**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D. C. 20549**

**FORM 10-KSB**

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**For the fiscal year ended December 31, 2005**

[?  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 000-30797

**EP GLOBAL COMMUNICATIONS, INC.**

(Name of Small Business Issuer in its charter)

| **DELAWARE**                                                            | **14-1818396**                              |
|-------------------------------------------------------------------------|---------------------------------------------|
| **(State or other jurisdiction of incorporation or organization)**      | **(I.R.S. Employer Identification Number)** |
| ** **                                                              | ** **                                  |
| **C/O Exceptional Parent Magazine**

**551 Main Street, Johnstown, PA** | **15901**                                   |
| **(Address of principal executive offices)**                            | **(Zip code)**                              |

**(814) 361-3860**

Issuer's Telephone Number

| Securities registered under Section 12(b) of the Exchange Act: |
|----------------------------------------------------------------|

|                            |                                       |
|---------------------------------|--------------------------------------------|
| Title of each class registered: | Name of each exchange on which registered: |
| **None**                        | **None**                                   |

|                                                           |
|----------------------------------------------------------------|
| Securities registered under Section 12(g) of the Exchange Act: |
| **Common Stock, par value $.0001**

(Title of class)           |

Indicateby check mark whether the registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during he preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subjectto such filing requirements for the past 90 days.

Yes [X]   No [  ]

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

Yes [X]   No [  ]

Checkif there is no disclosure of delinquent filers in response to Item 405of Regulation S-B not contained in this form, and no disclosure will becontained, to the best of the registrant’s knowledge, indefinitive proxy or information statements incorporated by reference inPart III of this Form 10-KSB or any amendment to this Form 10-KSB. [   ] 

Registrant's revenues for its most recent fiscal year were $2,671,089.

The Issuer's stock is trading on the OTC Electronic Bulletin Board under the symbol EPGL.OB.

As of April 14, 2006 the Company had 25,075,818 common shares outstanding.

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**Forward Looking Statements**

Certaininformation contained herein should be considered "forward-lookingstatements" within the meaning of the Private Securities LitigationReform Act of 1995 which is subject to a number of risks anduncertainties. The preparation of forward-looking statements requiresthe use of estimates of future revenues, expenses, activity levels andeconomic and market conditions, many of which are outside the controlof EP Global Communications, Inc. ("Company") control. Specific factorsthat could cause actual results to differ materially from those setforth in the forward-looking statements include: economic conditions,labor costs; competitive pressures on pricing; consumer perceptions ofthe Company's products; other operational matters discussed herein andother risks and uncertainties. Other factors and assumptions notidentified above are also involved in the preparation offorward-looking statements, and the failure of such other factors andassumptions to be realized may also cause actual results to differmaterially from those discussed.

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**EP GLOBAL COMMUNICATIONS, INC.**

**TABLE OF CONTENTS**

| PART I   |                                                                                                                   | 1      |
|----------|------------------------------------------------------------------------------------------------------------------------|--------|
|     | ITEM 1. DESCRIPTION OF BUSINESS                                                                                        | 1      |
|     | ITEM 2. DESCRIPTION OF PROPERTY                                                                                        | 10     |
|     | ITEM 3. LEGAL PROCEEDINGS                                                                                              | 10     |
|     | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                                           | 11     |
| PART II  |                                                                                                                   | 11     |
|     | ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                       | 11     |
|     | ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                                      | 13     |
|     | ITEM 7. FINANCIAL STATEMENTS                                                                                           | 21     |
|     | ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                            | 21     |
|     | ITEM  8A. CONTROLS AND PROCEDURES                                                                                 | 22     |
| PART III |                                                                                                                   | 23     |
|     | ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT | 23     |
|     | ITEM 10. EXECUTIVE COMPENSATION                                                                                        | 28     |
|     | ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                | 30     |
|     | ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                | 32     |
|     | ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K                                                                              | 33     |
|     | ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                        | 33     |
|     | SIGNATURES                                                                                                             | 35     |
|     |                                                                                                                   |   |

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**PART I**

**ITEM 1. DESCRIPTION OF BUSINESS.**

**Background**

Wewere incorporated in the State of Delaware in November 1999 under thename East Coast Airlines Inc. ("ECA") which was established to become afully certified Federal Aviation Regulation Part 121 air carrier. Theoriginal business plan was to provide scheduled air service to smalland medium sized markets which have experienced either a total orpartial loss of air service as a result of shifts in emphasis by majorairlines and their regional counterparts. We expected to operate as anindependent carrier and serve select markets in the Northeast UnitedStates.

InJune 2000, we filed a Form 10-SB Registration Statement with the SEC toregister our common stock under the Securities Act of 1933, as amended(the "1933 Act") which became effective in July 2000. The tragic eventsof September 11, 2001 severely affected the airline industry andimpeded ECA’s efforts to finance its business plan. In the monthsfollowing September 11, 2001 security concerns caused airline ridershipto plummet and as a consequence reduced, in management's opinion, thepotential for a successful launch of the airline. The ensuing declinein the United States economy also created a significant impairment tothe successful implementation of our original business plan.

Asa consequence of the events of September 11, management commenced itsnew plan to identify a strategic partner with whom it could develop abusiness relationship through either a joint venture, acquisition,merger or share exchange transaction. In February 2003, preliminarydiscussions began with a private entity to enact a consolidationthrough either a merger or acquisition transaction.

OnNovember 28, 2003, pursuant to unanimous adoption by the Boards ofDirectors of Psy-Ed Corporation and East Coast Airlines, Inc., thecompanies entered into a Share Acquisition Agreement that authorizedECA to offer 173 shares of our common stock for each share of Psy-EdCorporation (“Psy-Ed”) common stock held of record by allPsy-Ed Stockholders.

A summary of the material terms and conditions of the offering are as follows:

Psy-Ed Stockholders were offered 173 of our common shares for each common share of Psy-Ed owned of record.

Wereduced our outstanding common shares to 7,265,932 from 19,113,400common shares. We amended our Certificate of Incorporation, increasingour authorized common shares from 20,000,000 to 60,000,000. We changedour corporate name to “EP Global Communications Inc.,” ourpresent name.  The members of the Board of Directors of East Coastresigned and the nominees of Psy-Ed were appointed to the Board ofDirectors of the new parent company, with Joseph M. Valenzano Jr.becoming our President and CEO. Psy-Ed became our wholly ownedsubsidiary corporation.

Psy-EdStockholders owning 75,208 of the Psy-Ed common shares exchanged theirPsy-Ed common shares for our common shares. We issued an aggregate of13,010,984 common shares to the Psy-Ed stockholders. The share exchangeresulted in Psy Ed shareholders owning approximately 65% of ouroutstanding common stock. Psy-Ed has become our wholly ownedsubsidiary.   On January 24, 2004, Donald Chadwick wasappointed to our Board of Directors and Robert J. Salluzzo and CharlesG.Youngblood resigned. At that time, Joseph M. Valenzano, Jr. and JohnF. Crowley were appointed our Directors. Immediately thereafter, byunanimous written consent of the Board of Directors, our By-Laws wereamended to increase our Board of Directors to seven (7) members andDavid Hirsch, Gregg LaPointe,  Admiral Raymond C. Smith, U.S. Navy(Retired) and Edward McCabe, Esq. were appointed to fill the new seatson our board of directors.  

**About Us**

Havingcompleted this acquisition, we became a global communications companydedicated to providing information for people with disabilities andspecial health care needs. Our mission, as it was for the 35 years (PsyEd Corporation) prior to the combination, has remained unchanged: toprovide practical advice and emotional support to families, physicians,allied health care providers, teachers and caregivers who are involvedin the care and development of people with special needs.

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Our35 year old publication provides the foundation of what we do. In 2003,we received the New Freedom Initiative Award from the Jim MullenFoundation in Chicago, symbolic of the Best Publication and Web Site inthe Nation for People with Special Needs. Exceptional Parent Magazinewas also the recipient of Three Gold Medals for Editorial Excellencefrom FOLIO: at the Magazine Publishers Association Awards Dinner in NewYork over the past four years and three Gold Medals for Excellence inJournalism from the Consumer Health Publishing Association of Americafor our work in Epilepsy, Newborn Screening and Mitochondrial andMetabolic Disorders. In November, 2003 Exceptional Parent Magazinereceived the Distinguished Service Award from the Epilepsy Foundationof New Jersey for our work on behalf of people with epilepsy. JoeValenzano, our President and CEO is the recipient of numerous awardsfor his efforts on behalf of people with disabilities and special needsincluding the Distinguished Service Award from the Fragile X Foundationgiven to him by General James L. Jones, former Commandant of the MarineCorps and now Supreme Allied Commander NATO Forces. Working with theleaders in the field, we have established strategic relationships withmajor professional medical societies and lay organizations servingpeople with special needs.

In2003, we focused our editorial content on the key issues affecting ouraudience and worked to provide them with information on topics such asthe spectrum of autistic disorders, IDEA reauthorization, the No ChildLeft Behind Act, epilepsy and complex seizure disorders, ADHD(Attention Deficit Hyperactivity Disorder), and the latest developmentsin mobility and communication devices. Feature stories includedinterviews with former Assistant Secretary of Education for the Officeof Special Education and Rehabilitative Services, Dr. RobertPasternack, Major League Baseball pitcher Tim Wakefield, and technologyleader and inventor, Ray Kurzweil. 

Wealso expanded our coverage of key areas in the disability arena withadded columns including Tech- Scapes and IDEA Notebook as well ascontinuing series on autism, financial planning and adaptive physicalsports and recreation for people with disabilities. In addition, wehave continued our efforts to expand awareness of the benefits ofnewborn screening using tandem mass spectrometry. Our President andCEO, Joe Valenzano, speaks at state seminars and publishing on thesubject. We have also suggested to have expanded newborn screeningembraced by the U.S. Military eliciting the support of the ExceptionalFamily Member Program and through meetings with military health careprofessionals.  Those efforts and that of other professionals inthe Navy and Marine Corps were rewarded as the Navy and Marine Corpshave expanded newborn screening for Navy and Marine Corps births in2005. 

Beyondour monthly magazine, in 2004, we continued to intensify our efforts inother areas. The October 2004 World Congress and Exposition onDisabilities (WCD) in Orlando, Florida is now in its sixth consecutiveyear. As creators and developers of the entire program of educationalseminars offered at the WCD numbering between 110 and 140, we producethe largest exhibit and conference in the world focusing on specialneeds. The 2004 Show in Orlando, Florida offered over 100CME/CEU-accredited programs for physicians, allied health careprofessionals, special education and mainstream teachers, families andcaregivers, and included keynote speeches from the leaders in the fieldincluding Dr. Tim Shriver, President and CEO of Special OlympicsInternational, highly decorated Vietnam Veteran and Four Star GeneralJames “Tom” Hill, U.S. Southern Command and the father of adisabled young daughter, Meghan, and Jim Kelley, Hall of FameQuarterback of the Buffalo Bills and the co-founder of Hunter’sHope Foundation named after his deceased son who had Krabbe’sDisease, a devastating life threatening disorder without a known cure.

In2004, we also expanded the development of our relationship with MajorLeague Baseball (MLB) Teams.  The collaboration between us andMajor League Baseball teams began in 2002, when management for the NewYork Yankees and the Boston Red Sox agreed to promote awareness of thedisabilities population by reaching out to sports fans. Each teamhosted a pre-game ceremony, during which people who had madesignificant contributions to the disabilities community were honored.The program expanded to 14 Major League Baseball teams in 2003.Honorees included individuals such as General James L. Jones, former32nd Commandant of the Marine Corps, his wife Diane Jones and theirdaughter Jennifer who has Fragile X.  General Jones, who is nowSupreme Allied Commander of NATO and his wife Diane are supporters of the military Exceptional Family Member Program.Other honorees included Eunice Kennedy Shriver, founder of theInternational Special Olympics , Travis Roy, Dr. Darryl De Vivo, worldrenowned specialist in the field of mitochondrial and metabolicdisorders, Piero Rinaldo, MD, PhD, Director of the Human GeneticsDepartment at the Mayo Clinic and a pioneer in the field of expandednewborn screening, actress Geri Jewell and others. In 2004,twenty-seven teams participated in this unique awareness driven event,funded by lead sponsor, Massachusetts Mutual Life Insurance Company. In2005, we

 

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successfullydelivered thirty DAN events at both the Major League and Minor Leaguelevels as well as test marketed two successful DAN events with the NBA,one at the Portland Trail Blazers and the other with the New JerseyNets. The same NBA reams, the Portland Trail Blazers and New JerseyNets, both have expressed interest in events for 2006.  We alsosuccessfully test marketed a DAN event at the Johnstown Chiefs minorleague hockey game and are in discussions with various NHL Teams for2006.

Throughour production of online CME/CEU-accredited seminars focusedexclusively in the arena of chronic life-long disabilities and geneticdisorders, we have established a valuable way to expand knowledge inthis field, filling a major void that exists because of the lack ofsuch training in the nation’s medical schools. Over the past twoyears, we have delivered a total of twelve online seminars dealing witha range of topics such as childhood movement disorders, the managementand control of refractory seizures in people with mental retardationand developmental disabilities; managing pediatric gait deficienciesutilizing dynamic bracing, attention deficit/hyperactivity disorders,lysosomal storage disorders and newborn screening. In 2006, through ourassociation with several professional medical societies including theChild Neurology Society and American Academy of Developmental Medicineand Dentistry as well as lay organizations such as the EpilepsyFoundation and Family Resource Network as well as United CerebralPalsy, we plan on delivering a total of 20 CME/CEU online seminars,hopefully with the participation of the US Military. Four such programshave been committed to as of October 2005.  All of these seminarsoffer Continuing Medical Education Credit for Physicians and ContinuingEducation Units for nurses, allied health care professionals andeducators through academic affiliations we have developed atinstitutions such as the University of Pittsburgh School of Medicineand, of course the American Academy of Developmental Medicine andDentistry (AADMD).  In April  2005, the AADMD formallyrecognized Exceptional Parent Magazine as the official publication ofthe AADMD and we are embarking on an implementation plan to offer CMEaccreditation through the publication itself, something which shouldincrease the need for our publication by physicians as well as alliedhealth care professionals, hospitals and clinics.

ExceptionalParent Magazine was recently designated as the publisher of ThePresidents Report on People with Intellectual Disabilities(PCPID-formerly known as the President’s Committee on People withMental Retardation), complete with the seal of the office of thePresident of the United States of America, which appears on the coverof our 2005 January Resource Guide.

Overthe years, we have become an authority in the disabilities and specialhealth care needs arena and have in place the following attributes:

| -      | Anauthoritative, proprietary monthly publication read by physicians,educators, nurses, therapists and families alike and endorsed byprofessional medical societies and lay organizations;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| -      | ACustom Communications Business with the capability of producingclinical publications on a wide range of disorders. Examples of theseinclude: A Primary Care Physicians Guide to Mitochondrial and MetabolicDisorders, A Parent’s Guide to Mitochondrial and MetabolicDisorders, End Stage Renal Disease: A Primer for Nurses, Dieticians,Physicians and Patients, What Families Need to Know About ChildhoodSeizures, Epilepsy: New Patterns of Care for the Twenty-First Century,Childhood Movement Disorders, Positive Perspectives for Cerebral Palsy,Oral Health Care for People with Disabilities, Universal NewbornScreening (which has won world-wide acclaim) New Hope for People withEpilepsy: The Vagus Nerve Stimulator and many others; |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| -      | A web site (http://www.eparent.com) with over 1.7 million hits per month.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| -      | Weparticipate in a joint venture in an exhibit and conference businesscalled the World Congress & Exposition on Disabilities.  Thisis the defining event in the disabilities and special health care needsarena; the 2004 WCD took place in Orlando Florida October 7th, 8th and9th at the Orlando Convention Center and had over 6,000 registrants and200 + exhibitors.  In 2005 the WCD washeld on December 1,2 and 3rd at the Philadelphia Convention Center in Philadelphia Pennsylvania                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| -      | Areference library – The EP Bookstore - available for sale to thepublic with one of the largest arrays of disability and special needsbooks in the industry (over 1,500 titles).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

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| -      | StrategicAlliances with virtually every major professional society andconsumer/family support groups/organizations and associations in thefield including, The American Academy of Pediatrics (AAP); the ChildNeurology Society (CNS); the American Academy of Developmental Medicineand Dentistry; Special Care Dentistry; the International MedicalDystonia Research Foundation; Spina Bifida Association of America,Special Olympics International; United Cerebral Palsy Foundation forEducation and Research, Governmental bodies such as The NationalInstitutes of Health; the Centers for Disease Control & Prevention; U.S. Department of Education and the Office of Special Educationand Rehabilitation; Department of Defense and the U.S. MilitaryExceptional Family Member Program; the Military Child EducationCoalition; the International Dyslexia Association; The NationalMultiple Sclerosis Society; Family Voices; Fragile X Foundation, CureAutism Now, Autism Society of America, National Alliance for AutismResearch, Epilepsy Foundation, Children with Attention DeficitHyperactivity Disorder and a host of other organizations andassociations whose reach into the special health care needs market isenormous. |

TheMission of Exceptional Parent is to continue to grow as an integratedcommunications company leveraging our core strengths and serving theinformation needs of specific Professional and Consumer target-nichemarket segments in the disabilities and special needs market sectors. Tactically, we seek to accomplish this utilizing a multi-mediaapproach to communications that includes print, on-line interactiveservices and the Internet, customized reports, exhibits and conferencesand books.

