Unknown; ;
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, DC 20549

**FORM 10-Q**

[X]   Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

**          For the quarterly period ended June 30, 2008**

[ ]   Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

          For the transition period __________ to ___________

**Commission File Number    000-30797**

**EP Global Communications, Inc.**

(Exact name of small Business Issuer as specified in its charter) |
|                                                                                                                                                              |                                                   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|
| **Delaware**

(State or other jurisdiction of              

incorporation or organization) | **14-1818396**

(IRS Employer Identification No.) |
|                                                                                                                       |                                     |
|-----------------------------------------------------------------------------------------------------------------------|-------------------------------------|
| **c/o Exceptional Parent Magazine**

**416 Main Street, Johnstown, PA**

**(Address of principal executive offices)** | **15901**

**(Postal or Zip Code)** |
| **(814) 361-3860**

**Issuer’s telephone number, including area code**                                          |                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Indicate by check markwhether the issuer (1) filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the          issuer wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.**

**[X] Yes [  ] No**

**Indicate by check markwhether the registrant is a large accelerated filer, an acceleratedfiler, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”,“accelerated filer,” “accelerated filer” andsmaller reporting company” in Rule 12b-2 of the Exchange Act.**

**                Largeaccelerated filer [  ]                                     Acceleratedfiler [  ]**

**                Non-acceleratedfiler [  ]                                       Smallerreporting company [X]**

**Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).**

**Yes [  ] No [X]**

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

**517,118,753********shares of $0.0001 par value common stock outstanding as of August 4, 2008****.** |

----

|  |
|--|
|  |

**TABLE OF CONTENTS**
|        |             |                                                                                                                                                                                      |           |
|--------|-------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|   | **Part I**  | **FINANCIAL INFORMATION (Unaudited)**                                                                                                                                                |      |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 1.  Financial Statements**                                                                                                                                               |      |
|   |        | **              Consolidated Balance Sheets**                                                                  |      |
|   |        | **                    June30, 2008 and December 31, 2007 (audited)**             | **2-3**   |
|   |        |                                                                                                                                                                                 |      |
|   |        | **              Consolidated Statements of Operations**                                                        |      |
|   |        | **                    QuarterEnded and Six Months Ended June 30, 2008 and 2007** | **4**     |
|   |        |                                                                                                                                                                                 |      |
|   |        | **              ConsolidatedStatement of Stockholders’ Deficiency**                                      | **5**     |
|   |        |                                                                                                                                                                                 |      |
|   |        | **              Consolidated Statements of Cash Flows**                                                        |      |
|   |        | **                    SixMonths Ended June 30, 2008 and 2007**                   | **6-7**   |
|   |        |                                                                                                                                                                                 |      |
|   |        | **               Notesto Consolidated Financial Statements**                                              | **8-29**  |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 2. Management’s Discussion and Analysis of Financial Conditionand           Resultsof Operations**               | **30-49** |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 3.  Quantitative and Qualitative Disclosures About Market Risk**                                                                                                         | **49**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 4T.  Controls and Procedures**                                                                                                                                           | **50**    |
|   |        |                                                                                                                                                                                 |      |
|   | **Part II** | **OTHER INFORMATION**                                                                                                                                                                |      |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 1.  Legal Proceedings**                                                                                                                                                  | **51-52** |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 1A.  Risk Factors**                                                                                                                                                      | **53**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds**                                                                                                        | **53**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 3.  Defaults Upon Senior Securities**                                                                                                                                    | **53**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 4.  Submission of Matters to a Vote of Security Holders**                                                                                                                | **53**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 5.  Other Information**                                                                                                                                                  | **53**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Item 6.  Exhibits**                                                                                                                                                           | **53**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Signatures**                                                                                                                                                                       | **54**    |
|   |        |                                                                                                                                                                                 |      |
|   |        | **Certifications**                                                                                                                                                                   |      |

-1-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEETS**

See accompanying footnotes to financial statements

-2-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEETS**

See accompanying footnotes to financial statements

-3-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS****(UNAUDITED**)

See accompanying footnotes to financial statements

-4-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIENCY (UNAUDITED)**

See accompanying footnotes to financial statements

-5-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**

statement continued next page

-6-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**

See accompanying footnotes to financial statements

-7-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

**1.  Description of Business And Summary Of Significant Accounting Policies**

Basis of Presentation

Theunaudited interim financial statements have been prepared in accordancewith U.S. generally accepted accounting principles and applicable SECrules and regulations pertaining to quarterly financial reporting, andinclude all adjustments necessary for a fair presentation.  Thesestatements should be read in combination with the consolidatedfinancial statements and notes included in the Company’s annualreport on Form 10-KSB for the year ended December 31, 2007.

On November28, 2003, East Coast Airlines, Inc.  ("East Coast") entered into ashare exchange agreement with Psy-Ed Corporation.  In connectionwith the share exchange, East Coast acquired the assets and assumed theliabilities of Psy-Ed Corporation.  For accounting purposes, theshare exchange agreement has been treated as a recapitalization ofPsy-Ed Corporation as the acquirer.  

Organization

EP GlobalCommunications, Inc., formerly East Coast Airlines, Inc., andSubsidiary (“EP” or the “Company”), operatesits primary business through its subsidiary, Psy-Ed Corporation (d/b/aExceptional Parent Magazine).

EPpublishes and distributes Exceptional Parent Magazine, an internationalpublication, designed to serve the informational needs of families andprofessionals who are involved in the care and development of childrenand adults with disabilities and special health care needs.  EPalso develops and implements online accredited Continued MedicalEducation Programs; has its own library of over 2,600 disability booktitles and publishes clinical monographs which are disseminated tophysicians, researchers and allied health care professionals, as wellas families and caregivers all over the world.  

Significant Accounting Policies

Principles of Consolidation

Theconsolidated financial statements include the accounts of the Companyand its majority-owned subsidiary.  All intercompany transactionsand balances have been eliminated.  

Use of Estimates

Thepreparation of the consolidated financial statements in conformity withaccounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period.  Actual results could differ from thoseestimates.

-8-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Cash

Cashincludes cash in banks, deposits with financial institutions, and allhighly liquid investments with a maturity of three months or less. Cash and Cash Equivalents were $6,035 and $124,058 at June 30,2008 and December 31, 2007, respectively.

Concentration of Credit Risk

Financialinstruments which potentially subject the Company to concentrations ofcredit risk consist principally of cash and trade receivables.

TheCompany's cash and cash equivalents are concentrated primarily in twobanks in the United States.  At times, such deposits could be inexcess of insured limits.  Management believes that the financialinstitutions that hold the Company's financial instruments arefinancially sound and, accordingly, minimal credit risk is believed toexist with respect to these financial instruments.

The Companygrants credit primarily to advertisers based on an evaluation of thecustomer’s financial condition, without requiring collateral. Exposure to losses on these receivables is principally dependenton each customer’s financial condition.  A majority of thesubscription income is received in advance and presents little risk tothe Company.  The Company controls its exposure to credit riskthrough monitoring procedures and establishes appropriate allowancesfor anticipated losses.  

The Companyhas a major customer that comprised 22% and 27% of the Company’srevenue in the quarters ended June 30, 2008 and 2007, respectively. A second major customer comprised 21% and 17% of theCompany’s revenue in the quarters ended June 30, 2008 and 2007,respectively.  There were no other customers that comprisedgreater than 10% of the total company revenues in those quarters.

Provision for Losses on Uncollectible Receivables

Theprovisions for losses on uncollectible trade receivables are determinedprincipally on the basis of specific identification and past collectionexperiences.  The allowance for doubtful accounts on accountsreceivable balances was $22,551 and $37,760 at June 30, 2008 andDecember 31, 2007, respectively.

Inventories

Inventories,consisting primarily of books, are stated at the lower of cost ormarket, determined on the first-in, first-out (FIFO) method.  

-9-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Revenue Recognition

The Companyrecognizes revenue in accordance with the guidance contained in SECStaff Accounting Bulletin No. 101, “Revenue Recognition inFinancial Statements” (“SAB101”), and StaffAccounting Bulletin No. 104, “Revenue Recognition in FinancialStatements” (“SAB104”).  Under thesepronouncements, revenue is recognized when persuasive evidence of anarrangement exists, delivery of services and/or products has occurred,the sales price is fixed or determinable, and collectability of thesales price is reasonably assured. In addition to these general revenuerecognition criteria, the following specific revenue recognitionpolicies are followed:

Advertisingrevenue, which consists predominantly of graphic and text displays, isrecorded in the period corresponding to the presentation in thepublication. Online advertising revenues, primarily derived from thesale of banner advertisements and sponsorships on the Company's websites, is recognized in the period the advertising is displayed. The costs to develop this internet income are period costs andare expensed when incurred. Print publication advertising andcirculation revenues are recognized, net of agency commissions,applicable discounts and estimated returns and allowances, whenpublications are issued.  List rental income is recognized, net ofcommission, when a list is sold or rented.

Subscriptionincome generated by both the private sector and the Military isrecognized based upon the monthly pro-ration of income within thereporting period for a given subscription.

Deferredsubscription income, net of agency commission, is recorded whensubscription orders are received.  The Company uses a fulfillmenthouse, which calculates the revenue to be recorded for all periods. Customers subscribe to the Company's magazine for periods rangingfrom one to three years.  Deferred subscription income representsthe portion of the prepaid subscription not earned by the Company andpaid for in advance of fulfillment by the Company to the customer. 

Revenuefrom the production of online educational seminars for both the privatesector and the Military is recorded at the time the seminar isconducted.

Book ordersare received over the internet, telephone, and via the mail; revenue isrecognized after the order has been fulfilled and shipped.

Specialproject revenue is recognized based upon an estimate of the percentageof completion for each phase of the project.  Special projectsinclude such undertakings as custom communications as well as theCompany’s “Disability Awareness Night” (DANTM)program.

-10-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Cost of Sales

Cost ofsales consist of direct costs that are associated with the productionof income for a given business activity.  These costs includeprinting, design, circulation, fulfillment, salaries and benefitsdirectly associated with production, the cost of books, the cost oftickets associated with the DANTM program, and the costsassociated with online seminars.

Depreciation and Amortization

Propertyand equipment are stated at cost less accumulated depreciation andamortization.  Depreciation of property and equipment iscalculated on the straight-line method over the estimated useful livesof the respective assets, ranging from three to fifteen years.

Stock-Option Plan

In December2004, the FASB issued SFAS No. 123R, Share-Based Payment, whichestablishes standards for the accounting for transactions in which anentity exchanges its equity instruments for goods or services. A keyprovision of this statement is the requirement of a public entity tomeasure the cost of employee and non-employee services received inexchange for an award of equity instruments (including stock options)based on the grant-date fair value of the award. That cost will berecognized over the period during which an employee is required toprovide service in exchange for the award (i.e., the requisite serviceperiod or vesting period). This standard became effective on January 1,2006 for small business issuers. The Company adopted SFAS 123Rbeginning in the Company's first fiscal quarter of 2006.  

Equityinstruments issued to non-employees are recorded at their fair valuesas determined in accordance with SFAS No. 123 and Emerging Issues TaskForce 96-18, “Accounting for Equity Instruments That Are Issuedto Other Than Employees for Acquiring, or in Conjunction with SellingGoods and Services.”

No compensatory options or warrants were granted during the quarters ended June 30, 2008 or 2007.  

Income Taxes

The Companyaccounts for income taxes using an asset and liability approach underwhich deferred income taxes are recognized by applying enacted taxrates applicable to future years to the differences between thefinancial statement carrying amounts and the tax bases of reportedassets and liabilities.  

Theprincipal items giving rise to deferred taxes are certain expenseswhich have been deducted for financial reporting purposes which are notcurrently deductible for income tax purposes and the future tax benefitof certain net operating loss carryforward.

  

-11-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Evaluation of Long-Lived Assets

The Companyreviews property and equipment for impairment whenever events orchanges in circumstances indicate the carrying value may not berecoverable in accordance with guidance in SFAS No. 144“Accounting for the Impairment or Disposal of Long-Lived Assets. ” If the carrying value of the long-lived asset exceeds thepresent value of the related estimated future cash flows, the assetwould be adjusted to its fair value and an impairment loss would becharged to operations in the period identified.

Loss Per Share** **

Basic lossper common share is computed by dividing net loss by the weightedaverage number of common shares outstanding during the year. Diluted loss per common share is computed by dividing net loss bythe weighted average number of common shares and potential commonshares outstanding during the year.  The basic weighted averageshares were used in calculating quarter ended June 30, 2008 and 2007diluted loss per share, as inclusion of the incremental shares shown inthis calculation would be antidilutive.  Potential common sharesused in computing diluted loss per share at June 30, 2008 relate tocommon stock warrants convertible into 3,338,000 shares of common stockand convertible preferred stock convertible into 719,801 shares ofcommon stock.  

Fair Value Measures

On January1, 2008, the Company adopted SFAS No. 157, “Fair ValueMeasurement”. This statement defines fair value, establishes aframework for measuring fair value in generally accepted accountingprinciples, and expands disclosures about fair value measurements. Thisstatement applies under other accounting pronouncements that require orpermit fair value measurements. The adoption of SFAS No. 157 did nothave an impact on our consolidated financial statements

On January1, 2008, the Company adopted SFAS No. 159, “The Fair Value Optionfor Financial Assets and Financial Liabilities – Including anamendment to FASB Statement No. 115”. This statement permitscompanies to choose to measure many financial instruments and otheritems at fair value. The objective is to improve financial reporting byproviding entities with the opportunity to mitigate volatility inreported earnings caused by measuring related assets and liabilitiesdifferently without having to apply complex hedge accountingprovisions. This Statement is expected to expand the use of fair valuemeasurement of accounting for financial instruments. The fair valueoption established by this statement permits all entities to measureeligible items at fair value at specified election dates. The adoptionof SFAS No. 159 did not have an impact on our consolidated financialstatements.

Forfinancial instruments including cash, accounts payable and accruedexpenses and notes payable it was assumed that the carrying amountapproximated fair value because of the short maturities of suchinstruments.

-12-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

New Financial Accounting Standards** **

In July2006, the FASB issued FASB Interpretation No. 48, “Accounting forUncertainty in Income Taxes, an interpretation of FASB Statement109” (“FIN 48”). FIN 48 requires that a positiontaken or expected to be taken in a tax return be recognized in thefinancial statements when it is more likely than not (i.e. a likelihoodof more than fifty percent) that the position would be sustained uponexamination by tax authorities. A recognized tax position is thenmeasured at the largest amount of benefit that is greater than fiftypercent likely of being realized upon ultimate settlement. Uponadoption, the cumulative effect of applying the recognition andmeasurement provisions of FIN 48, if any, shall be reflected as anadjustment to the opening balance of retained earnings. The effectivedate of this interpretation is for fiscal years beginning afterDecember 15, 2006.  FIN 48 did not have an impact on ourconsolidated financial statements.

