Accountants

31.1  Certification Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002

32.1  Certification Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002


<PAGE>


Reports on Form 8-K
--------------------

May 5, 2003  Announcing the name change from Phoenix International
Industries, Inc. to Epicus Communications Group, Inc.

May 7, 2003  Announcing the execution on May 1, 2003 of a "Debenture
Redemption Agreement" with the holders of the Company's outstanding
convertible  debentures.


ITEM 14 - CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange Act, within the 90 days
prior to the filing date of this report, the Company carried out an
evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. This evaluation was
carried out under the supervision and with the participation of
the Company's management, including the Company's President, Chief
Executive and Financial Officer.  Based upon that evaluation, the
Company's President, Chief Executive and Financial Officer concluded
that the Company's disclosure controls and procedures are effective.
There have been no significant changes in the Company's internal
controls or in other factors, which could significantly affect internal
controls subsequent to the date the Company carried out its evaluation.

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



<PAGE>

                            SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                   EPICUS COMMUNICATIONS GROUP, INC.

Date: September 30, 2004           By:    /s/ Gerard Haryman
                                      -----------------------------------
                                      Gerard Haryman
                                      President, Chief Executive Officer,
                                      Acting Chief Financial Officer
                                      and Director


In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on, the dates indicated,

Date: September 30, 2004           By:    /s/ Gerard Haryman
                                      -----------------------------------
                                      Gerard Haryman
                                      President, Chief Executive Officer,
                                      Acting Chief Financial Officer and
                                      Director


Date: September 30, 2004           By: /s/ Thomas N. Donaldson
                                      -----------------------------------
                                      Thomas N. Donaldson
                                      Vice President, Secretary and
                                      Director




<PAGE>





                     EPICUS COMMUNICATIONS
                         GROUP, INC.

              Consolidated Financial Statements
                             and
                 Independent Auditor's Report

                    May 31, 2004 and 2003

























                                                [LOGO - SWH]
                                             S.W. HATFIELD, CPA
                                       certified public accountants
                                   Use our past to assist your future[sm]
<PAGE>


       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                        Page

Report of Independent Certified Public Accountants                      F-2

Consolidated Financial Statements

 Consolidated Balance Sheets
  as of May 31, 2004 and 2003                                           F-3

 Consolidated Statements of Operations and Comprehensive Loss
  for the years ended May 31, 2004 and 2003                             F-5

 Consolidated Statement of Changes in Stockholders' Equity
  for the years ended May 31, 2004 and 2003                             F-6

 Consolidated Statements of Cash Flows
  for the years ended May 31, 2004 and 2003                             F-7

 Notes to Consolidated Financial Statements                             F-9




<PAGE>


       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
       --------------------------------------------------


Board of Directors and Stockholders
Epicus Communications Group, Inc.

We have audited the accompanying consolidated balance sheets of
Epicus Communications Group, Inc. (a Florida corporation) and
Subsidiaries as of May 31, 2004 and 2003 and the related
statements of operations and comprehensive loss, changes in
stockholders' equity and cash flows for each of the years ended
May 31, 2004 and 2003, respectively.  These consolidated
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States).  Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall consolidated financial statement presentation.  We
believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Epicus Communications Group, Inc. as of May
31, 2004 and 2003 and the results of its operations and its cash
flows for each of the years ended May 31, 2004 and 2003,
respectively, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.  As discussed in Note C to the consolidated financial
statements, the Company continues to experience operating losses
and negative cash flow from operating activities.  Liquidity
during this period has been provided by management and/or
significant shareholders to provide sufficient working capital to
maintain the integrity of the corporate entity.  These
circumstances create substantial doubt about the Company's
ability to continue as a going concern.  The consolidated
financial statements do not contain any adjustments that might
result from the outcome of these uncertainties.



                                  /s/ S. W. HATFIELD, CPA
Dallas, Texas
July 23, 2004



                                                                      F-2
<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                  CONSOLIDATED BALANCE SHEETS
                     May 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                             May 31, 2004     May 31, 2003
                                                             ------------     ------------
<S>                                                          <C>              <C>
                             ASSETS
                             ------
Current Assets
 Cash on hand and in bank                                    $    921,740     $     65,191
 Accounts receivable - Trade
  net of allowance for doubtful accounts
  of approximately $1,500,000 and $750,000, respectively        5,719,436        3,004,887
 Advances due from officer                                         15,000           15,000
                                                             ------------     ------------
  Total current assets                                          6,646,176        3,085,078
                                                             ------------     ------------

Property and equipment - at cost                                  673,729          574,833
 Less Accumulated depreciation                                   (407,360)        (291,039)
                                                             ------------     ------------

  Net property and equipment                                      266,369          283,794
                                                             ------------     ------------

Other Assets
 Deposits                                                         357,217          214,717
 Loan costs and reserves                                          275,517             -
  Restricted cash                                                    -             201,296
 Assets held for sale                                                -              30,285
 Trademark and corporate name development costs                    23,524           23,524
                                                             ------------     ------------
                Total other assets                                656,258          469,822
                                                             ------------     ------------

TOTAL ASSETS                                                 $  7,568,803     $  3,838,694
                                                             ============     ============


              LIABILITIES AND STOCKHOLDERS' EQUITY
              ------------------------------------

Current Liabilities
 Bank overdraft                                              $    233,072      $      -
 Notes payable to banks and other                               1,197,878        1,308,878
 Convertible debentures                                         1,590,780        1,255,128
 Accounts payable - trade                                       5,085,574        3,880,830
 Accrued sales and service taxes payable                        3,305,537        1,268,450
 Accrued payroll and payroll taxes payable                        492,692          494,551
 Accrued rent payable to affiliate                                150,067          132,067
 Accrued interest payable                                         956,590          884,148
 Advances from controlling shareholder/officer                  1,015,617        1,267,608
 Accrued officer compensation                                   2,825,568        2,472,372
                                                             ------------     ------------
  Total liabilities                                            16,853,375       12,964,032
                                                             ------------     ------------




                                                                      F-3
<PAGE>

Commitments and contingencies

Stockholders' Equity (Deficit)
 Preferred stock - $0.001 par value - 5,000 shares authorized
  None issued and outstanding                                        -                -
 Common stock - $0.001 par value - 800,000,000 shares
  authorized 258,058,655 and 113,817,571 shares issued and
  outstanding, respectively                                       258,059          113,818
 Additional paid-in capital                                    16,874,667       13,891,580
 Accumulated deficit                                          (26,417,298)     (23,130,736)
                                                             ------------     ------------
  Total stockholders' equity                                   (9,284,572)      (8,125,338)
                                                             ------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $  7,568,803     $  3,838,694
                                                             ============     ============
</TABLE>






The accompanying notes ae an integral part of these consolidated
financial statements

                                                                      F-4

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
               Years ended May 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                              Year ended       Year ended
                                                             May 31, 2004     May 31, 2003
                                                             ------------     ------------
<S>                                                          <C>              <C>

Revenues - net                                               $ 25,190,543     $ 10,412,856
Cost of Sales (exclusive of depreciation shown
  separately below)                                           (17,509,300)      (6,042,666)
                                                             ------------     ------------
Gross Profit                                                    7,681,243        4,370,190

Operating Expenses
 Selling expenses                                               1,957,613        1,560,021
 General and administrative expenses                            4,982,769        3,799,891
 Bad debt expense                                               3,201,630          842,174
 Depreciation and amortization                                    116,321          105,023
 Compensation expense related to common
  stock issuances at less than "fair value"                       358,464           77,344
                                                             ------------     ------------
  Total operating expenses                                     10,616,797        5,883,333
                                                             ------------     ------------

Loss from operations                                           (2,935,554)      (1,513,143)

Other income
 Interest and other income (expense) - net                          1,826           27,524
 Interest expense                                                (324,649)        (415,691)
 Accretion of Beneficial Conversion
  Feature Discount on Convertible Debentures                         -            (141,177)
 Loss on sale, abandonment and/or
   impairment of property and equipment                           (28,185)         (33,962)
                                                             ------------     ------------
Loss before provision for income taxes                         (3,286,562)      (2,076,449)

Provision for income taxes                                           -                -
                                                             ------------     ------------

Net Loss                                                       (3,286,562)      (1,630,372)

Other comprehensive income                                           -                -
                                                             ------------     ------------

Comprehensive Loss                                           $ (3,286,562)    $ (1,630,372)
                                                             ============     ============

Net loss per weighted-average share
 of common stock outstanding, calculated
 on Net Loss - basic and fully diluted                       $      (0.02)    $      (0.02)
                                                             ============     ============
Weighted-average number of shares
 of common stock outstanding                                  163,960,608       88,673,078
                                                             ============     ============
</TABLE>


The accompanying notes ae an integral part of these consolidated
financial statements

                                                                      F-5

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
   CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
               Years ended May 31, 2004 and 2003


<TABLE>
<CAPTION>
                                                             Additional
                                             Common Stock     paid-in      Accumulated
                                  Shares       Amount         capital        Deficit         Total
                               -----------   ------------   -----------   ------------    ------------
<S>                            <C>           <C>            <C>           <C>             <C>

Balances at June 1, 2002        74,332,327   $     74,332   $13,145,002   $(21,500,364)   $ (8,281,030)

