| **UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, DC 20549

**FORM 10-QSB**

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

**          For the quarterly period ended March 31, 2007**

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

          For the transition period __________ to ___________

**Commission File Number    _______________**

**EP Global Communications, Inc.**

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

| **Delaware**

(State or other jurisdiction of              

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

(IRS Employer Identification No.) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|

| **c/o Exceptional Parent Magazine**

**416 Main Street, Johnstown, PA**

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

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

Issuer’s telephone number, including area code                                          |                            |

| Checkwhether the issuer (1) filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the issuer wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days 

[X] Yes [  ] No

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

Yes [  ] No [X]

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

136,545,818 shares of $0.0001 par value common stock outstanding as of May 10, 2007.

Transitional Small Business Disclosure Format        Yes [  ]   No [X] |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

**TABLE OF CONTENTS**

|   |    |                                                                          | Page          |
|--------|---------|-------------------------------------------------------------------------------|---------------|
|   | Part I  | FINANCIAL INFORMATION                                                         |          |
|   |    | Item 1.  Financial Statements                                            | 2 – 28  |
|   |    | Item 2.  Management’s Discussion and Analysis of Plan of Operation | 29 -38        |
|   |    | Item 3.  Controls and Procedures                                         | 38            |
|   |    |                                                                          |          |
|   | Part II | OTHER INFORMATION                                                             |          |
|   |    | Item 4.  Legal Proceedings                                               | 39 – 40 |
|   |    | Item 5.  Unregistered Sales of Equity Securities and Use of Proceeds     | 40            |
|   |    | Item 6.  Defaults Upon Senior Securities                                 | 40            |
|   |    | Item 7.  Submission of Matters to a Vote of Security Holders             | 40            |
|   |    | Item 8.  Other Information                                               | 40            |
|   |    | Item 9.  Exhibits and Reports on Form 8-K                                | 40            |
|   |    |                                                                          |          |
|   |    | Signatures                                                                    | 41            |
|   |    |                                                                          |          |

-1-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEET**

See accompanying footnotes to financial statements

-2-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEET**

See accompanying footnotes to financial statements 

-3-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

See accompanying footnotes to financial statements

-4-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIENCY**

****

See accompanying footnotes to financial statements

-5-

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

statement continued next page

-6- 

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

****

See accompanying footnotes to financial statements

-7-

----

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

**Notes To Consolidated Financial Statements**

**March 31, 2007**

**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.

EP publishes and distributes *Exceptional Parent*Magazine, an international publication, designed to serve theinformational needs of families and professionals who are involved inthe care and development of children and adults with disabilities andspecial health care needs.  EP also develops and implements onlineaccredited Continued Medical Education Programs; has its own library ofover 2000 disability book titles and publishes clinical monographswhich are disseminated to physicians, researchers and allied healthcare professionals as well as families and caregivers all over theworld.  

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.  

-8-

----

Use of Estimates

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

Cash

Cashincludes cash in banks, deposits with financial institutions, and allhighly liquid investments with a maturity of three months or less.

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 16% of the Company’srevenue in the quarters ended March 31, 2007 and 2006.  A secondmajor customer comprised 14% of the Company’s revenue in thequarter ended March 31, 2007.  There were no other customers thatcomprised greater than 10% of the total company revenues in thosequarters.

-9-

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 $68,437 at March 31, 2007.

Inventories

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

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

Deferredsubscription income, net of agency commission, is recorded whensubscription orders are received.  The Company uses a fulfillmenthouse, which calculates the revenue to be recorded for all periods. Customers 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.  

-10-

----

Revenuefrom the production of online educational seminars, for both theprivate sector and the military, is recorded at the time the seminar isconducted.

Bookorders are received over the internet and via the mail; revenue isrecognized after the order has been fulfilled and shipped.  

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.

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

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  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 Companyadopted SFAS 123R beginning in the Company's first fiscal quarter of2006.  

Nocompensatory options or warrants were granted during the quarters endedMarch 31, 2007 or 2006.  See Note 4 for discussion of warrantsissued during 2006 in connection with a debt financing.

-11-

----

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.