InSeptember 2006, the SEC issued SAB No. 108 in order to eliminate thediversity of practice surrounding how public companies quantifyfinancial statement misstatements. In SAB No. 108, the SEC staffestablished an approach that requires quantification of financialstatement misstatements based on the effects of the misstatements oneach of the company’s financial statements and the relatedfinancial statement disclosures. SAB No. 108 is effective for fiscalyears ending after November 15, 2006. SAB No. 108 did not have animpact to our consolidated financial statements.

FASBInterpretation No. 39, “Offsetting of Amounts Related to CertainContracts” (“FIN 39”), specifies what conditions mustbe met for an entity to have the right to offset assets and liabilitiesin the balance sheet and clarifies when it is appropriate to offsetamounts recognized for forward interest rate swaps, currency swaps,options and other conditional or exchange contracts. FIN 39 alsopermits offsetting of fair value amounts recognized for multiplecontracts executed with the same counterparty under a master nettingarrangement. In April 2007, the FASB issued FASB Staff Position FIN No.39-1, “An Amendment of FIN 39, Offsetting of Amounts Related toCertain Contracts” (“FSP FIN 39-1”), which amendsportions of FIN 39 to make certain terms consistent with those used inSFAS No. 133. FSP FIN 39-1 also amends FIN 39 to allow for theoffsetting of fair value amounts for the right to reclaim collateralassets or liabilities arising from the same master netting arrangementas the derivative instruments. Adoption of FSP FIN 39-1 did not have amaterial impact on our consolidated financial position and results ofoperations.

-13-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

In May2007, the FASB issued FASB Staff Position (“FSP”) FIN 48-1,"Definition of Settlement in FASB Interpretation No. 48" ("FSP FIN48-1"). FSP FIN 48-1 provides guidance on how to determine whether atax position is effectively settled for the purpose of recognizingpreviously unrecognized tax benefits. FSP FIN 48-1 is effectiveretroactively to January 1, 2007. The impact of this statement did nothave a material impact on the Company’s financial position orresults of operations.

In December2007, the FASB issued SFAS No. 160, “Noncontrolling Interests inConsolidated Financial Statements, an Amendment of ARB 51”(“SFAS No. 160”). SFAS No. 160 establishes accounting andreporting standards pertaining to ownership interests in subsidiariesheld by parties other than the parent, the amount of net incomeattributable to the parent and to the noncontrolling interest, changesin a parent’s ownership interest, and the valuation of anyretained noncontrolling equity investment when a subsidiary isdeconsolidated. SFAS No. 160 also establishes disclosure requirementsthat clearly identify and distinguish between the interests of theparent and the interests of the noncontrolling owners. SFAS No. 160 iseffective for fiscal years beginning on or after December 15, 2008.Management does not believe there will be a material impact from theadoption of SFAS No. 160 on our consolidated financial position andresults of operations.

In December 2007, the FASB issued SFAS No. 141(R), “BusinessCombinations” (“SFAS No. 141(R)”), which amends SFASNo. 141, and provides revised guidance for recognizing and measuringidentifiable assets and goodwill acquired, liabilities assumed, and anynoncontrolling interest in the acquiree. It also provides disclosurerequirements to enable users of the financial statements to evaluatethe nature and financial effects of the business combination. SFAS No.141(R) is effective for fiscal years beginning after December 15, 2008and is to be applied prospectively.  Management does not believethere will be a material impact from the adoption of SFAS No. 141(R) onour consolidated financial position and results of operations.In December 2007, the SEC issued Staff Accounting Bulletin ("SAB") No.110 "Share-Based Payment" ("SAB 110"). SAB 110 establishes thecontinued use of the simplified method for estimating the expected termof equity based compensation. The simplified method was intended to beeliminated for any equity based compensation arrangements granted afterDecember 31, 2007. SAB 110 is being published to help companies thatmay not have adequate exercise history to estimate expected terms forfuture grants. Management does not believe there will be a materialimpact from the adoption of SAB 110 on our consolidated financialposition and results of operations.

InMarch, 2008, the FASB issued SFAS No. 161, “Disclosures aboutDerivative Instruments and Hedging Activities – an amendment ofFASB Statement No. 133.”  This Statement requires enhanceddisclosures about an entity’s derivative and hedging activitiesand is effective for financial statements issued for fiscal years andinterim periods beginning after November 15, 2008 and is not expectedto have any impact on our consolidated financial position and resultsof operations.

-14-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

In May2008, the FASB issued SFAS No. 162, “The Hierarchy of GenerallyAccepted Accounting Principles (“SFAS No. 162”).  SFASNo. 162 identifies the sources of accounting principles and providesentities with a framework for selecting the principles used in thepreparation of financial statements that are presented in conformitywith GAAP.  The FASB believes the GAAP hierarchy should bedirected to entities because it is the entity (not its auditors) thatis responsible for selecting accounting principles for financialstatements that are presented in conformity with GAAP.  Theadoption of SFAS No. 162 is not expected to have a material impact onthe Company’s financial statements.

Basis of Presentation

Theaccompanying financial statements have been prepared assuming that theCompany will continue as a going concern. This basis of accountingcontemplates the recovery of the Company’s assets and thesettlement of its liabilities in the normal course of conductingbusiness.  

In thethree most recent years, the Company has obtained cash from variousdebt financings to fund existing operations.  From September 2005through January 2006, the Company used proceeds from a $3.0 millionloan to repay a substantial portion of its debt and to provide forcontinuing operations through the third quarter of calendar year 2006. In the third quarter of calendar 2006, the Company entered intoanother loan arrangement to provide proceeds of $2.0 million in theaggregate through November 2007.  (See Note 4.)

In thefourth quarter, 2006, the Company entered into an agreement with theUnited States Army for a U.S. Army Research Project entitled“Exceptional Family Training and Transitioning Program”,focusing on education and training in the developmental and specialhealth care needs arena.  The contract, which was worth over$800,000, was paid in installments and was effective from December 1,2006 through December 31, 2007. 

In thefourth quarter 2007, the Company entered into a continuation agreementwith the United States Army, to follow the same format as the previousyear’s contract.  The continuation contract, which is worth$799,005, will be paid in four installments and is effective fromNovember 26, 2007 through November 25, 2008.

The Company is continuing initiatives to produce significant increases in revenues and to enact cost reduction programs.

Reclassifications

Certainamounts reported for 2007 have been reclassified to conform to the 2008presentation.  Such reclassifications had no effect on reportedincome.

**2.  Property and Equipment**

Property and equipment at June 30, 2008 (unaudited) consisted of the following: 

-15-

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Property and equipment at December 31, 2007 (audited) consisted of the following: 

Depreciation expense for thequarters ended June 30, 2008 and 2007 was $9,211 and $22,287respectively.  Year-to-date as of June 30, depreciation expensewas $17,733 in 2008 and $43,787 in 2007.

**3.  Accrued Expenses**

Accrued expenses consisted of the following:

-16-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

**4.  Debt**

Long-Term Debt 

Long-term debt at June 30, 2008 consisted of the following:

Long-term debt at December 31, 2007 consisted of the following:

-17-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

The following are maturities of long-term debt:

OnSeptember 23, 2005, the Company completed financing agreements byexecuting a securities purchase agreement with the following entities:AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC andNew Millenium Capital Partners II, LLC.

Underthe securities purchase agreement, the Company will issue up to$3,720,000 in callable secured convertible notes. The notes areconvertible into shares of our common stock. The conversion price isbased on the lesser of $0.12 or the average of the lowest 3 intra-daytrading prices during the 20 trading days immediately prior to theconversion date discounted by 40%. The timing of the conversion is atthe option of the holder. The notes are secured by a grant of a generalsecurity interest in all of our assets both tangible and intangible. Inaddition, our Chief Executive Officer individually pledged 3,371,093shares of common stock.

Inaddition, the Company is to issue 5,000,000 stock purchase warrantsconvertible into shares of our common stock on a one for one basis. The exercise price is $.15 and the term of the warrants is 5years.  As of December 31, 2005, 3,338,000 warrants had beenissued.  The remainder was issued in January 2006.

-18-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

A privateinvestment firm received a commission of $240,000 (8% of the aggregatenet proceeds of $3,000,000) for arranging for this financing.

ThroughDecember 31, 2005, the Company received net proceeds of $2,000,000under the terms of the securities purchase agreement.  The Companyalso received $1,000,000 on January 29, 2006 immediately following theeffectiveness of a registration statement filed by the Company with theSEC.  

The convertible debt instrument bears interest at 8% per annum and is due September 23, 2008.

Inaccordance with Emerging Issues Task Force Topic 00-27 and SFAS 150,“Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity”, the Companyperformed calculations allocating the proceeds from the issuance ofconvertible debt with detachable warrants and the beneficial conversionprivileges to each respective security at their fair values.  The Company referred to SFAS 133, “Accounting forDerivative Instruments and Hedging Activities,” and EITF 00-19,“Accounting for Derivative Financial Instruments Indexed to, andPotentially Settled in, a Company's Own Stock,” in determiningwhether the conversion option is an embedded derivative instrument. In the case of the detachable warrants and the beneficialconversion privileges, the Company concluded the fair value was nil;accordingly, the entire amount recorded as a liability was associatedwith the convertible debt. Thecalculated fair value of the convertible debt of $3,404,937 wasrecorded as a liability as of June 30, 2008.  The convertible debtwill be accreted to its face value of $3.7 million under the interestmethod until it is either converted or matures. As of June 30, 2008,the accretion was $669,201, of which $67,218 was recorded in the secondquarter of 2008, $66,183 was recorded in the first quarter of 2008,$257,684 was recorded in calendar year 2007 and $278,116 was recordedin prior years.

If theobligation had been settled on June 30, 2008, the Company would haveissued 17,024,685,000 shares of its common stock (with a fair value,based solely on the quoted market price per share as of June 30, 2008,of $3,404,937).  However, under the terms of the agreement, themaximum number of shares that could be required to be issued is206,666,666.

For the sixmonths ended June 30, 2008, principal and accrued interest of $25,091was converted into 136,630,608 shares of common stock. For the periodJuly 1, 2008 through August 13, 2008, principal and accrued interest of$1,492 was converted into 16,000,000 shares of common stock.

Providedthe Company is not in default under the financing documents, it has asufficient number of authorized shares of its common stock reserved forissuance upon full conversion of the promissory notes and its commonstock is trading at or below $.15 per share, the Company shall have theright, exercisable on not less than 10 trading days prior writtennotice to the holders of the promissory notes, to prepay all of theoutstanding promissory notes. If the Company exercises its right toprepay the promissory notes, it shall make payment to the holders of anamount in cash equal to either (i) 125% (for prepayments occurringwithin 30 days of the issue date of the promissory notes), (ii) 130%for prepayments occurring between 31 and 60 days of the issue date ofthe promissory notes, or (iii) 140% (for prepayments occurring afterthe 60th day following the issue date of the promissory notes,multiplied by the sum of the then outstanding principal amount of thepromissory notes plus default interest.

-19-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

On August15, 2006, the Company completed a second financing agreement byexecuting a securities purchase agreement with the following entities:AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC andNew Millenium Capital Partners II, LLC.

Under thesecond securities purchase agreement, the Company will issue up to$2,600,000 in callable secured convertible notes.  The notes areconvertible into shares of our common stock. The conversion price isbased on the lesser of $0.05 or the average of the lowest 3 intra-daytrading prices during the 20 trading days immediately prior to theconversion date discounted by 40%. The timing of the conversion is atthe option of the holder. The notes are secured by a grant of a generalsecurity interest in all of our assets both tangible and intangible. In addition, the Company issued 5,000,000 stock purchase warrantsconvertible into shares of our common stock on a one for one basis. The exercise price is $.01 per share and the term of the warrantsis seven years.

ThroughDecember 31, 2007, the Company received all of the $2,000,000 proceedsunder the terms of the securities purchase agreement. The funds werereceived in the amount of $500,000 upon signing the definitiveinvestment agreements and $100,000 monthly thereafter.

A private investment firm received 8% of the amount loaned as the funds were received.

The convertible debt instrument bears interest at 10% per annum and is due beginning in August, 2009.

Inaccordance with Emerging Issues Task Force Topic 00-27 and SFAS 150,“Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity”, the Companyperformed calculations allocating the proceeds from the issuance ofconvertible debt with detachable warrants and the beneficial conversionprivileges to each respective security at their fair values.  The Company referred to SFAS 133, “Accounting forDerivative Instruments and Hedging Activities,” and EITF 00-19,“Accounting for Derivative Financial Instruments Indexed to, andPotentially Settled in, a Company's Own Stock,” in determiningwhether the conversion option is an embedded derivative instrument. In the case of the detachable warrants and the beneficialconversion privileges, the Company concluded the fair value was nil;accordingly, the entire amount recorded as a liability was associatedwith the convertible debt. The calculated fair value of the convertibledebt of $2,308,624 was recorded as a liability as of June 30, 2008. The convertible debt will be accreted to its face value of $2.6million under the interest method until it is either converted ormatures.  As of June 30, 2008, the cumulative accretion was$308,624, of which $56,767 was recorded in the second quarter of 2008,$55,371 was recorded in the first quarter of 2008, $167,740 wasrecorded in calendar year 2007 and $28,746 was recorded in calendaryear 2006.

-20-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

If theobligation had been settled on June 30, 2008, under the formula forconversion, the Company would issue approximately 11,543,120,000 sharesof its common stock (with a fair value, based solely on the quotedmarket price per share as of June 30, 2008, of $2,308,624). However, under the terms of the agreement, the maximum number ofshares that could be required to be issued is 206,666,666, and themaximum number of shares of common stock that are authorized to beissued by the Company is 500,000,000.

Inconnection with the notes payable to AJW Partners, LLC, AJW Offshore,Ltd., AJW Qualified Partners, LLC and New Millenium Capital PartnersII, LLC, described above, the Company has deferred financing costs andfees, which are amortized over 36 months, as follows:

In thefirst quarter of 2008, the Company entered into discussion with the NIRGroup, LLC with the intent of restructuring all of the Company'soutstanding debt obligations to AJW Capital Partners, LLC, AJWOffshore, Ltd., AJW Qualified Partners, LLC and New Millenium CapitalPartners II, LLC.  The intended restructuring is to, among otherthings, extend the current maturity date of all principal amounts dueduring 2008 for an additional two years.  It is expected that theCompany and the NIR Group will formalize the restructuring through arevised financing agreement or an addendum to the current agreementprior to September 1, 2008.

**5.  Related Party Transactions**

Amounts due to shareholders at June 30, 2008 consisted of the following: 

schedule continues next page

-21-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Amounts due to shareholders at December 31, 2007 consisted of the following:

The deferred compensationamount due the Chief Executive Officer represents unpaid compensationdue him based upon the normal annual compensation that remains unpaidat the end of June 30, 2008. This balance is non-interest bearing.

 See Note 6 for information regarding common stock issued for services.

-22-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

**6.  Stock Issued for Services**

For the sixmonths ended June 30, 2008 and 2007 the Company did not issue any ofits common stock, except in connection with conversion if its debt.