**Products and Services**

The following is a list of our products and services:

**Sale of Advertising Space in Exceptional Parent Magazine:** This is driven by a number of factors, including our editorialcontent and focus.  Our customers consist of large Fortune 500companies:  Ford, Chrysler, Kimberly Clark, NovartisPharmaceuticals, Johnson & Johnson, Massachusetts Mutual LifeInsurance Company, Verizon and Merrill Lynch.  All purchase adspace in our publications to enhance awareness and image for theirproducts and services and brand recognition for their names.

**Disability Awareness Night Programs at Major and Minor League Stadiums:** This program generates revenue. Each of these DAN Events aresponsored on a national basis by a leading sponsor, MassMutualFinancial Group followed by regional and local sponsorships.  In2005 for example, total revenues from this effort aggregatedapproximately $400,000.  We have already signed the sponsorshipagreement with our lead sponsor for 2006 and have commitments fromother sponsors that will yield revenues well in excess of $400,000 in2006.  This does not include any sponsorship revenues from othervenues such as the NBA Games and NHL and Minor League Hockey Games.

**EP Bookstore:** The EP Bookstore houses approximately 1,500 disability specificbooks video and tapes dealing with a wide range of disability topics. We have been building this base for quite some time and are nowpoised to leverage its growth with some targeted marketing to specificmarket segments such as military bases and libraries across the nation.

**Custom Publishing & Contract Publishing**: Over the years, we have taken educational editorial seriespublished in EP Magazine, had them reviewed by a panel of clinicalthought and opinion leaders, edited and packaged into stand alonemonographs focused on a specific subject area and distributed to keytarget market segments mutually identified by a project sponsor andourselves.  All of this work is completely funded underunrestricted educational grants secured from major pharmaceuticalcompanies, medical equipment device manufacturers, consumer packagedgoods companies and financial services companies.  At all times,we adhere to strict ACCME Standards for medical education and strictstandards that insure the separation of that which is educational andthat which is promotional in nature.  An example of this approachis as follows:

Oureditorial advisory board suggests a topic that is cutting edge and muchneeded in the context of medical education.  An example is TheSpectrum of Mitochondrial and Metabolic Disorders.

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Aseries is published on this subject featuring the very best medical andscientific research authorities we can find. The series might be three,four or six consecutive articles in EP magazine, each one focused on aspecific area.

Oncecomplete, the series is then reviewed by a separate panel of experts toinsure that it is adequate and or needs additional bolstering if it isto be packaged as a stand-alone monograph.  Additional content mayor may not be recommended and we would then take it forward to thesponsor/grantor.

Thesponsor/grantor will decide whether to proceed with the development ofa stand-alone monograph.  We would price the project to includepaper, printing, distribution costs, packaging, etc.  A pricequote will be provided to the sponsor inclusive of our profit margin.

The project will be produced and implemented.

Thisdescription fits A Primary Care Physicians Guide to Mitochondrial andMetabolic Disorders and its companion publication, a Parent’sGuide to Mitochondrial and Metabolic Disorders. Both publications arenow in their third printing with press runs in excess of 100,000 copiesand distributed all over the world and used at major teaching hospitalsand clinics internationally.   Sponsorship revenue for thesetwo products aggregated over $250,000 in 2004 with profit margins ofapproximately 25%.  Extra supplies are always printed and thesecopies are sold through our EP Library at reduced rates, such as $5.00per copy intended to cover postage costs and yield a small profit.

Thisformula is followed for all other such sponsored custom publishingprojects.   However, in 2006, we will become the ContractPublisher for Special Care Dentistry and will be paid by thatprofessional dental society for its services.  We will also beable to share in the revenues and profits generated in excess ofmutually agreeable targets/goals.

OnLine Interactive Educational Seminars:  Another element in ourproduct mix is the EP On Line Interactive TV Quality EducationalSeminars.  This is a project that capitalizes on the relationshipsand credibility we have built with major professional medical societiesas well as lay and consumer organizations representing the interests ofpeople with disabilities. We have produced a total of twenty suchseminars over the past three years and now are poised to offer these inconcert with professional medical societies such as the AADMD, CNF andCNS.  The fact that all of these seminars offer CME accreditationfor physicians usually without fees, coupled with the fact that they donot have to travel but can instead participate from the comforts oftheir homes or offices, help to reduce costs and improve efficiency andeducational results.  To our knowledge, no other company in theUnited States offers the kind of comprehensive authoritativeeducational programming focused exclusively on chronic life longconditions as we do. In addition, we do this by offering on line realtime live interactive TV quality manner utilizing proprietary softwareand delivered over the Internet.  

**Competition**

The following publications are our competition:

(1) C2 Publishing/ABILITY MAGAZINE; Audience – Americans with disabilities, Lifestyle, consumer

(2)Equal Opportunity Publications/CAREERS AND THE DISABLED; Audience -People with disabilities who are at the undergraduate, graduate orprofessional level

(3) No Limits Comm., Inc./NEW MOBILITY Audience – Wheelchair Users

(4)Challenge Publications, Ltd./PALAESTRA; Audience - Sport, PhysicalEducation & coaches & Recreation for those with Disabilities

(5) Paralyzed Veterans of America/PN News & info for people who use wheelchairs

(6)Muscular Dystrophy Assoc/QUEST; Audience – Primarily people withany of 43 neuro-muscular diseases in MDA program; also read by 1000s ofphysicians, clinicians, therapists, and other medical care providers

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(7) Paralyzed Veterans of America/SPORTS ‘N SPOKES; Audience – Wheelchair Users - sports and recreation

(8)Special Living Magazine/SPECIALIVING Magazine; Audience –Physically disabled individuals looking for new products and means tomake life easier and better.

(9) Caregiver Media Group/TODAY’S CAREGIVER; Audience - Caregivers

The following medical education companies are our competition:

AAF-MED

CME and CE accredited provider

660 White Plains Rd., Ste. 535

Tarrytown, NY  10591

1-800-247-7615

www.aafmed.com

CMEand CE accredited provider that specializes in symposia,teleconferences, internet programs, algorithms, monographs, video-andaudiotapes.

Academy for Healthcare Education

Division of The Impact Group

330 Madison Ave., 21st Floor

New York, NY 10017

212-490-2300

www.ahe.edu

DevelopsCME/CPE-certified programs for physicians and pharmacists includingregional, local, and satellite symposia.  Also develops enduringmaterials such as monographs and multimedia programs includingwebsites, audioconferences, and videoconferences.

Advanstar Medical Economics

Five Paragon Drive

Montvale, NJ  07645

888-581-8052

www.advanstarhealthcare.com

CME/CE and non CME/CE accredited meetings and symposia, conferences and market research.

Alpha & Omega Worldwide, LLC

370 Campus Drive

Somerset, NJ 08873

888-999-9672

www.alpha-and-omega-llc.com

Designs and implements medical education and non-traditional communication programs including CME.

Center for Bio-Medical Communication, Inc.

433 Hackensack Avenue

9th Floor

Hackensack, NJ  07601

201-342-5300

www.cbcbiomed.com

A full service medical education (CME) provider

The Chatham Institute

26 Main Street, 3rd Floor

Chatham, NJ  07928-2402

800-381-4012

Accredited provider of medical, pharmacy and nursing continuing education.

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CPE Communications

84 Headquarters Plaza

West Tower, 6th Floor

Morristown, NJ  07960

973-971-0700

www.cpeducate.com

Full-servicemedical education group that brings scientific expertise and strategicsolutions to the planning, promotion and implementation of educationprograms.

DiMedix, LLC

34 Mountain Blvd.

Suite 202

Warren, NJ  07059

800-465-8870

www.dimedix.com

A full-service medical education company specializing in the design, development, and execution of CME/CE education programs.

The Hatherleigh Company, Ltd.

800-367-2550

5-22 46th Avenue

Suite 200

Long Island City, NY  11101

800-367-2550

www.hatherleigh.com

CME and CE distance learning activities for physicians, nurses, and allied health professionals.

Health Learning Systems

155 Route 46 West

Wayne, NJ  07470

973-785-8500

www.commonhealth.com

Creates comprehensive and ground breaking medical education solutions.

Impact Communications

330 Madison Ave., 21st Floor

New York, NY  10017

800-490-2300

www.impactgroup1.com

Specializesin developing and implementing CME/CPE-certified and non-certifiedprograms for physicians, allied healthcare professionals, and patients.

Thomson Interphase

5 Paragon Drive

Montvale, NJ  07646-1742

201-358-7400

Full-service company dedicated to delivering timely, academically rigorous continuing medical education activities.

IntraMed

230 Park Avenue South

New York, NY  10003-1566

212-614-3800

Specializesin developing and managing educational programs intended for healthcareprofessionals, patients, families of patients and other caregivers.

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Network for Continuing Medical Education

One Harmon Plaza

Secaucus, NJ  07094

800-223-0433

www.ncme.com

Independent,full-service, ACCME-accredited medical communications company that hasbeen providing medical education to physicians & other healthcareprofessionals since 1965.

Spectrum Healthcare Communications

1140 Route 22 East. Ste. 201

Bridgewater, NJ  08807

800-922-0949

www.impactgroup1.com

Specializesin developing and implementing CME/CPE-certified and non-certifiedprograms for physicians, allied healthcare professionals and patients.

Althoughthe above companies may be deemed to be our competition, none of theabove companies focus on chronic life long conditions and disabilitiesin the manner that we do. EP Magazine, for example, is the only specialinterest consumer publication serving the special needs marketplace whohas been accorded the privilege of offering Continual Medical EducationCredits to physicians and who is endorsed by a professional medicalsociety.  

**Material Agreements**

(1)Printing Contract with Transcontinental Printing & Graphics, Inc.– this agreement was originally signed with Exceptional Parentmagazine in 1999.  It was for a five year period commencingOctober 1, 1999 and ending on October 1, 2004.  In July 2004, itwas extended for an additional 5 years through October 2009, in theform of  a letter received from Transcontinental. It provides forthe printing of our monthly publication called “ExceptionalParent.”

(2)EBSCO Publishing, Inc. License Agreement – we executed thisagreement on October 1, 2005 but have not received an executedagreement from EBSCO Publishing, Inc. This agreement is for a 3-yearterm with successive one year renewals unless either party providesnotice of non-renewal 90 days prior to the expiration of the presentterm. This agreement provides for the license of our content in ourpublications to be disseminated by EBSCO Publishing, Inc. EBSCO agreesto pay us royalties, on a quarterly basis, equal to 20% of the netrevenue collected on products sold by them.

(3)Booke and Company, Inc. Investor Relations Agreement – thisagreement was executed in September 2005.  It requires Booke andCompany, Inc. to provide us with investor relations services.  Theterm of the agreement is for one year.  We are required to makemonthly payments of $4,000.  The principals of Booke and Company,Inc., were given options as follows: Stephen B. Booke – 60,000options; and Gerald A. Amato – 340,000 options.  The optionsexpire on October 1, 2012 and have an exercise price of $.05 per share.

(4)Vemics, Inc. Agreement - On December 8, 2005, we entered into anexclusive joint venture agreement with Vemics, Inc (Vemics) wherebyVemics and us will undertake to jointly provide an Internet-based,on-line interactive TV quality communication system for the delivery ofeducational/training content and business meetings (the Agreement).Pursuant to the Agreement, we will (i) market and resell Vemicsservices to our customers and sponsors in the special needs market;and, (ii) utilize exclusively the Vemics system in providing ourcustomers and sponsors with On-Line, Interactive Live Internet-basededucational/training content and business meetings.  Vemics hasappointed us to act as Vemics’ exclusive global representative inthis capacity and has granted us a license to provide Vemics services,software, and documentation to our customers.  Vemics will provideus with sales and marketing literature and training sessions for oursales and technical personnel.  Vemics will also provide customersupport services to us and our customers.  Vemics and us willshare equally among the profits after all direct expenses are paid,from fees paid by our customers and sponsors in connection with theservices rendered as contemplated by the Agreement. EP Global reportswill report all revenues as a component of its financial reporting. Theagreement shall remain in force until November 1, 2007 (the InitialTerm).  Upon the expiration of the Initial 

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Term,the Agreement will automatically renew for one additional term of threeyears (Renewal Term) unless and until either party notifies the otherparty in writing.  The Agreement may be terminated by either partyupon default or insolvency of the other party.

(5)Child Neurology Foundation Agreement -   On October 26, 2005,we signed an agreement with the Child Neurology Foundation to producefour (4) on-line CME and CEU accredited seminars on spasticity. The seminars will educate and inform caregivers of children andadolescents with neurologic and developmental disorders and thephysicians, educators and allied health care professionals involved intheir care and development. 

(6)ProCirc, LLC. Circulation Services Agreement – Effective November11, 2005, we signed a Circulation Services Agreement with ProCirc, LLCwhereby ProCirc will perform circulation services for us.  Theagreement commenced on December 1, 2005 and terminates on November 30,2006. It shall automatically renew for successive one year periodsstarting on December 1, 2006 unless either party terminates theAgreement on 90 days prior written notice before the end of any term.We are required to pay ProCirc the sum of $7,000 per month for basicservices under the agreement for the first 12 months of the agreement. Thereafter, the fee increases each year by 5%.  In addition,ProCirc can receive a 10% bonus for every dollar earned over $30,000per month 

**Recent Financing**

OnSeptember 23, 2005, we completed financing agreements by executing asecurities purchase agreement with the following entities: AJWPartners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and NewMillenium Capital Partners II, LLC. Under the securities purchaseagreement, we will issue up to $3,720,000 in callable securedconvertible notes. The notes are convertible into shares of our commonstock. The conversion price is based on the lesser of $0.12 or theaverage of the lowest 3 intra-day trading prices during the 20 tradingdays immediately prior to the conversion date discounted by 40%. Thetiming of the conversion is at the option of the holder. The notes aresecured by a grant of a general security interest in all of our assetsboth tangible and intangible. In addition, our officer and director,Joseph Valenzano individually pledged 3,371,093 shares of our commonstock. 

Inaddition, we are to issue stock purchase warrants convertible intoshares of our common stock on a one for one basis.  The exerciseprice is $.15 and the term of the warrants is 5 years.  

Aprivate investment firm, Westminster Securities Corporation based inNew York City, received a commission of $240,000 (8% of the netproceeds of $3,000,000) for arranging for this financing.

Todate, we have received net proceeds of $3,000,000 under the terms ofthe securities purchase agreement which represents the total commitmentfor funding from the group identified above.

**Governmental Regulation**

Our business is not subject to any governmental regulations.

**Intellectual Property**

Wedo not have any patents.  We have registered trademarks for thefollowing: DAN (Disability Awareness Night); EP Symbol of Excellence;and EP Global.

**Employees**

Asof April 14, 2006, we have 20 full time employees and 3 part timeemployees. We have never had a work stoppage, and no employees arerepresented under collective bargaining agreements. We consider ourrelations with our employees to be good. We have entered into anemployment agreement with our principal executive officer and director.

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**ITEM 2. DESCRIPTION OF PROPERTY**

Wecurrently operate our business from two (2) corporate offices locatedas follows: (1) corporate headquarters: 551 Main Street, Johnstown,Pennsylvania 15901, telephone number (814) 361-3860.   Thelease agreement for this space is from November 1, 2004 through October1, 2006.  The monthly base rent payment for the initial year ofthe lease was $6,021.88. There are additional rent payments for commonarea maintenance.  During the previous year, our monthly rentpayments for base rent and additional rent were approximately $7,500per month.  The monthly base rent payment for the period November1, 2005 through October 1, 2006 is $6,262.75. We have the right to two3-year options by providing the landlord with 90 days prior noticebefore the end of the preceding term.  For the first 3-year periodcommencing November 21, 2006, the base rent shall be $6,744.50 permonth.  For the second 3-year option period commencing November 1,2009, the base rent shall be $7,467.13 per month. We receive a monthlyrent subsidy of approximately $5,000 from InforMdx a past venturepartner, This subsidy was a component of an original agreement withInforMdx that has since been voided with exception of the continuationof this subsidy. The term of the subsidy coincides with the initial twoyear term of the lease of the Johnstown space.  We presently leaseapproximately 5,781 square feet of office space; (2) New Jersey office:65 State Route 4, River Edge, New Jersey 07661; telephone number (800)EPARENT.  The lease for the New Jersey office is a five (5) yearlease that commenced on September 1, 2001 and expires on August 31,2006.  It consists of approximately 5,850 rentable square feet. The annual rent is a net amount. Electric is separately meteredand all operating expenses and real estate tax increases from theinitial year are our responsibility based on our percentage of 24.38%. The monthly and annual gross rent for the period September 1,2005 through August 31, 2006 is $9,750 and $117,000, respectively. Wehave the option to renew this lease at the end of the initial five (5)year term for an additional five (5) years at the rate of $125,775 peryear.  This lease is in the name of Psy-Ed Corporation doingbusiness as Exceptional Parent Magazine, our wholly owned subsidiary.