(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 quarter ended March 31, 2007and 2006 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 March 31,2007 relate to common stock warrants convertible into 3,338,000 sharesof 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.

-12-

----

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) had no material effect on theCompany'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 productive assets and replaces it witha general exception for exchanges of nonmonetary assets that do nothave commercial substance.  A nonmonetary exchange has commercialsubstance if the future cash flows of the entity are expected to changesignificantly as a result of the exchange.  SFAS No. 153 iseffective for periods beginning after June 15, 2005.  The adoptionof SFAS No. 153 had no material effect on the Company's financialposition or results of operations.

InFebruary 2006, the FASB issued SFAS 155, "Accounting for Certain HybridFinancial Instruments—an amendment of FASB Statements No. 133 and140."  This Statement amended FASB Statements No. 133, "Accountingfor Derivative Instruments and Hedging Activities", and No. 140,"Accounting for Transfers and Servicing of Financial Assets andExtinguishments of Liabilities".  This pronouncement had nomaterial effect on the Company's financial position or results ofoperations.

InMarch 2006, the FASB issued SFAS 156, "Accounting for Servicing ofFinancial Assets—an amendment of FASB Statement No. 140." This Statement amended FASB Statement No. 140, "Accounting forTransfers and Servicing of Financial Assets and Extinguishments ofLiabilities." This pronouncement had no material effect on theCompany's financial position or results of operations.

-13-

----

InJuly 2006, the FASB issued FASB Interpretation No. 48,“Accounting for Uncertainty in Income Taxes, an interpretation ofFASB Statement 109” (“FIN 48”). FIN 48 requires thata position taken or expected to be taken in a tax return be recognizedin the financial statements when it is more likely than not (i.e. alikelihood of more than fifty percent) that the position would besustained upon examination by tax authorities. A recognized taxposition is then measured at the largest amount of benefit that isgreater than fifty percent likely of being realized upon ultimatesettlement. Upon adoption, the cumulative effect of applying therecognition and measurement provisions of FIN 48, if any, shall bereflected as an adjustment to the opening balance of retained earnings.The effective date of this interpretation is for fiscal years beginningafter December 15, 2006. We are currently in the process of evaluatingthe impact of this interpretation on its consolidated financialstatements.

InSeptember 2006, the FASB issued SFAS 158, "Employers’ Accountingfor Defined Benefit Pension and Other Postretirement Plans—anamendment of FASB Statements No. 87, 88, 106, and 132(R)."  ThisStatement requires an employer to recognize the overfunded orunderfunded status of a defined benefit postretirement plan (other thana multiemployer plan) as an asset or liability in its statement offinancial position and to recognize changes in that funded status inthe year in which the changes occur through comprehensive income of abusiness entity.  This pronouncement had no material effect on theCompany's financial position or results of operations.

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

InSeptember 2006, the FASB issued SFAS No. 157, “Fair ValueMeasurement”. This statement defines fair value, establishes aframework for measuring fair value in generally accepted accountingprinciples, and expands disclosures about fair value measurements. Thisstatement applies under other accounting pronouncements that require orpermit fair value measurements. SFAS No. 157 is effective for fiscalyears beginning after November 15, 2007. We are currently assessing theimpact of the adoption of SFAS No. 157 may have on our consolidatedfinancial statements.

InFebruary 2007, the FASB issued Statement No. 159, “The Fair ValueOption for Financial Assets and Financial Liabilities – Includingan amendment to FASB Statement No. 115”. This statement permitscompanies to choose to measure many financial

-14-

----

 instrumentsand other items at fair value. The objective is to improve financialreporting by providing entities with the opportunity to mitigatevolatility in reported earnings caused by measuring related assets andliabilities differently without having to apply complex hedgeaccounting provisions. This Statement is expected to expand the use offair value measurement of accounting for financial instruments. Thefair value option established by this statement permits all entities tomeasure eligible items at fair value at specified election dates. Thisstatement is effective as of the beginning of an entity’s firstfiscal year that begins after November 15, 2007. We are currentlyassessing the impact that adoption of SFAS No. 159 may have on ourconsolidated financial statements.