Equityinstruments issued to non-employees are recorded at their fair valuesas determined in accordance with SFAS No. 123 and Emerging Issues TaskForce 96-18, “Accounting for Equity Instruments That Are Issuedto Other Than Employees for Acquiring, or in Conjunction with SellingGoods and Services.”

**7.  Stockholders' Deficiency**

Common Stock

TheCompany's board of directors and a majority of its stockholdersauthorized an increase of the number of shares of common stock from500,000,000 to 2,000,000,000 shares.  All the outstanding commonstock is fully paid and non-assessable. 

Preferred Stock – Series A

The Companyis authorized to issue 5,000,000 shares of $ .01 par value PreferredStock – Series A.  All the outstanding Preferred Stock isfully paid and non-assessable. Each share of the Preferred Stock isconvertible, at the option of the holder at any time, into 190 sharesof the Company’s Common Stock.  The holders of Series Apreferred Stock have the following rights.

Dividends:

If anydividend is declared on the Company’s Common Stock in any fiscalyear, the holders of the Series A Preferred Stock first shall beentitled to receive a dividend of $200 per share in preference to thepayment of any dividends on the Company’s Common Stock.

-23-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Liquidation Preference:

In theevent of any liquidation or winding up of the Company, if the fundsavailable for liquidation are less than $4,000,000 the holders of theSeries A Preferred Stock shall be entitled to receive in full, prior toany other distribution made on the Company’s Common Stock, cashdividends in an amount of $25.00 per share (as adjusted for any stockdividends, combinations or splits with respect to such shares), on anequal basis with any distribution to be made to the holders of theSeries B Preferred Stock.

After thispreferred amount, if any, has been paid in full, any of theCompany’s remaining funds and assets legally available fordistribution to shareholders will be distributed on an as-convertedbasis to the holders of the shares of Series A and Series B PreferredStock and our Common Stock.  If the funds available fordistribution to stockholders on liquidation is greater than $4,000,000,then such funds will be distributed to the holders of the Series APreferred Stock and Series B Preferred Stock (on a pro rata basis basedon the number of shares of common stock into which all such shares ofpreferred stock are convertible) and the holders of the Company’sCommon Stock.

Redemption:

Upon thesale by the Company of its capital stock which results in 51% ofcapital stock being held by persons other than those who held itscapital stock on September 30, 1995 then the Company must offer toredeem the Series A Preferred Stock at a price equal to two times theconversion price of the Series A Preferred Stock (currently $25 pershare).  Notwithstanding the foregoing, if the Company does nothave sufficient funds to redeem the Series A Preferred Stock withoutcausing a material adverse effect on the Company’s ability tocarry out its business, only the funds that are available that will notcause such material adverse effect shall be used to redeem the Series APreferred Stock.  This redemption requirement will continue untilsuch time as all of the shares of Series A Preferred Stock have beenredeemed.

Conversion:

Each shareof Series A Preferred Stock is convertible into 190 shares of CommonStock (subject to adjustment) at any time at the option of the holder. The Preferred Stock automatically converts into theCompany’s Common Stock upon the consummation of a public offeringby the Company with aggregate proceeds or fair market value in excessof $4,000,000.  All rights incident to a share of Series APreferred Stock will terminate automatically upon any conversion ofsuch shares into Common Stock.  The conversion rate will besubject to appropriate adjustment upon any stock split, reverse stocksplit or stock dividend or similar transaction.

-24-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

Anti-dilution Adjustments:

The SeriesA Preferred Stock provides for proportional adjustments to theconversion rate for stock splits, dividends, recapitalizations andsimilar transactions.

Voting Rights

Holders ofthe Series A Preferred Stock are entitled to vote on all matterssubmitted to the Company’s shareholders for a vote or consent. Each share of Series A Preferred Stock has voting rights equal tothe number of shares of Common Stock into which it converts (presently190 for 1).  Except when a separate class vote is required by law,the Series A Preferred Stock will vote with the Common Stock as asingle class.

Preferred Stock – Series B

The Companyis authorized to issue 5,000,000 shares of $1.00 par value cumulativePreferred Stock – Series B.  All the outstanding PreferredStock is fully paid and non-assessable. Each share of the PreferredStock is convertible, at the option of the holder at any time, into 277shares of the Company’s Common Stock.

Holders ofthe Series B Preferred Stock are entitled to 10% cumulative dividend ifdeclared by the Board of Directors. This class of stock holdsliquidation preferences and was redeemable in December 2005 for facevalue plus accrued dividends.

Dividends:

The holdersof the Series B Preferred Stock shall be entitled to cumulativedividends of 10% per share prior to the Company paying any dividends onthe Series A Preferred Stock or its Common Stock.

Liquidation Preference:

In theevent of any liquidation or winding up of the Company, if the fundsavailable for liquidation are less than $4,000,000 the holders of theSeries B Preferred Stock shall be entitled to receive in full, prior toany other distribution made on the Company’s Common Stock, cashdividends in an amount of $61.00 per share (as adjusted for any stockdividends, combinations or splits with respect to such shares), plusall accumulated and unpaid dividends, on an equal basis with anydistribution to be made to the holders of the Series A Preferred Stock.

-25-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

After thispreferred amount has been paid in full, any of the Company’sremaining funds and assets legally available for distribution toshareholders will be distributed on an as-converted basis to theholders of the shares of Series A and Series B Preferred Stock and ourCommon Stock.

If thefunds available for distribution to stockholders on liquidation isgreater than $4,000,000, then such funds will be distributed to theholders of the Series A Preferred Stock and Series B Preferred Stock(on a pro rata basis based on the number of shares of common stock intowhich all such shares of preferred stock are convertible) and theholders of Company’s Common Stock on a pro rata basis.

Redemption:

Upon thesale by the Company of its capital stock which results in 51% ofcapital stock being held by persons other than those who held itscapital stock on September 30, 1995 then the Company must redeem theSeries B Preferred Stock at a price equal to two times the conversionprice of the Series B Preferred Stock (currently $61 per share). In addition, the Series B Preferred Stock was redeemable by theCompany in December 2005 for its issue price of $61 per share plusaccrued dividends.  Notwithstanding the foregoing, if the Companydoes not have sufficient funds to redeem the Series B Preferred Stockwithout causing a material adverse effect on the Company’sability to carry out its business, only the funds that are availablethat will not cause such material adverse effect shall be used toredeem the Series B Preferred Stock.  This redemption requirementwill continue until such time as all of the shares of Series BPreferred Stock have been redeemed.

Conversion:

Each shareof Series B Preferred Stock is convertible into 277 shares of CommonStock (subject to adjustment) at any time at the option of the holder. The Series B Preferred Stock automatically converts into theCompany’s Common Stock upon the consummation of a public offeringby the Company with aggregate proceeds or fair market value in excessof $4,000,000.  All rights incident to a share of Series BPreferred Stock will terminate automatically upon any conversion ofsuch shares into Common Stock.  The conversion rate will besubject to appropriate adjustment upon any stock split, reverse stocksplit or stock dividend or similar transaction.

Anti-dilution Adjustments:

The SeriesB Preferred Stock provides for proportional adjustments to theconversion rate for stock splits, dividends, recapitalizations andsimilar transactions.

Voting Rights:

Holders ofthe Series B Preferred Stock are entitled to vote on all matterssubmitted to the Company’s shareholders for a vote or consent. Each Share of Series B Preferred Stock has voting rights equal tothe number of shares of Common Stock into which it converts (presently277 for 1).  Except when a separate class vote is required by law,the Series B Preferred Stock will vote with the Common Stock as asingle class.

As a resultof the merger between East Coast Airlines and Psy-Ed Corporationcertain shareholders of record with preferred stock were notidentifiable and unknown.  The company presently believes that thepossibility of redemption of these shares is extremely remote andtherefore no accrual is deemed necessary.

-26-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

On October1, 2007, we entered into an Investment Agreement (the “InvestmentAgreement”) with Dutchess Private Equities (the“Investor”). Pursuant to this Investment Agreement, theInvestor committed to purchase up to $10,000,000 of our common stockover the course of thirty-six (36) months. The amount that we shall beentitled to request from each purchase (“Puts”) shall beequal to, at our election, either (i) up to $250,000 or (ii) 200% ofthe average daily volume (U.S. market only) of the common stock for theten (10) trading days prior to the applicable Put Notice Date,multiplied by the average of the three (3) daily closing bid pricesimmediately preceding the Put Date. The Put Date shall be the date thatthe Investor receives a put notice of a draw down by us. The purchaseprice shall be set at ninety-three percent (93%) of the lowest closingBest Bid price of the Common Stock during the Pricing Period. ThePricing Period shall be the five (5) consecutive trading daysimmediately after the put notice date. There are put restrictionsapplied on days between the put date and the closing date with respectto that particular put. During this time, we shall not be entitled todeliver another put notice.

Inconnection with the Agreement, we entered into a Registration RightsAgreement with the Investor (the “Registration Agreement”).Pursuant to the Registration Agreement, we were obligated to file aregistration statement with the Securities and Exchange Commission(“SEC”) covering 80,016,826 shares of the common stockunderlying the Investment Agreement within 15 days after the closingdate. In addition, we were obligated to use all commercially reasonableefforts to have the registration statement declared effective by theSEC within 90 days after the closing date.  Such registrationstatement was filed and declared effective in a timely manner.

To date, we have not drawn any funds or paid anything on the Dutchess Line of Credit.

**8. Commitments and Contingencies**

Operating Leases

TheCompany has operating leases for temporary living space expiring in2008, for office space expiring in 2009, and for office equipmentexpiring in 2008.  Total operating lease expense amounted to$26,652 and $26,474 at June 30, 2008 and 2007, respectively. Subsequent operating lease payments are $27,000 in 2008 and$42,000 in 2009.

Legal Proceedings  

JosephBraumstein, Chapter 7 Trustee of The McCabe Group versus Joseph M.Valenzano, Jr. and Psy-Ed Corporation et al. Adversary proceeding No06-01351.

 WhenThe McCabe Group (TMG) ceased business operations in October 2004, itentered into a Chapter 7 liquidation proceeding, under the terms ofTitle 11 of the U.S. Code (Bankruptcy).  The Chapter 7 Trustee ofTMG, Joseph Braumstein in June 2006 brought a lawsuit in the U.S.Bankruptcy Court alleging that the Company and its President and CEO,jointly and severally, owed approximately $53,000 for legal fees andexpenses to TMG.  The Company and its CEO are vigorously defendingthis complaint.  The Company and its counsel believe that furtherlitigation could result in the ultimate dismissal of this Chapter 7Trustee Claim.  The Company has made all timely filings with thecourt..  This case is now out of bankruptcy court and scheduledfor trial in December, 2008.

Psy-EdCorporation, d/b/a Exceptional Parent, Plaintiff v. Stanley D. Kleinand Kimberly Schive, Superior Court in and for the County of Middlesex,in the Commonwealth of Massachusetts, Civil Action No. 99-6140;Counterclaims Brought by Klein Against Plaintiffs and Third-PartyDirectors (Kenneth Rossano, David Hirsch, MD, Robert Striano, Donald S.Chadwick, C. Kenneth Mehrling and Robert K. Hopkins, Jr.) ofExceptional Parent in Civ. No. 99-6140.

Thiscase was commenced on December 17, 1999. Psy- Ed is the plaintiff andcounter-claimants in this case. The Company and its president werepreviously successful in defending an action taken by Ms. Schive in1996 for wrongful termination and successfully defended itself in threeseparate appeals made by Ms. Schive alleging that the Company and itsPresident and CEO “discriminated against people withdisabilities, especially people who were deaf” and that“the CEO orchestrated the relocation of the office from

-27-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

BrooklineMassachusetts to New Jersey for the purpose of terminating heremployment”.  At present, most of the claims by KimberlySchive have been dismissed and are no longer pending, either in anycourt proceeding or before the MCAD. Still pending are her claims forabuse of process and retaliation. The company and its attorney’sfeel that further litigation should result in the ultimate dismissal ofher claims

Theemployment of Stanley D. Klein, a former officer, director andshareholder of the company was terminated for cause in August of 1997.He filed a complaint with the Massachusetts Commission AgainstDiscrimination in 2000 alleging that the Company, which had brought anaction against him in December 1999 for misconduct, fraud anddefamation causing damage to the Company, had retaliated against himbecause of his support for Kimberly Schive.

Mr.Klein filed an action against the Company and Mr. Valenzano in theSuperior Court for Middlesex County, Massachusetts in December 2002seeking payment of unspecified damages. That lawsuit was dismissed in2005. Mr. Klein then filed an action seeking precisely the same reliefin a state court in New Jersey which action was summarily dismissed bySuperior Court in Bergen County New Jersey. At the time of filing bothof these actions, Mr. Klein was a defendant in an action brought by theCompany against him in 1999.

Duringthe non-jury trial held in June of 2006, eight of Klein’s tenclaims against the Company were dismissed. The Company was found liableby the judge with respect to abuse of process in the Schive case andtortuous interference with respect to a promissory note. The balance onthat note was approximately $124,000. The Company intends to rigorouslydefend against the decision and to date no decision with regard to anyaward of damages has been made, although a four and one half hourhearing on all positions regarding these matters was held on January 4,2008 with no decision being reached.  During that hearing,attorney’s for the Company presented oral arguments in support ofmotions for entry of judgment in favor of the Company, Mr. Valenzanoand all former and present directors on all counts or, in thealternative, for a new trial.  Company counsel also opposed themotions of Stanley Klein and Kimberly Schive for entry of judgment intheir favor without the need for further proceedings concerning damagesor attorney’s fees.  The attorneys for Schive havespecifically sought an award of $426,661.31 for attorney’s feesand $125,000 in compensation for her alleged emotional distress. Attorney’s for Klein petitioned the court for an award of$124, 174.71 in principal on the portion of the Psy-Ed promissory Notethat remained unpaid (an amount that is incorrect and disputed) plusinterest from December 31, 1999 as well as $125,000 in emotionaldistress and $527,962.73 in attorney’s fees.  Companycounsel argued on behalf of the defendants that it would beprocedurally and substantively improper to award the plaintiffs theseamounts.  The matter is now under advisement by Judge SandraHamlin.  Counsel for the Company is unable to render an opinionconcerning how Judge Hamlin will resolve the motions for judgment infavor of the defendants and third-party defendants, nor, should some orall of those motions be denied, how the court will resolve the motionsfor judgment submitted by Klein and Schive.  It is theCompany’s position that it will prevail with respect to anyadverse findings although it is impossible to assert at this time thatthere is any certainty with respect to this position.

Heath & Associates and EP Global Communications, Inc.

American Arbitration Association Case No. 13 147 E 00538 08

Theunderlying demand for arbitration was filed by Heath & Associates(“Heath”) an independent sales contractor on or about March3, 2008.  Heath alleges sales commissions due from EP in theamount of $61,804 arising out of EP’s alleged breach of twoAdvertising Sales Representation Agreements (“Agreements”)between Heath and EP dated September 13, 2005 and October 1, 2006,respectively.  EP maintains that the Agreements were lawfully andproperly terminated for cause by EP.  EP further maintains thatthe demand from Heath is excessive, inaccurately and improperlycomputed and inappropriate.  In addition, while early discussionsinvolved an offer by the Company of a far lesser amount as asettlement, that offer was withdrawn once it became clear that Heathwas threatening arbitration.  Further, once the independent salesagreement was terminated for cause, the Company’s position isthat no commissions are due and owing.