**ITEM 3. LEGAL PROCEEDINGS.**

MichaelMiller, Juan Sala, Carolina Hernandez, Cesar Alquegui, Josephine Lugo,III and George Sukornyk v. EP Global Communications, Inc., Court ofChancery of the State of Delaware in and for New Castle County, C.A.No. 1502-N – This case was commenced on July 22, 2005. Plaintiffs made the following allegations in their lawsuit: Theplaintiffs were shareholders of our company when it was known as EastCoast Airlines, Inc., prior to the acquisition agreement with Psy-EdCorporation in November 2003. Subsequent to the Psy-Ed acquisition, theplaintiffs allegedly agreed to surrender certain "free trading" sharesof our common stock in exchange for restricted shares of our commonstock.  Plaintiffs claim that we never delivered the restrictedshares of common stock to each of them. On September 30, 2005, we filedour answer denying liability to the plaintiffs together withcounterclaims for unjust enrichment, civil conspiracy and relatedclaims against each of the plaintiffs.  Our answer denies anywrongdoing and, in fact, asserts unjust enrichment to the plaintiffs,negligent misrepresentations by the plaintiffs and a civil conspiracy. By our counterclaim, we are requesting the return of any of ourshares of common stock still held by the plaintiffs and relateddamages. The plaintiffs in the lawsuit are requesting specificperformance of an alleged agreement to give them 1 restricted share ofour common stock for every 2 unrestricted shares they tendered to us(they claim to have tendered approximately 4 million shares), togetherwith unspecified compensatory damages, interest and costs. The parties,as of April 14, 2006, have settled this lawsuit and have signed adefinitive settlement agreement all appropriate releases beingexchanged.

Psy-EdCorporation, d/b/a Exceptional Parent v. Stanley Klein and KimberlySchive, Superior Court in and for the County of Middlesex, in theCommonwealth of Massachusetts, Civil Action No. 99-6140; CounterclaimsBrought By Klein Against Plaintiffs and Third-Party Directors (KennethRossano, David Hirsch, 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. We are plaintiffin a case pending in the Superior Court of Middlesex County,Massachusetts, in which claims have been asserted against a formerofficer of the company, Stanley Klein, and a former employee, KimberlySchive. The claims arise out of a settlement agreement executed by usand Klein in March, 1998, one which we claim Klein breached even beforehe signed the document and again shortly after the document was signed.There are additional claims of fraud, defamation, slander and tortuousinterference against Klein. Klein has counterclaimed, seeking thebenefits he was to receive under the agreement, including the remainderof a buy-out of shares of our common stock he holds. The trial iscurrently scheduled to begin on June 12, 2006. It is our opinion thatwe will not be liable for the payments and that the amount of damagesbeing sought as compensation to us far exceeds the contract balancewhich is $119,825.

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

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

There were no matters submitted to security holders in the fourth quarter of the Company’s fiscal year.  

**PART II**

**ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.**

**Market Information**

Ourcommon stock is currently traded on the OTC Bulletin Board under thesymbol “EPGL.” Our common stock has been quoted on the OTCBulletin Board since December 15, 2004.  The following table setsforth the range of high and low bid quotations for the last 16 days ofcalendar year 2004, and for each of the four quarters of calendar year2005. These quotations as reported by the OTC Bulletin Board reflectinter-dealer prices without retail mark-up, mark-down, or commissionsand may not necessarily represent actual transactions.

|   | **YEAR** | **QUARTER**                                                                                                                    | **HIGH** | **LOW** |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------|----------|---------|
|   |     |                                                                                                                           |     |    |
|   | 2004     | Fourth- Eleven trading days in calendar 2004 subsequent to the Company'slisting on the OTC Bulletin Board on December 15, 2004 | $0.75    | $0.68   |
|   | 2005     | First                                                                                                                          | $0.65    | $0.17   |
|   | 2005     | Second                                                                                                                         | $0.22    | $0.06   |
|   | 2005     | Third                                                                                                                          | $0.145   | $0.050  |
|   | 2005     | Fourth                                                                                                                         | $0.07    | $0.035  |

**Holders**

Asof April 14, 2006 in accordance with our transfer agent records, we had163 shareholders of record. Such shareholders of record held 25,075,818shares of our common stock.   

**Dividends**

Wehave never paid a cash dividend on our common stock. It is our presentpolicy to retain earnings, if any, to finance the development andgrowth of our business. Accordingly, we do not anticipate that cashdividends will be paid until our earnings and financial conditionjustify such dividends. There can be no assurance that we can achievesuch earnings.

**Recent Sales of Unregistered Securities**

Fiscal Year 2003 - The Company issued the following unregistered securities:

| - | OnMarch 4, 2003, the Board of Directors authorized a forward stock splitof all of the issued and outstanding Company common shares on the basisof 25.2 common shares for 1 common share outstanding, issueable toholders of record as of March 5, 2003. Accordingly, the 754,500outstanding common shares held of record on March 5, 2003 were forwardsplit and resulted in 19,013,400 common shares outstanding as of thatdate. The 25.2 forward stock split was in the form of a stock dividend. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| -      | OnAugust 13, 2003, the Company received gross subscription proceeds inthe amount of $5,000 from an accredited investor and issued to it100,000 restricted common shares pursuant to a private placement,utilizing the exemption from the registration requirements of the 1933Act provided in Rule 506 of Regulation D.                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| -      | OnNovember 28, 2003, pursuant to unanimous adoption by the Boards ofDirectors of  Psy-Ed Corporation and East Coast Airlines, Inc.,the companies entered into a Share Acquisition Agreement thatauthorizes  East Coast Airlines, Inc. (the “Company”or “East Coast”) to offer  (the“Offering”) 173 shares of its Common Stock (the“Common Stock”) for each share of Psy-Ed Corporation(“Psy-Ed”) Common Stock held of record by all Psy-EdStockholders. This Offering resulted in the issuance of 13,010,984shares of the Company’s common stock to 50 Psy-Ed shareholders. |

Fiscal Year 2004 - The Company issued the following unregistered securities:

| -      | In August 2004, we issued 800,000 shares of its common stock for financial services.                                                                                                      |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                      |
| -      | In August 2004, we issued 200,000 shares of its common stock for legal services.                                                                                                          |
|   |                                                                                                                                                                                      |
| -      | In October 2004, we issued 6,000 shares of its common stock to its Directors for directors’ fees.                                                                                   |
|   |                                                                                                                                                                                      |
| -      | InDecember 2004, we issued 500,000 shares of its common stock to itsChief Executive Officer and 300,000 shares of its common stock to itsChief Operating Officer for management services. |

Fiscal Year 2005 - The Company issued the following unregistered securities:

| -      | OnJanuary 2, 2005, we issued an aggregate of 1,000,000 shares of ourrestricted common stock in consideration for professional servicesrendered to us.  The issuance was valued at $.009 per share or$9,000. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                             |
| -      | OnFebruary 9, 2005, we issued 80,000 shares of our restricted commonstock in consideration for professional services rendered to us. Theissuance was valued at $.162 per share or $12,960.                       |
|   |                                                                                                                                                                                                             |
| -      | OnFebruary 9, 2005, we issued 20,000 shares of our restricted commonstock in consideration for professional services rendered to us. Theissuance was valued at $.162 per share or $3,240.                        |
|   |                                                                                                                                                                                                             |
| -      | OnMay 9, 2005, we issued 50,000 shares of our restricted common stock toin consideration for services rendered to us as an employee. Theissuance was valued at $.09 per share or $4,500.                         |
|   |                                                                                                                                                                                                             |
| -      | OnJuly 27, 2005, we issued an aggregate of 40,000 shares of ourrestricted common stock in consideration for services rendered asemployees.  The issuance was valued at $.117 per share or $ 4,680.          |
|   |                                                                                                                                                                                                             |
| -      | OnSeptember 30, 2005, we issued 10,000 shares of our restricted commonstock in consideration for consulting services rendered to us forbusiness consulting. The issuance was valued at $.048 per share or $480.  |
|   |                                                                                                                                                                                                             |
| -      | OnSeptember 30, 2005, we issued 50,000 shares of our restricted commonstock in consideration for consulting services rendered to us. Theissuance was valued at $.048 per share or $ 2,400.                       |
|   |                                                                                                                                                                                                             |

**Equity Compensation Plan Information**

Thefollowing table sets forth certain information as of April 14, 2006,with respect to compensation plans under which our equity securitiesare authorized for issuance:

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|   |                | (a)                                                                                         | (b)                                                                         | (c)                                                                                                                                       |
|--------|---------------------|---------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|   |                | _________________                                                                           | _________________                                                           | _________________                                                                                                                         |
|   |                | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Numberof securities remaining available for future issuance under equitycompensation plans (excluding securities reflected in column (a)) |
|   |                |                                                                                        |                                                                        |                                                                                                                                      |
|   | Equity compensation | None                                                                                        |                                                                        |                                                                                                                                      |
|   | Plans approved by   |                                                                                        |                                                                        |                                                                                                                                      |
|   | Security holders    |                                                                                        |                                                                        |                                                                                                                                      |
|   |                |                                                                                        |                                                                        |                                                                                                                                      |
|   | Equity compensation | None                                                                                        |                                                                        |                                                                                                                                      |
|   | Plans not approved  |                                                                                        |                                                                        |                                                                                                                                      |
|   | By security holders |                                                                                        |                                                                        |                                                                                                                                      |
|   | Total               |                                                                                        |                                                                        |                                                                                                                                      |

**ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

Inthis section, “Management's Discussion and Analysis or Plan ofOperation,” references to "we," "us," "our," and "ours" refer toEP Global Communications, Inc. and its consolidated subsidiaries.

Critical Accounting Policies:

Ourdiscussion and analysis of our financial condition and results ofoperations are based upon our financial statements, which have beenprepared in accordance with generally accepted accounting principles inthe United States of America. The preparation of these financialstatements requires us to make estimates and judgments that affect thereported amount of assets, liabilities and expenses, and relateddisclosure of contingent assets and liabilities. We bases our estimateson historical experience and on other various assumptions that arebelieved to be reasonable under the circumstances, the results of whichform the basis from making judgments about carrying values of assetsand liabilities that are not readily apparent from other sources.Actual results may differ from these estimates under differenceassumptions or conditions.

 

Plan of Operation:

 

Itis management’s intent to continue and expand our 35 yearheritage of providing “Information that matters from those whocare” to the special needs market. The 35 year heritage is basedon our wholly owned subsidiary, Psy-Ed Corporation. In 2004, we beganimplementing a growth strategy that consists of a three-pointinitiative as outlined below to increase revenues and profitability for2006 and beyond.

 

Managementbelieves that our core services, consisting of ad revenue, customcommunications and EPGL special project segments including“Disabilities Awareness Night” conducted in various sportsmediums as well as our innovative on line interactive educationalprograms are all forecast to experience significant growth beginning inthe second quarter of 2006 

 

Outlinedbelow are the significant reasons why we believe that all segments ofour business are poised for significant growth in 2006.

Special Projects:

DisabilityAwareness Night - In each of the preceding three years, theDisability Awareness Night (DAN) campaign launched in 2002 has grownsubstantially.  In 2002, we started with two teams, the New YorkYankees and the Boston Red Sox.  In 2003, the participationexpanded to fourteen teams.  In 2004, we grew to twenty-seventeams and in 2005 we had DAN events in thirty-one stadiums includingthe Hall of Fame Game in Cooperstown, New 

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York.In 2005, we experienced the participation of our lead sponsor whosefinancial contribution has now expanded from $150,000 to $300,000 withancillary sponsorship totaling approximately $200,000 for print andother services. We also benefited from additional sponsorship providedby other national entities such as Genzyme, Shire Pharmaceuticals andVolvo.   

EducationalOn Line Programming - In December 2005 we launched the first of fouron-line interactive live TV quality educational programs underunrestricted educational grants from a major pharmaceutical company,Allergan Inc. This will be followed by other series dealing withconditions such as epilepsy and expanded newborn screening utilizingtandem mass spectronomy (MS/MS). It is expected that in 2006 thepreponderance of an appropriation of $1,000,000 to provide educationand informationsl access to professional and family military caregiverswill be dedicated to providing this education using our on line medium.

 

Strategic Initiatives:

Ourplatform for growth in part is due to a number of marketing jointinitiatives that have been entered into allow EPGL to address targetmarkets in a concentrated manner. Listed below are the keyrelationships we now have that are intended to result in additionalrevenue for the Company.  

 

ChildNeurology Foundation - Agreement to co produce on line seminars in2006. No other entity has this opportunity. The CNF is the recognizedextension of the more than 1,300 child and adult neurologists in theUnited States and the acknowledged entity by this group to conducteducational programming.

 

Vemics, Inc. - Relating to technology exclusivity in health care.

 

CTCFoundation and John Williams - EPGL and CTC / John Williams have agreedto joint market to assistive technology companies capitalizing on thework and writings already performed by John Williams an acknowledgedexpert in the field of assistive technology. Mr. Williams is a regularcontributor to publications such as USA today, writing on trends anddevelopments in assistive technology an area of c critical importanceto individuals with special needs.

 

Wehave been notified that as of December 31, 2005, the bill containing anappropriation earmarked for EP Global in the amount of $1,000,000 haspassed both houses of Congress and been signed by the president. Please refer to the commentary that follows for furtherexplanation of the process that will lead to the funding of thisappropriation... These funds will be used to provide ongoing educationfor military families and physicians caring for children withdisabilities and special health care needs.

 

Wehave also expanded our sales force from four individuals in 2005 toeight individuals and one outside representative responsible for WestCoast sales in support of our selling efforts primarily of spaceadvertising in our various markets across the nation.

 

Toimprove efficiency and allow for greater promotion or our magazine tostimulate subscription income we have outsourced our entire circulationmanagement to a firm specializing in this area.   Theincremental cost of doing this is not material in relation to the coststo date.  Previously, circulation management has been handledinternally by our existing staff.  Our business, with its multipleproduct lines and multi media approach to publishing andcommunications, suggests that we might best be able to grow ourexisting paid circulation base under the direction of an experiencedand professional circulation management team who can also oversee theshift to a smaller more effective fulfillment firm; one more suited tothe nature of our business which is heavily involved in medical andhealth care related activities.  Accordingly, we are shiftingcompensation and related expenses to outside professional circulationservices that have experience in both consumer as well asmedical/professional publishing.  The cost differential associatedwith this shift, as noted, is negligible but the potential forsignificant increases in paid circulation and related developmentactivities such as bundled advertising and sponsored bulk distributionof the monthly magazine should yield higher revenue performance for us.

Theagreement with ProCirc, based in Miami, Florida, is for one year andcan be expanded or terminated depending on its performance.  Thereare incentives built into the agreement to reward performance. Finally, it is important to note that increases in unitcirculation will also result in increases in advertising as we will bereaching a larger audience which should justify increases in ad pagesales from a larger number of ad page sales as well as ad page rateincreases.

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In2005, we have expanded our Disabilities Awareness Night programs,principally conducted in major league baseball parks in 2004. Prior to this time, our programs were taking place in NationalBasketball Association venues, minor league baseball parks and minorleague hockey arenas. On May 23, 2005, in conjunction with the NationalBaseball Hall of Fame in Cooperstown, New York, we hosted prior to theannual “Hall of Fame” game, a ceremony honoring returningdisabled veterans from Iraq and Afghanistan.  This was done inconjunction with Walter Reed Army Medical Hospital and its CommandingGeneral who presented awards to returning veterans and their familiesselected for the honor. Also at that event, one of the honoreesreceived his “Purple Heart” for wounds received in Iraq. Wewill, once again, on May 15, 2006 hold an event at the 2006 “Hallof Fame” game in Cooperstown. Sponsorship for the event is beingprovided by Mass Mutual financial Group and Bearing Point, a nationalconsulting firm headquartered in Tysons Corners, Virginia.

 

OnDecember 1-3, 2005 the Annual World Congress and Exhibition onDisabilities was held in Philadelphia, Pennsylvania. Previously, inOctober 2004, it had been held in Orlando, Florida with approximately6,000 attendees.  We conducted over 100 individual educationsessions during the event with world renowned guest lecturers providingeducation on topics including autism, ADHD (Attention DeficitHyperactivity Disorder), cerebral palsy and mental retardation.