Issuance of common stock for
 Payment of interest and
  retirement of debt            32,963,022         32,963       462,041         -              495,004
 Services rendered               2,222,222          2,223        68,660         -               70,883
 Compensation to employees       4,300,000          4,300        74,700         -               79,000
Accretion of Beneficial
 Conversion Discount Feature          -              -          141,177         -              141,177

Net loss for the year                 -              -             -        (1,630,372)     (1,630,372)
                               -----------   ------------   -----------   ------------    ------------

Balances at May 31, 2003       113,817,571        113,818    13,891,580    (23,130,736)     (9,125,338)

Issuance of common stock for
  Cash                          17,000,000         17,000       621,000         -              638,000
 Retirement of debt            109,160,584        109,161     1,813,652         -            1,922,813
 Services rendered              18,080,500         18,080       548,435         -              566,515

Net loss for the year                 -              -             -        (3,286,562)     (3,286,562)
                               -----------   ------------   -----------   ------------    ------------

Balances at May 31, 2004       258,058,655   $    258,059   $16,874,667   $(26,417,298)   $ (9,284,572)
                               ===========   ============   ===========   ============    ============
</TABLE>










The accompanying notes ae an integral part of these consolidated
financial statements

                                                                      F-6

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF CASH FLOWS
               Years ended May 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                              Year ended       Year ended
                                                             May 31, 2004     May 31, 2003
                                                             ------------     ------------
<S>                                                          <C>              <C>
Cash Flows from Operating Activities
 Net loss for the year                                       $ (3,286,562)    $ (1,630,372)
 Adjustments to reconcile net loss to net cash
  provided by operating activities
   Depreciation                                                   116,321          105,023
   Bad debt expense                                             3,201,630          842,174
   Expenses paid with common stock                                566,515          149,884
   Forgiveness and extinguishment of accounts payable            (111,000)         446,077
   Loss on sale, abandonment and/or
    impairment of property and equipment                           28,185           33,962
   Compensation expense related to common stock
     issuances at less than "fair value"                          358,464           77,344
   Accretion of Beneficial Conversion Feature
     Discount on Convertible Debentures                              -             141,177
  (Increase) Decrease in
   Accounts receivable                                         (5,906,179)      (2,493,401)
   Deposits, intangible and other assets                         (142,500)          (6,819)
  Increase (Decrease) in
   Accounts payable                                             1,204,745        1,746,519
   Accrued liabilities                                          2,053,228          894,204
   Accrued interest payable                                       204,648          395,780
   Accrued officer compensation                                   353,196          353,196
                                                             ------------     ------------
Net cash used in operating activities                          (1,359,309)        (162,594)
                                                             ------------     ------------

Cash Flows from Investing Activities
 (Increase) Decrease in restricted cash                           201,296            2,502
 Proceeds from sale of assets held for sale                         2,100             -
 Purchase of property and equipment                               (98,896)         (70,834)
                                                             ------------     ------------
Net cash used in investing activities                             104,500          (68,332)
                                                             ------------     ------------

Cash Flows from Financing Activities
 Increase (Decrease) in cash overdraft                            233,072          (74,206)
 Proceeds from sale of common stock                               638,000             -
 Proceeds from convertible debentures                           1,100,000          150,000
 Cash paid for loan costs and to fund reserves                   (275,517)            -
 Cash advanced from (paid to) affiliated entities                    -            (105,715)
 Repayments of advances from stockholder, net of new
   advances                                                      (415,803)            -
                                                             ------------     ------------
Net cash used in financing activities                           2,111,358          (29,921)
                                                             ------------     ------------

Increase (Decrease) in Cash                                       856,549           64,341
Cash at beginning of period                                        65,191              850
                                                             ------------     ------------

Cash at end of period                                        $    921,740     $     65,191
                                                             ============     ============

</TABLE>


The accompanying notes ae an integral part of these consolidated
financial statements

                                                                      F-7

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
               Years ended May 31, 2003 and 2002


<TABLE>
<CAPTION>
                                                              Year ended       Year ended
                                                             May 31, 2004     May 31, 2003
                                                             ------------     ------------
<S>                                                          <C>              <C>
Supplemental Disclosure of
 Interest and Income Taxes Paid
  Interest paid for the period                               $    120,000     $     19,911
                                                             ============     ============
  Income taxes paid for the period                           $       -        $       -
                                                             ============     ============

Supplemental Disclosure of Non-cash
 investing and financing activities
  Common stock issued for retirement of debt                 $    764,348     $    378,784
                                                             ============     ============
  Common stock issued in payment of accrued interest         $    132,206     $     38,875
                                                             ============     ============
  Common stock issued in repayment of advances
   from shareholder/officer or affiliated entity             $    667,794     $       -
                                                             ============     ============
</TABLE>












The accompanying notes ae an integral part of these consolidated
financial statements

                                                                      F-8

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

Phoenix International Industries, Inc. (Company) was incorporated
on July 22 1985, pursuant to the laws of the State of Florida
under the name Hydrobac, Inc.  On July 7, 1986, the Company's
name was changed to ProBac, Inc. and on October 5, 1994, its name
was changed to Trident Environmental Systems, Inc.  During those
periods the Company's primary business was in various types of
products and systems for use in the environmental clean-up
industry.  On October 2, 1996, the Company's name was changed to
Phoenix International Industries, Inc.  From January 1996 through
May 31, 1997, the Company sought acquisitions as it wound down
and closed its original environmental clean-up business.

In May 2003, Phoenix International Industries Inc. changed the
company's name to Epicus Communications Group, Inc. (Epicus
Group).  The name change was effected to better reflect the
Company's business emphasis on the telecommunications sector and
to better create consistent name branding with the Company's
wholly-owned operating subsidiary, EPICUS, Inc.

During Fiscal 2000, the Company acquired control of Telephone
Company of Central Florida, Inc. (TCCF), an entity then operating
under Chapter 11 of the United States Bankruptcy Court.  As an
integral component of TCCF's Plan of Reorganization, the Company
recapitalized TCCF, effective on the effective date of TCCF's
discharge from bankruptcy.  On July 9, 1999, the U. S. Bankruptcy
Court issued an Order of Confirmation related to TCCF's Plan of
Reorganization and the Company recapitalized TCCF within ten days
of the Confirmation Order.  TCCF is a "competitive local exchange
carrier ("CLEC") telephone company and a reseller of other
telecommunications services.  On January 17, 2001 the corporate
name of TCCF was changed to EPICUS, Inc. (Epicus).

On July 28, 2000, the Company acquired 100% of the stock of Moye
& Associates, Inc. (Moye) of St. Simons Island, Georgia.  Moye's
primary business was that of an Internet Service Provider (ISP)
known as TheBest.Net.  This move was seen by management as being
synergetic with the operations of TCCF.  On July 19, 2001, the
Company sold all operating assets of Moye to an unrelated party
and, effectively, discontinued all operations within this
subsidiary.

On April 9, 1998, the Company acquired 100% of the outstanding
stock of Mic Mac Investments, Inc. (Mic Mac), a South Carolina
corporation.  Mic Mac at the time of acquisition was a  long
distance telephone service "reseller" specializing in services to
the hospitality industry.  All operations related to Mic Mac were
discontinued by February 1999.


NOTE B - PREPARATION OF FINANCIAL STATEMENTS

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

The Company follows the accrual basis of accounting in accordance
with accounting principles generally accepted in the United
States of America and has adopted a year-end of May 31.


                                                                      F-9

<PAGE>
       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE B - PREPARATION OF FINANCIAL STATEMENTS - Continued

Management further acknowledges that it is solely responsible for
adopting sound accounting practices, establishing and maintaining
a system of internal accounting control and preventing and
detecting fraud.  The Company's system of internal accounting
control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are
recorded; and 3) transactions are recorded in the proper period
in a timely manner to produce financial statements which present
fairly the financial condition, results of operations and cash
flows of the Company for the respective periods being presented.

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

These financial statements reflect the books and records of
Epicus Communications Group, Inc., EPICUS, Inc., Mic Mac, Inc.
and Moye & Associates, Inc. for the years ended May 31, 2004 and
2003, respectively.  All significant intercompany transactions
have been eliminated in consolidation.  The consolidated entities
are referred to as either Company or Epicus Group.

The Company conducted business activities in only one distinct
business segment during Fiscal 2004 and 2003.


NOTE C - GOING CONCERN UNCERTAINTY

The Company has experienced cumulative operating losses for the
previous four-year period of approximately $18,600,000 and has
used cash in operating activities for the same period of
approximately $5,996,000.  In a effort to control costs and
better manage the Company's key operating subsidiary, Epicus,
Inc., the Company discontinued all operations within Mic Mac and
Moye during the year ended May 31, 2002 and has sold or otherwise
disposed of all operating assets of these subsidiaries.

Further, the Company remains delinquent in the payment of various
Federal and State payroll and service taxes accrued in prior
years.  The Company has been the subject of various levies and
collection actions by the Internal Revenue Service and various
State tax authorities.  The withdrawal of the Company's ability
to operate in any jurisdiction as a result of the non-payment of
these taxes could be detrimental to the Company's ongoing
operations and financial condition.

The Company's liquidity has been sustained through the sale of
equity securities, restricted and unrestricted, domestically and
in international markets.  Further, significant working capital
advances have been made by members of management or by entities
owned or controlled by members of management.