-28-

----

**EP Global Communications, Inc. And Subsidiary**

**Notes To Consolidated Financial Statements**

**June 30, 2008**

EP hasfiled an Answering Statement in the arbitration.  EP’sAnswering Statement includes Counterclaims for defamation and tortuousinterference against Heath and its principal, James Heath, based on thefinancial damage and damage to the reputations of EP and itsprincipals, including but not limited to EP’s CEO, Joseph M.Valenzano, Jr., arising out of various false and slanderous statementsmade by Heath.  EP maintains that such actions caused theresignation of one of EP’s most influential contributing writersin the assistive technology field and the loss of directly associatedadvertising revenue and was damaging to the strategic relationship withits on line interactive partner, Vemics, Inc. by virtue of slanderousand untrue comments made to Vemics, Inc employees and executives.

EPintends to aggressively present the facts and evidence it has,including witnesses who directly heard Mr. Heath’s remarks andbelieves it will prevail in the arbitration proceeding and in itsCounterclaims. 

Arbitration in this matter took place on July 15th and 16th,2008 at the offices of the American Arbitration Association in NewYork, NY.  After one and one half days of direct testimony of Mr.Heath and cross examination of EP counsel a settlement was reached. The Company agreed to pay Mr. Heath $17,500 on or before October1, 2008 and such amount has been accrued.

Other than noted above, there is no litigation pending or threatened by or against us at June 30, 2008.

-29-

----

**Item 2.  Management’s Discussion and Analysis or Plan of Operation**

In this section,“Management's Discussion and Analysis of Plan ofOperation,” references to “we,” “us,”“our,” and “ours” refer to EP GlobalCommunications, Inc. (EPGL), and its consolidated subsidiaries.

Operating Activity

While the current economicenvironment has posed great challenges for virtually every businesssector in the United States and abroad, and while EPGL has beenimpacted significantly in the last quarter by these conditions, theCompany continues to hold fast to its marketing and growth plans. We have laid the foundation for a multi-media platform and haveno intention of deviating from it, in spite of the difficulties marketconditions present.  We feel that the manner in which we havebuilt our organization will enable us to adapt and improvise quickly tochanging market conditions, turning them to our advantage.  Anillustration of this is the emphasis we place now on our worldwidestrategic relationship with Vemics, Inc.  Heretofore we havefocused attention on the delivery of high quality online real-timeaccredited educational seminars in the medical arena.  While thatstill remains a significant focus, we have also adapted our marketingefforts to the very real market conditions of high travel costsresulting from high fuel costs.  The Vemics LiveAccess technologylends itself to enabling large and small companies to continue toconduct important sales meetings and business development activitieswithout incurring the expensive costs of travel.  In addition,recent activities with key companies delivering educational programsfrom central site facilities have found it economically viable and avaluable incremental add-on in terms of revenue from broadcasting thecontent to a network of Vemics sites which we have built around thecountry.  So, while it is true that traditional streams of incomeare difficult to achieve in the face of these extraordinary times, ourunique multi-media platform provides a way to overcome this. EPGL’s goal remains to capitalize upon its 38-yearprofessional history, with new streams of revenue and innovativeprojects under way that have the potential for significantly andpositively impacting, far into the future, the kind of proprietaryinformation and support vital to people with disabilities and specialneeds, and for the physicians, allied healthcare professionals,teachers, families, and other caregivers involved in their care anddevelopment. 

Management intends to expandEPGL’s 38-year heritage of providing “Information ThatMatters from People Who Care” to the community of those withdisabilities and special needs. Our award-winning *EP* magazinerepresents the foundation and core of all that we do. Most of ourefforts and investment up to the beginning of 2008 have been directedto this purpose. Our focus is entirely in the arena of chroniclong-term conditions, not disease states. The significance of this isthat diseases for the most part can be cured with various medicalinterventions and surgery. Chronic life-long conditions are different.There are no cures for these and so the challenge is to improve uponthe quality of life and assist people with special needs to developinto the very best they can be and help make them contributing membersof our society. A corollary to this is to increase the awareness amongall Americans that we will become a stronger nation and a better peoplewhen we learn to regard those with specials needs as people to berespected, not problems to be confronted. That is both the spirit andphilosophy of our company.

Editorial

EP’s editorial team movedthrough the 2nd quarter of 2008 publishing many compelling featurestories, monthly theme-related articles, and continuing series in theprint magazine and on the EP Web site.

Monthly Editorial Themes and Feature Stories

The 2nd quarter of 2008 included the following monthly themes:

·

April:

 

Autism

Stress Management

·

May: 

Mobility

Assistance Animals

·

June:

Sports, Recreation, and Exercise

-30-

----

April

In recognition of AutismAwareness Month, EP’s April issue featured a variety of articleson this subject, including a gripping feature in the U.S. Militarysection that highlighted the Doyle family. As more and more U.S.children continue to be diagnosed with autism (current statisticsreleased by the Centers for Disease Control and Prevention [CDC]estimate 1 in 150), families across the country find their liveseternally changed. For most, the search for therapies, interventions,and treatments begins immediately upon diagnosis as studies show thatthe earlier therapy can begin the greater chance at a reduction inautistic behaviors. Keeping pace with nationwide statistics, there isalso now data to support that autism is a prevalent diagnosis for manychildren born into military families. Thus, families who are alreadycontending with the rigors of Permanent Change of Station (PCS) orders,deployment of a family member to the Iraq or Afghanistan theaters ofwar, as well as the many other stresses inherent in the militarylifestyle, are also now challenged with autism. The Doyle family issuch a family. For MSgt. Buck Doyle and his wife, Kyla, the autismdiagnosis they received for their youngest daughter, Kate, beganseveral years of finding and fighting for services for Kate thatcontinues to this day. In an Editor’s Note that appeared at thebeginning of the article, EP stated:

*KylaDoyle is a military wife, mother, and advocate for her daughter withautism. In this article, Kyla openly and honestly relates the strugglesand triumphs that her family has experienced in securing services forher daughter. Mrs. Doyle encompasses some of the best qualities of aparent advocate—fortitude, resilience, a positive attitude, and adogged determination. An EP staff member recently met Mrs. Doyle andher husband, MSgt. Buck Doyle at Camp Pendleton, where MSgt. Doyleserved as a speaker at an on-base Autism Conference thatdrew policy makers, senior executives, military and civilianhealth care providers and support personnel, other Navy and MarineCorps leaders, TRICARE Regional Office West Staff, TriWest Staff,education community representatives and other military family members.EP presents this parent-authored article as a way of bringing thechallenges faced by military families to the fore as part of theshared, mutual goals EP has with the U.S. military in improving thelives of children with special needs.*

In the wake of this article,Kyla contacted EP to report: “...Since the issue has comeout we have had tons of positive feedback. The article has been sent toseveral legislators and used as an example to help convince leaders tomake changes on both the medical and educational fronts (Tricare Autismpolicy & the recent decision by CA legislators to audit OAH dueprocess system, etc.).  This is exactly why we wanted to get itout there--to help others.  In addition, because of the article Ihave been invited to be a speaker at the end of the month at theUSSOCOM Care Coalition's 3rd Annual Conference in NC.  I will bespeaking to a room full of high ranking military leaders from allbranches of service and others about our family's story and how theycan better support military families affected by autism. It will be anhonor and is an opportunity I believe was a direct result of EPmagazine's effort to get stories like our family's out to the public.Thanks so much for all that you do for families like ours and childrenlike Kate! I will keep you posted on any new developments.” 

Also in April, EP featuredstories entitled, “Your Child with Autism: When is Augmentativeand Alternative Communication and Appropriate Option?”; Taking onthe Real World: Steps for Transitioning into the Adult World forChildren with Asperger Syndrome”; and “Everyone is Welcomedat the Library, Including Children with Autism.” Under the StressManagement theme, EP ran articles called, “Supporting theSupporter” and “Yoga for Exceptional Parents.”Installments in the ongoing Aquatics Therapy and Recreation, theMedical Home, and the Feeding and Swallowing series added further valueto the April issue.

May

May’s issue of EP had asthe cover story a multi-page feature on hyperbaric oxygen therapy(HBOT) relating the story of the Kenitz family and Mom Shannon’sstruggle to secure HBOT for her daughter Grace who was diagnosed with arare mitochondrial disorder. The article also featured two interviewswith physicians who employ HBOT in their medical practices. The articledebunked many of the misconceptions about HBOT and gave families awellspring of information on the subject. Coincidentally, EP’smanaging editor, who is located out of an office in Chattanooga, TN,caught a spot on a Jackson, TN news station, featuring a little girlwho lives in Tiptonville, TN. The little girl has a rare disorder thatdoctors felt could be treated with HBOT. The news clip was seekinglocal support in raising money for the little girl to travel to an HBOTfacility in Wisconsin. The family related having recently learned aboutHBOT, and during the news spot, the little girl’s mother washolding a copy of what was quite obviously EP’s May issue. 

-31-

----

Also, noteworthy in May wasEP’s coverage of research being done by Dr. Jack Kessler, arenowned stem cell expert. An interview with Melissa Winkle, anassistance animal expert and trainer, highlighted the month’ssub-theme, and a variety of series installments were included in May.

In May, several of EP’smilitary section articles mirrored the issue’s overarchingMobility theme and Assistance Animal sub-theme. Highlighted wereseveral mobility companies that feature special, innovative programsspecifically for Veterans with disabilities that aid in mobility.Articles covered companies like Segs4Vets and Vans of Valor. AccessibleVans and Mobility also got prominent mention as they quickly respondedto a request from EP in providing an accessible van for the Halls, amilitary family. Coverage of this included the May magazine article anda posting to the EP Web site of the audio interview conducted by EPmilitary editor, Maria Caroff.

June

The month of June focused onSports, Recreation, and Exercise with an exciting, “wind in yourface” cover photo, featuring Paralympiad and Quickie Wheelchairfounder, Marilyn Hamilton, on her recumbent bicycle. Marilyn is trulythe epitome of the resiliency and fortitude capable in the humanspirit. The sub-theme for June was Travel with articles about AssistedCycling Tours, a non-profit that offers bicycling adventures to thosewith disabilities, and Sesame Place, an amusement park that considerskids with special needs as VIPs. Noteworthy in this issue were tworeader drawings/giveaways—one, a family four-pack of tickets toSesame Place, and two, the offer of free copies of the book, BallerinaDreams—which was reviewed in EP’s monthly column called“Further Reading”—to ten lucky readers who enteredthe drawing. 

In addition to other recurringongoing series, EP kicked off a three-part mini-series on the value ofplay for children with disabilities in conjunction with theInternational Playground Equipment Manufacturers Association (IPEMA).

In June, the well-receivedseries, The Medical Home, saw its ninth and final installment. Thisseries took a novel approach to explaining and demystifying the conceptof the Medical Home as the series followed a fictional family. FromAnjali’s premature birth, through her childhood, adolescence,young adulthood and on to the starting of her own family, readers had afront row seat into this reality-showesque printed series. This seriestopic, which had the potential for being dry at best, came to lifethrough the experience of following this family’s journey withthe Medical Home. The array of contributing authors, each experts inthe concept of the Medical Home, infused an added ingredient by writingabout a family from the Indian heritage, affording a further pinch ofspice and interest and cultural diversity to the series. Efforts arealready underway to give this series further shelf life and reach as EPSales staff search out for monograph sponsorship.

The military section in Juneincluded a riveting story about Hospital Corpsman First Class JenniferKnuth. Corpsman Knuth, has done a tour in Iraq, treating Soldiers andoften going “outside the wire” to treat Iraqi women andchildren. Incidentally, at the time EP military editor, Maria Caroffconducted the initial telephone interview, Corpsman Knuth was speakingfrom Camp Taqaddum, Iraq with a literal sandstorm raging outside. Asthe article went through production, Corpsman Knuth completed her tourand returned stateside to her two young daughters, both of whom haveautism. 

Also, in the June militarysection, EP ran a story on an organization called Reading for the Blindand Dyslexic (RFB&D). For 60 years, RFB&D, a nationalnonprofit, volunteer organization, has been the leading producer ofaccessible audio books for students with disabilities, such as visualimpairment or dyslexia, conditions that make reading standard printdifficult or impossible. EP is currently building a collaborativerelationship with RFB&D. As this new relationship develops, EP willbe able to add a new dimension to its continuing efforts to address theneeds of the community with disabilities by making the EP Web siteevermore accessible; partnering with RFB&D, EP will begin providingaudio files of EP magazine articles in order to assist Veterans, andall Web site visitors, who have visual impairments. 

-32-

----

Looking Ahead

As the editorial staff movesinto the second half of 2008, several new series will begin and a cadreof important feature articles will run. Below are some highlights:

·

Athree-part series in the military section entitled, “ParentingThrough Deployment When Your Child has Special Needs.”

·

A four-part series on Incontinence Education and Solutions.

·

Two articles on pediatric mental illness.

·

At least two articles on the theme Emergency and Disaster Preparedness Considerations for Children and Adults with Disabilities

·

Work willbegin in July and continue through November on the 2009 Annual ResourceGuide. Plans are underway so that the 2009 Annual Resource Guide willcome out earlier than it has in recent years, with shipping occurringthe third week in December and reaching subscribers’ mailboxesbefore year’s end.

***EP*’s Special Monthly Military Section**

During the first quarter of2008, EPGL’s EFTTP (Exceptional Family Transitional TrainingProgram) underwent some staff duty changes as EPGL continues to expand,evolve, and refine its staff support for the various military offeringsand efforts in which the Company is involved. The former MilitaryManaging Editor is now serving as Chief Military Contracting andOperations Officer and the Eastern and Western Region Coordinators areworking directly with *EP*’s Managing Editor as Military Editors. These changes took effect in early March.

January’s 2008 AnnualResource Guide featured a significantly expanded military listingsection compared to 2007’s Resource Guide. The military resourcelistings totaled eleven pages and were divided into two categories:military listings and family organizations. The military listingsincluded: the Exceptional Family Member Program (EFMP) Managers of theUnited States Army; the Exceptional Family Member Coordinators of theU.S. Navy and the Marine Corps; and the Family Resource Specialists ofthe U.S. Coast Guard. This section also contained a comprehensivelisting of U.S. Department of Veterans Affairs hospitals and regionaloffices. The listing of Military Family Organizations containedorganizations that would be of special interest to military familieswho have a member with special needs.