Wehave disengaged from the World Congress and Exhibition as an entity andare expected to pursue alternative venues to continue the production ofhosted educational sessions in a forum environment. This in addition toour interactive on line initiatives.

 

Itshould also be noted that further internal growth is expected to resultfrom Exceptional Parent Magazine being designated as the officialpublication of the American Academy of Developmental Medicine andDentistry (“AADMD”), a national organization of over 1,000doctors and dentists who have dedicated their efforts to providing“best practices” advice to caregivers on how to medicallyand dentally care for the special needs individual. Beginning with theJuly 2005 issue of Exceptional Parent Magazine, AADMD is providingarticles for the magazine and the opportunity for physicians to secureup to 2 credit hours of Continuing Medical Education by completing atest that is to follow each article. Management believes thatExceptional Parent Magazine is the first consumer publication ever tooffer Continuing Medical Education credits to physicians. Ourrelationship with the AADMD is in addition to relationships we enjoywith numerous disabilities groups throughout the United States as wellas with medical societies such as the Child Neurology Society.

 

Itshould also be noted that our officer and director, Joseph M. ValenzanoJr. is the only non-physician to hold a board seat on the AADMD and Mr.Valenzano currently chairs the Executive Advisory Board of the AADMD.

 

InMarch 2005, we submitted an appropriations request in the amount of$1,000,000 to Congress. Under the appropriation request, the Army wouldreceive $1,000,000 and then develop a contract for delivery of servicewith EP Global for that approximate value. We have been notified thatthe appropriation has been approved by both houses of Congress andsigned by the President. Further, in February 2006 we were notifiedthat “these funds had been released to the appropriate departmentat Fort Dietrich, MD which allows EP to begin the processing of itscontract.   A pre proposal submission has been made whichrepresents a condition precedent to actual contract development.between EP Global and the Army. We have been told that the actualcontract development is expected to take 90 -120 days which would meanthat funding for the programs to be undertaken could occur in the latespring to early summer of 2006 although there is not absolute assurancethat this will occur.

 

However,if funded in 2006 as outlined, this would increase our education andinformation programs to military families with special needs dependentsand caregivers. It is our intent to build upon our existingrelationships within the military community to bring timely andmeaningful educational content in both print and on a web baseddelivery system to these families but also to the physicians chargedwith their care.  In this regard, we have already begun theprocess of exploring ways in which we can deliver high qualityeducational content focused in the chronic disability and special needsarea in cooperation with military hospitals such as Walter Reed ArmyMedical Center, Brooke Army Medical Center and the Uniformed MedicalServices School in Bethesda. This initiative, once operational, wouldresult in increased revenue of the entire $1,000,000, to be recognizedsubstantially in 2006 from subscriptions, on-line interactive trainingsessions and custom communication sales. We would account for allrevenues consistent with existing accounting policy which is toidentify revenue streams consistent with our core services which aresubscriptions, page advertising, and special projects/customcommunications and on line web 

15

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basedprogramming. We would also identify these revenue streams as beinggenerated from military funding so as to distinguish the revenuestreams from those funded by private sponsorship.

Managementestimates that the overall cost associated with the planned educationalprogramming will approximate 65% to 75% of revenues received.

  

Our revenues are generated from the following activities:

 

Saleof Advertising Space in Exceptional Parent 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 purchase ad space in our publications toenhance awareness and image for their products and services and brandrecognition for their names. Historically, revenues generated from thesale of advertising space has ranged from approximately $1.6 milliondollars to as high as $2.2 million in the past (1998).

 

Disability Awareness Night Programs at Major and Minor League Stadiums:** **Thisprogram generates revenue. Each of these DAN Events are sponsored on anational basis by a leading sponsor, MassMutual Financial Groupfollowed by regional and local sponsorships.  In 2005 for example,total revenues from this effort aggregated approximately $400,000. Wehave already signed the sponsorship agreement with our lead sponsor for2006 in the amount of $300,000 and have commitments from other sponsorsthat will yield revenues well in excess of $400,000 in 2006.  Thisdoes not include any sponsorship revenues from other venues such as theNBA Games and NHL and Minor League Hockey Games.

 

EPBookstore:  The EP Bookstore houses approximately 1,500 disabilityspecific books, video and tapes dealing with a wide range of disabilitytopics.  We have been building this base for quite some time andare now poised to leverage its growth with some targeted marketing tospecific market segments such as military bases and libraries acrossthe nation. In 2004, library sales amounted to $135,000, which includedretail sales at various trade shows.

 

Thebulk of our library has been built through negotiating with third partypublishers such as Baker and Taylor and McGraw Hill.  This hasbeen done over a period of years and with great selectivity andsensitivity.  We evaluate the extensive titles published by otherbook publishing companies and inquire about their sales.  Based onthe intelligence we obtain, we approach these companies which roughlynumber about 90 and negotiate with them for bulk purchases of certaintitles our Editorial Advisory Board indicates are consistent with ourmission, goals and objectives.  In many cases we are able tonegotiate consignment inventory. All of this is possible because largebook publishers really do not have a good sense of the disabilitymarketplace and/or the needs of specific targeted audiences whetherconsumer or professional in nature. We have this expertise and we wentabout building our library of titles in specific disciplines.  Inthe process of building this library, we place importance inunderstanding 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.  The EP Library also consists of booktitles we own outright and exclusively.  Examples of such titlesinclude the following: No Apologies for Ritalin by Bhushan Gupta, MD;and Patient Persistence by Adele Gill, RN and approximately five othertitles.  None have a material impact taken individually orcollectively but the profit margins earned on these sales areapproximately 30% while the profit margins on other titles are in thevicinity of 10%.  Our decision to have a stake in book publishingis based on the fact that we receive countless number of requests topublish specific manuscripts as books. While most of these arerejected, 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 multi media publishing activities in print or on line. We do not envision total revenues from our book operation toreach levels much beyond $500,000 per year with profit margins on theorder of 15%.

 

CustomPublishing & Contract Publishing:  Over the years, we havetaken educational editorial series published in EP Magazine, had themreviewed by a panel of clinical thought and opinion leaders, edited andpackaged into stand alone monographs focused on a specific subject areaand distributed to key target market segments mutually identified by aproject sponsor and ourselves.  All of this work is completelyfunded under unrestricted educational grants secured from majorpharmaceutical companies, medical equipment device manufacturers,consumer packaged goods companies and financial services companies. At all times, we adhere to strict ACCME Standards for medicaleducation and strict standards that insure the separation of that whichis educational and that which is promotional in nature.  Anexample of this approach is as follows:

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Oureditorial advisory board suggests a topic that is cutting edge and muchneeded in the context of medical education.  An example is TheSpectrum of Mitochondrial and Metabolic Disorders.   

 

Aseries is published on this subject featuring the very best medical andscientific research authorities we can find.  The series might bethree, four or six consecutive articles in EP magazine, each onefocused on a specific area.

 

Oncecomplete, the series is then reviewed by a separate panel of experts toinsure that it is adequate and or needs additional bolstering if it isto be packaged as a stand-alone monograph.  Additional content mayor may not be recommended and we would then take it forward to thesponsor/grantor

 

Thesponsor/grantor will decide whether to proceed with the development ofa stand-alone monograph.  We would price the project to includepaper, printing, distribution costs, packaging, etc.  A pricequote will be provided to the sponsor inclusive of our profit margin.

 

The project will be produced and implemented.

 

This description fits *A Primary Care Physicians Guide to Mitochondria and Metabolic Disorders*and its companion publication, a *Parent’s Guide to Mitochondrial and Metabolic Disorders.*Both publications are now in their third printing with press runs inexcess of 100,000 copies and distributed all over the world and used atmajor teaching hospitals and clinics internationally.  Sponsorship revenue for these two products aggregated over$250,000 in 2004 with profit margins of approximately 25%.  Extrasupplies are always printed and these copies are sold through our EPLibrary at reduced rates, such as $5.00 per copy intended to coverpostage costs and yield a small profit.

 

Thisformula is followed for all other such sponsored custom publishingprojects.   However, in 2006, we will become the ContractPublisher for Special Care Dentistry and will be paid by thatprofessional dental society for its services.  We will also beable to share in the revenues and profits generated in excess ofmutually agreeable targets/goals. Historically, we have produced one ormore significant custom communications projects per year. In 2003 and2004, revenue from this segment amounted to $235,000 and $75,000,respectively. In 2005, no major custom communications program wasundertaken. However, lesser projects involving the sale reprints ofpreviously produced custom communications were done.

 

OnLine Interactive Educational Seminars:  Another element in ourproduct mix is the EP On Line Interactive TV Quality EducationalSeminars.  This is a project that capitalizes on the relationshipsand credibility we have built with major professional medical societiesas well as lay and consumer organizations representing the interests ofpeople with disabilities.  We have produced a total of twenty suchseminars over the past three years and now are poised to offer these inconcert with professional medical societies such as the AADMD, CNF andCNS.  The fact that all of these seminars offer continuing medicaleducation (CME) accreditation for physicians usually without fees,coupled with the fact that they do not have to travel but can insteadparticipate from the comforts of their homes or offices, help to reducecosts and improve efficiency and educational results.  To ourknowledge, no other company in the United States offers the kind ofcomprehensive authoritative educational programming focused exclusivelyon chronic life long conditions as we do. In addition, we do this byoffering on line real time live interactive TV quality manner utilizingproprietary software and delivered over the Internet.   Weexpect to conduct over 20 such seminars in 2006 in combination with ourmilitary initiative.  We had four on line seminars under contractas of December 30, 2005, and have added an additional two since thatdate without consideration of the military. We also have several otherproposals outstanding. 

 

Liquidity and Capital Resources

 

Earningswere insufficient in years 2004 and 2005 to meet the liquidity needs ofoperations in those periods. These deficits experienced were in partthrough a number of proactive actions taken including the conversion ofa $350,000 trade payable and $300,000 of other short term debt intothree year notes effective December 31, 2004.  Each of these noteswill require interest payments only in 2005 at 6% with amortizationbased on a five year term commencing January 1, 2006 until the end ofthe three year term at which time any remaining balance will be due.

 

Inaddition, in the fourth quarter of 2004, we received approximately$200,000 of prepayments for 2005 advertising and other services. These funds improved liquidity but increased deferred revenues.

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Tofurther support the working capital requirements of operations, inMarch 2005, we received a short-term loan of $90,000 from JosephValenzano, our CEO.

ThroughApril 30, 2005, the short-term debt modifications noted above haveresulted in the reclassification of approximately $1,200,000 fromcurrent liabilities to long-term debt.

 

FromApril 2005 through September 30, 2005, additional liquidity wasprovided by non-affiliated shareholders who collectively loaned oradvanced $272,000 under varying arrangements generally with terms ofunder one year at rates linked to prime.  While managementbelieves that these non-affiliated shareholders will continue to investin us, they are under no obligation to do so.

 

Asreflected in our financial statements, our liabilities arecollateralized by our tangible and intangible assets.  Theseassets, stated at their nominal historical cost do not provide adequatecollateral for these liabilities.  However, management believesthat the historical cost of our assets together with the unrecordedvalue of the editorial and library content (maintained in digitalformat) developed over our 35 years of our publication providessubstantial collateral in excess of the amounts owed secured creditors.To date, the Provident Bank loan has been paid in full and the creditagreement with Provident Bank has been terminated. 

 

Wewere the recipient in 2004 of an “Opportunity Grant” fromthe State of Pennsylvania in the amount of $50,000.  The grant isfor reimbursable costs associated with the administration of the WorldCongress and Exhibition on Disabilities. To date, we have received$38,000 of the committed $50,000 with the balance expected to bereceived in the second quarter of 2006.

 

OnSeptember 23, 2005, we completed financing agreements by executing asecurities purchase agreement with the following entities: AJWPartners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and NewMillenium Capital Partners II, LLC. Under the securities purchaseagreement, we will issue up to $3,720,000 in callable securedconvertible notes. The notes are convertible into shares of our commonstock. The conversion price is based on the lesser of $0.12 or theaverage of the lowest 3 intra-day trading prices during the 20 tradingdays immediately prior to the conversion date discounted by 40%. Thetiming of the conversion is at the option of the holder. The notes aresecured by a grant of a general security interest in all of our assetsboth tangible and intangible. In addition, our officer and director,Joseph Valenzano individually pledged 3,371,093 shares of our commonstock. 

 

Inaddition, we are to issue stock purchase warrants convertible intoshares of our common stock on a one for one basis. The exercise priceis $.15 and the term of the warrants is 5 years.  

 

Aprivate investment firm, Westminster Securities Corporation based inNew York City, received a commission of $240,000 (8% of the netproceeds of $3,000,000) for arranging for this financing.

 

To date, we have received net proceeds of $2,000,000 under the terms of the securities purchase agreement. 

 

Todate we have received $2,000,000 under the terms of the securitiespurchase agreement. We have applied these funds in the manner outlinedin the table below. 

|   | Gross Proceeds Received |  $      2,000,000 |
|--------|-------------------------|-------------------------------------------------|

|   |   |   |     |
|--------|--------|--------|--------------------|

|   | Less - Use of Proceeds |   |
|--------|------------------------|--------|

|   |   | Prorated Closing Costs and Fees                   |             280,000 |
|--------|--------|---------------------------------------------------|---------------------------------------------------------------------------------|
|   |   | Liquidation of line of credit and other bank debt |             470,000 |
|   |   | Pay down of trade debt                            |             446,000 |
|   |   | Pay down of private debt*                         |             606,000 |
|   |   | Total Proceeds Utilized                           |          1,802,000                 |
|   |   |                                              |                                                                            |

|   | Net Retained for operating expenses |  $         198,000 |
|--------|-------------------------------------|-----------------------------------------------------------------|

|   |   |   |   |
|--------|--------|--------|--------|

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*Thepay down of private debt included $140,000 owed to an individual where2,000,000 shares of our stock were contingently issuable as collateral. 

 

Weexpect to receive the final $1,000,000 owed under the securitiespurchase agreement within 2 business days of our registration statementbeing declared effective by the SEC. If the SB-2 is not declaredeffective within 120 days after September 23, 2005, we must pay apenalty of 2% of the outstanding principal balance of the callablesecured convertible notes for each thirty-day period that the SB-2 isnot declared effective.

 

Underthe terms of the Securities Purchase Agreement, we were required tofile with the SEC a proxy to increase our authorized shares by no laterthan October 21, 2005.  Such proxy was not filed until November23, 2005.  We have been advised that the investors do not intendto seek any liquidated damages for our failure to file theproxy. Notwithstanding same, the investors have the right torequest the liquidated damages.  If the investors choose torequest the liquidated damages based on the failure to file the proxyin a timely manner, then we would be required to pay a penalty of 2% ofthe outstanding principal balance from the period the proxy should havebeen filed on October 21, 2005 until it was filed on November 23, 2005.

     

Theremaining proceeds will be used to liquidate private debt approximating$400,000 with the balance of $600,000 to be used for general workingcapital.

 

Withan existing forecast of minimum revenues of $4,000,000 in 2006,management believes that with the operational cash to be generated andthe retained working capital from our recent funding as well as theremaining $1,000,000 of funding to be received, the overall cashrequirements of operations are expected to be met. While there is noabsolute guarantee that we will generate the forecast revenues,management believes that both the revenue generation forecast and theadditional funding received will meet the liquidity requirements ofEPGL for 2006.

 

Atthe present level of operations, working capital requirements tosustain operations approximates $325,000 per month exclusive of anyexisting debt service that approximates an additional $7,000 per month.

 

Toprovide additional liquidity, management has in the first quarter of2006, to applied for a line of credit secured by accounts receivable. Apreviously held line of credit in the amount of $450,000 had been paidoff pursuant to the requirements of the securities purchase agreementunder which $2,000,000 has been received through December 31, 2005.Although there is no assurance that we would be able secure suchfunding, management believes that with its improved working capitalratios and its improving revenue production it is reasonable to believethat a working capital line would be able to be secured. 

 

Should2006 forecast revenues trend toward 2005 levels of, any requirement foradditional liquidity may be provided by a line of credit as well as anincreased in reliance on trade debt it is believed, would in the shortterm provide the liquidity to support operations while adjustments areconsidered to bring revenues back on plan.  It should be notedthat trade debt has been reduced from $600,000 (pre-funding) to under$200,000 (post-funding).

 

Itis management’s estimate that with its existing working capitalresources and with the insurance of the contemplated additional fundingnoted, we will be able to meet the working capital requirements ofoperations for the coming twelve months of operations.

 

Results of Operations

 

Reflectedin the tables below comparisons of revenue and sales and generaladministrative expenses for the years ended December 31, 2005 and 2004as well as commentary on significant variations noted between theperiods.