Management is of the opinion that Epicus became cash flow
positive during the third quarter of Fiscal 2003 (year ending May
31, 2003).  This event contributed significantly to the
improvement of relations with the Company's vendors to relieve
daily operational pressures and should continue to provide
sufficient cash to support the Company's day-to-day liquidity
requirements as well as retire outstanding debt and delinquent
trade payables during future periods.  However, the Company
continues to experience significant charges for bad debts due to
the Company's customer base which impair the related cash flows.

The Company's continued existence is dependent upon its ability
to generate sufficient cash flows from operations to support its
daily operations as well as provide sufficient resources to
retire existing liabilities and obligations on a timely basis.


                                                                      F-10

<PAGE>
       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE C - GOING CONCERN UNCERTAINTY - Continued

Because of the Company's lack of positive cash flows, the
Company's continuance is fully dependent either future sales of
securities or upon its current management and/or advances or
loans from significant stockholders or corporate officers to
provide sufficient working capital to preserve the integrity of
the corporate entity.

There is no assurance that the Company will be able to obtain
additional funding through the sales of additional securities or,
that such funding, if available, will be obtained on terms
favorable to or affordable by the Company.

It is the intent of management and significant stockholders to
provide sufficient working capital necessary to support and
preserve the integrity of the corporate entity.  However, there
is no legal obligation for either management or significant
stockholders to provide additional future funding.


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.    Cash and cash equivalents
      -------------------------

  For  Statement  of  Cash Flows purposes, the Company  considers
  all  cash  on  hand  and in banks, including accounts  in  book
  overdraft positions, certificates of deposit and other  highly-
  liquid  investments with maturities of three  months  or  less,
  when purchased, to be cash and cash equivalents.

  Cash  overdraft positions may occur from time to  time  due  to
  the  timing  of making bank deposits and releasing  checks,  in
  accordance with the Company's cash management policies.

2.    Accounts receivable
      -------------------

  In   the   normal  course  of  business,  the  Company  extends
  unsecured  credit to virtually all of its customers  which  are
  located  throughout  the  United  States  and  are  principally
  concentrated  in  the  southeastern quadrant  of  the  country.
  Because  of  the credit risk involved, management has  provided
  an  allowance for doubtful accounts which reflects its  opinion
  of  amounts which will eventually become uncollectible.  In the
  event of complete non-performance, the maximum exposure to  the
  Company  is  the  recorded amount of trade accounts  receivable
  shown on the balance sheet at the date of non-performance.

3.    Property and Equipment
      ----------------------

  Property and equipment are recorded at historical cost.   These
  costs   are  depreciated  over  the  estimated  useful   lives,
  generally  three to ten years, of the individual  assets  using
  the   straight-line  method.   Gains  and   losses   from   the
  disposition   of  property  and  equipment  are   included   in
  operations as incurred.

4.    Intangible Assets
      -----------------

  Monies  paid  for  development  of  the  trade  name  "Epicus",
  approximately  $23,525,  were capitalized  as  a  component  of
  Other  Assets on the Company's consolidated balance sheet.   In
  accordance  with  Statement of Financial  Accounting  Standards
  No.  144,  "Accounting for the Impairment or Disposal of  Long-
  Lived  Assets",  the Company follows the policy  of  evaluating
  all  qualifying assets as of the end of each reporting quarter.
  For  each of the years ended May 31, 2004 and 2003, no  charges
  to  operations were made for impairments in the future  benefit
  of this trade name.

  Other  intangible  assets  are  amortized  over  the  estimated
  useful  life  of  the underlying asset using the  straight-line
  method.

                                                                      F-11

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

5.    Revenue Recognition
      -------------------

  Local  telephone services for business and residential  service
  are  billed  to  the  respective customer  in  advance  at  the
  initiation  of  each  monthly  billing  cycle.   Long  distance
  telephone   services  are  billed  in  arrears  in  the   month
  following the provision of the service.  All revenue  for  both
  local and long distance services are recognized as earned  with
  respect to each billing cycle.

  In  the event of cancellation of service by a customer prior to
  the  expiration of the completion of the monthly billing  cycle
  results  in  a  partial  refund due  to  the  customer.   These
  reductions  of  revenue,  if any, due to  the  cancellation  of
  service  by a customer, are recognized at the point of  service
  termination  and  are  recognized  as  a  component  of   trade
  accounts  payable  until  final settlement  of  the  customer's
  account balance.

6.    Income Taxes
      ------------

  The  Company uses the asset and liability method of  accounting
  for  income taxes.  At May 31, 2004 and 2003, the deferred  tax
  asset  and  deferred tax liability accounts, as  recorded  when
  material  to the financial statements, are entirely the  result
  of  temporary  differences.   Temporary  differences  represent
  differences  in  the recognition of assets and liabilities  for
  tax  and  financial  reporting purposes, primarily  accumulated
  depreciation and amortization, allowance for doubtful  accounts
  and vacation accruals.

  As  of May 31, 2004 and 2003, the deferred tax asset related to
  the   Company's  net  operating  loss  carryforward  is   fully
  reserved.

7.    Advertising costs
      -----------------

  The  Company  does not conduct any direct response  advertising
  activities.   For non-direct response advertising, the  Company
  charges  the costs of these efforts to operations at the  first
  time the related advertising is published.

8.    Earnings (loss) per share
      -------------------------

  Basic  earnings  (loss) per share is computed by  dividing  the
  net  income  (loss)  available to common  shareholders  by  the
  weighted-average  number  of common shares  outstanding  during
  the  respective period presented in our accompanying  financial
  statements.   Fully  diluted  earnings  (loss)  per  share   is
  computed  similar to basic income (loss) per share except  that
  the  denominator is increased to include the number  of  common
  stock   equivalents   (primarily   outstanding   options    and
  warrants).   Common  stock equivalents represent  the  dilutive
  effect  of  the  assumed  exercise  of  the  outstanding  stock
  options  and  warrants,  using the treasury  stock  method,  at
  either the beginning of the respective period presented or  the
  date  of  issuance, whichever is later, and only if the  common
  stock  equivalents  are  considered  dilutive  based  upon  the
  Company's net income (loss) position at the calculation date.

  At  May 31, 2004 and 2003, the Company's issued and outstanding
  warrants,   options   and  convertible  debt   are   considered
  antidilutive due to the Company's net operating loss position.

9.    Employee Stock Options
      ----------------------

  The  Company  has  adopted  the  policy  of  fair  value  based
  accounting  for  stock-based compensation  in  accordance  with
  Statement of Financial Accounting Standards No. 123.


                                                                      F-12

<PAGE>
       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash, accounts receivable, accounts
payable and notes payable, as applicable, approximates fair value
due to the short term nature of these items and/or the current
interest rates payable in relation to current market conditions.

Interest rate risk is the risk that the Company's earnings are
subject to fluctuations in interest rates on either investments
or on debt and is fully dependent upon the volatility of these
rates.  The Company does not use derivative instruments to
moderate its exposure to interest rate risk, if any.

Financial risk is the risk that the Company's earnings are
subject to fluctuations in interest rates or foreign exchange
rates and are fully dependent upon the volatility of these rates.
The company does not use derivative instruments to moderate its
exposure to financial risk, if any.


NOTE F - CONCENTRATIONS OF CREDIT RISK

The Company and its Epicus subsidiary maintain their respective
cash accounts in a financial institution subject to insurance
coverage issued by the Federal Deposit Insurance Corporation
(FDIC).  Under FDIC rules, the Company and its subsidiaries are
entitled to aggregate coverage of $100,000 per account type per
separate legal entity per financial institution.  During the
years ended May 31, 2004 and 2003, respectively, the various
operating companies had deposits in a financial institution with
credit risk exposures in excess of statutory FDIC coverage.  The
Company did not incur any losses during Fiscal 2004 or 2003 as a
result of any of these unsecured situations.


NOTE G - BUSINESS COMBINATIONS

On July 28, 2000, in accordance with an Agreement and Plan of
Share Exchange, the Company acquired 100% of the outstanding
shares of common stock of Moye and Associates, Inc., a Georgia
Corporation, doing business as TheBest.Net (Moye).  The Company
exchanged an aggregate 600,000 shares of restricted, unregistered
common stock for 100.0% of the issued and outstanding stock of
Moye.  The transaction was accounted for using the purchase
method of accounting.  Goodwill is normally recorded when the
purchase price exceeds the fair value of the net assets and
liabilities acquired.  Management reviewed the prospects of
recovery of goodwill that was recorded on the date of purchase
and determined that the goodwill was 100% impaired based on the
Letter of Intent to sell Moye & Associates (see below).  The
excess of the fair value of the liabilities assumed over the fair
value of the assets acquired (negative book value) was not
recorded as negative Goodwill.

On July 19, 2001, the Company signed a Letter of Intent to sell
the active clients of Moye.  The buyer paid $133.33 for each
existing"dial-up" and "domain hosting client".  It was estimated
that there were between approximately 1,500 and 2,700 active fee-
for-service clients on the date of signing the Letter of Intent.
The buyer deposited a down payment of $150,000 with the Company
and an additional $50,000 into an interest bearing account at the
date of signing.   As of May 31, 2002, all amounts due under this
sale of assets contract had been satisfied.