The *Community of One...From our Families to Your Families*regular military section in the February issue contained some superbcontent. An article ran on the subject of Response to Intervention(RTI), currently a hot-button topic among parents, educators, and otheradvocates of people with disabilities. The article introduced thetheory and practice of RTI – i.e., how best to provide learningsupport to children before referral for special education. The articlewent on to summarize ten points for understanding the RTI model.February also featured an article on Project Devin, a program startedby Major Henry Pittman and his wife, Felecia, whose son, Devin, has arare mitochondrial disorder, epilepsy, and autism. Realizing thestruggles with which their family contends, they founded Project Devin,along with the help of Abilities Network, a local nonprofit in theirarea, to help other military families cope.

In March, the military sectionfeatured an innovative new program sponsored by the American EpilepsyFoundation called Operation Giveback, an educational campaign onpost-traumatic epilepsy in brain-injured soldiers. Additionally, anarticle on paraprofessionals in the classroom took a candid look at theusefulness and appropriateness of using these support staff forchildren with special needs. *EP* makes an ongoing effort tooffer support and help for exceptional families who are going through aPermanent Change of Station (PCS). This was evidenced by the article, *What You Need to Know When Your Family is Transferred During a Transition Phase in Your Child’s Care*.

In late March, one ofEP’s Military Editors traveled to Lourdes, France, with theAmerican Special Children’s Pilgrimage Group (ASCPG), anorganization based in New Jersey that takes children and young adultswith disabilities to Lourdes each year during Easter Week. One of themost striking aspects of the pilgrimage was the development of many ofthe children and young adults from uncertain and shy at the beginningof the journey to more confident, aware, and interactive throughout theweek and by travel’s end. An article detailing the trip will run 

in the June issue of EP.

-33-

----

In the second quarter, theEditorial Team began a couple of new series in the military section.One multi-installment series, which will run every other monthbeginning in May, will explore the incidence, diagnosis, and treatmentof traumatic brain injury (TBI) as well as the natural sequallae ofanxiety, depression and post traumatic stress syndrome.  Co-morbidconditions and federal legislation dealing with TBI, especially as itapplies to servicemembers returning from Iraq and Afghanistan will alsobe a major area of focus.  Our President and CEO has been asked toserve as a member of the Department of Defense Center for Excellence inTraumatic Brain Injury and Post-Traumatic Stress Syndrome, a majorinitiative launched by Congress with initial emergency funding of $800million. The team is also forging new relationships and strengtheningexisting ones with organizations like the Military Child EducationCoalition (MCEC); the Veterans Health Administration (VA); Health NetFederal Services; and Specialized Training of Military Parents (STOMP),working to set up deadline dates and determine article topics forsubmissions from these groups which are interested in serving aseditorial content contributors through the remainder of 2008 and intothe next calendar year.  During the second quarter, our MilitaryEditors will be traveling to Washington, D.C. to follow several storyleads for articles which will appear through the remainder of 2008. InJuly, the Editorial Team will be participating in the annual MCECconference.

The Army has requested aproposal from EPGL for continuation funding so that the work we havebeen delivering to soldiers and their families can continue beyond theexpiration of the existing contract in November, 2008.  Similarrequests have been made of EPGL by the Navy and Marine Corps, with aspecial request from the Air Force Telehealth Branch, as well. And, we have also been asked to provide a detailed proposal tothe United States Coast Guard , which falls under Homeland Security.

The work we have deliveredunder the Army Cooperative Agreement has had a positive impact onfamilies and has indeed improved overall unit readiness.

-34-

----

**EPGL Web Site  **

EPGL continues to expand its content-rich Web site (http://www.eparent.com).The site includes expanded features, such as its Blogs Channel, now upto five regularly contributing bloggers. The writers include a personwith disabilities, parent bloggers who share their experiences and theunique challenges of parenting a child with special needs as well astwo teachers. Parents, educators, healthcare professionals, and anyother person reading these blogs will come away with insight, empathy,gratefulness for progress in things both big and small, heartbreak attimes, heartfelt humor at others, and heartwarming, uplifting faith inthe ability of people to persevere in the face of mountainouschallenges. Medical thought and opinion leaders in virtually everydiscipline and therapeutic area as well as nurses, therapists, andother allied healthcare professionals will be added as blogcontributors in the coming months.

The EPGL site has 11 MainChannels, including: Education, Family and Community, FinancialPlanning, Healthcare, Investor Relations, Legal, Military, Mobility,Professional, Sports and Recreation, and Technology. These channelsfeature first-time-published editorial articles, with new content beingadded on a regular basis. Continuing its coordinated commitment toUnited States Military families, the site’s Military Channelincludes information especially pertinent to the thousands of militaryfamilies who are caring for a member with disabilities, includingSoldiers, Sailors, Airmen, and Marines who have children withdisabilities, as well as Wounded Warriors returning home with specialneeds from Iraq, Afghanistan, and other locations where the U.S. has amilitary commitment.

Our popular Search and Respondfeature provides an opportunity for Web site visitors to exchangeinformation about their practical experiences in meeting the everydaychallenges of life with a child, adolescent, or adult who has adisability. All response entries are forwarded to the writers of theoriginal searches. Some are published in the print magazine and arefeatured on the Web site.

The Investor Relations channelon our web site will see much more use in the coming months. Plans are underway for a significant media campaign which will benational in scope.  This will coincide with an equally importantinvestor relations campaign to include more information released aboutthe Company and its plans and programs, all with the goal of making thefinancial community take notice of EPGL and the work we do.

The Organization Links Channelhighlights various organizations, agencies, and professional groupsfrom across the United States that are serving the needs of people withdisabilities. The National Disability News and International DisabilityNews links round out the offerings on the site, and Internet users areencouraged to visit often. The EPGL Web site is also linked directly to**EP***LiveOnline*TM, EPGL’s state-of-the-art,live, online, interactive, TV-quality Strategic Marketing Alliance withVemics, Inc., which offers Category I Continuing Medical Education(CME) accredited programs to physicians.

Web site visitors also haveeasy access to the over 2,500 disability-related titles in EPBookstore, including books, videos, and DVDs available for purchase.

EPGL-Vemics, Inc. Strategic Marketing Alliance 

The Strategic MarketingAlliance between EPGL and Vemics (Visually Enhanced MultiPointInteractive Communications System) is barely two years old, having beensigned in late November 2005 for an initial two-year commitment on thepart of both companies. Work on the alliance, known as **EP***LiveOnline*(EPLO) did not commence until the first quarter of 2006 with the launchof four online interactive programs sponsored by Allergan, Inc. ofIrvine, California. The content of the four programs focused entirelyon spasticity associated with cerebral palsy. In October 2007, bothEPGL and Vemics mutually agreed to extend the agreement upon itsexpiration for three years, with an expiration date of December 31,2010.

One of the initial elements ofthe Strategic Marketing Alliance provided for EPGL to have a worldwideexclusive license to market and sell the Vemics LiveAccess Proprietarysystem in the medical and disabilities/special needs arena. EPGL hascollaborated with Vemics to co-promote and market online interactiveseminars in the disability and special needs arena, funded underunrestricted educational grants and/or marketing agreements frompharmaceutical and medical equipment device companies or from ourCooperative Agreement, entitled the Exceptional Family TransitionalTraining Program (EFTTP), with the United States Army. We have foundthis approach to be very successful, largely because there is nocompetition for our services and because it was a logical way to extendand leverage EPGL’s very significant contacts in the specialneeds arena.

-35-

----

Thus far, over the past twoyears, we have developed, produced and implemented twenty two onlineinteractive seminars. The differentiating characteristics of **EP***LiveOnline*versus other systems used today are as follows:

1.

EPLOoffers live, interactive, real-time, TV-quality programs delivered withsynchronized voice over video and a full suite of educationalcapabilities designed to replicate anything that can be done in a liveclassroom setting to an audience who has downloaded the *Vemics LiveAccess* software and has an appropriate video camera and microphone installed.

2.

At the sametime, any online interactive seminar is also offered to an infinitenumber of people via streaming video. Participation via this mode isalso live and in real time except that there is no interactivecapability ... but the participant can take advantage of everyother feature and can communicate via text chat.

3.

Finally, allcontent of every seminar is digitized and stored electronically so thatit can be accessed by anyone, usually for a period of ninety daysfollowing the end of a seminar.

4.

Clinical andmedical seminars offer Category I Continuing Medical Education (CME)credits for physicians, usually through an accredited teaching hospitalor university such as the University of Tennessee College of Medicine;The University of Pittsburgh School of Medicine; University of Medicineand Dentistry of New Jersey; or Rady Children’s Hospital SanDiego.

5.

Allclinical and medical programs are endorsed by a professional medicalsociety such as the Child Neurology Society (CNS) and the AmericanAcademy of Developmental Medicine and Dentistry (AADMD).

6.

Bothconsumers as well as physicians are encouraged to attend. Registrationand attendance is not restricted to physicians only for accreditedprograms. This approach is markedly different from traditionalapproaches, and reinforces and validates our belief system thatempowering parents and caregivers through quality education enhancesoverall care and positive outcomes.

7.

Accessto the online programs for consumers and professionals alike, includingphysicians, nurses, occupational and physical therapists, teachers,families and caregivers is completely free. Funding of all costs andprofit comes from the sale of sponsorship arrangements.

All revenues earned from thesale of sponsored programs to various pharmaceutical companies likeAllergan, Inc., Shire Pharmaceuticals, and Valeant Pharmaceuticals isrecorded in “Online Revenues.” 

Proceeds from the sale of sponsorships are recorded as earned revenues at the time the seminar is delivered.

Costs of any kits containingvideo cameras, microphones, etc., and initial training over the freesoftware downloads are recorded in costs of goods sold.

Operating costs such asadvertising and promotion, e-mail blasts to EPGL and Vemics databases,honoraria for faculty, streaming video costs (which are direct billedfrom an outside third party, Chorus Call, Inc.) and other marketingexpenses are all recovered out of the proceeds of the sponsorshipreceived. Sponsorship revenues flow through EPGL and are identified asEPLO related, along with any costs and expenses, including shipping,postage, etc.

Equally important however isthe utility value of the Vemics LiveAccess technology for companies andorganizations purely as a meeting tool or as a way of conducting salesmeetings that would otherwise require people to fly into a centralsite, stay overnight at a hotel, etc...a costly effort.  Useof the Vemics Technology virtually eliminates the costs of travel andallows for important sales and business development meetings to takeplace from offices around the world or from the comfort of employee andexecutive homes.  This aspect of the Strategic Alliance has takenon more significance for our respective operations.

-36-

----

EP LiveOnlineTM: Second Quarter 2008

During the second quarter of2008, EP Global Communications, Inc. and Vemics, Inc—through itsjoint collaboration entity, EP LiveOnline—signed up threecompanies for development or coverage of online, interactive seminars. 

The first company EP LiveOnlinecollaborated with during the second quarter, Future Horizons,previously had been known for producing in-person seminars around thecountry on the subject matter of Asperger’s syndrome and autism. EP approached Future Horizons and presented the idea of coveringone such live event of theirs taking place in Dixon, IL in July 2008,thereby significantly increasing the attendance numbers for the two-dayconference—and widening the audience beyond the locality of thestate of Illinois, covering registered attendees from other states andcountries around the world.  The model for this type of coverageis akin to that which EP LiveOnline had broadcast live via theInternet, and recorded for archiving, with the group Autism Today,which took place last in February 2008 in Orlando, Florida. EPLiveOnline’s coverage and recording of the Future Horizons eventalso involved fees for attendance: $175 for two full days and $95 forone day.  The program was a success, garnering close to 500registered attendees, some of them viewing the program in groups of upto 90 people, from remote areas such as Alaska, and counties likeSweden, Canada, Australia, Ireland, Japan, etc.  Aside fromreceiving sponsorship support to cover this conference, EP LiveOnlinewill also receive 20% of revenues from online purchases. The title ofthe program was: “Asperger’s Syndrome: Presented by Dr. Temple Grandin and Dr. Tony Attwood.”

Still following theaforementioned model, EP LiveOnline approached another company,Cyberonics, Inc.— previously a long-time EP advertiser—tocover their planned live, 1.5 hour seminar at the annual conference forthe organization Developmental Disabilities Nurses Association (DDNA),which took place in Foxwoods, CT on June 8th, 2008. The program titled “Treatment Options for theDevelopmentally Delayed Patient with Epilepsy” had the supportand endorsement of the DDNA, the American Academy of DevelopmentalMedicine (AADMD), and the Epilepsy Foundation of NJ.  Unlike theFuture Horizons event, this was free of charge and open toprofessionals (with an emphasis on nurses), families and caregivers. Aside from live attendance, interested parties can continue tolog-on to www.epliveonline.com, 90 days following June 8th, to view thearchived recording of the event.  So far, there have beenregistered attendance numbers close to 300, which should continue toincrease in the coming two months.

The third company, ValeantPharmaceuticals, is a return customer, having worked with EP LiveOnlinein June of 2007, also for a seminar on the topic of epilepsy/seizuredisorders.  During the second quarter of 2008, they agreed tosupport two educational programs: “The Three-Alarm Seizure:Special Considerations Relating to the Epilepsy Patient withIntellectual and Developmental Disabilities” which took place,live on June 24th, 2008; “Managing Seizure Emergencieswithin the School Environment: A Seminar for Professionals &Caregivers” which will go live on August 5th, 2008. Speakers for these seminars include some well-respected expertsin the field like Jack Pellock, MD and Kathryn O’Hara, RN. Totalregistered attendees, so far, for the Valeant events number over 400,including those from various Epilepsy Foundation affiliates across theUS who have LiveAccess systems, and the Military Base locations alreadynetworked into EP LiveOnlines’ programming. Archive viewing willbe available for 90 days following each live event.  TheCyberonics, Inc. and Valeant Pharmaceuticals seminars were all non-CMEseminars, whereas the Future Horizons event offered CEUs.

Starting June of 2008, EP andEP LiveOnline initiated e-commerce sales in the EP Bookstore, ofselected programs from the past two years, in DVD and Web formats.

Looking forward into the finalhalf of 2008 and early part of 2009, EP LiveOnline is working onproducing several more interactive educational programs withorganizations that are actively reviewing our proposals, such as:Allergan, Inc., Dynavox,  Cyberonics, Inc. and ValeantPharmaceuticals—as well as branches of the Military, includingthe US Coast Guard, US Air Force and US Navy.

-37-

----

Background - EP LiveOnline (EPLO) Educational Online Programming:  

Another element in our productmix is the EPLiveOnline interactive, TV-quality, educational seminars.This is a project that capitalizes on the relationships and credibilitywe have built with major professional medical societies as well as layand consumer organizations representing the interests of people withdisabilities. We have produced a total of twenty such seminars over thepast three years, and are now offering these with professional medicalsocieties such as the AADMD. The fact that all of these seminars offerCategory I Continuing Medical Education (CME) credits for physicians,usually without fees, coupled with the fact that they do not have totravel but can instead participate from the comfort of their homes oroffices, helps to reduce costs and improve efficiency and educationalresults. To our knowledge, no other company in the United States offersthe kind of comprehensive authoritative educational programming focusedexclusively on chronic, life-long conditions as we do. In addition, wedo this by offering live, online, real-time interactive, TV qualitydelivery, utilizing proprietary software with delivery via theInternet. 