 

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Sales

 

|   |   | Year Ended December 31, |
|--------|--------|-------------------------|

|   |                 | 2005                                                                                |   | 2004                                                                          |
|--------|----------------------|-------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|
|   | Revenue:             |                                                                                |   |                                                                          |
|   | Advertising revenue  |  $    1,662,527                                                 |   |  $   1,831,457                                                 |
|   | Subscription revenue |           315,579                 |   |          316,150                 |
|   | On line seminars     |             50,000      |   |          125,000                 |
|   | Book sales           |             36,330      |   |            97,489      |
|   | Special projects     |           603,088                 |   |          223,090                 |
|   | Other revenue        |              3,565 |   |             3,754 |
|   | Revenue              |  $    2,671,089                                                 |   |  $   2,596,940                                                 |
|   |                 |                                                                                |   |                                                                          |

 

Salesfor the Twelve months ended December 31, 2005 as compared to the sameperiod in 2004 increased as noted by approximately $75,000. The netincrease is principally the result of the increase in special projectrevenues of approximately $380,000 balanced by decreases in all othersegments as reflected above.

 

Theincrease in special projects income was due to greater sponsorshiprevenues relating to our Disability Awareness Night Program. 

Operating Expenses Including Cost of Sales

 

Costof sales in 2005 decreased by approximately $155,000 as compared to2004. the decrease is primarily due to reducing print run expenseincluding print and postage expense.

 

Commentary on the significant variations in selling, general and administrative expense follow the table that is noted below.

|   |   | Year Ended December 31, |
|--------|--------|-------------------------|

|   |                                               | 2005                                                                           |   | 2004                                                                                                                 |
|--------|----------------------------------------------------|--------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|
|   | Selling general and administrative expenses:       |                                                                 |   |                                                                                                                 |
|   | Salaries and Benefits                              |  $       863,347                            |   |  $      890,132                                                                        |
|   | Business Travel                                    |           381,033            |   |          194,205                                                        |
|   | Legal                                              |           299,119            |   |          106,634                                                        |
|   | Office Expenses                                    |           314,807            |   |          410,992                                                        |
|   | Information Technology                             |             79,613 |   |            75,012                                             |
|   | Administrative Travel                              |             25,700 |   |            91,713                                             |
|   | Consultants                                        |             95,133 |   |          118,237                                                        |
|   | Investor Relations                                 |             26,025 |   |                  -    |
|   | Sales and Marketing                                |             39,783 |   |            19,523                                             |
|   | Other Professional Fees                            |           208,234            |   |            74,542                                             |
|   | Other G&A                                      |           362,056            |   |          231,925                                                        |
|   |  Selling, general and administrative expenses |  $    2,694,850                                            |   |  $   2,212,915                                                                                        |
|   |                                               |                                                                           |   |                                                                                                                 |

Businesstravel expenses have increased approximately $187,000 as a result ofthe increase in sales personnel and an aggressive travel policy thathas included extended travel missions to the West Coast and otherlocations outside of Pennsylvania and New Jersey requiring increasedair travel, overnight accommodations, auto rental and meals while onstation.

Legalexpense increased  $193,000 and relates to 2005 litigation expenseof approximately $160,000 with the balance relating to the costs of SEC compliance and legal expense for general corporate matters.

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Officeexpense decreased $96,000 related almost exclusively to the reductionin equipment lease expense from 2004 to 2005. EPGL terminated allsignificant equipment leases in 2005 resulting in this decrease.

Administrativetravel was reduced in 2005 compared to 2004.  The decrease is dueto the pre move and transition travel costs associated with the move ofthe corporate headquarters to Johnstown, Pennsylvania.

OtherProfessional Fees increased $134,000 over 2004  related to thecost of outside business consultants utilized for identifying revenueopportunities at the state, federal and local levels as well as withinthe military, implementation of a database management system and anetwork management contract. 

Othergeneral and administrative expenses increased approximately $130,000. The most significant components of the increase were an increaseto bad debt expense of $30,000, costs of key man life insurance of$15,000 and an increase in payroll taxes and payroll administrationfees of approximately $20,000.  Other increases occurred over arange of expense categories that, when viewed individually, vary lessthan $5,000.  

Interest 

 

Interestexpense has increased in 2005 compared to 2004 due to an increase indebt, including the $2,000,000 in new funding as previously andincreasing interest rates due prime based lending on certain of theoutstanding debt instruments as well 

 

Taxes

 

Wereflected no provision for income taxes in the first quarter of 2005because of the availability of a significant net operating loss carryforward to offset any taxable income.

 

Debt Expenses 

 

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 $2,035,200 was recorded as a long term liability as of December31, 2005.  (An additional $1 million was received in February2006.)  The convertible debt will be accreted to its face value of$3.7 million under the interest method until it is either converted ormatures. As of December 31, 2005, the accretion was $35,200.

 

Weincurred debt issue costs of $380,000 relating to their convertiblenotes and will be expensed over the term of the convertible debt.

**ITEM 7. FINANCIAL STATEMENTS**

The Company's Financial Statements and Notes to Financial Statements are attached hereto beginning with page F-1.

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

OnFebruary 3, 2006, EP Global Communications, Inc. (the“Company”)  terminated the client-auditor relationshipwith Wiener, Goodman & Company, P.C. effective February 3, 2006. On February 3, 2006, the Audit Committee of the Board ofDirectors of the Company unanimously approved the appointment of Malin,Bergquist & Company, LLP as the independent accountant for theCompany. The Company engaged Malin, Bergquist & Company, LLP onFebruary 3, 2006.

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Inconnection with the audit of the fiscal year ended December 31, 2004and the interim periods subsequent through February 3, 2006, there wereno disagreements with Wiener, Goodman & Company, P.C. on any matterof accounting principles or practices, financial statement disclosure,or auditing scope or procedure, which disagreements if not resolved totheir satisfaction would have caused them to make reference inconnection with their opinion to the subject matter of the disagreementor any event requiring disclosure pursuant to Item 304(a)(1)(iv)(B),(C), (D) or (E) of Regulation S-B.

Theaudit report of Wiener, Goodman & Company, P.C. on the consolidatedfinancial statements of the Company as of and for the year endedDecember 31, 2004, did not contain any adverse opinion or disclaimer ofopinion, nor were they qualified or modified as to uncertainty, auditscope, or accounting principles.   During the most recentfiscal year and the interim period subsequent to February 3, 2006,there have been no reportable events with the Company as set forth inItem 304(a)(i)(v) of Regulation S-K.

**ITEM  8A. CONTROLS AND PROCEDURES**

**Evaluation of disclosure controls and procedures**

Ourchief executive officer and chief financial officer have each evaluatedour disclosure controls and procedures (as defined in rule 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934, as amended) asof a date within 90 days before the filing of this annual report (theEvaluation Date).  Based on that evaluation, our principalexecutive officer and principal financial officer concluded that, amaterial weakness in our internal accounting controls existed prior toSeptember 2005 so that our disclosure controls and procedures in placewere not adequate to ensure that information required to be disclosedby us, including our consolidated subsidiaries, in reports that we fileor submit under the Exchange Act, is recorded, processed, summarizedand reported on a timely basis in accordance with applicable rules andregulations.  Although our principal executive officer andprincipal financial officer believe our current existing disclosurecontrols and procedures are adequate to enable us to comply with ourdisclosure obligations, we intend to formalize and document theprocedures already in place and establish a disclosure committee.

**Changes in internal controls**

Wehave made significant changes to our internal controls subsequent tothe Evaluation Date.  During the course of the most recentexamination of our financial statements for the period ended December31, 2005 by our independent accountants, we were advised of theexistence of a material weakness in our internal accounting controlsthat existed prior to September 2005.  We have since applied thenecessary corrective action and believe this weakness has beenremediated.

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**PART III**

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

**Directors and Executive Officers**

The following table sets forth information about our executive officers and directors.

|   | **Name**                      | **Age** | **Position**                                          |
|--------|-------------------------------|---------|-------------------------------------------------------|
|   | Joseph M. Valenzano, Jr.      | 60      | President; Chief Executive Officer; and Director      |
|   | Donald Chadwick               | 54      | Director; Secretary; and Treasurer                    |
|   | Robert Salluzzo               | 59      | Chief Operating Officer                               |
|   | Paul  Cunningham         | 43      | Chief Financial Officer, and Chief Accounting Officer |
|   | Dr. David Hirsch              | 58      | Director                                              |
|   | William Bleil                 | 64      | Director                                              |
|   | Rear Admiral Raymond C. Smith | 62      | Director                                              |
|   | Diane Jones                   | 61      | Director                                              |
|   | Antoinette J.G. Hill          | 59      | Director                                              |
|   | F. Chandler Coddington, Jr.   | 73      | Director                                              |

Theabove listed officers and directors will serve until the next annualmeeting of the shareholders or until their death, resignation,retirement, removal, or disqualification, or until their successorshave been duly elected and qualified. Vacancies in the existing Boardof Directors are filled by majority vote of the remaining Directors.Officers of the Company serve at the will of the Board of Directors .Tothe Company’s knowledge, there are no agreements orunderstandings for any officer or director to resign at the request ofanother person nor is any officer or director acting on behalf of or isto act at the direction of any other person other than in his fiduciarycapacity of and for the benefit of the Company and at its direction.

Set forth below is certain biographical information regarding our executive officers and directors:

**Joseph M. Valenzano, Jr., MBA, APC - President / Chief Executive Officer / Director**

JosephM. Valenzano, Jr. is our President, Chief Executive Officer andDirector. He assumed such positions upon our transaction with Psy-EdCorporation in November 2003.  From 1993 until such time, Mr.Valenzano was the President, CEO and director of Psy-Ed Corporationoriginally located in Hackensack, New Jersey and then located inOradell, New Jersey.

Mr.Valenzano received Bachelor of Science and Bachelor of Arts degrees inhistory and economics from Upsala College in 1967.  He also holdsan MBA in Finance and Management from Fairleigh Dickinson University(1971); a Certified Management Accountant (CMA), in 1978, Mr. Valenzanowas awarded an Advanced Professional Certificate (APC) in Accountingand Information Systems from the Graduate School of Business at NewYork University also in 1978.

Priorto his involvement with EP Global Communications, Inc and ExceptionalParent, Mr. Valenzano served as Vice President, Development for McGrawHill Inc. from 1970 through 1977; Vice President, Corporate Developmentfor Elsevier–NDU in the Netherlands, from 1977 through 1980; Sr.Vice President, Finance for Playboy Magazine in Chicago from 1980through 1982; Executive Vice President, Operations for Medical 

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Economicsfrom 1982 through 1988; and Executive Vice President Finance and ChiefFinancial Officer for Thomson International Publishing from 1988through 1993.

Mr.Valenzano is a frequent speaker at conferences, organizations andmedical and dental organizations serving people with disabilities andis on the board of a number of disability organizations. He is theFounder and Member of the Board of Trustees of the EP Foundation forEducation, Inc., an IRS-approved 501(c)(3) not-for-profit corporation. He has served as Chairman of the Executive Advisory Board for theChild Neurology Society and Child Neurology Foundation and as a memberof the board of directors for the CNF. He is currently Chairman of theExecutive Advisory Board to the American Academy of DevelopmentalMedicine and Dentistry and serves as a member of the board of directorsof that prestigious professional society.  He also serves on theboard of directors of Oral Health America; CMRA of Tennessee and MOVEInternational. 

He is the father of five sons, one of whom has a disability.

**Donald S. Chadwick – Secretary, Treasurer and Director**

DonaldS. Chadwick is our Secretary, Treasurer and a director.  He becameour Treasurer in 1997; our Secretary in 2000 and our director in 1997. He is Chairman and the only member of the Finance Committee; anda member of our Audit Committee and Compensation Committee. 

Donaldobtained his Bachelor of Science Degree in Accounting from BabsonCollege located in Massachusetts in 1974.  In 1994, he received aMasters of Business Administration in Strategic Planning from theUniversity of Pittsburgh. Mr. Chadwick is currently a financial and taxconsultant. 

Mr.Chadwick was employed by Price Waterhouse & Co. from 1974 to 1985as an auditor and later joined the tax department. In 1985, he leftPrice Waterhouse & Co. to establish a tax consulting practiceserving individuals and corporations. 

InOctober 1998, Mr. Chadwick formed Cardinal Debt Associates, L.P. (Debt)and Cardinal Equity Associates, L.P. (Equity) which are businessdevelopment companies providing capital to small growth orientedbusinesses. In September 2000, Debt provided a short-term loan and lineof credit to Psy Ed Corporation, a company that we undertook atransaction with in November 2003. In conjunction with the loan, Equityacquired a warrant position in Psy Ed which has been exchanged as aresult of the share exchange with East Coast Airlines (now EP GlobalCommunications Inc.) for 220,754 common shares.

Mr.Chadwick is the general partner of Cardinal Equity Associates, L.P., amajority member of 40401 Corporation LLC.  In August 2005, 40401Corporation LLC filed for bankruptcy protection. In addition, Mr.Chadwick is the director of Signature Financial Group, Inc., a dormantcompany that previously owned various NASD registered broker-dealers.

**Robert J. Salluzzo, CPA– Chief Operating Officer**

RobertSalluzzo is our Chief Operating Officer  He assumed the positionsof Chief Operating Officer and Chief Financial Officer in January 2004. 

Mr.Salluzzo began his professional career with Price Waterhouse & Co.,now PriceWaterhouseCoopers, in 1969, specializing in all areas oftaxation relevant to multinational corporations, high net worthindividuals and various charitable and personal benefit trusts. In1976, he established his own accounting firm, Robert J. Salluzzo, CPA,P.C. focusing on the needs of emerging businesses. In this capacity, hewas involved in the structuring of multi-million dollar asset basedcredit facilities as well as integrating funding from economicdevelopment agencies into capital formation plans for development stagecompanies. In 1977, he merged his firm with John R. Gleason CPA to formGleason and Salluzzo Certified Public Accountants.  This businesswas located in Johnstown, New York.

In1985, Gleason and Salluzzo was merged into Marvin & Company, aregional accounting firm located in both Albany, and Schenectady, NewYork. Mr. Gleason left the practice and Mr. Salluzzo became one of sixpartners responsible for the growth of the firm. In 1992, he retired toestablish a consulting practice called Robert J. Salluzzo CPA, PClocated in Johnstown, New York.  The consulting practice was aimedsolely at addressing the financial 

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needsof emerging and development stage companies with a secondaryconcentration in aviation related activities, including businessplanning for airports.

Throughouthis professional career, Mr. Salluzzo has been actively involved inaviation pursuits, not only as a pilot but also as a consultant invarious aviation matters, including airline certification andmanagement.

Hewas primarily responsible in a consulting role for the construction ofa general aviation airport located in Canandaigua, New York State. Hehas consulted with numerous communities on air service needs as well asbeing a guest speaker at aviation seminars. He has also teamed withleading New York State engineering firms in relation to various airportprojects throughout New York State.

In1969, Mr. Salluzzo received a Bachelor of Business Administration inaccounting from St. Bonaventure University and is an honorablydischarged Army officer having served as a battalion officer of the 5th of the 83rd Artillery from March 1970 through November 1971.

**Paul Cunningham CPA MBA - Chief Financial Officer**

Paul W. Cunningham is our Chief Financial Officer.  He joined the Company in March of 2006.  

Mr.Cunningham received his Bachelor of Arts Degree in Accounting fromWestminster College located in Western Pennsylvania in 1985 and hereceived his Masters of Business Administration in 1987 from the FuquaSchool of Business at Duke University.  He is a Certified PublicAccountant and a Certified Management Accountant.

Priorto joining EPGL Mr. Cunningham was the Chief Financial Officer andController for the Team Dealerships, a privately held group ofautomobile dealerships in central Pennsylvania with approximate annualsales of $70 million.  From 1994 through 2002, Mr. Cunningham wasthe Senior Operations Controller for Crown American Properties LP, aregional shopping mall developer with twenty six malls in seven states. Crown American was acquired by Pennsylvania Real EstateInvestment Trust (PREIT) in 2003.

**David Hirsch, MD – Director**

Dr. David Hirsch is our director.  He became a director in November 2003. 