Basis of Presentation

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

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

Inthe fourth quarter, 2006, the Company entered into an agreement withthe United States Army for a U.S. Army Research Project entitledExceptional Family Training and Transitioning Program, focusing oneducation and training in the developmental and special health careneeds arena.  The contract, which is worth over $800,000, is paidin installments and will be effective from December 1, 2006 throughDecember 31, 2007. 

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

Reclassifications

Certainamounts reported for 2006 have been reclassified to conform to the 2007presentation.  Such reclassifications had no effect on reportedincome.

-15-

----

**2.  Property and Equipment**

Property and equipment at March 31, 2007 consists of the following: 

Depreciation expense for the quarters ended March 31, 2007 and 2006 was $21,500 and $15,244, respectively.

**3.  Accrued Expenses**

Accrued expenses at March 31, 2007 consist of the following: 

**4.  Debt**

Long-Term Debt 

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

-16-

----

The following are maturities of long-term debt:

-17-

----

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 $3,211,756 was recorded as a long term liability as of March31, 2007.  The convertible debt will be accreted to its face valueof $3.7 million under the interest method until it is either 

-18-

----

converted or matures. As of March 31, 2007, the accretion was $342,032, of which $63,917 was recorded in calendar year 2007.

Ifthe obligation had been settled on March 31, 2007, the Company wouldhave issued 3,148,780,423 shares of its common stock (with a fairvalue, based solely on the quoted market price per share as of March31, 2007, of $5,352,927).  However, under the terms of theagreement, the maximum number of shares that could be required to beissued is 206,666,666.

Providedthe Company is not in default under the financing documents, it has asufficient number of authorized shares of its common stock reserved forissuance upon full conversion of the promissory notes and its commonstock is trading at or below $.15 per share, the Company shall have theright, exercisable on not less than 10 trading days prior writtennotice to the holders of the promissory notes, to prepay all of theoutstanding promissory notes. If the Company exercises its right toprepay the promissory notes, it shall make payment to the holders of anamount in cash equal to either (i) 125% (for prepayments occurringwithin 30 days of the issue date of the promissory notes), (ii) 130%for 

prepaymentsoccurring between 31 and 60 days of the issue date of the promissorynotes, or (iii) 140% (for prepayments occurring after the 60th dayfollowing the issue date of the promissory notes, multiplied by the sumof the then outstanding principal amount of the promissory notes plusdefault interest.

OnAugust 15, 2006, the Company completed a second financing agreement byexecuting a securities purchase agreement with the following entities:AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC andNew Millenium Capital Partners II, LLC.

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

ThroughMarch 31, 2007, the Company received proceeds of $1,200,000 under theterms of the securities purchase agreement. The funds were received inthe amount of $500,000 upon signing the definitive investmentagreements and $100,000 monthly thereafter.

Aprivate investment firm is receiving 8% of the amount loaned as thefunds are received. There was also an origination fee to the lender of$20,000, which has been paid.

-19-

----

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

Inaccordance with Emerging Issues Task Force Topic 00-27 and SFAS 150,“Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity”, the Companyperformed calculations allocating the proceeds from the issuance ofconvertible debt with detachable warrants and the beneficial conversionprivileges to each respective security at their fair values.  The Company referred to SFAS 133, “Accounting forDerivative Instruments and Hedging Activities,” and EITF 00-19,“Accounting for Derivative Financial Instruments Indexed to, andPotentially Settled in, a Company's Own Stock,” in determiningwhether the conversion option is an embedded derivative instrument. In the case of the detachable warrants and the beneficialconversion privileges, the Company concluded the fair value was nil;accordingly, the entire amount recorded as a liability was associatedwith the convertible debt. The calculated fair value of the convertibledebt of $1,252,029 was recorded as a long term liability as of March31, 2007.  The convertible debt will be accreted to its face valueof $2.6 million under the interest method until it is either convertedor matures.  As of March 31, 2007, the cumulative accretion was$52,029, of which $23,283 was recorded in calendar year 2007.