During Fiscal 2003, the Company issued approximately 500,000
shares of restricted, unregistered common stock to Tully Moye in
complete settlement of all remaining obligations related to the
acquisition and disposition of Moye & Associates, Inc. (dba
TheBest.Net).


                                                                      F-13

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE H - RESTRICTED CASH

As collateral for a standby letter of credit securing telephone
service provided by BellSouth Corp., the Company placed on
deposit with the financial institution issuing the standby letter
of credit approximately $201,000 in an interest bearing
certificate of deposit.  Any interest earnings in excess of the
required balance to collateralize the standby letter of credit
may be transferred to the Company's operating account at the
discretion of management.

During the quarter ended February 29, 2004, management redeemed
the amounts on deposit and transferred the funds directly to
BellSouth Corp. in lieu of maintaining the standby letter of
credit.  As of February 29, 2004, the Company has approximately
$322,000 on deposit with BellSouth Corp.


NOTE I - ADVANCES DUE FROM OFFICER

The Company has advanced approximately $15,000 to a corporate
officer.  This amount is non-interest bearing and is unsecured.
The advance is repayable upon demand and may, at the officer's
discretion, be used to offset accrued, but unpaid, compensation.
As of May 31, 2004, the Company has accrued approximately
$826,000 in compensation due, but unpaid, to this officer.


NOTE J - PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of May 31,
2004 and 2003, respectively:

<TABLE>
<CAPTION>                                 May 31, 2004  May 31, 2003  Estimated life
                                          ------------  ------------  --------------
<S>                                       <C>           <C>           <C>
     Computer equipment                   $    460,488  $    385,668     5 years
     Office furniture and fixtures              68,202        44,126    7-10 years
     Software and system programming           145,039       145,039     5 years
                                          ------------  ------------
                                               673,729       574,833
     Less accumulated depreciation            (407,360)     (291,039)
                                          ------------  ------------
     Net property and equipment           $    266,369  $    283,794
                                          ============  ============
</TABLE>


Depreciation expense for the years ended May 31, 2004 and 2003,
was $116,321 and $105,023, respectively.


NOTE K - ACCRUED OFFICER COMPENSATION

As of May 31, 2004 and 2003, respectively, the Company has
accrued approximately $2,825,568 and $2,472,372 for earned, but
unpaid, compensation to it's Chief Executive Officer and Chief
Operating Officer, at a rate of approximately at the rate of
approximately $20,833 and $8,600 per month respectively.



       (Remainder of this page left blank intentionally)




                                                                      F-14

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE L - NOTES PAYABLE TO BANKS AND OTHERS

Notes payable to banks and others at May 31, 2004 and 2003 are as
follows:

<TABLE>
<CAPTION>
                                                                    May 31, 2004     May 31, 2003
                                                                    ------------     ------------
<S>                                                                 <C>              <C>
$750,000 note payable to a foreign corporation.  Interest at 13.0%
 Accrued interest payable quarterly.  Final maturity due in
 June 2003 and automatically renewable for one-year periods
 upon written notice by the Company prior to the maturity
 date.  Collateralized by 3,000,000 shares of restricted,
 unregistered common stock of the Company.                          $    750,000     $    750,000

$400,000 note payable to creditor trust fund.  Interest at 8.0%.
 Payable in quarterly installments of $25,000 plus accrued
 interest.  Final maturity in April 2004. In the event the
 Company fails to make any scheduled quarterly payment,
 the Creditors' Trust is entitled to an immediate entry of
 judgment for any remaining amounts due upon the filing
 of an Affidavit of Non-Payment by the Creditors' Trust.                 350,000          350,000

$150,000 note payable to an individual. Principal and
 unpaid interest due upon demand.  Unsecured.  This
 note was forgiven by the estate of the lender during the
 fourth quarter of Fiscal 2004.                                             -             111,000

$97,878 note payable to an unrelated entity.  Non-interest
 bearing.  Unsecured.  Due upon demand                                    97,878           97,878
                                                                    ------------     ------------

 Total notes payable to banks and others                            $  1,197,878     $  1,308,878
                                                                    ============     ============
</TABLE>


NOTE M - LONG-TERM DEBT

Long-term debt consists of the following at May 31, 2004 and
2003:

<TABLE>
<CAPTION>
                                                                    May 31, 2004     May 31, 2003
                                                                    ------------     ------------
<S>                                                                 <C>              <C>
Unsecured advances made by the Company's Chief Executive
 Officer and/or entities controlled by either Company officers
 and/or individuals related to the Company's Chief Executive
 Officer.  Interest at 6.25%.  Due upon demand.  Unsecured          $  1,015,617     $  1,267,608
                                                                    ============     ============
</TABLE>






       (Remainder of this page left blank intentionally)

                                                                      F-15

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE N - CONVERTIBLE DEBENTURES

Debenture #1
------------

On September 28, 2001, a consortium of four (4) separate
investment entities under common management purchased 12%
convertible debentures from the Company and were issued the right
to receive warrants to purchase an aggregate of 3,500,000 shares
of common stock from the Company in a future private placement
transaction.

As of May 31, 2004 and 2003, respectively, the Company has issued
and outstanding approximately $490,780 and $1,255,128 in 12.0%
convertible debentures (Debentures).  Interest on these
debentures is payable on a quarterly basis on March 31, June 30,
September 30 and December 31 of each year while such Debentures
are outstanding and on each Conversion Date, whichever occurs
earlier.  Interest may be paid, at the Company's option, in
either cash or restricted, unregistered common stock.  The
Debentures must be prepaid if an event of default occurs under
the Debentures and at the Company's option may be prepaid within
thirty days of the original issue date of the Debentures.
Management is of the opinion that the Company has sufficient
authorized common shares to cover the conversions.  In the event
that the Company does not have adequate authorized and unissued
shares of common stock to effect the maximum shares needed to
effect the conversion, the Company may need to seek shareholder
consent to increase our amount of authorized shares.  If we do
not have enough authorized shares to cover the conversions and
are unable to obtain shareholder approval to increase our
authorized shares, such failure would be considered a breach of
certain relevant provisions and representations and warranties
under the Debenture documents and could result in the
acceleration of all amounts due under the Debentures.

On May 1, 2003, the Company and the Debenture Holders entered
into a Debenture Redemption Agreement (Redemption Agreement).
The Redemption Agreement sets forth the following terms and
conditions related to the Debentures on an ongoing basis:

 7.    Redemption Schedule; Payment of Net Redemption Amount: The
   Company  shall  pay the Net Redemption Price to the  Debenture
   Holders in monthly installments in the amount of $40,000  (the
   "Monthly Redemption Payment"), with the first installment thereof
   due on July 1, 2003 and subsequent installments thereof due on
   the first business day of each succeeding month (each, a "Payment
   Date") until the Net Redemption Amount has been paid in  full.
   The Company shall pay the Debenture Holders by wire transfer of
   immediately available funds pursuant to the Debenture Holders'
   written instructions.  The Monthly Redemption Payment shall be
   applied with respect to the Debenture Holders in the following
   order: (i) Accrued Interest, (ii) Redemption Premium, and (iii)
   outstanding principal balance of the Owned Debentures.  During
   Fiscal  2004, the Company paid approximately $120,000 cash  in
   accordance with this section of this Agreement.

 8.     Prohibited Conversions: The Debenture Holders  shall  not
   convert the Owned Debentures into shares of the Company's common
   stock,  par  value $0.001 per share (the "Shares") during  the
   period commencing on the date hereof and ending on June 30, 2003
   (the "Prohibited Period").

 9.    Permitted Conversions: Following the Prohibited Period, the
   Debenture  Holders  shall be permitted to  convert  its  Owned
   Debentures, to the extent such Owned Debentures have not  been
   previously redeemed hereunder, into Shares in accordance with the
   terms  and  subject to the conditions of the Owned Debentures,
   subject to the following restrictions:

   7.    If the last reported sale price of the Shares on the Over-
      the-Counter Bulletin Board as reported by Bloomberg (the "Price")
      is less than $.10 per Share, then the Debenture Holders shall
      have the right to convert their Owned Debentures into not more
      than an aggregate of 300,000 Shares every thirty (30) days during
      the period in which the Price remains less than $.10 per Share,


                                                                      F-16

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE N - CONVERTIBLE DEBENTURES - Continued

   8.    If the Price is equal to or exceeds $.10 per Share but is
      less than $.20 per Share, then the Debenture Holders shall have
      the right to convert their Owned Debentures into not more than an
      aggregate of 500,000 Shares every thirty (30) days during the
      period that the Price is equal to or exceeds $.10 per Share but
      is less than $.20 per Share,

9.        If the Price is equal to or exceeds $.20 per Share but
is less than $.30 per Share, then the Debenture Holders shall
have the right to convert their Owned Debentures into not more
than an aggregate of 750,000 Shares every thirty (30) days during
the period that the Price is equal to or exceeds $.20 per Share
but is less than $.30 per Share, and

10.       If the Price is equal to or exceeds $.30 per Share,
then the Debenture Holders shall not be restricted by the Company
hereunder with respect to the number of Shares into which the
Debentures may be converted during the period that the Price is
equal to or exceeds $.30 per Share, provided, however, that if
the Company fails to (i) make the Monthly Redemption Payment
pursuant to Section 2 hereof within five (5) business days
following the Payment Date or (ii) pay any delinquent amounts
that are due and owing under this Agreement, then the foregoing
restrictions on the Debenture Holders' right to convert their
Owned Debentures into Shares shall be suspended until the first
day of the next month following the date that the Monthly
Redemption Payment is received in full by the Debenture Holders.