Apediatric physician, Dr. Hirsch specializes in caring for children withspecial health care needs.  He is presently the Medical Directorfor Maricopa Health Plan, based in Arizona.  He started thisposition in February 2005. In addition, he is also the Medical Directorfor Physicians Review Network, based in Arizona.  He also startedthis position in February 2005. In addition he is presently the MedicalDirector for both Hacienda de Los Ninos (this position commenced in1994) and Hacienda de Los Angeles Skilled Nursing Facility (thisposition commenced in 2001). From 1979 through August 2004, he was apartner in Phoenix Pediatrics, Ltd., located in Phoenix, Arizona. . He has worked with hundreds of children with disabilitiesthroughout Arizona.  Dr. Hirsch is a fellow and is activelyinvolved in the American Academy of Pediatrics (AAP) as a member in thesection on Neurology, Home Health Care and Developmental Disabilities. Dr. Hirsch received three degrees in engineering fromCarnegie-Mellon University, Pittsburgh, Pennsylvania prior to earninghis medical degree at the University of Cincinnati in 1975. In 1969, hereceived his Bachelor Of Science in Mechanical Engineering; in 1970, hereceived his Master of Science in Mechanical Engineering; and in 1970,he also received his Master of Science in Biotechnology.  From1976 to 1978, he did his residency in pediatrics at the University ofMichigan Affiliated Hospitals.   Dr. Hirsch writes a monthlycolumn called “Ask the Doctor” for Exceptional Parent andis active on several boards of foundations and non-profitorganizations.  He also serves as a member of ExceptionalParent’s Editorial Advisory Board.  

Dr.Hirsch has the following teaching appointments: (i) 1978 - ChiefResident and Instructor in Pediatrics, Department of Pediatrics,University of Michigan; (ii) 1970 - Research Associate in Biomechanics,University of Pittsburgh; (iii) 2000 to Present – ClinicalAssistant Professor in Pediatrics, Kirksville College of OsteopathicMedicine; and (iv) 1999 to Present – Clinical AssistantProfessor, Midwestern College of Medicine. He has the followingcertifications and licenses: (i) National Board of Medical Examiners(1976); (ii) Arizona Board of Medical Examiners (1979); (iii) Fellow,American Academy of Pediatrics (1979); and (iv) Board Certified inPediatrics, American Board of Pediatrics (1979). 

25

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**William J. Bleil – Director**

WilliamJ. Bleil is our director.  He became a director on June 24, 2005.He is also the Chairman of our Audit Committee and a member of ourCompensation Committee.

Since1989, Bill has been the President of First Presque Isle Corp. based inErie, Pennsylvania, which was established at such time. It wasestablished to assist companies in obtaining financing through banks,subordinated debt structures and equity structures. Bill has acted in apart-time executive capacity for several businesses.  All suchbusinesses have been private companies.

He received a Bachelor of Science degree in Accounting from Gannon University in Erie, Pennsylvania in 1963.

**Rear Admiral Raymond C. Smith, United States Navy (Retired) – Director**

RearAdmiral Ray Smith is our director.  He became a director inNovember 2003.  He is the Chairman of our Compensation Committee.

RearAdmiral Smith, United States Navy (Retired), age 60 was a Navy SEAL for31 years. During his four-year tenure as Commander of the 2300-menworldwide SEAL force, he raised personnel retention to a level threetimes the Navy average.  As a Navy Captain, Admiral Smith led theNavy SEALs in Operation Desert Storm, conducting over 200 combatoperations of strategic significance while incurring no casualties. Earlier in his career, Admiral Smith directed Navy SEAL training,generally considered to be the most challenging military training inthe world. While in this position, Admiral Smith achieved the highestgraduation rate in the 50-year history of the course (55%).

AdmiralSmith has been recognized in numerous publications and books, mostrecently in Noel Tichy’s book, The Leadership Engine, in which heis cited as a leader closely involved with employees at every level ofhis organization.  Admiral Smith has also been recognized inNewsweek, Fortune, Readers Digest, and on the Discovery Channel, theHistory Channel, and CBS This Morning.

AdmiralSmith was awarded the California Distinguished Service Award while amember of the Governor’s Council on Physical Fitness and Sports. Working directly for the Council Chair, now Governor ofCalifornia Arnold Schwarzenegger, he and the Navy SEALs focused oninner-city at-risk youth, children with special needs, and seniorcitizens.  The Admiral has spoken extensively on his leadershipexperiences and the philosophical underpinning which has supported hiscareer. Admiral Smith also published two Navy SEAL manuals presently inprint by the Government Printing Office.  These two, The SEALNutrition Manual and The SEAL Physical Fitness Manual, focus on thespecial nutritional and fitness needs of Navy SEALs, but have beenwell-received by the general population because of their application toall walks of life.

Priorto retiring from the U.S. Navy, Admiral Smith was assigned as theDirector of Assessment for the U.S. Navy. As the first SEAL Admiral toserve in a general Navy assignment, Admiral Smith was responsible fordeveloping the Navy’s first capability-based assessment process. He led 100 systems analysts in providing service-levelrecommendations directly to the Chief of Naval Operations.

In1967, Admiral Smith received his Bachelor of Science degree inengineering from the United States Naval Academy.  In 1974, hereceived a Masters of Science in Oceanography from the NavalPostgraduate School. 

**Diane Jones – Director**

Diane Jones is our director.  She became our director on December 8, 2005.

DianeJones has made significant contributions to the US Marine Corps familyfor the past several decades.  A strong supporter of all militaryfamilies and volunteerism, she serves as an honorary member of theBoard of Directors of the Marine Corps/Law Enforcement Foundation, andhas served on the Advisory Board of the US Naval Services FamilyLine,the Armed Forces Association, the Armed Forces Branch of the YMCA, andthe US Marine Officers Wives Club.  In 2002, the Marine CorpsLeague selected Mrs. Jones as the recipient of the “Dickey 

26

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ChappelleAward” which is one of the most prestigious awards of the MarineCorps League.  The award is presented annually to a womandeserving of recognition by having made significant contributions inthe interest of Marines or the United States Marine Corps.  Alifelong advocate for individuals with disabilities, Mrs. Jones is amember and past Board member of the Association for Retarded Citizens,an honorary member of the Board of Directors of the Jewish Foundationfor Group Homes, and has served on the Board of Directors for GabrielHouse, a non-profit organization which provides community residentialprograms with disabilities.  She has also served as Director ofthe Parent Resource Center assisting the families of students withspecial needs in Fairfax County, Virginia and has worked in specialeducation as a teacher and coordinator of programs and placements forstudents with learning disabilities. During these last three years asFirst Lady of the Marine Corps, she has been instrumental in improvingthe quality of life for those Marines with family members in theExceptional Family Member Program.  She is a member of theDepartment of Defense steering committee which held its first summitthis year to explore ways of standardizing this program throughoutmilitary services.  Mrs. Jones has fostered a Committee forPersons with Disabilities comprised of family, base, and communityrepresentatives on every major Marine Corps base.   Mrs.Jones expertise has led her to testify before the Subcommittee onSelect Education, U.S. House of Representatives, and she has served asa lecturer to graduate classes at George Mason University, MarymountCollege, and the University of Virginia.  She was appointed to theCalifornia State Council on Developmental Disabilities by Governor PeteWilson during his term.  Mrs. Jones holds a Bachelor of ArtsDegree from George Washington University and a Master’s Degree inSpecial Education from George Mason University. She is married toGeneral James L. Jones, former 32nd Commandant of the Marine Corps andnow presently serving as Supreme Allied Commander NATO.  TheGeneral and Mrs. Jones are long time supporters of the ExceptionalFamily Member Program (EFMP) in the United States Military and they arethe parents of a young woman, Jennifer with Fragile X Syndrome.

**Antoinette J.G. Hill – Director**

Antoinette Hill is our director.  She became our director on December 8, 2005.

AntoinetteHill is a Community Advocate for children with disabilities and anactive participant in promoting partnerships and programs that supporthealthy families and excellence in education for military children. Mrs. Hill is currently a Consultant to the University of MiamiSchool of Medicine’s Mailman Center where she co-developed andteaches a family perspective curriculum to third year pediatricresidents. She is an active board member of the Military ChildEducation Coalition (MCEC), the Chairman of the Sub-Committee onSpecial Education and an immediate past member of the National AdvisoryBoard for the MCEC.  Mrs. Hill is certified as a Special EducationParent Trainer and has received numerous public service awards forcommunity and charitable work and was named one of the OutstandingYoung women of America in 1984.  Mrs. Hill holds abachelor’s and master’s degree.  She is married toGeneral James “Tom” Hill recently retired four star U.S.Army General, U.S. Southern Command.  Mrs. Hill and General Hillare long time supporters of the EFMP Program and the Military ChildEducation Coalition. They are the parents of two children one of whom,Meghan, has a severe disability.  

**F. Chandler Coddington, Jr. – Director**

F. Chandler Coddington is our director.  He became our director on December 8, 2005.

F.Chandler Coddington has served as a director of Vemics, Inc. since2002.  Mr. Coddington has 46 years of experience in the insuranceand retail/agency brokerage business.  He has served in severalchairmanship posts, including Travelers, St. Paul, Cigna, andConnecticut General Life Insurance Company.  He is also active inmany local non-profit endeavors, including United Way, OverlookHospital, Chamber of Commerce, and the YMCA.  Mr. Coddington holdsa Bachelor of Science degree from the University of Maine.  

**Other**

There are no family relationships among any of the directors or officers of the Company.

None of the foregoing Directors or Executive Officers has, during the past five years:

|   | (a) | Hadany bankruptcy petition filed by or against any business of which suchperson was a general partner or executive officer either at the time ofthe bankruptcy or within two years prior to that time; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

27

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|   |   |                                                                                                                                                                                                                                                                                               |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b)    | Been convicted in a criminal proceeding or subject to a pending criminal proceeding;                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                               |
|   | (c)    | Beensubject to any order, judgment, or decree, not subsequently reversed,suspended or vacated, of any court of competent jurisdiction,permanently or temporarily enjoining, barring, suspending or otherwiselimiting his involvement in any type of business, securities or bankingactivities; and |
|   |   |                                                                                                                                                                                                                                                                                               |
|   | (d)    | Beenfound by a court of competent jurisdiction (in a civil action), theCommission or the Commodity Futures Trading Commission to have violateda federal or state securities or commodities law, and the judgment hasnot been reversed, suspended, or vacated.                                      |

**Compliance with Section 16(a) of the Securities Exchange Act of 1934**

TheCompany knows of no person, who at any time during the period fromJanuary 1, 2003, to the present, was a director, officer, beneficialowner of more than ten percent of any class of equity securities of theCompany (a "Reporting Person"), that failed to file on a timely basisany reports required to be furnished pursuant to Section 16(a). Basedupon a review of Forms 3, 4 and 5 furnished to the Company under Rule16(a)-3(d) the Company knows of no Reporting Person that failed to filethe required reports within the required time limits.

**Audit Committee and Audit Committee Financial Expert**

TheCompany has established an audit committee of the Board of Directorscomprised of Mr. Bleil and Mr. Donald Chadwick.  The Board hasdetermined that Mr. Bleil, who is an “independent”director, (as that term is used in Item 7(d)(3)(iv) of Schedule 14Aunder Exchange Act) meets all of the criteria required of an auditcommittee expert.  

**Code of Ethics**

TheCompany has adopted a Code of Ethics applicable to its Chief ExecutiveOfficer and Chief Financial Officer. This Code of Ethics is filedherewith as an exhibit.

**ITEM 10. EXECUTIVE COMPENSATION**

**Compensation of Executive Officers**

**Summary Compensation Table.**The following information relates to compensation received by ourofficers in fiscal year ending December 31, 2005, 2004 and 2003 whosesalary and compensation exceeded $100,000.

**SUMMARY COMPENSATION TABLE**

|   |   |   | **Annual Compensation** | **Long-Term Compensation** |
|--------|--------|--------|-------------------------|----------------------------|

|   | Name and Principal Position  | Year   |  Salary |  Bonus | Other Annual Compensation | Restricted Stock Award(s) | Securities Underlying Options |
|--------|------------------------------|--------|--------------|-------------|---------------------------|---------------------------|-------------------------------|
|   |                         |   |         |        |                      |                      |                          |
|   | Joseph M. Valenzano, Jr. (1) | 2005   | $150,000     | 0           | 0                         | 0                         | 0                             |
|   | President and CEO            | 2004   | $150,000     | 0           | 0                         | 0                         | 0                             |
|   |                         | 2003   | $120,000     | 0           | 0                         | 0                         | 0                             |
|   |                         |   |         |        |                      |                      |                          |
|   |                         |   |         |        |                      |                      |                          |
|   | Robert Salluzzo (3)          | 2005   | $127,500     | 0           | 0                         | 0                         | 0                             |
|   | COO                          | 2004   | $125,000     | 0           | 0                         | 0                         | 0                             |
|   |                         | 2003   | $55,000      | 0           | 0                         | 0                         | 0                             |
|   |                         |   |         |        |                      |                      |                          |
|   | Donald S. Chadwick (2)       | 2005   | $6,000 (2)   | 0           | 0                         | 0                         | 0                        |
|   | Secretary and Treasurer      | 2004   | $6,000 (2)   | 0           | 0                         | 1,000 shares (4)          |                          |
|   |                         | 2003   | $6,000       | 0           | 0                         | 0                         | 0                             |

28

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(1)In accordance with Mr. Valenzano’s employment agreement datedJune 1, 2005, he is to receive an annual salary of $200,000. Due to ourcash constraints, the actual monthly amount owed to Mr. Valenzano hasnot been able to be paid. Presently, Mr. Valenzano is being paid as ifhis annual compensation is based on an annual salary of $200,000 withan accrual being placed on our records for the monthly difference thatis owed. In this regard, as of December 30, 2005, an accrual ofapproximately $32,000 is reflected on our records for amounts owed butnot yet paid.

(2)In 2005, Mr. Chadwick  received $4,500 in salary and $1,700 inconsulting fees for preparing our tax returns.  In 2004, Mr.Chadwick also received $1,300 in consulting fees for preparing our taxreturns.

(3)In 2005, Mr. Salluzzo received $127,500 against a base salary of$160,000. Due to our cash constraints, the actual monthly amount owedto Mr. Salluzzo has not been able to be paid. Presently, Mr. Salluzzois being paid as if his annual compensation is based on an annualsalary of $90,000 with an accrual being placed on our records for themonthly difference that is owed. In this regard, as of December 31,2005, an accrual of approximately $24,000 is reflected on our recordsfor amounts owed but not yet paid.

(4) For Mr. Chadwick’s attendance at our board of directors meetings. 

**Option Grants Table.**The following table sets forth information concerning individual grantsof stock options to purchase our common stock made to the executiveofficer named in the Summary Compensation Table during fiscal yearended December 31, 2005

**OPTIONS GRANTS IN PRESENT FISCAL YEAR (INDIVIDUAL GRANTS)**

 

|   | Name   | Number of securities underlying options granted (#) | Percent of total options granted to employees in last fiscal year | Exercise or base Price ($/Share) | Expiration Date |
|--------|--------|-----------------------------------------------------|-------------------------------------------------------------------|----------------------------------|-----------------|
|   |   |                                                |                                                              |                             |            |
|   |   |                                                |                                                              |                             |            |
|   | None   |                                                |                                                              |                             |            |

**Aggregated Option Exercises and Fiscal Year-End Option Value Table.**The following table sets forth certain information regarding stockoptions exercised during fiscal year ending December 31, 2005, by theexecutive officer named in the Summary Compensation Table.

**AGGREGATED OPTION EXERCISES IN**

**LAST FISCAL YEAR ANDFISCAL YEAR-END OPTION VALUES**

|   | Name   | Shares acquired on exercise (#) | Value realized ($) | Number of Securities Underlying Unexercised Options at Fiscal Year-End(#)

Exercisable/ Unexercisable | Value of Unexercised In-the-Money Options at Fiscal Year- End($)(1)

Exercisable/ Unexercisable |
|--------|--------|---------------------------------|--------------------|-------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|
|   |   |                            |               |                                                                                                  |                                                                                            |
|   | None   |                            |               |                                                                                                  |                                                                                            |

**Employment Contracts**

Wepresently have an employment agreement with Joseph Valenzano, ourofficer and director. The summary of such employment agreements is asfollows: 

EffectiveJune 1, 2005, we entered into an agreement with Mr. Valenzano toact as our President and Chief Executive Officer; and Publisher ofExceptional Parent Magazine. The term of the agreement expires on June30, 2008. His compensation is as follows: (i) Salary: $200,000 per yearfrom June 1, 2005 through May 31, 2006.  For 

29

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theperiods June 1, 2006 through May 31, 2007 and June 1, 2007 through May31, 2008, Mr. Valenzano’s base salary increases based on theConsumer Price Index increase in the preceding year for the NewYork/Metropolitan Area. Our board of directors may increase his basecompensation based on its evaluation of his performance. The agreementacknowledges that Mr. Valenzano has voluntarily deferred a portion ofhis compensation owing him.  The agreement requires payment ofsuch compensation by no later than December 31, 2005. If third partyfinancing is secured by us, we are required to pay such amount at suchtime. Even though we have recently received financing, such amount hasnot been paid to date; (ii) stock options: upon execution of theagreement, Mr. Valenzano received 1,500,000 options to purchase ourshares of common stock at a price equal to the fair market value of ourstock on the exercise date.  The options are exercisable ascashless options. On each of the first and second anniversaries of theagreement, Mr. Valenzano shall receive an additional 500,000 options onthe same terms as the original 1,500,000 (or an aggregate of 1,000,000options); (iii) Mr. Valenzano will also be eligible to participate inan approved Incentive Stock Option Plan (which must be implemented byus no later than December 31, 2005); a cash incentive plan based onperformance criteria negotiated by our Board of Directors orCompensation Committee no later than December 31, 2005; life anddisability insurance policies.  Finally, upon reaching age 65, Mr.Valenzano shall have the right to sell up to 50% of his equity holdingsin us, to us at 80% of fair market value or other reasonable value. Mr. Valenzano’s employment may be terminated for cause. In addition, if he is disabled for 180 days consecutive businessdays or 210 business days in a 270 business day period, the employmentagreement shall be terminated. Mr. Valenzano can resign from hisposition with us at any time. If he is terminated based on his breach,there is a 2 year non-compete clause which prevents him from competingwith us for a period of 2 years from such termination.