Ifthe obligation had been settled on March 31, 2007, under the formulafor conversion, the Company would issue approximately 1,227,479,807sharesof its common stock (with a fair value, based solely on the quotedmarket price per share as of March 31, 2007, of $2,086,716). However, under the terms of the agreement, the maximum number ofshares that could be required to be issued is 206,666,666, and themaximum number of shares of common stock that are authorized to beissued by the Company is 500,000,000.

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

-20-

----

Short-Term debt 

Short-termbank obligations at March 31, 2007, consist of an unsecured line ofcredit with MBNA in the amount of $12,760, interest at 24.5%.

**5.  Related Party Transactions**

Amounts due to shareholders at March 31, 2007 consist of the following: 

Thedeferred compensation amounts due the Chief Executive Officer andformer Chief Operating Officer represent unpaid compensation due eachindividual based upon their normal annual compensation that remainsunpaid at the quarter ended March, 31, 2007. These balances arenon-interest bearing.

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 

-21-

----

assetsand liabilities and are measured using the enacted tax rates and lawsthat are expected to be in effect when the differences are expected toreverse.

ThroughMarch 31, 2007, the Company recorded a deferred tax asset associatedwith its net operating loss (“NOL”) carryforwards ofapproximately $1,739,566 that was fully offset by a valuation allowancedue to the determination that it was more likely than not that theCompany would be unable to utilize these benefits in the foreseeablefuture.  The Company’s NOL carryforward expires beginning in2010 through 2018.

Thereis no provision for income taxes for the quarters ended March 31, 2007and 2006, as there was no taxable income in either quarter.

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:

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

-22-

----

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.

**7.  Stock Issued for Services**

Forthe quarter ended March 31, 2007, the Company did not issue any of itscommon stock except in connection with conversion of its debt (see Note4).

Forquarter ended March 31, 2006, the Company issued 225,000 shares of theCompany’s common stock to employees and non-employees asstock-based compensation in the amount of $7,500, that has beenrecorded as an expense in the Company’s financial statements.

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.

-23-

----

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.

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 ability tocarry out its business, only the funds that are available that will notcause such material adverse effect shall be used to redeem the Series APreferred Stock.  This redemption requirement will continue untilsuch time as all of the shares of Series A Preferred Stock have beenredeemed.

-24-

----

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.

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:

-25-

----

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.

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.

-26-

----

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 

consummationof a public offering by the Company with aggregate proceeds or fairmarket value in excess of $4,000,000.  All rights incident to ashare of Series B Preferred Stock will terminate automatically upon anyconversion of such shares into Common Stock.  The conversion ratewill be subject to appropriate adjustment upon any stock split, reversestock split 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.

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 (presently277 for 1).  Except when a separate class vote is required by law,the Series B Preferred Stock will vote with the Common Stock as asingle class.

**9.  Commitments and Contingencies**

Operating Leases

TheCompany has operating leases for office space and temporary livingspace expiring in 2009 and 2007, and for office equipment expiring in2007.  Total operating lease expense amounted to $115,600 and$148,814 in 2006 and 2005, respectively.  Subsequent operatinglease payments are $40,340 in 2007, $47,340 in 2008, and $48,540 in 2009. 

Legal Proceedings  

JosephBraumstein, Chapter 7 Trustee of The McCabe Group versus Joseph M.Valenzano, Jr. and Psy-Ed Corporation et al. Adversary proceeding No06-01351.  When The McCabe Group (TMG) ceased business operationsin October 2004, it entered into a Chapter 7 liquidation proceeding,under the terms of Title 11 of the U.S. Code (Bankruptcy).  TheChapter 7 Trustee of TMG, Joseph Braumstein in June 2006 brought alawsuit in the U.S. Bankruptcy Court alleging that the Company and itsPresident and CEO, jointly and severally, owed approximately $53,000for legal fees and expenses to TMG.  The Company and its CEO arevigorously defending this complaint.  The Company and Counselbelieves 

-27-

----

thatfurther litigation should result in the ultimate dismissal of thisChapter 7 Trustee Claim.  The Company has made all timely filingswith the court and to date has heard nothing further with regard to theposition of the court.