Special Projects

Disability Awareness NightTM (DANTM)

We continue to refine ourDisability Awareness Night campaign by regularly re-examining ourmission statement. This mission statement guides our every action as wecontinue to expand our program into other sports venues.

DAN Mission Statement: *Themission of Disability Awareness Night is to recognize the 54.6 millionpeople in the United States classified as having some form ofdisability, and highlight their extraordinary persistence, dedication,passion, and commitment as well as their abilities to accomplish theirgoals and achieve their hopes and dreams in the face of adversity.*(DANTM)*also strives to recognize the many people who care for and supportpeople with disabilities and special needs and who recognize them ascontributing, valued citizens of our nation. They are sources ofinspiration and motivation for us all.*

The Disability Awareness Nightcampaign has grown substantially since its launch in 2002. In 2002, westarted with two teams, the New York Yankees and the Boston Red Sox,who embraced the idea that public awareness about disabilities wasimportant. In 2003, participation expanded to fourteen teams. In 2004,we grew to twenty-seven teams, and in 2005, we held (DANTM) eventsin thirty-one stadiums, including the Hall of Fame Game in Cooperstown,New York. The Hall of Fame Game was the first Military Night ofDistinction where Soldiers, Sailors, Airmen, and Marines with disablingconditions as a result of the conflicts in Iraq and Afghanistan werehonored on Doubleday Field, in Cooperstown, New York. In 2005 and 2006,we benefited from the participation of our lead sponsor, MassachusettsMutual Life Insurance Company, whose Special*Care* program hasmade significant contributions to the field of disabilities and whosefinancial commitment to the DAN program has been substantial.  In2007, as in 2006, we held nearly forty (DANTM) events, includingour annual Military event.  In 2007 our annual Military event washeld prior to a NASCAR race in Loudon, NH at the New HampshireInternational Speedway. 

During the second quarter of2008 we began the (DANTM) baseball season with thirteen successfulevents.  This included our regular annual events with thePhiladelphia Phillies, Boston Red Sox, Potomac Nationals, New HampshireFisher Cats and New York Mets.  Posted below is a complete list ofgames that occurred during the second quarter.
|                              |                               |                  |        |             |
|------------------------------|-------------------------------|------------------|--------|-------------|
| **Date**                     | **Team**                      | **City**         | **St** | **Time**    |
| **Saturday, May 31, 2008**   | **Fort Worth Cats**           | **Ft. Worth**    | **TX** | **7:05 PM** |
| **Tuesday, June 03, 2008**   | **Philadelphia Phillies**     | **Philadelphia** | **PA** | **7:05 PM** |
| **Friday, June 06, 2008**    | **Nashville Sounds**          | **Nashville**    | **TN** | **7:00 PM** |
| **Saturday, June 07, 2008**  | **Boston Red Sox**            | **Boston**       | **MA** | **3:55 PM** |
| **Saturday, June 07, 2008**  | **Potomac Nationals**         | **Woodbridge**   | **VA** | **6:35 PM** |
| **Thursday, June 19, 2008**  | **New Hampshire Fisher Cats** | **Manchester**   | **NH** | **7:05 PM** |
| **Thursday, June 19, 2008**  | **Midland RockHounds**        | **Midland**      | **TX** | **7:00 PM** |
| **Friday, June 20, 2008**    | **Chattanooga Lookouts**      | **Chattanooga**  | **TN** | **7:15 PM** |
| **Wednesday, June 25, 2008** | **New York Mets**             | **Flushing**     | **NY** | **7:10 PM** |
| **Thursday, June 26, 2008**  | **Syracuse Sky Chiefs**       | **Syracuse**     | **NY** | **7:00 PM** |
| **Friday, June 27, 2008**    | **Sarasota Reds**             | **Sarasota**     | **FL** | **7:00 PM** |
| **Saturday, June 28, 2008**  | **Rochester Red Wings**       | **Rochester**    | **NY** | **7:05 PM** |
| **Saturday, June 28, 2008**  | **Wilmington Blue Rocks**     | **Wilmington**   | **DE** | **6:05 PM** |

-38-

As each event passes we arecontinuously reviewing our processes.  Asking questions like whatcould have gone better or how can we expand this program at this site. Standard After-Action Reports are being submitted after eachevent, reviewed and filed to be reviewed again prior to (DANTM)2009.  Pre-event conference calls have been instituted allowingall the parties involved to speak to one another and ask any lastminute questions.  All of the events hosted in the second quarterand viable candidates for events in 2009.

Appended below is the remaining(DANTM) Schedule for 2008.  Currently there are twenty-sixevents left in the year.  More games may be added.
|                                   |                             |                    |        |             |
|-----------------------------------|-----------------------------|--------------------|--------|-------------|
| **Date**                          | **Team**                    | **City**           | **St** | **Time**    |
| **Wednesday, July 09, 2008**      | **Trenton Thunder**         | **Trenton**        | **NJ** | **7:05 PM** |
| **Wednesday, July 09, 2008**      | **Salt Lake Bees**          | **Salt Lake City** | **UT** | **7:05 PM** |
| **Friday, July 11, 2008**         | **Charlotte Knights**       | **Fort Mill**      | **SC** | **7:15 PM** |
| **Friday, July 11, 2008**         | **Fort Wayne Wizards**      | **Fort Wayne**     | **IN** | **7:00 PM** |
| **Saturday, July 12, 2008**       | **Lake County Captains**    | **Eastlake**       | **OH** | **7:05 PM** |
| **Thursday, July 17, 2008**       | **Peoria Chiefs**           | **Peoria**         | **IL** | **7:00 PM** |
| **Sunday, July 20, 2008**         | **Cincinnati Reds**         | **Cincinnati**     | **OH** | **1:15 PM** |
| **Saturday, July 26, 2008**       | **Orange County Flyers**    | **Fullerton**      | **CA** | **5:05 PM** |
| **Sunday, July 27, 2008**         | **Erie SeaWolves**          | **Erie**           | **PA** | **1:05 PM** |
| **Tuesday, July 29, 2008**        | **Toledo Mudhens**          | **Toledo**         | **OH** | **7:00 PM** |
| **Wednesday, July 30, 2008**      | **Los Angeles Dodgers**     | **Los Angeles**    | **CA** | **7:10 PM** |
| **Thursday, July 31, 2008**       | **New York Yankees**        | **Bronx**          | **NY** | **7:05 PM** |
| **Thursday, July 31, 2008**       | **Kansas City T-Bones**     | **Kansas City**    | **KS** | **7:05 PM** |
| **Saturday, August 02, 2008**     | **Frederick Keys**          | **Frederick**      | **MD** | **6:00 PM** |
| **Thursday, August 07, 2008**     | **Charleston RiverDogs**    | **Charleston**     | **SC** | **7:05 PM** |
| **Tuesday, August 12, 2008**      | **Chicago White Sox**       | **Chicago**        | **IL** | **7:11 PM** |
| **Friday, August 15, 2008**       | **Detroit Tigers**          | **Detroit**        | **MI** | **7:05 PM** |
| **Sunday, August 17, 2008**       | **Buffalo Bisons**          | **Buffalo**        | **NY** | **1:05 PM** |
| **Tuesday, August 19, 2008**      | **Greensboro Grasshoppers** | **Greensboro**     | **NC** | **7:00 PM** |
| **Thursday, August 21, 2008**     | **Albuquerque Isotopes**    | **Albuquerque**    | **NM** | **6:35 PM** |
| **Friday, August 22, 2008**       | **Jupiter Hammerheads**     | **Jupiter**        | **FL** | **7:05 PM** |
| **Tuesday, August 26, 2008**      | **Everett AquaSox**         | **Everett**        | **WA** | **7:05 PM** |
| **Thursday, August 28, 2008**     | **Indianapolis Indians**    | **Indianapolis**   | **IN** | **7:15 PM** |
| **Friday, August 29, 2008**       | **Pawtucket Red Sox**       | **Pawtucket**      | **RI** | **7:05 PM** |
| **Monday, September 01, 2008**    | **Aberdeen IronBirds**      | **Aberdeen**       | **MD** | **7:05 PM** |
| **Wednesday, September 17, 2008** | **Pittsburgh Pirates**      | **Pittsburgh**     | **PA** | **7:05 PM** |

(DANTM) expanded into a newmarket in the second quarter (Fort Worth, TX) and will do the same inthe third quarter.  Fort Wayne, Lake County, Albuquerque, Everettand Aberdeen will all host their first (DANTM) events while(DANTM) returns to several other markets that have not had anevent in years, such as Peoria, Erie, Toledo Los Angeles, Frederick,Detroit, and Greensboro.  It’s through this expansion thatwe can further achieve our mission of increasing awareness.

During the upcoming quarter, EPwill continue to effectively plan the annual baseball events, procuringadditional sponsors, and exploring other sport arenas to enter. There continues to be talk about a relationship with NCAAbasketball and possibly several NBA franchises.  We are also indiscussions about bringing our annual Military event to the Army Navyfootball game.  We have established positive communication withboth West Point and Annapolis and hope to see this come to fruitionthis year.  There is no doubt that 2008 stands to be the biggestyear 

in (DANTM) history.

-39-

----

United States Military: Exceptional Family Transitional Training Program (EFTTP)

EPGL continues to build on itsstrength and growth by diversifying its workforce in the ExceptionalFamily Transitional Training Program (EFTTP). During this reportingperiod, EPGL began working with Camber Corporation of Huntsville,Alabama, on the delivery of four Exceptional Family Member Program(EFMP) Interactive Multimedia Training Modules for the United StatesArmy. The relationship with Camber has greatly enhanced EPGL’sopportunity to expand its contracting, operations, and services for theUnited States Army and to seek other funding streams through all thebranches of the military as well as state and local agencies.

The status of EFTTP deliverables under 2007 continuation funding follows:

·

EPGL’s award-winning *EP* magazine continues to be delivered to over 60 Army installations worldwide.

·

EPGLdelivered 10,000 customized U.S. Army Family and Morale, Welfare andRecreation Command (FMWRC) Pocket Resource Guides to Army installationsworldwide.

·

EPGL iscontinuing its work with Camber Corporation, subcontracting thedelivery of four EFMP Interactive Multimedia Training Modules to Camber:

§

Thefour EFMP Interactive Multimedia Training Modules program managementplan was developed and EPGL is proud to announce the work order ismoving forward. The following is a list of the four EFMP InteractiveMultimedia Training Modules:

·

EFMP Overview Interactive Multimedia Training Module

·

EFMP Overseas Interactive Multimedia Training Module

·

EFMP Respite Care Interactive Multimedia Training Module

·

EFMP Advocacy Interactive Multimedia Training Module

·

EPGLis collaborating with Defense Web Technologies, Inc, to deliver anonline directory for respite care centers within the continental UnitedStates (CONUS) during the fourth quarter of  2008.

EPGL submitted an EFTTPContinuity Proposal for fiscal year 2009 (FY09) to Family and Morale,Welfare and Recreation Command (FMWRC). EPGL will create a Statement ofWork (SOW) for delivery in July 2008. The continuity proposal containsthe following products and services:

·

*EP* magazine monthly distribution worldwide, at 10,000 copies. This includes the *EP Annual Resource Guide*,the definitive reference source for organizations and associations aswell as local, state, and federal agencies, professional medicalsocieties, and disability-specific special needs organizationsthroughout the United States, with a special military section listingEFMP offices and Department of Veterans Affairs centers.

·

Update and distribution of a customized Army Pocket Resource Guide to EFMP Managers worldwide, at 15,000 copies

·

Books from EP Bookstore to approximately 80 U.S. Army Installations

·

Continued20% military discount for U.S. Army installations on all EP Bookstorespecial needs books throughout all of FY09. (This discount will alsoapply to the 80 installations after delivery of their special orders.)

EPGL submitted an EFTTPProposal for FY09 to the Special Needs Program Manager of the U.S.Coast Guard – U.S. Department of Homeland Security. EPGL willcreate a Statement of Work (SOW) for delivery in August 2008. Ourproposal for products and services follows:

·

*EP* magazine monthly distribution worldwide, of 5,000 copies. (This includes the *EP Annual Resource Guide*,the definitive reference source for organizations and associations aswell as local, state, and federal agencies, professional medicalsocieties, and disability-specific special needs organizationsthroughout the United States, with a special military section listingEFMP offices and Department of Veterans Affairs centers.

·

Distribution of a customized Pocket Resource Guide to EFMP Coordinators worldwide, of 20,000 copies.

-40-

·

Books from EP Bookstore at special discounted prices to all twenty-five U.S. Coast Guard installations worldwide.

·

In thefuture, U.S. Coast Guard installations will be able to purchase booksfrom the EP Bookstore at a 20% discount. At present, the EP Bookstorehas over 2,600 disability-specific titles available and numerous audioand videotapes focused on a myriad of disability-related topics.

·

Four online,interactive, live, TV-quality Continuing Medical Education(CME)-accredited educational programs with content of choosing for U.S.Coast Guard medical personnel and families.

·

The elementsof this proposal closely mirror the elements that we have delivered aspart of the U.S. Army EFTTP funding over the past two years. Inaddition, there are eight U.S. Army installations worldwide that havebeen provided with fully integrated, fully functioning *LiveAccess Systems*which have, and can continue to be, used by families, physicians, andallied healthcare professionals to participate in any and all of theonline education programs EP offers during the year, free of charge.For physicians and allied healthcare professionals, this means thatthey can obtain valuable CME credits and Continuing Education Units(CEUs) from anywhere they are stationed, without incurring the expenseof travel and conference fees. The *LiveAccess Systems* can alsobe used for communication with Coordinators in real time to collaborateon projects that have a short turnaround time for delivery and to holddiscussions and coordinate with other EFMP Coordinators at Army, Navyand Marine Corps bases worldwide.

EPGL submitted an EFTTPProposal for FY09 to the EFMP Manager of the Personnel & FamilyReadiness Division of the United States Navy. This proposal is a jointproposal for the Department of the Navy and the U.S. Marine Corps. EPGLwill create a Statement of Work (SOW) for delivery in August 2008. Ourproposal for products and services follows:

·

*EP* magazine monthly distribution worldwide, of 20,000 copies. (This includes the *EP Annual Resource Guide*,the definitive reference source for organizations and associations aswell as local, state, and federal agencies, professional medicalsocieties, and disability-specific special needs organizationsthroughout the United States, with a special military section listingEFMP offices and Department of Veterans Affairs centers.

·

Distribution of Navy and Marine Corps customized Pocket Resource Guides to EFMP Coordinators worldwide, of 20,000 copies.

·

Navy and Marine Corps Coffee Table Book distribution to U.S. Navy and Marine Corps Commands worldwide, at the end of 2009.

·

Books from EP Bookstore to the 20 largest U.S. Navy and the 10 largest Marine Corps bases, stations, and camps worldwide.

·

Forremaining U.S. Navy and Marine Corps naval bases, stations, and campsworldwide, a 20% discount on all EP Bookstore special needs booksthroughout all of fiscal year 2009

·

Four online,interactive, live, TV-quality Continuing Medical Education(CME)-accredited educational programs with content of choosing for Navyand Marine Corps medical personnel and families.