 10.   Issuance of Additional Shares: The Company shall issue and
   deliver  to  the  Debenture Holders  shares  of  common  stock
   representing,  in  the  aggregate, one  percent  (1%)  of  the
   outstanding shares of the Company on the earlier to occur of: (i)
   the date of full conversion by the Debenture Holders of all of
   the Owned Debentures and (ii) the date of payment by the Company
   of  the  total  Aggregate Redemption Price (collectively,  the
   "Additional Shares").

 11.   Interest: Interest on the outstanding balance of the Owned
   Debentures shall continue to accrue following the date hereof as
   specified in the respective Owned Debenture and shall be payable
   in cash or Shares in accordance with the terms thereof.

 12.    Effectiveness of the Registration Statement: The  Company
   shall take all necessary actions, including the preparing  and
   filing of one or more registration statements of the Company and
   any  amendments  or  supplements  thereto  (the  "Registration
   Statement")  required under the Securities  Act  of  1933,  as
   amended, and the rules and regulation thereunder, to cause the
   Shares issuable upon conversion of the Owned Debentures to  be
   registered  for  resale pursuant to an effective  Registration
   Statement.  If (i) the Company fails to respond to all comments
   made by the Securities and Exchange Commission (the "SEC")  in
   connection  with  the Registration Statement within  ten  (10)
   business days of receipt from the SEC or (ii) the SEC has  not
   declared the Registration Statement effective on or before July
   10,  2003,  then  the Company shall immediately  pay  to  each
   Debenture Holders an amount equal to five percent (5%) of the sum
   of (a) the outstanding balance of the Debenture Holders's Owned
   Debentures, (b) accrued interest on the Debenture Holders's Owned
   Debentures and (c) a premium equal to thirty percent (30%) of the
   sum   of  (a)  and  (b)  (the  "Registration  Penalty").   The
   Registration Penalty shall be payable either in cash or Shares,
   the number of which shall be based on the conversion price set
   forth  in  the  Owned Debentures, at each Debenture  Holders's
   option.   If  a  Debenture  Holders  elects  to  receive   the
   Registration  Penalty in cash, then the  full  amount  of  the
   Registration Penalty shall be paid to such Debenture Holders by
   wire transfer of immediately available funds in accordance with
   the instructions set forth on attached Schedule II.


                                                                      F-17

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE N - CONVERTIBLE DEBENTURES - Continued

 13.   Effect of Breach:  In the event of a breach by the Company
   of any of the provisions of this Agreement, either by a failure
   to timely make any payment or failure to effect any conversion by
   the  Debenture Holders or otherwise, in addition to any  other
   remedies available to the Debenture Holders in law or equity with
   respect to such breach, the applicable discount to the  market
   price of the Owned Debentures shall permanently be amended from
   fifty percent (50%) to seventy-five percent (75%).

In  conjunction with the issuance of the convertible  debentures,
the debentures were issued with an equivalent per share value  of
common  stock  below  the  ending  quoted  market  price  of  the
Company's  common  stock  on  the issue  date.   This  difference
created a Beneficial Conversion Feature Discount of approximately
$300,000.   This discount was then amortized over  the  unexpired
time period between the date of issue of the eligible shares  and
the  maturity  date of the underlying debentures.   Approximately
$141,177  was amortized to operations during the year  ended  May
31, 2003.

Debenture #2
------------

On  May  28,  2004,  we  completed the private  placement  of  an
aggregate  of (a) $1,100,000 in 8% secured convertible notes  and
(b) warrants to purchase 1,100,000 shares of our common stock  to
4  accredited investors. The transaction was consummated pursuant
to  a  Securities  Purchase Agreement by and  among  us  and  the
purchasers named therein (the "Securities Purchase Agreement").

The  secured  convertible notes mature on May 28,  2006  and  are
convertible into shares of our common stock, at the option of the
holder at any time and from time to time after the date when  the
debentures where issued, at a conversion price equal to the lower
of  (i) $0.10 per share and (ii) 60% of the average of the lowest
three  inter-day  trading prices of our common stock  during  the
twenty trading days immediately preceding the date of conversion.
The  warrants are exercisable, at $0.03 per share, until May  28,
2009.

Interest  on the notes are payable, quarterly on March  31,  June
30,  September 30 and December 31 of each year beginning on  June
30,  2004.   The warrants and debentures contain customary  anti-
dilution protections.  In addition, on May 28, 2004, we have also
agreed to sell additional Notes to the original purchasers in the
aggregate principal amount of $2,200,000 and additional  Warrants
to  purchase an aggregate of 2,200,000 shares of our common stock
for   an  aggregate  purchase  price  of  $2,200,000.   Of  these
additional Notes and Warrants, $1,100,000 of additional Notes and
Warrants  to  purchase 1,100,000 shares will be sold within  five
(5)  days upon the filing by us of the Registration Statement and
an  additional  $1,100,000  of Notes  and  Warrants  to  purchase
1,100,000  will be sold within five (5) days of our  Registration
Statement  being declared effective by the U. S.  Securities  and
Exchange  Commission  (SEC).   The  obligation  to  purchase  the
additional Notes and issue the additional Warrants is subject  to
the  satisfaction of certain conditions and the  absence  of  any
material adverse effect as of the date the Registration Statement
is  declared effective by the SEC.  The terms of these additional
Notes and the additional Warrants shall be identical to the terms
of  the  Notes and Warrants that are currently outstanding.   The
Securities  Purchase Agreement contains various  representations,
warranties  and  covenants  of  the  parties  customary   for   a
transaction  of  this  type.  We have  agreed  to  indemnify  the
purchasers  against  various  liabilities.   We  entered  into  a
Registration  Rights  Agreement with  each  purchaser,  and  have
agreed  to  file a Registration Statement with the SEC under  the
Securities Act, covering the resale of (i) the shares  of  common
stock  underlying the currently issued warrants; (ii) the  shares
of common stock underlying the notes currently outstanding in the
amount of $1,100,000; (iii) the shares of common stock underlying
the  warrants  to  be  issued; (iv) the shares  of  common  stock
underlying  the  convertible notes in  the  aggregate  amount  of
$2,200,000  to  be  issued; and (v) any shares  of  common  stock
issued  or  issuable  upon  a  stock  split,  dividend  or  other
distribution, recapitalization or similar event for  an  offering
to be made on a continuous basis pursuant to Rule 415.


                                                                      F-18

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE N - CONVERTIBLE DEBENTURES - Continued

The Registration Rights Agreement requires us to initially
register 200% of the shares issuable upon the exercise of all of
the warrants and the conversion of all of the notes both issued
and to be issued.  We and the purchasers each agreed with the
other to indemnify the other for certain liabilities arising
under the Securities Act.  Pursuant to the Registration Rights
Agreement and subject to certain other provisions therein, if we
fail to timely perform or provide in accordance with our
responsibilities under the Registration Rights Agreement and
certain Securities Act provisions, then, in addition to any other
rights the holder or holders may have pursuant to the
Registration Rights Agreement or under applicable law, on each
monthly anniversary of each such event date (if the applicable
event shall not have been cured by such date) until the
applicable event is cured, we shall pay to each holder an amount
in cash, as partial liquidated damages and not as a penalty,
equal to 2.0% of the outstanding principal amount of the Notes
issued pursuant to the Securities Purchase Agreement.  The
foregoing transactions were completed under exemptions from the
registration requirements of the Securities Act, including those
afforded by Section 4(2) of the Securities Act of 1933, and the
rules and regulations promulgated under that Section.


NOTE O - INCOME TAXES

The components of income tax (benefit) expense for the years
ended May 31, 2004 and 2003, respectively, are as follows:

<TABLE>
<CAPTION>
                                          May 31, 2004    May 31, 2003
                                          ------------    ------------
<S>                                       <C>             <C>
   Federal:
     Current                              $     -         $     -
     Deferred                                   -               -
                                          ------------    ------------
                                                -               -
                                          ------------    ------------
   State:
     Current                                    -               -
     Deferred                                   -               -
                                          ------------    ------------
                                                -               -
                                          ------------    ------------
     Total                                $     -         $     -
                                          ============    ============

</TABLE>

The Company has a net operating loss carryforward of
approximately $16,500,000 to offset future taxable income.
Subject to current regulations, this carryforward will begin to
expire in 2006.  The amount and availability of the net operating
loss carryforwards may be subject to limitations set forth by the
Internal Revenue Code. Factors such as the number of shares
ultimately issued within a three year look-back period; whether
there is a deemed more than 50 percent change in control; the
applicable long-term tax exempt bond rate; continuity of
historical business; and subsequent income of the Company all
enter into the annual computation of allowable annual utilization
of the carryforwards.