Wemaintain $1,000,000 of key man life insurance on the life of Mr.Valenzano. Based on our recent financing, we have purchased and have inforce $3,000,000 of additional key man life insurance on  the  life of Mr. Valenzano   In the event ofMr.Valenzano’s demise, any insurance proceeds would be used topay the outstanding balance remaining on the financing. 

**Compensation of Directors**

Directorsare permitted to receive fixed fees and other compensation for theirservices as directors. The Board of Directors has the authority to fixthe compensation of directors. No amounts have been paid to, or accruedto, directors in such capacity. In October 2004, the board of directorseach received 1,000 shares for attendance at a directors meeting. 

**Consulting Agreement with Donald S. Chadwick**

Priorto December 31, 2005, on an annual basis, Mr. Chadwick prepared our taxreturns and we paid him a consulting fee for such work.

**ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

Thefollowing table sets forth certain information derived from the namedperson, or from the transfer agent, concerning the ownership of commonstock as of April 14, 2006, of (i) each person who is known to us to bethe beneficial owner of more than 5% of the common stock; (ii) alldirectors and executive officers; and (iii) directors and executiveofficers as a group:

|  

  | **Name and Address of**

**Beneficial Owner** | **Amount and Nature of**

**Beneficial Ownership** | **Percent of**

**Class (1)** |
|----------------|-----------------------------------------------|----------------------------------------------------|-------------------------------|
|           |                                          |                                               |                          |
|           | Joseph M. Valenzano, Jr                       | 4,395,441(2)                                       | 17.52%                        |
|           | 6 Pickwick Lane                               |                                               |                          |
|           | Woodcliff Lake, New Jersey 07677              |                                               |                          |
|           |                                          |                                               |                          |
|           | Donald Chadwick                               | 628,537 (3)                                        | 2.51%                         |
|           | 403 River Oaks Drive                          |                                               |                          |
|           | Rutherford, New Jersey 07070                  |                                               |                          |

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|   |                                          |          |   |
|--------|-----------------------------------------------|---------------|--------|
|   | William J. Bleil                              | 1,861,940 (6) | 7.43%  |
|   | 1521 South Shore Drive Erie,                  |          |   |
|   | Pennsylvania 16505                            |          |   |
|   |                                          |          |   |
|   | Robert J. Salluzzo                            | 673,783 (4)   | 2.69%  |
|   | 204 South William Street                      |          |   |
|   | Johnstown, New York 12095                     |          |   |
|   |                                          |          |   |
|   | Raymond C. Smith                              | 1,000         | *      |
|   | 179 Annandale Road                            |          |   |
|   | Pasadena, California 91105                    |          |   |
|   |                                          |          |   |
|   | David Hirsch                                  | 141,130(5)    | *      |
|   | 602 West Ocotillo Road                        |          |   |
|   | Phoenix, Arizona 85013                        |          |   |
|   |                                          |          |   |
|   | Sigma-Tau Pharmaceuticals Inc. (7)       | 2,206,615     | 8.80%  |
|   | 800 South Frederick                           |          |   |
|   | Gaithersburg, Maryland 20877                  |          |   |
|   |                                          |          |   |
|   | Diane Jones                                   | 0             | 0      |
|   |                                          |          |   |
|   | Antoinette J. G. Hill                         | 0             | 0      |
|   | 1225 Malaga Avenue                            |          |   |
|   | Coral Gables, Florida 33134                   |          |   |
|   |                                          |          |   |
|   | F. Chandler Coddington, Jr.                   | 0             | 0      |
|   |                                          |          |   |
|   | Officers and Directors as a Group (9 persons) | 7,701,831     | 30.71% |

* Less than 1%

|   | (1) | Basedon 25,075,818 shares of common stock issued and outstanding as of April14, 2006. In May 2005, Giltner Stevens was issued 2,000,000 shares inhis name, to be held in escrow as contingent security for a loan of$140,000 made by Giltner Stevens.  The loan has recently been paidin full and Mr. Stevens has sent the 2,000,000 shares to our transferagent for cancellation.  Therefore, although the 2,000,000 sharesare reflected on the records of our transfer agent, we are not treatingthem as issued and outstanding. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2) | Mr.Valenzano’s shareholdings consist of the following: 500,000shares owned individually; 3,871,048 shares held in an IRA account forMr. Valenzano; and 24,393 shares held in an IRA account for PatriciaValenzano, Mr. Valenzano’s wife.                                                                                                                                                                                                                                                                                         |
|   | (3) | Mr.Chadwick’s shareholdings consist of the following: 144,983 sharesheld individually; 12,800 shares held in a profit sharing plan for Mr.Chadwick; and 220,754 shares held in the name of Cardinal EquityAssociates, L.P., a company beneficially owned by Mr. Chadwick. On July28, 2005, Mr. Chadwick purchased 250,000 of our shares of common stock. To date, such shares have not been issued and are not included inthis calculation.                                                                                       |
|   | (4) | Mr.Salluzzo’s shareholdings consist of the following: 373,783 sharesheld individually; and 300,000 shares held by his wife, Mary W.Salluzzo.                                                                                                                                                                                                                                                                                                                                                                                           |

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|   | (5) | Mr.Hirsch’s shareholdings consist of the following: 1,000 sharesheld individually; 24,393 shares held as a custodian for his minorchild, Eythan Hirsch; and 24,393 shares held as a custodian for hisminor child, Nathan Hirsch; and 91,344 shares held by the PhoenixPediatrics Ltd profit Sharing Plan, of which Mr. Hirsch is the trusteeand beneficiary. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (6) | Mr.Bleil’s shareholdings consist of the following: 1,803,040 sharesheld individually; 58,900 shares held as trustee for his minorgrandchildren.                                                                                                                                                                                                              |
|   | (7) | Gregg LaPointe is a representative of, and has investment control of, Sigma-Tau Pharmaceuticals Inc.                                                                                                                                                                                                                                                               |

Underthe terms of the callable secured convertible note and the relatedwarrants, the callable secured convertible note and the warrants areexercisable by any holder only to the extent that the number of sharesof common stock issuable pursuant to such securities, together with thenumber of shares of common stock owned by such holder and itsaffiliates (but not including shares of common stock underlyingunconverted shares of callable secured convertible notes or unexercisedportions of the warrants) would not exceed 4.99% of the thenoutstanding common stock as determined in accordance with Section 13(d)of the Exchange Act. Therefore, the table does not include AJWPartners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and NewMillenium Capital Partners II, LLC. 

**ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**

InOctober 1988, Donald Chadwick, our director, formed Cardinal DebtAssociates, L.P. (Debt) and Cardinal Equity Associates, L.P. (Equity),both of which are business development companies providing capital tosmall growth oriented businesses. In September 2000, Debt provided ashort-term loan and line of credit to Psy Ed Corporation, a companythat we undertook a share exchange transaction with in November 2003.In conjunction with the loan, Equity acquired warrants in Psy Ed. Since such time, the warrants have been exchanged as a result ofthe share exchange with us (previously known as East Coast Airlines)for 220,754 common shares.  We still owe Debt $177,000 ($77,000was incurred from a loan to Psy-Ed and $100,000 was incurred from aloan to us). This loan provided for interest only until the end of 2005and is a three-year note. 

Priorto December 31, 2005, Don Chadwick, one of our officers and directors,provided consulting work for us by preparing our annual tax returns. He received a separate consulting fee for such work.

InAugust 2005, we condensed all loans and advances made by JosephValenzano, our officer and director, into an interest bearing note of$225,000 reflecting all advances made to us as through August 2005. The balance at December 31, 2005 was $108,342.  The loanbears interest at the rate of 10% per annum and is payable on demand.It is an interest only loan. 

F.Chandler Coddington is our director.  He became our director onDecember 8, 2005. F. Chandler Coddington has served as a director ofVemics, Inc. since 2002.  We just signed a material agreement withVemics, Inc.  

Otherthan as noted above, none of the directors, executive officers nor anymember of the immediate family of any director or executive officer hasbeen indebted to us since its inception. We have not and do not intendto enter into any additional transactions with our management or anynominees for such positions. We have not and do not intend to enterinto any transactions with our beneficial owners.

32

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**ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K**

|   | (a) | Reports on Form 8-K and Form 8K-A 

On December 12, 2005 we filed an 8K based on the Agreement with Vemics, Inc. |
|--------|-----|------------------------------------------------------------------------------------------------------------------|

            

| EXHIBIT  DESCRIPTION

10.1            Articles of Incorporation and Amendments (1)

10.2            By-Laws (1)

10.3           SecuritiesPurchase Agreement for $3,720,000 Financing (1)

10.4            Form of Callable Secured Convertible Note (1)

10.5            Form of Stock Purchase Warrant (1) 

10.6            Joseph M. Valenzano, Jr. Employment Agreement (1)

10.7           DemandLoan Agreement dated August 31, 2005 made by us to Joseph M. Valenzano,Jr. 

                     asthe holder (1) 

10.8           PrintingContract with Transcontinental Printing & Graphics, Inc. (1)

10.9           EBSCOPublishing, Inc. License Agreement (not executed) (1)

10.10          Booke and Company, Inc. Investor Relations Agreement (1)

10.11          Stock Option Agreements for Stephen B. Booke and Gerald A. Amato (1)

10.12          Registration Rights Agreement for $3,720,000 Financing (2)

10.13          Cardinal Debt Associates, L.P. Promissory Notes (2)

10.14          Vemics, Inc. Agreement (3)

10.15          Child Neurology Foundation Joint Vnture Agreement (3)

10.16          ProCirc Inc. Agreement (3)

  (1)   Filed with original SB-2 filing on October 20, 2005 (SEC File No. 333-129153)

  (2)   Filed with Amendment No. 1 to Form SB-2 on December 5, 2005 (SEC File No. 333-129153)

  (3)   Filed with Amendment No. 2 to Form SB-2 on December 30, 2005 (SEC File No. 333-129153) |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES**

**Audit Fees**

Theaggregate fees billed for each of the last two fiscal years forprofessional services rendered by the principal accountant for theaudit of the registrant’s annual financial statements and reviewof financial statements included in the registrant’s 10-QSB (17CFR 249.308b) or services that are normally provided by the accountantin connection with statutory and regulatory filings or engagements forthose fiscal years are:

Audit fees  2005:     $28,678

Audit fees  2004:     $37,837

**Audit Related Fees**

Theaggregate fees billed in each of the last two fiscal years forassurance and related services by the principal accountant that arereasonably related to the performance of the audit or review of theregistrant’s financial statements and are not reported under Item9(e)(1) of Schedule 14A are: 

None

**Tax Fees**

Theaggregate fees billed in each of the last two fiscal years forprofessional services rendered by the principal accountant for taxcompliance, tax advice, and tax planning are:

None

33

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**All Other Fees**

Theaggregate fees billed in each of the last two fiscal years for productsand services provided by the principal accountant, other than theservices reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A. are:

None

34

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**SIGNATURES**

Inaccordance with Section 13 or 15(d) of the Securities Exchange Act of1934 The Registrant has caused this report to be signed on its behalfby 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/ Paul Cunningham

     Paul Cunningham, Chief Financial Officer                              |
|   |                                                                                                                     |
|   |                                                                                                                     |
|   |                                                                                                                     |

| Inaccordance with the requirements of the Securities Exchange Act of1934, this Report has been signed below by the following persons onbehalf of the Registrant and in the capacities and on the datesindicated. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                           |
|--------|------------------------------------------------------------------------------------------------|
|   | /s/ Joseph M. Valenzano, Jr. 

     Joseph M. Valenzano, Jr, Director |
|   |                                                                                           |
|   | /s/ William Bleil

     William Bleil, Director                       |
|   |                                                                                           |
|   | /s/ Raymond Smith

     Raymond Smith, Director                       |
|   |                                                                                           |
|   |  /s/ Diane Jones

      Diane Jones, Director               |
|   |                                                                                           |
|   | /s/ F. Chandler Coddington

     F. Chandler Coddington, Director     |
|   |                                                                                           |
|   |                                                                                           |
| Dated: | April 14, 2006                                                                                 |

35

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**INDEX**

****

F1

----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

EP Global Communications, Inc.

Wehave audited the accompanying consolidated balance sheet of EP GlobalCommunications, Inc. and subsidiaries (the Company) as of December 31,2005, and the related consolidated statements of operations,stockholders’ deficiency and cash flows for the year endedDecember 31, 2005. These financial statements are the responsibility ofthe Company’s management. Our responsibility is to express anopinion on these financial statements based on our audit.

Weconducted our audit in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

Inour opinion, such consolidated financial statements present fairly, inall material respects, the financial position of EP GlobalCommunications, Inc. and subsidiaries as of December 31, 2005, and theresults of their operations and their cash flows for the year thenended in conformity with accounting principles generally accepted inthe United States of America.

            Erie, Pennsylvania

            March 17, 2006

F2

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders EP Global Communications, Inc.

Wehave audited the accompanying consolidated statements of operations,stockholders' deficiency,and cash flows of EP Global Communications,Inc. for the year ended December 31, 2004. These financial statementsare the responsibility of the Company's management. Our responsibilityis to express an opinion on these financial statements based on ouraudit.

Weconducted our audit of these statements in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates) Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.

Inour opinion, the financial statements referred to above present fairly,in all material respects, the results of operations and cash flows ofEP Global Communications, Inc. for the year ended December 31, 2004, inconformity with accounting principles generally accepted in the UnitedStates of America.

        Wiener, Goodman & Company, P.C.

        Eatontown, New Jersey

        February 24, 2005, except as to Notes 9 and 10 for which the date is August 5, 2005

F3

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEET**

See accompanying footnotes to financial statements

F4

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEET**

See accompanying footnotes to financial statements 

F5

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

See accompanying footnotes to financial statements

F6

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIENCY**

****

See accompanying footnotes to financial statements

F7

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

statement continued next page

F8

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

****

See accompanying footnotes to financial statements

F9

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

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

Basis of Presentation

OnNovember 28, 2003, East Coast Airlines, Inc.  ("East Coast")entered into a share exchange agreement with Psy-Ed Corporation. In connection with the share exchange, East Coast acquired theassets and assumed the liabilities of Psy-Ed Corporation.  Foraccounting purposes, the share exchange agreement has been treated as arecapitalization of Psy-Ed Corporation as the acquirer.  

Organization

EPGlobal Communications, Inc., formerly East Coast Airlines, Inc., andSubsidiaries (“EP” or the “Company”), operatesits primary business through its subsidiary, Psy-Ed Corporation (d/b/aExceptional Parent Magazine).   In late 2004 and early 2005,EP entered into a joint venture, which has been consolidated in theCompany’s financial statements, to promote on line educationalseminars, using a web based medium presenting topics that relate to thecare of special needs individuals.

EPpublishes and distributes Exceptional Parent Magazine, an internationalpublication, designed to serve the information 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 1,000 disability booktitles and publishes clinical monographs which are disseminated tophysicians, researchers and allied health care professionals as well asfamilies and caregivers all over the world.  

Significant Accounting Policies

Principles of Consolidation

Theconsolidated financial statements include the accounts of the Companyand its majority-owned subsidiaries.  All intercompanytransactions and 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 

F10

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

andthe reported amounts of revenues and expenses during the reportingperiod.  Actual results could differ from those estimates.

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.

TheCompany grants credit primarily to advertisers based on an evaluationof the customer’s financial condition, without requiringcollateral.  Exposure to losses on these receivables isprincipally dependent on each customer’s financial condition. A majority of the subscription income is received in advance andpresents little risk to the Company.  The Company controls itsexposure to credit risk through monitoring procedures and establishesappropriate allowances for anticipated losses.  

TheCompany has a major customer that comprised 18% and 19% of theCompany’s revenue in the years ended December 31, 2005 and 2004,respectively.  There were no other customers that comprisedgreater than 10% of the total company revenues in those years.

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 $79,000 at December 31, 2005.

Inventories

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

Minority Interests

Minorityinterests consist of a fifty percent (50%) ownership interest in EPEducational Network LLC (“LLC”) from September 2004 throughSeptember 2005 (see Note 9).  