·

The elementsof this proposal closely mirror the elements that we have delivered aspart of the U.S. Army EFTTP funding over the past two years. Inaddition, there are eight U.S. Army installations worldwide that havebeen provided with fully integrated, fully functioning *LiveAccess Systems*which have, and can continue to be, used by families, physicians, andallied healthcare professionals alike to participate in any and all ofthe online education programs EP offers during the year, free ofcharge. For physicians and allied healthcare professionals, this meansthat they can obtain valuable CME credits and Continuing EducationUnits (CEUs) from anywhere they are stationed, without incurring theexpense of travel and conference fees. The *LiveAccess Systems*can also be used for communication with Coordinators in real time tocollaborate on projects that have a short turnaround time for deliveryand to hold discussions and coordinate with Navy and Marine Corps EFMPCoordinators and Army EFMP Managers worldwide.

·

Creation ofeight interactive multimedia training modules for the Navy and MarineCorps EFMP Coordinators, with ongoing maintenance and updates tocontent and graphic design. EPGL will develop and deliver online, withfull access, the following eight Level Three Knowledge, Skills, andAbilities (KSAs) interactive multimedia and training modules: (1) EFMPOverview; (2) Customer Service; (3) EFMP Screening; (4) Respite Care;(5) Advocacy; (6) Extended Care Health Option (ECHO); (7) Humanitarianor Compassionate Requests; and (8) Community Recreation Special Needs,all to be hosted on the services’ respective Web.

-41-

·

AHouse Appropriations Subcommittee on Defense (HAC) FY09 Member RequestForm was submitted for expansion of the EFTTP that would provideresources and support for United States Military servicemembers who arecaring for a family member with disabilities or special needs. Ifapproved, HAC FY09 would deliver services under EFTTP for Soldiers,Sailors, Marines, and Airmen. EPGL will create a Statement of Work(SOW) for delivery in August 2008.

EPGL is awaiting the obligationof $1M in funding from the Department of Defense Education Activity(DoDEA), which will deliver services under EFTTP for Soldiers, Sailors,Marines, and Airmen. EPGL will create a Statement of Work (SOW) fordelivery in August 2008.

Strategic Initiatives:

EPGL’s platform forgrowth is due in part to a number of initiatives that allow EPGL toaddress target markets in a concentrated manner:

·

TheChief Military Contracting and Operations Officer is actively pursuingfunding streams through federal government acquisition services.

·

EPGL hascontracted with DeSutter, Kerr & Associates, Inc. (DKA), of WestPalm Beach, Florida, to assist EPGL in a submittal of proposal for theGeneral Services Administration (GSA) Schedule. This move will provideEPGL greater leverage to make federal government acquisitions this yearand in the future.

-42-

----

Trade Shows

As a world-wide multi media company, EP Global Communications, Inc believes th**a**thaving a company presence at key trade shows and conferences around thenation represents an excellent opportunity to accomplish severalmarketing objectives:

1.

Acost efficient way to meet our existing advertisers and share ideas andexperiences with them and to let them know developments and newofferings of our company;

2.

Acost effective way to meet and establish working relationships with newadvertisers and potential clients who might not otherwise be availableof the varied products and services offered by EPGL;

3.

Aproven methodology for reaching out to readers of EP Magazine,solidifying our reputation with them and engaging them to help spreadthe word about EP and our mission, goals and objectives.

4.

Sell product  i.e. books and subscriptions 

EPGL has also found over theyears that Trade Shows and Conferences are an excellent way to identifywith speakers and presenters who, in turn, can be approached toparticipate in EPGL editorial contributions and as faculty members forour on line interactive educational seminars.

Over the years EPGL has beensuccessful in swapping advertising space in EP Magazine in exchange forprime booth space and other valuable consideration, thus minimizingdrains on cash while maximizing exposure to the very market we serve.

In the second quarter ending June 30, 2008 EPGL had a presence at the following Trade Shows and Conferences:

·

American Network of Community Options and Resources

·

The American Occupational Therapy Association

·

Developmental Disabilities Nurses Association

·

American Physical Therapy Association 

·

Showcase for Commerce

·

The Arc of New Jersey

·

Family Café

·

Abilities Exposition

·

The Council for Exceptional Children

At the end of the secondquarter 2008 EPGL has had a presence at 22 Trade Shows and Conferencesexposing EP and its wide array of products to over 50,600 attendees,consumers, physicians, allied health care professionals, educators andcaregivers.

-43-

----

Circulation and Marketing

EP hasbecome a leader in offering multimedia educational resources for thespecial needs community through our publishing and communicationproduct lines.  In order to strengthen all facets of the EP lines,we have been, and are continuing to be, heavily focused on areas ofefficiency, productivity, and new innovative marketing concepts.

Ourcontinued goal is to significantly increase our paid circulation andrelated development activities, such as bundled advertising andsponsored bulk distribution of the monthly magazine, which we believeshould yield higher revenue performance for us. It is important to notethat increases in unit circulation will also result in increases inadvertising, as we will be reaching a larger audience, which shouldjustify increases in ad page sales from a larger number of ad pagesales as well as ad page rate increases.

Ouraggressive and forward-thinking marketing efforts have begun to move EPforward in its circulation growth patterns.  We are workingdiligently to improve the efficiency and performance on multiple levelsaffecting customer service, marketing and promotional efforts, andperformance reporting. While significant changes have been made to eachof these areas, we continue to evaluate and adjust initiatives andprocedures in order to achieve the greatest productivity andrecognition of EP’s various product lines.

A sampling of some of the actions *EP* is taking in this area follows:

·

Survey and analysis research to more closely capture audience needs

·

Increased personal contact with new subscribers as well as those considering non-renewal

·

Creation of campaigns to more closely accommodate the needs of special groups and organizations

·

Cross-promotion of the multiple resources offered by EP (e.g.: DAN events promoting **EP***LiveOnline*)

·

Sales team members bundling advertisement space with e-blast efforts

·

Subscription sales offering charity revenue in return

·

Increased media use (e.g.: radio, print news)

·

Entrance into new markets, such as the film industry, through sponsorship and public relations support

·

Directed andindividualized campaign efforts for each branch of EP (e.g.: specificmarketing copy and promotional items for each of the following: DANevents, **EP** LiveOnline, EP Bookstore, Subscription Donation Program, subscription promotions, etc.), in addition to cross-promotion efforts

·

E-blasting

·

Community involvement through participation in local events at various locations

·

Review,analysis, and reorganization of subscription renewal efforts, includingreview and analysis of option for automatic renewal of subscriptions

·

Re-evaluation of production schedules (subscriber processing) and adjustment of operations accordingly

·

Monitoring of events on daily/weekly tracks versus monthly/quarterly/annually

·

Acquiringaccess to vendors’ subscriber processing databases in order toestablish new operating procedures for each stage of thecirculation/subscriber series of events

As EP moves toward a moremodernized, more efficient, and more productive circulation andmarketing department, we are confident of greater ROI and higher profityields occurring within upcoming quarters.

-44-

----

Sales

We continue to train new salesstaff capable of marketing the complete package of services the Companynow offers, both via print and online. These new sales personnel arereceiving ongoing training to implement effective sales strategies andoutcomes for EPGL.

Additional Growth and Initiatives 

As mentioned earlier, in 2008,we have expanded our Disabilities Awareness Night (DAN) programs,principally conducted in Major League Baseball parks, from 2002 to2007, and continuing in 2008. Prior to this time, our programs weretaking place in a limited number of National Basketball Associationvenues, Minor League Baseball parks, and Minor League Hockey arenas. OnMay 23, 2005, and again in May 2006, in conjunction with the NationalBaseball Hall of Fame in Cooperstown, New York, we hosted prior to theannual Hall of Fame Game a ceremony honoring returning disabledveterans from Iraq and Afghanistan. This was done in conjunction withWalter Reed Army Medical Center and its Commanding General, whopresented awards to returning veterans and their families selected forthe honor. Also at that event, one of the honorees received his PurpleHeart for wounds received in Iraq. In July 2007, we held our first DANevent at a racetrack, at New Hampshire International Speedway (NHIS),in Loudon, New Hampshire, prior to the NASCAR Nextel Cup Race.Massachusetts Mutual Life Company sponsored this DAN event. The eventincluded a Day of Military Distinction, and involved returning woundedSoldiers, Sailors, Airmen, and Marines from Walter Reed Army MedicalCenter. We plan to continue this DAN expansion to racetracks associatedwith NASCAR, and are test-marketing programs with two NBA teams as wellas evaluating the feasibility of expanding into other sports venuessuch as National Collegiate Athletic Association (NCAA) Basketball. Weare also hopeful that launching the DAN Day of Military Distinction atthe Army-Navy football game in December will become a reality.

We continue to provideeducation regarding Assistive Technology for people with disabilities,both physical and intellectual (e.g.: cerebral palsy and autismspectrum disorders). This includes the launch of our Consumer’sGuide to Assistive Technology, written by leading authorities in thefield.

We continue to publish monthly in *EP*magazine and on our Web site valuable information regarding Financialand Estate Planning for people with special needs and for familiescaring for children and adults with disabilities.

We continue to provideeducation regarding Mobility, including via the National MobilityEquipment Dealers Association (NMEDA) Guide to Mobility Products, whichwe publish each year. NMEDA is the leading national authority onmobility products and services. (*The Consumer’s Guide to Mobility Equipment Dealers* will again be published in our June issue.)

Revenue Generation

Our revenues are generated from the following activities:

Sale of Advertising Space in *Exceptional Parent* (*EP*) Magazine

This isdriven by a number of factors, including our editorial content andfocus. Our customers consist of large Fortune 500 companies: Ford,Chrysler, Kimberly Clark, Novartis Pharmaceuticals, Johnson &Johnson, Massachusetts Mutual Life Insurance Company, Verizon, andMerrill Lynch. All of these companies purchase ad space in ourpublications to enhance awareness and image for their products andservices and brand recognition for their names. Historically, revenuesgenerated from the sale of advertising space have ranged fromapproximately $1.6 million to as high as $2.2 million in the past(1998).   Budget projections for 2008 indicate advertisingrevenue of $1.75 million.

-45-

----

Disability Awareness NightTM (DANTM) Programs at Major and Minor League Baseball Stadiums

Thisprogram generates revenue. Each of the DAN events is sponsored on anational basis by a leading sponsor, MassMutual Financial Group,followed by regional and local sponsorships. In 2006, for example,total revenues from this effort aggregated approximately $400,000. Wesigned a sponsorship agreement with our lead sponsor for 2008, and haveanticipated commitments from other sponsors that will yield revenues inexcess of $400,000 in 2008. This does not include any sponsorshiprevenues from other venues such as National Basketball Association(NBA) games, and National Hockey League (NHL) and Minor League Hockeygames, which are still under discussion.  

EP Bookstore

EP Bookstore houses over 2,600disability-specific books, DVDs, videos, and tapes dealing with a widerange of disability topics. We have been building this base for quitesome time and are now poised to leverage its growth with some targetedmarketing to specific market segments such as military bases andlibraries across the nation.

The bulk of our bookstore hasbeen built through negotiating with third-party publishers such asBaker and Taylor and McGraw Hill. This has been done over a period ofyears and with great selectivity and sensitivity. We evaluate theextensive titles published by other book publishing companies andinquire about their sales. Based on the intelligence we obtain, weapproach these companies, which roughly number about 90 and negotiatewith them for bulk purchases of certain titles our Editorial AdvisoryBoard indicates are consistent with our mission, goals, andobjectives.. All of this is possible because large book publishersreally do not have a good sense of the disability marketplace and/orthe needs of specific targeted audiences, whether consumer orprofessional in nature. We have this expertise and we went aboutbuilding our bookstore of titles in specific disciplines. In thecontinuing process of building this bookstore, we place importance onunderstanding the marketing requirements for reaching this audience andwhether or not we believe we can do so effectively through ourmagazine, Web site, and contacts within disability organizations andprofessional medical societies; and via distribution and sales at tradeshows and conferences. EP Bookstore also consists of book titles we ownoutright and exclusively. Examples of such titles include: *No Apologies for Ritalin*, by Vidya Bhushan Gupta, MD, and*Patient Persistence*,by Adele Gill, RN; as well as approximately five other titles. Whilenone of the titles has a material impact taken individually orcollectively, the profit margins earned on these sales areapproximately 30 percent while the profit margins on other titles arein the vicinity of 10 percent. Our decision to have a stake in bookpublishing is based on the fact that we receive countless numbers ofrequests to publish specific manuscripts as books. While most of theseare rejected, the pipeline for such valuable information is of highimportance to us because some of this can be turned into productivetitles we can publish while others can serve as useful content for someof our other multimedia publishing activities in print or online. We donot envision total revenues from our book operation to reach levelsmuch beyond $500,000 per year, with profit margins on the order of 15percent.

Custom Publishing & Contract Publishing

Over the years, we have taken educational editorial series published in *EP*magazine and had them reviewed by a panel of clinical thought andopinion leaders, edited and packaged into stand-alone monographsfocused on a specific subject area, and distributed to key targetmarket segments mutually identified by a project sponsor and EPGL. Allof this work is completely funded under unrestricted educational grantssecured from major pharmaceutical companies, medical equipment devicemanufacturers, consumer packaged goods companies, and financialservices companies. At all times, we adhere to strict AccreditationCouncil for Continuing Medical Education (ACCME) Standards for medicaleducation and strict standards that ensure the separation of that whichis educational and that which is promotional in nature.

-46-

----

Online Interactive Educational Seminars

Another element in our product mix is the **EP***LiveOnline*TM(EPLO) interactive, TV-quality, educational seminars that we makeavailable through our Strategic Marketing Alliance with Vemics, Inc.This is a project that capitalizes on the relationships and credibilitywe have built with major professional medical societies as well as layand consumer organizations representing the interests of people withdisabilities. We have produced a total of twenty-five such seminarsover the past three years. We have offered these in concert withprofessional medical societies such as the AADMD and now are poised tooffer them with societies such as the Child Neurology Foundation (CNF)and CNS. We expect to conduct a total of over 15 such seminars in 2008.The fact that all of these seminars offer Continuing Medical Education(CME) accreditation for physicians, usually without fees, coupled withthe fact that the physicians do not have to travel but can insteadparticipate from the comfort of their homes or offices, helps to reducecosts and improve efficiency and educational results. To our knowledge,no other company in the United States offers the kind of comprehensive,authoritative, educational programming that is focused exclusively onchronic life-long conditions that we do. In addition, we do this byoffering real-time, live, interactive, TV-quality information utilizingproprietary software and delivery over the Internet. 

Results of Operations

Liquidity and Capital Resources

Cash decreased to $6,035 at June 30, 2008 from $124,058 at December 31, 2007. 

Net cash used for operatingactivities for the six months ended June 30, 2008 was $115,805. The primary reason for the cash usage was to fund the loss forthe period.

Net cash used for investingactivities for the six months ended June 30, 2008 amounted to $14,337and represented the acquisition of property and equipment.