The Company's income tax expense for the years ended May 31, 2004
and 2003, respectively, are as follows:

<TABLE>
<CAPTION>
                                          May 31, 2004    May 31, 2003
                                          ------------    ------------
<S>                                       <C>             <C>

Statutory rate applied to loss before
  income taxes                            $ (1,120,000)   $   (554,000)
Increase (decrease) in income taxes
  resulting from:
    State income taxes                            -               -
    Other, including reserve for
      deferred tax asset                     1,120,000         554,000
                                          ------------    ------------
     Income tax expense                   $       -       $       -
                                          ============    ============
</TABLE>



                                                                      F-19

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE O - INCOME TAXES - Continued

Temporary differences, consisting primarily of statutory
deferrals of expenses for organizational costs and accrued, but
unpaid, accruals for officer compensation and statutory
differences in the depreciable lives for property and equipment,
between the financial statement carrying amounts and tax bases of
assets and liabilities give rise to deferred tax assets and
liabilities as of May 31, 2004 and 2003, respectively:

<TABLE>
<CAPTION>
                                          May 31, 2004    May 31, 2003
                                          ------------    ------------
<S>                                       <C>             <C>
   Deferred tax assets
     Net operating loss carryforwards     $  5,680,000    $  4,760,000
     Less valuation allowance               (5,680,000)     (4,760,000)
                                          ------------    ------------
   Net Deferred Tax Asset                 $       -       $       -
                                          ============    ============
</TABLE>


During the year ended May 31, 2004 and 2003, respectively, the
valuation allowance (decreased) increased by approximately
$920,000 and $(435,000).


NOTE P - PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of
up to 5,000 shares of Preferred Stock, $0.001 par value per
share, the designation and rights of which are to be determined
by our Board of Directors.

There are no shares of Preferred Stock issued and outstanding at
May 31, 2004 and 2003, respectively.

The Board of Directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but
unissued Preferred Stock in one or more series and to determine
the voting rights, preferences as to dividends and liquidation,
conversion rights, and other rights of such series.  We consider
it desirable to have Preferred Stock available to provide
increased flexibility in structuring possible future acquisitions
and financings and in meeting corporate needs which may arise.
If opportunities arise that would make desirable the issuance of
Preferred Stock through either public offering or private
placements, the provisions for Preferred Stock in our Articles of
Incorporation would avoid the possible delay and expense of a
shareholder's meeting, except as may be required by law or
regulatory authorities.  Issuance of the Preferred Stock could
result, however, in a series of securities outstanding that will
have certain preferences with respect to dividends and
liquidation over the common stock that would result in dilution
of the income per share and net book value of the common stock.
Issuance of additional common stock pursuant to any conversion
right that may be attached to the terms of any series of
Preferred Stock may also result in dilution of the net income per
share and the net book value of the common stock.  The specific
terms of any series of Preferred Stock will depend primarily on
market conditions, terms of a proposed acquisition or financing,
and other factors existing at the time of issuance.  Therefore,
it is not possible at this time to determine in what respect a
particular series of Preferred Stock will be superior to our
common stock or any other series of Preferred Stock which we may
issue. Our Board of Directors may issue additional Preferred
Stock in future financings, but has no current plans to do so at
this time.



       (Remainder of this page left blank intentionally)

                                                                      F-20

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE Q - COMMON STOCK TRANSACTIONS

On February 3, 2004, at the Annual Meeting of the Company
Shareholders, an action was approved to increase the authorized
number of shares of common stock to be issued from 200,000,000 to
800,000,000.  This action has been registered as an amendment to
the Company's Articles of Incorporation and is reflected in the
accompanying financial statements as of the first day of the
first period presented.

On June 10, 2002, the Company issued an aggregate 150,000 (50,000
each) shares of restricted, unregistered common stock to three
unrelated individuals as payment for various business and
financial consulting services.  This transaction was valued on
the respective transaction date at the discounted closing quoted
market price of the Company's common stock.  As a result of this
transaction, approximately $3,000 was charged to operations.

On July 29, 2002, the Company issued 100,000 shares of
restricted, unregistered common stock to an employee of Epicus,
Inc. as payment of a retirement bonus.  This transaction was
valued on the respective transaction date at the discounted
closing quoted market price of the Company's common stock.  As a
result of this transaction, approximately $2,000 was charged to
operations.

During the period from September 25, 2002 through November 13,
2002, the Company issued an aggregate 3,104,832 shares of common
stock to the respective Debenture Holders as a result of the
exercise of the conversion of outstanding 12% debentures.
Additionally, the Company issued 1,375,000 shares in payment of
accrued interest on these debentures.  These transactions were
valued pursuant to the debenture terms.

On February 2, 2003, the Company issued an aggregate 1,800,000
shares (200,000 shares each) of restricted, unregistered common
stock nine (9) separate employees of Epicus, Inc. for performance
bonuses.  Further, the Company issued 1,000,000 shares of
restricted, unregistered common stock to the Chief Information
Officer of Epicus, Inc. as a performance bonus.  These aggregate
transactions were valued on the respective transaction date at
approximately the closing quoted market price of the Company's
common stock.  As a result of this transaction, approximately
$56,000 was charged to operations.

On February 20, 2003 and April 15, 2003, the Company, in separate
transactions, issued 500,000 and 972,222 shares of restricted,
unregistered common stock, respectively,  to an unrelated
corporation for business and financial consulting services.  This
transaction was valued on the transaction date at approximately
the closing quoted market price of the Company's common stock.
As a result of these transactions, approximately $42,083 was
charged to operations.

During the period from September 25, 2002 through February 28,
2003, the Company issued an aggregate 17,384,592 shares of common
stock to the respective Debenture Holders as a result of the
exercise of the conversion of outstanding 12% debentures.
Additionally, the Company issued 3,375,000 shares in payment of
accrued interest on these debentures.  These transactions were
valued pursuant to the debenture terms.

On March 7, 2003, the Company issued an aggregate 300,000
(100,000 each) shares of common stock previously registered on
Form S-8 to the three individuals receiving common stock in the
June 10, 2002 transaction listed above.  As a result of this
transaction, approximately $6,300 was charged to operations.

During the period from March 14, 2003 through April 11, 2003, the
Company issued an aggregate 11,003,034 shares of common stock to
the respective Debenture Holders as a result of the exercise of
the conversion of outstanding 12% debentures.  These transactions
were valued pursuant to the debenture terms.

During the period from July 10, 2003 through August 15, 2003, the
Company issued an aggregate 1,800,000 shares of common stock to
the respective Debenture Holders as a result of the exercise of
the conversion of outstanding 12% debentures.  These transactions
were valued pursuant to the debenture terms.  In situations where
the conversion price, per the debenture terms, was less than the
discounted closing price of the Company's common stock on the
NASDAQ Electronic Bulletin Board on the date of each respective
transaction, the Company recognized a non-cash charge to
operations.  The Company recognized a non-cash charge of
approximately $12,750 for the differential between the "fair
value" of these securities sold and the contractual exchange
price.
       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE Q - COMMON STOCK TRANSACTIONS - Continued

During the period from June 24, 2003 through August 8, 2003, the
Company sold an aggregate 12,000,000 shares of common stock
pursuant to Regulation S of the Securities Act of 1933 for gross
proceeds of approximately $568,000.  No underwriter was used in
connection with the sale of these securities.

On July 14, 2003, the Company issued approximately 1,000,000
shares of restricted, unregistered common stock to an unrelated
entity providing consulting and telemarketing services to the
Company's wholly-owned subsidiary, Epicus, Inc.  This transaction
was valued at approximately $45,000, which was equal to or in
excess of the discounted closing price of the Company's common
stock on the NASDAQ Electronic Bulletin Board on the date of each
respective transaction.  The Company relied upon Section 4(2) of
The Securities Act of 1933, as amended, for an exemption from
registration on these shares.

On July 11, 2003, the Company issued approximately 680,000 shares
of common stock previously registered pursuant to a Registration
Statement on Form S-8 for legal services.  These transactions
were valued at approximately $64,600, which was equal to the
quoted closing price of the Company's securities on the NASDAQ
Electronic Bulletin Board.

During the period from September 10, 2003 through November 14,
2003, the Company issued an aggregate 8,978,902 shares of common
stock to the respective Debenture Holders as a result of the
exercise of the conversion of outstanding 12% debentures.  These
transactions were valued pursuant to the debenture terms.  In
situations where the conversion price, per the debenture terms,
was less than the discounted closing price of the Company's
common stock on the NASDAQ Electronic Bulletin Board on the date
of each respective transaction, the Company recognized a non-cash
charge to operations.  The Company recognized a cumulative non-
cash charge of approximately $51,473 for the differential between
the "fair value" of these securities sold and the contractual
exchange price.

During the period from December 12, 2003 through February 27,
2004, the Company issued an aggregate 15,173,478 shares of common
stock to the respective Debenture Holders as a result of the
exercise of the conversion of outstanding 12% debentures.  These
transactions were valued pursuant to the debenture terms.  In
situations where the conversion price, per the debenture terms,
was less than the discounted closing price of the Company's
common stock on the NASDAQ Electronic Bulletin Board on the date
of each respective transaction, the Company recognized a non-cash
charge to operations.  The Company recognized a cumulative non-
cash charge of approximately $79,254 for the differential between
the "fair value" of these securities sold and the contractual
exchange price.