F11

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

Duringthis period, the income from the operation of the entity and itsrespective minority interests have been reflected in theCompany’s statement of operations for the years ended December31, 2005 and 2004.  Beginning in October 2005, the LLC became asingle member LLC with all transactions consolidated in the financialstatements.

Revenue Recognition

TheCompany recognizes revenue in accordance with the guidance contained inSEC Staff 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 collectibility 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 services advertising revenues, primarily derivedfrom the sale of banner advertisements and sponsorships on theCompany's web sites, is recognized in the period the advertising isdisplayed.  The costs to develop this internet income are periodcosts and are expensed when incurred. Print publication advertising andcirculation revenues are recognized, net of agency commissions andestimated returns and allowances, when publications are issued. List rental income is recognized, net of commission, when a listis sold or rented.

Subscriptionincome is recognized based upon the monthly pro-ration of income withinthe reporting 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 generally subscribe to the magazine for three years. Deferred subscription income represents the portion of theprepaid subscription not earned by the Company and paid for in advanceof fulfillment by the Company to the customer.  

Revenue from the production of on line educational seminars is recorded at the time of the the seminar is conducted.

 

Specialproject revenue recognition occurs at the time of delivery of theproduct or service that constitutes the special project.  Specialprojects include such undertakings as custom communications as well asthe Company’s “Disability Awareness Night” program.

F12

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

Cost of Sales

Cost of sales consist of those costs that are associated with the production of income for a given business activity.  

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 five years. Leaseholdimprovements are amortized over the lesser of the useful life of theasset or the term of the lease.  

Stock-Option Plan

TheCompany accounts for equity-based compensation issued to employees inaccordance with Accounting Principles Board (“ABP”) OpinionNo.  25 “Accounting for Stock Issued to Employees”. APB No.  25 requires the use of the intrinsic value method,which measures compensation cost as the excess, if any, of the quotedmarket price of the stock at the measurement date over the amount anemployee must pay to acquire the stock.  The Company makesdisclosures of pro forma net earnings and earnings per share as if thefair-value-based method of accounting had been applied as required bySFAS No. 123 “Accounting for Stock-Based Compensation.”

InDecember 2002, the FASB issued SFAS No. 148, “Accounting forStock-Based Compensation-Transition and Disclosure, an amendment ofFASB Statement No. 123”.  SFAS No. 148 provides alternativemethods of transition for a voluntary change to the fair value basedmethod of accounting for stock-based employee compensation.  

Italso requires disclosure in both annual and interim financialstatements about the method of accounting for stock-based employeecompensation and the effect of the method used on reported results. TheCompany adopted the disclosure provisions of SFAS No. 148 beginningwith the year ended December 31, 2002.  The Company grants stockoptions with exercise prices at fair market value at the date of grant. The Company will continue to account for stock-based employeecompensation under the recognition and measurement principle of APBOpinion No. 25 and related interpretations through December 31, 2005.

InDecember 2004, the FASB issued SFAS No. 123R, Share-Based Payment,which establishes standards for the accounting for transactions inwhich an entity exchanges its equity instruments for goods or services.A key provision of this statement is the requirement of a public entityto measure the cost of employee and non-employee 

F13

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

servicesreceived in exchange for an award of equity instruments (includingstock options) based on the grant-date fair value of the award. Thatcost will be recognized over the period during which an employee isrequired to provide service in exchange for the award (i.e., therequisite service period or vesting period). This standard becomeseffective on January 1, 2006 for small business issuers. The Companywill adopt SFAS 123R beginning in the Company's first fiscal quarter of2006.  

TheCompany has adopted the disclosure-only provisions of SFAS No. 123,"Accounting for Stock-Based Compensation"(SFAS No. 123).  Therewere no awards or outstanding compensatory options or warrants in theyears ended December 31, 2005 or 2004; accordingly, had compensationcost for the Company's stock option plan been determined based on thefair value at the grant date for awards in 2005 and 2004 consistentwith the provisions of SFAS No. 123, the Company's results ofoperations, as reported, would not have changed.

Nocompensatory options or warrants were granted during the years endedDecember 31, 2005 or 2004.  See Note 4 for discussion of warrantsissued during 2005 in connection with a debt financing.

Income Taxes

TheCompany accounts for income taxes using an asset and liability approachunder which deferred income taxes are recognized by applying enactedtax rates 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.  

Evaluation of Long-Lived Assets

TheCompany reviews property and equipment for impairment whenever eventsor changes 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.

F14

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

(Loss) Per Share  

Basic(loss) per common share is computed by dividing net (loss) by theweighted average number of common shares outstanding during the year. Diluted (loss) per common share is computed by dividing net(loss) by the weighted average number of common shares and potentialcommon shares outstanding during the year.  The basic weightedaverage shares were used in calculating year ended December 31, 2005and 2004 diluted (loss) per share, as inclusion of the incrementalshares shown in this calculation would be antidilutive.  Potentialcommon shares used in computing diluted (loss) per share at December31, 2005 relate to common stock warrants convertible into 3,338,000shares of common stock and convertible preferred stock convertible into719,801 shares of common stock.  

Fair Value of Financial Instruments

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

New Financial Accounting Standards  

InDecember 2004, the Financial Accounting Standard Board(“FASB”) issued Statement on Financial Accounting Standards("SFAS") No. 123(R), "Share-Based Payment" (revised), that will requirecompensation costs related to share-based payment transactions to berecognized in the financial statements.  

Withlimited exceptions, the amount of compensation cost will be measuredbased on the grant-date fair value of the equity or liabilityinstruments issued.  In addition, liability awards will beremeasured each reporting period.  Compensation cost will berecognized over the period that an employee provides service inexchange for the reward.  The statement also amends SFAS No. 95,"Statement of Cash Flows", to require that excess tax benefits bereported as a financing cash inflow rather than as a reduction of taxespaid.  SFAS No. 123(R) is effective as to the Company as of thebeginning of the first interim period that begins after December 15,2005.  The adoption of SFAS 123(R) is not expected to have amaterial effect on the Company's reported results of operations.

InDecember 2004, the FASB issued SFAS No. 153 an amendment of APB OpinionNo. 29 "Exchanges of Nonmonetary Assets".  SFAS No. 153 amends APBOpinion No. 29 by eliminating the exception under APB No. 29 fornonmonetary exchanges of similar 

F15

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

productiveassets and replaces it with a general exception for exchanges ofnonmonetary assets that do not have commercial substance.  Anonmonetary exchange has commercial substance if the future cash flowsof the entity are expected to change significantly as a result of theexchange.  SFAS No. 153 is effective for periods beginning afterJune 15, 2005.  The adoption of SFAS No. 153 is not expected tohave a material effect on the Company's financial position or resultsof operations.

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 the two most recent years, the Company has obtainedcash from various debt financings to fund capital expenditures and forcash used by existing operations.  From September 2005 throughJanuary 2006, the Company used proceeds from a $3.0 million loan torepay a substantial portion of its debt and to provide for continuingoperations through the third quarter of calendar year 2006.  TheCompany is continuing initiatives to produce significant increases inrevenues and to enact cost reduction programs.

**2.  Property And Equipment**

Property and equipment at December 31, 2005 consists of the following:

Depreciation expense for the years ended December 31, 2005 and 2004 was $54,602 and $21,675, respectively.  

**3.  Accrued Expenses**

Accrued expenses at December 31, 2005 consist of the following:

F16

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

**4.  Debt**

Long-Term Debt

Long-term debt at December 31, 2005 consists of the following:

F17

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

The following are maturities of long-term debt:

F18

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

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.

Aprivate investment firm received a commission of $240,000 (8% of theaggregate net 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. The calculated fair value of the convertibledebt of $2,035,200 was recorded as a long term liability as of December31, 2005.  (An additional $1 million was received in February2006.)  The convertible debt will be accreted to its face 

F19

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

valueof $3.7 million under the interest method until it is either convertedor matures. As of December 31, 2005, the accretion was $35,200.

Ifthe obligation had been settled on December 31, 2005, the Company wouldhave issued 96,914,285 shares of its common stock (with a fair value of$3,392,000).  Under the terms of the agreement, the maximum numberof shares that could be required to be issued is 206,666,666.

Providedthe Company in 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.

Short-Term debt

Short-termbank obligations at December 31, 2005, consists of an unsecured line ofcredit with MBNA in the amount of  $19,224, interest at 21.25%.

**5.  Related Party Transactions**

Amounts due to shareholders at December 31, 2005 consists of the following:

F20

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

Thedeferred compensation amounts due the Chief Executive Officer and ChiefOperating Officer represent unpaid compensation due each individualbased upon their normal annual compensation that remains unpaid at theend of 2005. These balances are non interest bearing and are expectedto be paid during 2006.

Thenon interest bearing advance from a shareholder represents fundsadvanced during 2005.  This balance was fully paid in February2006. 

Also, see Note 7 for information regarding common stock issued for services.

**6.  Income Taxes**

Theliability method, prescribed by SFAS No. 109, “Accounting forIncome Taxes”, is used by the Company in accounting for incometaxes.  Under this method, deferred tax assets and liabilities aredetermined based on differences between financial reporting and taxbasis of assets and liabilities and are measured using the enacted taxrates and laws that are expected to be in effect when the differencesare expected to reverse.  

Duringthe year ended December 31, 2005, the Company recorded a deferred taxasset associated with its net operating loss (“NOL”)carryforwards of approximately $1,224,359 that was fully offset by avaluation allowance due to the determination that it was more likelythan not that the Company would be unable to utilize these benefits inthe foreseeable future.  The Company’s NOL carryforwardexpires beginning in 2010 through 2018.

Thereis no provision for income taxes for the years ended December 31, 2005and 2004 as there was no taxable income in either year.

Thetypes of temporary differences between tax basis of assets andliabilities and their financial reporting amounts that give rise to thedeferred tax liability and deferred tax asset and their approximate taxeffects are as follows:

F21

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

  

Theprovision for income taxes on earnings differs from the amount computedusing the federal statutory rate of 34% as a result of the following:

SeeNote 1 regarding the Company's business combination pursuant to a shareacquisition agreement.  The business combination was a tax-freemerger pursuant to Internal Revenue Code Section 368. Accordingly, inconnection with this merger, the Company's ultimate recognition of itsNOL became subject to Internal Revenue Code Section 382.

Thegeneral tax principle underlying Code Section 382 is that lossesincurred by a corporation may be utilized by offsetting income it latergenerates, as long as its separate existence and the identity of itsmajor shareholders are basically unchanged. However, significantlimitations to the use of the Company's NOL may apply if there is anownership change.  The testing period is defined as the three-yearperiod ending on the day of any shift involving a five-percentshareholder or the equity structure.

Whilethe Company does not believe the ultimate realization of its NOLcarryforward will be impacted by the merger, it can give no assurancethat limitations that may exist under the prevailing, or future, CodeSection 382 will not apply.

F22

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

**7.  Stock Issued for Services**

Forthe year ended December 31, 2005, the Company issued 1,250,000 sharesof the Company's common stock to employees and non-employees asstock-based compensation in the amount of $37,620, that has beenrecorded as an expense in the Company’s financial statements. Of these amounts, 50,000 shares ($4,500) were issued to officersof the Company (a related party transaction).

Forthe year ended December 31, 2004, the Company issued 1,806,000 sharesof the Company's common stock to employees and non-employees asstock-based compensation in the amount of $16,254, that has beenrecorded as an expense in the Company’s financial statements. Of these amounts, 800,000 shares ($7,200) were issued to officersof the Company (a related party transaction).  

The Company accounts for the services using the fair market value of the services rendered.

**8.  Stockholders' Deficiency**

Common Stock

TheCompany is authorized to issue 500,000,000 shares of $.0001 par valuecommon stock.  All the outstanding Common Stock is fully paid andnon-assessable.

Preferred Stock – Series A

TheCompany is authorized to issue 5,000,000 shares of $ .01 par valuePreferred Stock – Series A.  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 190shares of the Company’s Common Stock.  The holders of SeriesA preferred Stock have the following rights.

Dividends:

Ifany dividend is declared on the Company’s Common Stock in anyfiscal year, 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.

F23

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

Liquidation Preference:

Inthe event 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.

Afterthis preferred 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:

Uponthe sale 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  abilityto carry out its business, only the funds that are available that willnot cause such material adverse effect shall be used to redeem theSeries A Preferred Stock.  This redemption requirement willcontinue until such time as all of the shares of Series A PreferredStock have been redeemed.

Conversion:

EachShare of Series A Preferred Stock is convertible into 190 shares ofCommon Stock (subject to adjustment) at any time at the option of theholder.  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.

F24

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

Anti-dilution Adjustments:

TheSeries A Preferred Stock  provides for proportional adjustments tothe conversion rate for stock splits, dividends, recapitalizations andsimilar transactions.

Voting Rights:

Holdersof the 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

TheCompany is authorized to issue 5,000,000 shares of $1.00 par valuecumulative Preferred Stock – Series B.  All the outstandingPreferred Stock is fully paid and non-assessable. Each share of thePreferred Stock is convertible, at the option of the holder at anytime, into 277 shares of the Company’s Common Stock.

Holdersof the Series B Preferred Stock are entitled to 10% cumulative dividendif declared by the Board of Directors. This class of stock holdsliquidation preferences and is redeemable in December 2005 for facevalue plus accrued dividends.

Dividends:

Theholders of 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:

Inthe event 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 B Preferred Stock.

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

Afterthis preferred 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.

Ifthe funds 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:

Uponthe sale 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 A Preferred Stock at a price equal to two times the conversionprice of the Series A Preferred Stock (currently $61 per share). In addition, the Series B Preferred Stock is 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:

Eachshare of Series B Preferred Stock is convertible into 277 shares ofCommon Stock (subject to adjustment) at any time at the option of theholder.  The Series B Preferred Stock automatically converts intothe Company’s Common Stock upon the consummation of a publicoffering by the Company with aggregate proceeds or fair market value inexcess of $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:

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

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

Voting Rights:

Holdersof the 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(presently 277 for 1).  Except when a separate class vote isrequired by law, the Series B Preferred Stock will vote with the CommonStock as a single class.

**9. Interest In LLC**

EPGlobal, during September 2004, entered into a joint venture with theInforMedx Group, LLC, (“InforMedx”) a subsidiary of theConemaugh Health System of Johnstown, Pennsylvania, to promote on lineeducational seminars, using a web based medium presenting topics thatrelate to the care of special needs individuals.  The content ofthe seminars is medically based in most instances.  The intendedaudiences are professional, and aligned and family caregivers ofspecial needs individuals.  

Toimplement the joint venture, EP has established a limited liabilitycompany, EP Educational Network LLC, (“Network”) andInforMedx agreed to pay $210,000 for a one half interest in this newlyestablished entity.  Of this amount $100,000 was received inSeptember 2004 with the balance due September 2005.  

Allcontent used is to remain the property of EP with any jointly developedcontent being the property of seminars with each of the parties able toutilize the content in any manner so long as that use is not disruptiveto the purpose, intent or in conflict with the business activities ofseminars.  Profits were to allocated based on the ownership ratio. 

EP has recognized the transaction as an addition to minority interest.

InJune of 2005, shortly after a change in senior management at Conemaugh,InforMedx informed the Company that it had reconsidered its continuingparticipation in the joint venture and made a determination thatcontinued participation would not be consistent with Conemaugh’sstrategic goals.  Accordingly, InforMedx returned its one-halfownership of the LLC to the company in exchange for being released frommaking the $110,000 contribution in September 2005.  Consequently,the Company has transferred $100,000 of minority interest to additionalpaid in capital.  Also, the minority interest was further reduced,with an offset to paid in capital, by $7,173.  There are noobligations to InforMedx at December 31, 2005.

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

**Notes To Consolidated Financial Statements**

**December 31, 2005**

**10.  Commitments and Contingencies**

Operating Leases

TheCompany has operating leases for office space and temporary livingspace expiring in 2006 and office equipment expiring in 2007. Total operating lease expense amounted to $148,814 and $111,988in 2005 and 2004, respectively.  Subsequent lease payments are$134,949 in 2006 and $6,035 in 2007.   

Legal Proceedings

TheCompany is a plaintiff against a former director and shareholder whohas not satisfied the terms of his agreement with the Company of April1998.  The action resulted in the Company suspending payments tohim under that agreement which at the time of suspension had a balanceof $119,651.  It is the Company’s belief that it will not beliable for the payments and that it has meritorious defenses to theamount claimed and well supported counter-claims that exceed the amountsought in this action.

OnJuly 27, 2005, the Company received notice that an action has beencommenced against the Company alleging breach of contract and othercauses of action seeking specific performance and other unspecifieddamages.  The Company denied liability and counter-claimed forfraud.  In January 2006, the parties agreed to settle the matter,and the action was dismissed.

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