Net cash provided by financingactivities for the six months ended June 30, 2008 was $12,119. The increase was related primarily to related party activity.

Management believes that withthe operational cash to be generated by military programs, as well asonline seminars, the overall cash requirements of operations areexpected to be met. While there is no absolute guarantee that we willgenerate the forecasted revenues, management believes that both therevenue generation forecasted will meet the liquidity requirements ofEPGL for 2008.

Results of Operations

Reflected in the tables thatfollow are comparisons of revenue and sales and general andadministrative expenses for the three months ended June 30, 2008 and2007, as well as for the six months ended June 30, 2008 and 2007. TheCompany continues to invest in methods of improving advertising revenueand these efforts are detailed below.

-47-

----

Revenues for the three monthsended June 30, 2008, as compared to the same period in 2007, decreasedby approximately $164,000. Advertising revenue decreased byapproximately $135,000 for the quarter.  This decrease occurred asa result of sales representatives being replaced in two separateregions.  Subscription revenue saw a decrease of approximately$18,000.  Over the past year, EPGL has moved away from an outsidevendor who handled subscriptions, to an in-house staff position. As a result, there will be a turn-around, which has alreadystarted in the first quarter of 2008, capturing expired subscriptionand renewing them for additional one, two, or three year period.   A decrease of approximately $35,000 in book salestook place as a result of military installations receiving their ordersin the first quarter of 2008 versus the second quarter in 2007. 

Special Project revenueincreased by approximately $14,000 as a result of timing differencesrelated to Disability Awareness Night events and Pocket ResourceGuides.  Pocket Resource Guides were generated and distributedduring the first quarter of 2007; however, in 2008, the Pocket ResourceGuides were distributed during the second quarter; therefore, theincome is reflected in the June 30, 2008 financials.

Operating Expenses Including Cost of Sales

The significant variations in the components of selling, general and administrative expense are discussed below.

For the quarter ended June 30,2008, SG&A expenses increased by approximately $63,000 as comparedto June 30, 2007. The increase reflects a 9.9% increase over 2007levels.

There was an increase insalaries and benefits of approximately $70,000 as a result of theincreased allocation of such costs to selling, general, andadministrative expenses.  During the second quarter of 2008, threestaff positions have been eliminated from the Johnstown, PAheadquarters.

Business travel has beenreduced by approximately $7,000 as a result of closer monitoring oftravel expenses and reduction in the number of employees being sent toconferences and trade shows.

Consulting fees have increasedby $6,000 over the same quarter of 2007.  EPGL has entered into anagreement for consulting services as several items under litigationdraw to a close.  Other General and Administrative expenses haveshown a increase of approximately $13,000 over 2007 levels. Management continues to monitor all areas of expenses in aneffort to keep all associated costs below 2007 levels.

-48-

----

Interest expense has increasedin the second quarter of 2008 over the second quarter of 2007, byapproximately $25,000 due to the accretion of interest on funding debtto the NIR Group.  This funding of $100,000 per month wascompleted in November, 2007.

Depreciation and amortizationexpenses have decreased by approximately $10,000 in the second quarterof 2008 from the second quarter of 2007 as a result of several fixedassets being fully depreciated, but which are still utilized by thestaff.

Taxes

We reflected no provision forincome taxes in the first quarter month of 2008 because of theavailability of a significant net operating loss carryforward to offsetany taxable income.

Debt Expenses

In accordance with EmergingIssues Task Force Topic 00-27 and SFAS 150, “Accounting forCertain Financial Instruments with Characteristics of both Liabilitiesand Equity,” the Company performed calculations allocating theproceeds from the issuance of convertible debt with detachable warrantsand the beneficial conversion privileges to each respective security attheir fair values.

The Company referred to SFAS133, “Accounting for Derivative Instruments and HedgingActivities,” and EITF 00-19, “Accounting for DerivativeFinancial Instruments Indexed to, and Potentially Settled in, aCompany’s Own Stock,” in determining whether the conversionoption is an embedded derivative instrument. In the case of thedetachable warrants and the beneficial conversion privileges, theCompany concluded the fair value was nil; accordingly, the entireamount recorded as a liability was associated with the convertibledebt. The calculated fair value of the convertible debt of $5,713,561was recorded as a liability as of June 30, 2008. The convertible debtwill be accreted to its face value of $6.32 million under the interestmethod until it is either converted or matures. As of June 30, 2008,the total accretion was $977,825 (of which $245,539 was recorded in thefirst six months of 2008; $200,613 was recorded in the first six monthsof 2007). Separately, the holder of the note exercised conversionprivileges for 136,630,608 shares of common stock in 2008, therebyreducing the amount of the debt by $25,091.     

We incurred debt issue costs of$524,000 relating to the convertible notes that will be expensed overthe term of the convertible debt.

**Off Balance Sheet Arrangements**

None

**Item 3.  Quantitative and Qualitative Disclosures about Market Risk**

Item 3 is not required by smaller reporting companies.

-49-

----

**Item 4T.  Controls and Procedures**

Evaluation of Disclosure Controls and Procedures

The Company’s management has established disclosure controls andprocedures designed to ensure that information it is required todisclose in the reports that it files or submits under the SecuritiesExchange Act of 1934, as amended (the ‘‘ExchangeAct’’) is recorded, processed, summarized and reportedwithin time periods specified in the Securities and Exchange Commissionrules and forms. Such disclosure controls and procedures include,without limitation, controls and procedures designed to ensure thatinformation the Company is required to disclose in the reports that itfiles or submits under the Exchange Act is accumulated and communicatedto the Company’s 

Management to allow timely decisions regarding required disclosure.

Based on an evaluation of the Company’s disclosure controls andprocedures as of June 30, 2008 made by management, under thesupervision and with the participation of the Chief Executive Officerand Chief Financial Officer, the Chief Executive Officer and ChiefFinancial Officer have concluded that the Company’s disclosurecontrols and procedures (as defined in Rules 13a-15(e) and 15d-15(e)promulgated under the Exchange Act) were not effective as of June 30,2008 inasmuch as two material weaknesses existed in the Company'ssystem of internal control.  These are:

·

There is inadequate segregation of duties in certain areas without sufficient compensating controls. 

·

The company’s accounting software is currently being operated in a manner that permits previously recordedtransactions to be edited and modified. 

Our management is in theprocess of implementing plans intended to remediate the internalcontrol weaknesses and to strengthen our internal controls overfinancial reporting effective in the second quarter of calendar year2008.Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting occurredduring the quarter ended June 30, 2008 that has materially affected oris reasonably likely to materially affect our internal control overfinancial reporting.

-50-

----

**PART II – OTHER INFORMATION**

**Item 1.  Legal Proceedings**

Joseph Braumstein, Chapter 7Trustee of The McCabe Group versus Joseph M. Valenzano, Jr. and Psy-EdCorporation et al. Adversary proceeding No 06-01351.  When TheMcCabe Group (TMG) ceased business operations in October 2004, itentered into a Chapter 7 liquidation proceeding, under the terms ofTitle 11 of the U.S. Code (Bankruptcy).  The Chapter 7 Trustee ofTMG, Joseph Braumstein in June 2006 brought a lawsuit in the U.S.Bankruptcy Court alleging that the Company and its President and CEO,jointly and severally, owed approximately $53,000 for legal fees andexpenses to TMG.  The Company and its CEO are vigorously defendingthis complaint.  The Company and its counsel believe that furtherlitigation could result in the ultimate dismissal of this Chapter 7Trustee Claim.  The Company has made all timely filings with thecourt..  This case is now out of bankruptcy court and scheduledfor trial in December, 2008.

Psy-Ed Corporation, d/b/aExceptional Parent, Plaintiff v. Stanley D. Klein and Kimberly Schive,Superior Court in and for the County of Middlesex, in the Commonwealthof Massachusetts, Civil Action No. 99-6140; Counterclaims Brought byKlein Against Plaintiffs and Third-Party Directors (Kenneth Rossano,David Hirsch, MD, Robert Striano, Donald S. Chadwick, C. KennethMehrling and Robert K. Hopkins, Jr.) of Exceptional Parent in Civ. No.99-6140. This case was commenced on December 17, 1999. Psy- Ed is theplaintiff and counter-claimants in this case. The Company and itspresident were previously successful in defending an action taken byMs. Schive in 1996 for wrongful termination and successfully defendeditself in three separate appeals made by Ms. Schive alleging that theCompany and its President and CEO “discriminated against peoplewith disabilities, especially people who were deaf” and that“the CEO orchestrated the relocation of the office from BrooklineMassachusetts to New jersey for the purpose of terminating heremployment”.  At present, most of the claims by KimberlySchive have been dismissed and are no longer pending, either in anycourt proceeding or before the MCAD. Still pending are her claims forabuse of process and retaliation. The company and its attorney’sfeel that further litigation should result in the ultimate dismissal ofher claims

The employment of Stanley D.Klein, a former officer, director and shareholder of the company wasterminated for cause in August of 1997. He filed a complaint with theMassachusetts Commission Against Discrimination in 2000 alleging thatthe Company, which had brought an action against him in December 1999for misconduct, fraud and defamation causing damage to the Company, hadretaliated against him because of his support for Kimberly Schive.

Mr. Klein filed an actionagainst the Company and Mr. Valenzano in the Superior Court forMiddlesex County, Massachusetts in December 2002 seeking payment ofunspecified damages. That lawsuit was dismissed in 2005. Mr. Klein thenfiled an action seeking precisely the same relief in a state court inNew Jersey which action was summarily dismissed by Superior Court inBergen County New Jersey. At the time of filing both of these actions,Mr. Klein was a defendant in an action brought by the Company againsthim in 1999.

During the non-jury trial heldin June of 2006, eight of Klein’s ten claims against the Companywere dismissed. The Company was found liable by the judge with respectto abuse of process in the Schive case and tortuous interference withrespect to a promissory note. The balance on that note wasapproximately $124,000. The Company intends to rigorously defendagainst the decision and to date no decision with regard to any awardof damages has been made, although a four and one half hour hearing onall positions regarding these matters was held on January 4, 2008 withno decision being reached.  During that hearing, attorney’sfor the Company presented oral arguments in support of motions forentry of judgment in favor of the Company, Mr. Valenzano and all formerand present directors on all counts or, in the alternative, for a newtrial.  Company counsel also opposed the motions of Stanley Kleinand Kimberly Schive for entry of judgment in their favor without theneed for further proceedings concerning damages or attorney’sfees.  The attorneys for Schive have specifically sought an awardof $426,661.31 for attorney’s fees and $125,000 in compensationfor her alleged emotional distress.  Attorney’s for Kleinpetitioned the court for an award of $124, 174.71 in principal on theportion of the Psy-Ed promissory Note that remained unpaid (an amountthat is incorrect and disputed) plus interest from December 31, 1999 aswell as $125,000 in emotional distress and $527,962.73 inattorney’s fees.  Company counsel argued on behalf of thedefendants that it would be procedurally and substantively improper toaward the plaintiffs these amounts.  The matter is now underadvisement by Judge Sandra Hamlin.  Counsel for the Company isunable to render an opinion concerning how Judge Hamlin will resolvethe motions for judgment in favor of the defendants and third-partydefendants, nor, should some or all of those motions be denied, how thecourt will resolve the motions for judgment submitted by Klein andSchive.  It is the Company’s position that it will prevailwith respect to any adverse findings although it is impossible toassert at this time that there is any certainty with respect to thisposition.

-51-

Heath & Associates and EP Global Communications, Inc.

American Arbitration Association Case No. 13 147 E 00538 08

The underlying demand forarbitration was filed by Heath & Associates (“Heath”)an independent sales contractor on or about March 3, 2008.  Heathalleges sales commissions due from EP in the amount of $61,804 arisingout of EP’s alleged breach of two Advertising SalesRepresentation Agreements (“Agreements”) between Heath andEP dated September 13, 2005 and October 1, 2006, respectively.  EPmaintains that the Agreements were lawfully and properly terminated forcause by EP.  EP further maintains that the demand from Heath isexcessive, inaccurately and improperly computed and inappropriate. In addition, while early discussions involved an offer by theCompany of a far lesser amount as a settlement, that offer waswithdrawn once it became clear that Heath was threatening arbitration. Further, once the independent sales agreement was terminated forcause, The Company’s position is that no commissions are due andowing.

EP has filed an AnsweringStatement in the arbitration.  EP’s Answering Statementincludes Counterclaims for defamation and tortuous interference againstHeath and its principal, James Heath, based on the financial damage anddamage to the reputations of EP and its principals, including but notlimited to EP’s CEO, Joseph M. Valenzano, Jr., arising out ofvarious false and slanderous statements made by Heath  EPmaintains that such actions caused the resignation of one of EP’smost influential contributing writers in the assistive technology fieldand the loss of directly associated advertising revenue and wasdamaging to the strategic relationship with its on line interactivepartner, Vemics, Inc. by virtue of slanderous and untrue comments madeto Vemics, Inc employees and executives.

EP intends to aggressivelypresent the facts and evidence it has, including witnesses who directlyheard Mr. Heath’s remarks and believes it will prevail in thearbitration proceeding and in its Counterclaims. 

Arbitration in this matter tookplace on July 15th and 16th, 2008 at the offices of the AmericanArbitration Association in New York, NY.  After one and one halfdays of direct testimony of Mr. Heath and cross examination of EPcounsel a settlement was reached.  The Company agreed to pay Mr.Heath $17,500 on or before October 1, 2008.

Other than noted above, there is no litigation pending or threatened by or against us at June 30, 2008.

-52-

----

**Item 1A.  Risk Factors**

Not required to be provided by smaller reporting companies.

**Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds**

None

**Item 3.  Defaults Upon Senior Securities**

None

**Item 4.  Submission of Matters to a Vote of Security Holders**

None

**Item 5.  Other Information**

None

**Item 6.  Exhibits and Reports on Form 8-K**

        A.  Exhibits
|        |        |                                                                                                                        |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|
|   | 31     | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|   |   |                                                                                                                   |
|   | 32     | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

        B.  Reports on Form 8-K
|        |        |                                                     |
|--------|--------|-----------------------------------------------------|
|   | 8-K    | Changes in Registrant’s Certifying Accountant |
|   |   |                                                |
|   |   |                                                |

-53-

----

**SIGNATURES**

In accordance with Section 13or 15(d) of the Securities Exchange Act of 1934, the Registrant hascaused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

**EP Global Communications, Inc. (Registrant)**
|        |                                                                                                                         |
|--------|-------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                    |
|   |                                                                                                                    |
| By:    | /s/ Joseph M. Valenzano, Jr.

     Joseph M. Valenzano, Jr, President, Chief Executive Officer |
|   |                                                                                                                    |
|   | /s/ James McGinnis

     James McGinnis, Chief Financial Officer, Vice President of Operations |
|   |                                                                                                                    |
|   |                                                                                                                    |
|   |                                                                                                                    |
|   |                                                                                                                    |
| Dated: | August 14, 2008                                                                                                         |

-54-