During January 2004, the Company's Board of Directors approved
the issuance of an aggregate 62,500,000 shares of restricted,
unregistered common stock to Gerard Haryman, the Company's
Chairman, in repayment of approximately $1,000,000 in unsecured
debt.  Through February 29, 2004, the Company has issued
50,000,000 of the approved shares in retirement of $800,000 in
debt.  The per share exchange price was equal to or in excess of
the discounted closing price of the Company's common stock on the
NASDAQ Electronic Bulletin Board on the date of the transaction.
The Company relied upon Section 4(2) of The Securities Act of
1933, as amended, for an exemption from registration on these
shares.

On February 27, 2004, the Company filed a Registration Statement
under the Securities Act of 1933 on Form S-8 to register an
aggregate 50,500,000 shares of common stock to be used as
follows:

  7. 20,000,000 shares of the Company's Common Stock that may be
     issued pursuant to its 2004 Stock Option Plan. Also registered
     hereunder are such additional shares of Common Stock, presently
     indeterminable, as may be necessary to satisfy the anti-dilution
     provisions of the Plan to which this Registration  Statement
     relates in accordance with Rule 416 under the Securities Act of
     1933, as amended (the "Securities Act");

  8. 9,000,000 shares of the Company's Common Stock to be
     issued to Marc Sporn as compensation for consulting services
     performed by Mr. Sporn under contract with Eastern Consulting
     Corp;

  9. 3,500,000 shares of the Company's Common Stock to be
     issued to Jeffrey A. Rinde as compensation for legal services
     rendered by Mr. Rinde under a retainer agreement with Bondy &
     Schloss LLP, the Company's new principal securities counsel; and


                                                                      F-21

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE Q - COMMON STOCK TRANSACTIONS - Continued

 10. 18,000,000  shares of the Company's Common Stock  to  be
     issued to Manny Shulman as compensation for consulting services
     rendered by Mr. Shulman.

Approximately 15,650,500 shares registered on this Form S-8  were
issued between March 1, 2004 and May 31, 2004.

During  the period from March 9, 2004 through May 25,  2004,  the
Company  issued an aggregate 33,208,204shares of common stock  to
the  respective Debenture Holders as a result of the exercise  of
the conversion of outstanding 12% debentures.  These transactions
were valued pursuant to the debenture terms.  In situations where
the  conversion price, per the debenture terms, was less than the
discounted  closing price of the Company's common  stock  on  the
NASDAQ  Electronic Bulletin Board on the date of each  respective
transaction,  the  Company  recognized  a  non-cash   charge   to
operations.  The Company recognized a cumulative non-cash  charge
of  approximately $255,490 for the differential between the "fair
value"  of  these  securities sold and the  contractual  exchange
price.


NOTE R - STOCK WARRANTS

On  September  28,  2001, in conjunction  with  the  sale  of  an
aggregate of $700,000 of 12% convertible debentures, the  Company
issued  the  right to receive warrants to purchase  an  aggregate
3,500,000  shares of common stock at a price to be determined  at
the  time  of  the  warrant(s) issue.  As of May  31,  2004,  and
subsequent  thereto,  the  Company has not  issued  any  warrants
related to this issue.

On  May 28, 2004, in conjunction with the sale of an aggregate of
$1,100,000  in  8% secured convertible notes, the Company  issued
warrants  to purchase 1,100,000 shares of our common stock  to  4
accredited investors. The transaction was consummated pursuant to
a   Securities  Purchase  Agreement  by  and  among  us  and  the
purchasers  named therein (the "Securities Purchase  Agreement").
The  warrants are exercisable, at $0.03 per share, until May  28,
2009.

The  following  table presents warrant activity through  May  31,
2004:

<TABLE>
<CAPTION>
                                                              Weighted
                                                               Average
                                                Number of     Exercise
                                                   Shares       Price
                                                ---------     --------
<S>                                             <C>           <C>

   Balance at December 31, 2003                      -             -
      Issued                                    1,100,000     $   0.03
                                                ---------

   Balance at March 31, 2004                    1,100,000
                                                =========
</TABLE>



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                                                                      F-22

<PAGE>


       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - STOCK OPTIONS

1998 Stock Option Plan
----------------------

On May 31, 1998, the Company's Board of Directors adopted a Stock
Option Plan far its employees, directors and consultants.  On
April 24, 2001, the Company filed a Registration Statement under
the Securities Act of 1933 on Form S-8 to register 5,000,000
underlying shares of the stock option plan.

The purpose of the plan is to promote success of the Company by
providing a method whereby eligible employees, directors and
independent contractors and consultants providing services to the
Company may be awarded additional remuneration for services
rendered and invest in the capital stock of the Company.   The
plan will be administered by the Compensation Committee of the
Board of Directors and will consist of not less than two people.
This committee shall have the full power and authority to grant
to eligible persons options under the plan.  Persons eligible to
participate in the plan include officers and directors, employee,
non-employee directors, independent contractors and consultants
of the Company, as the Committee shall select.  The plan includes
and participants may receive Incentive Stock Options or
Nonqualified Stock Options.  An option granted under the plan
shall remain exercisable during the term of the option to the
extent provided in the applicable agreement and the plan.  Shares
of Common Stock delivered in payment in connection with the
exercise of an Option, and shares of Common Stock withheld for
such payment, shall be valued for such purpose at their Fair
Market Value as of the exercise date.  By acceptance of an Award,
the Award is a special incentive compensation that will not be
taken into account, in any manner, as salary, compensation or
bonus in determining the amount of any payment under any pension,
retirement or other employee benefit plan, program or policy of
the Company or any Subsidiary.

Employees of the Company who have been granted options are
authorized by the Committee to purchase the shares at a price
equal to 55% of the three day average closing bid price prior to
the date of written election to exercise.  Through May 31, 2004,
options to purchase a cumulative 4,280,277 shares of common stock
of the 5,000,000 shares authorized in the Plan have been granted
and were concurrently exercised.

2004 Stock Option Plan
----------------------

In February 2004, the Company's Board of Directors adopted a
Stock Option Plan far its employees, directors and consultants.
On February 27, 2004, Company filed a Registration Statement
under the Securities Act of 1933 on Form S-8 to register
20,000,000 underlying shares of the 2004 Stock Option Plan.

The purpose of the 2004 Stock Option Plan (2004 Plan) is to
secure for the Company and its shareholders the benefits arising
from capital stock ownership by employees, officers, directors,
consultants and other service providers of the Company or any
parent or subsidiary of the Company (each an "Affiliate") who are
expected to contribute to the Company's future growth and
success.  The 2004 Plan is also designed to attract and retain
other persons who will provide services to the Company.  Those
provisions of the 2004 Plan which make express reference to
Section 422 of the Internal Revenue Code of 1986, as amended or
replaced from time to time (the "Code"), shall apply only to
Incentive Stock Options (as that term is defined herein).

Options granted pursuant to 2004 Plan shall be authorized by
action of the Board of Directors (the "Board") of the Company (or
the committee appointed by the Board in accordance with Section
2(b) below) and may be either incentive stock options ("Incentive
Stock Options") intended to meet the requirements of Section 422
of the Code or non-statutory options which are not intended to
meet the requirements of Section 422 of the Code ("Non-Qualified
Options").

                                                                      F-23

<PAGE>


       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - STOCK OPTIONS - Continued

2004 Stock Option Plan - continued
----------------------

The purchase price per Share issuable upon the exercise of an
option shall be determined by the Board or the Committee at the
time of grant of such option, provided, however, that such
exercise price in the case of Incentive Stock Options, shall not
be less than 100% of the Fair Market Value (as hereinafter
defined) of such Shares at the time of grant of such option, and
for Incentive Stock Options granted to a "10% Shareholder" (as
defined in Section 11(b)), shall not be less than 110% of such
Fair Market Value.  "Fair Market Value" of a Share as of a
specified date for purposes of the Plan shall mean the closing
price of a Share on the principal securities exchange (including,
but not limited to, the Nasdaq SmallCap Market or the Nasdaq
National Market) on which such Shares are traded on the day
immediately preceding the date as of which Fair Market Value is
being determined, or on the next preceding date on which such
Shares are traded if no Shares were traded on such immediately
preceding day, or if the Shares are not traded on a securities
exchange, Fair Market Value shall be deemed to be the average of
the high bid and low asked prices of the Shares in the over-the-
counter market on the day immediately preceding the date as of
which Fair Market Value is being determined or on the next
preceding date on which such high bid and low asked prices were
recorded.  If the Shares are not publicly traded, Fair Market
Value of a Share (including, in the case of any repurchase of
Shares, any distributions with respect thereto which would be
repurchased with the Shares) shall be determined in good faith by
the Board taking into consideration prices at which the Company
has issued Shares during the preceding six months.  In no case
shall Fair Market Value be determined with regard to restrictions
other than restrictions which, by their terms, will never lapse.

Options granted under the Plan may provide for the payment of the
exercise price by delivery of cash or a check to the order of the
Company in an amount equal to the exercise price of such options,
or by any other means which the Board determines are consistent
with the purpose of the Plan and with applicable laws and
regulations (including, without limitation, the provisions of
Rule 16b-3).

Subject to earlier termination as provided herein, each option
and all rights thereunder shall expire on such date as determined
by the Board or the Committee and set forth in the applicable
option agreement, provided that such date shall not be later than
ten (10) years after the date on which the option is granted, or
as prescribed by Section 11(b) of the 2004 Plan.

Each option granted under the Plan shall be exercisable either in
full or in installments at such time or times and during such
period as shall be set forth in the option agreement evidencing
such option, subject to the provisions of the Plan.  Subject to
the requirements in the immediately preceding sentence, if an
option is not at the time of grant immediately exercisable, the
Board or the Committee may (i) in the agreement evidencing such
option, provide for the acceleration of the exercise date or
dates of the subject option upon the occurrence of specified
events and/or (ii) at any time prior to the complete termination
of an option, accelerate the exercise date or dates of such
option.

As of May 31, 2004, no options under the 2004 Stock Option Plan
have been granted.






       (Remainder of this page left blank intentionally)

                                                                      F-24

<PAGE>


       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE S - STOCK OPTIONS - Continued

The following tables summarize all common stock options granted
through May 31, 2004:

<TABLE>
<CAPTION>

                                                       Weighted average
                                                        price per share
                                                       ----------------
<S>                                      <C>           <C>
  Options outstanding at June 1, 2001            -              -
   Issued                                4,280,277            $0.05
   Exercised                            (4,280,277)           $0.05
   Expired/Terminated                            -              -

  Options outstanding at May 31, 2002            -              -
   Issued                                        -              -
   Exercised                                     -              -
   Expired/Terminated                            -              -

  Options outstanding at May 31, 2003            -              -
   Issued                                        -              -
   Exercised                                     -              -
   Expired/Terminated                            -              -

  Options outstanding at May 31, 2004            -              -
</TABLE>

<TABLE>
<CAPTION>

                  Options      Options     Options       Options      Exercise price range
                  granted     exercised   terminated   outstanding   per outstanding option
                 ---------    ---------   ----------   -----------   ----------------------
<S>              <C>          <C>         <C>          <C>           <C>

2002 employees   3,067,777    3,067,777       -             -             $0.04 - $0.09
2002 officers    1,212,500    1,212,500       -             -                 $0.07
                 ---------    ---------   ----------   -----------
  Totals         4,280,277    4,280,277       -             -
                 =========    =========   ==========   ===========
</TABLE>


As of May 31, 2004, there are no granted and outstanding options.
Additionally, all granted options were concurrently and
simultaneously exercised by the respective employee or officer.

The weighted-average fair value of options covering approximately
1,227,868 shares of common stock granted during the year ended
May 31, 2002 for which the exercise price was greater than the
market price on the grant date was $0.06 and the weighted-average
exercise price was $0.07.

The weighted-average fair value of options covering approximately
2,442,192 shares of common stock granted during the year ended
May 31, 2002 for which the exercise price was less than the
market price on the grant date was $0.07 and the weighted-average
exercise price was $0.04.  The Company recognized a cumulative
non-cash charge to operations for the differential between "fair
value" and the exercise price of approximately $72,242 on these
transactions.

The Company issued options covering approximately 610,217 shares
of common stock during the year ended May 31, 2002 where the
weighted-average fair value was equal to the market price on the
grant date.  In these situations, the weighted-average fair value
of the options and the weighted-average exercise price was $0.06.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which do not have
vesting restrictions and are fully transferable.  In addition,
option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.

                                                                      F-25

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE T - COMMITMENTS AND CONTINGENCIES

Leased facilities
-----------------

The Company leases its corporate offices from an entity owned by
the Company's President and Chief Executive Officer.  The lease
was renegotiated in June 2003 and provides for annual rentals of
approximately $18,000.  Rent expense for the years ended May 31,
2004 and 2003 was $18,000 and $42,400, respectively.

The Company's operating subsidiary, Epicus, has entered into
sublease agreement for office space in Lake Mary, Florida.  The
lease expires September 24, 2004 and requires monthly rental
payments of approximately $11,500 per month for the first 12
months of the sublease term and $11,845 for the remainder of the
term.  Epicus also has a first right of refusal to acquire
additional space contiguous to the new space.  Further, the
Company has an option to acquire certain office furnishings left
in the space by the former tenant at a bargain price if said
option is exercised by December 31, 2003.  Future payments under
this sublease are as follows: year ending December 31, 2003 -
approximately $138,000; year ending December 31, 2004 -
approximately $106,600.

Litigation
----------

EPICUS, Inc. (Epicus) has been involved in a dispute with one of
its former carriers, Sprint Florida, regarding a default in
payment for services.  On August 23, 2000, Sprint filed suit in
the Circuit Court of the Ninth Judicial Circuit in and for Orange
County Florida.  The Company believed that the accusation was
incorrect, however after obtaining advice from legal counsel, we
decided not to litigate the matter and on December 21, 2000, the
carrier was awarded by that court, a default judgment against
Epicus in the amount of $321,587.52.  In accordance with a
Judgment Payment Agreement dated February 15, 2001, Epicus agreed
to pay Sprint as follows: Principal payments of $10,000 each will
be due commencing March 15, 2001 through September 15, 2002 (18
months). The final balloon payment of $142,000 was payable on
October 15, 2002.  While the scheduled payment(s) have not been
demanded by Sprint, as of the date of this filing, Management of
the Company intends to enter negotiations to renew and/or
restructure the payment agreement in order to mitigate any
potentially negative effect on the Company's cash flow while
satisfying this obligation.

A suit has been filed against Epicus in the Supreme Court of
British Columbia in Vancouver, Canada by EXL Information
Corporation, a Canadian corporation, in the amount of $184,761
for alleged breach of contract regarding a licensing fee for the
use of their billing software.  Epicus used the software for a
short period of time and found that, contrary to the vendor's
representations, it did not meet our specific needs and therefore
stopped payment.  EXL Information Corporation is seeking damages
for the loss of revenue that would have been earned over the life
of the agreement.  The outcome of this litigation is not
determinable at this time.  Management intends to aggressively
defend this action to conclusion.

In June 2002, AT&T Corporation filed a lawsuit against Epicus
Group in the amount of $480,796 alleging non-payment of charges.
Epicus Group has consistently denied responsibility for the
charges and negotiations have been ongoing in an attempt to
resolve this dispute.  The matter has gone to mediation and a
verbal agreement for a settlement in the amount of $120,000 has
been reached.

During the quarter ended May 31, 2004, and subsequent thereto,
there has been no significant change in any of the above listed
litigation, except as noted.

                                                                      F-26

<PAGE>

       EPICUS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE T - COMMITMENTS AND CONTINGENCIES - Continued

Post-Bankruptcy matters
-----------------------

On March 11, 2004, in the U.S. Bankruptcy Court, Southern
District of Florida, Judge Arthur Briskin ruled in favor of the
Internal Revenue Service (IRS) allowing the IRS to amend their
claim of past due excise taxes to a total of $2,849,469.98.  This
motion was made by the IRS in October of 1997 during the
bankruptcy hearings of Epicus, Inc.'s predecessor, The Telephone
Company of Central Florida.  Epicus Communications Group, Inc.'s
original Plan of Reorganization was approved and accepted by
Judge Briskin on July 9, 1999.  In the approved Plan of
Reorganization, Epicus Communications Group agreed to pay a
maximum of $300,000 in past due excise taxes.  Epicus
Communications Group would never have agreed to a debt of this
size in its Plan of Reorganization.  Epicus Communications Group
is examining is legal options in this matter and a course of
action has yet to be decided.

Due to the unusual nature of this event and the uncertainty of
the ultimate outcome related hereto, Management has not accrued
any provision for this contingency in the accompanying financial
statements.


NOTE U - SELECTED FINANCIAL DATA (Unaudited)

The following is a summary of the quarterly results of operations
for the years ended May 31, 2004 and 2003, respectively:

<TABLE>
<CAPTION>
                            Quarter ended  Quarter ended  Quarter ended  Quarter ended   Year ended
                              August 31,    November 31,   February 28,      May 31,       May 31,
                            -------------  -------------  -------------  -------------  ------------
<S>                         <C>            <C>            <C>            <C>            <C>
Fiscal 2004
-----------
 Telecommunication
  revenues                  $   5,180,596  $   5,852,767  $   6,906,208  $   7,250,972  $ 25,190,543
 Gross profit               $   1,641,560  $   1,888,936  $   1,826,433  $   2,324,314  $  7,681,243
Net earnings (loss)
  after provision
  for income taxes          $    (211,160) $    (711,591) $    (588,412) $  (1,511,163) $ (3,086,562)
 Basic and fully diluted
  earnings per share             nil           $(0.01)          nil           $(0.01)       $(0.02)
 Weighted average
  number of shares
  issued and outstanding      121,470,398    133,413,944    167,746,141    233,131,297   164,013,204

Fiscal 2003
-----------
 Telecommunication
  revenues                  $   1,700,256  $   2,547,832  $   3,210,507  $   2,954,261  $ 10,412,856
 Gross profit               $     975,655  $   1,440,695  $   1,647,117  $     306,723  $  4,370,190
 Net earnings (loss)
  after provision
  for income taxes          $     (22,197) $     261,431  $      10,645  $  (1,880,251) $ (1,630,372)
 Basic and fully diluted
  earnings per share              nil            nil            nil           $(0.02)       $(0.02)
 Weighted average
  number of shares
  issued and outstanding       74,504,610     76,328,926     87,967,274    109,572,103    88,673,078
</TABLE>








                                                                      F-27

<PAGE>