Psy-EdCorporation, d/b/a Exceptional Parent, Plaintiff v. Stanley D. Kleinand Kimberly Schive, Superior Court in and for the County of Middlesex,in the Commonwealth of Massachusetts, Civil Action No. 99-6140;Counterclaims Brought by Klein Against Plaintiffs and Third-PartyDirectors (Kenneth Rossano, David Hirsch, MD, Robert Striano, Donald S.Chadwick, C. Kenneth Mehrling and Robert K. Hopkins, Jr.) ofExceptional Parent in Civ. No. 99-6140.  This case was commencedon December 17, 1999.  Psy- Ed is the plaintiff andcounter-claimants in this case.  The Company and its presidentwere previously successful in defending an action taken by Ms. Schivein 1996 for wrongful termination. and successfully defended itself inthree separate appeals made by Ms. Schive.  At present, most ofthe claims by Kimberly Schive have been dismissed and are no longerpending, either in any court proceeding or before the MCAD.  Stillpending are her claims for abuse of process and retaliation. Thecompany and its attorney’s feel that further litigation shouldresult in the ultimate dismissal of her claims

Theemployment of Stanley D. Klein, a former officer, director andshareholder of the company was terminated for cause in August of 1997.   He  filed a complaint with the MassachusettsCommission Against Discrimination in 2000 alleging that the Company,which had brought an action against him in December 1999 formisconduct, fraud and defamation causing damage to the Company, had retaliated against him because of his support for Kimberly Schive.

Mr.Klein filed an action against the Company and Mr. Valenzano in theSuperior Court for Middlesex County, Massachusetts in December 2002seeking payment of unspecified damages.  That lawsuit wasdismissed in 2005.  Mr. Klein then filed an action seekingprecisely the same relief in a state court in New Jersey which actionwas summarily dismissed by Superior Court in Bergen County New Jersey. At the time of filing both of these actions, Mr. Klein was adefendant in an action brought by the Company against him in 1999.

Duringthe non-jury trial held in June of 2006, eight of Klein’s tenclaims against the Company were dismissed.  The Company was foundliable by the judge with respect to abuse of process in the Schive caseand tortuous interference with respect to a promissory note.  Thebalance on that note was approximately $124,000.  The Companyintends to rigorously defend against the decision and to date nodecision with regard to any award of damages has been made.  It isthe Company’s position that it will prevail with respect to anyadverse findings although it is impossible to assert at this time thatthere is any certainty with respect to this position.

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

-28-

----

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

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

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 based our estimateson historical experience and on other various assumptions that arebelieved to be reasonable under the circumstances, the results of whichform the basis for making judgments about carrying values of assets andliabilities that are not readily apparent from other sources. Actualresults may differ from these estimates under different assumptions orconditions.

Plan of Operation:

EPGLis on the brink of its most expansive growth in its 36-year history,with never-before streams of revenue and innovative projects under waythat have the potential for significantly and positively impacting, farinto the future, the kind of proprietary, need-to-have information andsupport for people with disabilities and special needs, and for thephysicians, allied health care professionals, teachers, families, andother caregivers involved in their care and development. We believethat a key result of these initiatives will be the continued worldwideevolution of the awareness of the abilities and potential of peoplewith disabilities and special needs. We anticipate that EP’scutting-edge education outreach and multiple forums for communication(e.g.: **EP***LiveOnline*TM; and Search & Respond in *EP* magazine and on the new, expanded EP Web site, http://www.eparent.com,to be launched in May 2007) will continue to establish links amongfamilies and professionals to enhance knowledge bases regarding chronicdisabilities and to provide the most up-to-date strategies foroptimizing individual lives and well-being.

Managementintends to expand EP’s 36-year heritage of providing“Information That Matters from People Who Care” to thecommunity of those with disabilities and special needs. Ouraward-winning *EP* magazine represents the foundation of all thatwe do. Most of our efforts and investment up to the beginning of 2007have been directed to this purpose. Our focus is entirely in the arenaof chronic long-term conditions, not disease states. The significanceof this is that diseases for the most part can be cured with variousmedical interventions and surgery. Chronic life-long conditions aredifferent. There are no cures for these and so the challenge is toimprove upon the quality of life and assist people with special needsto develop into the very best they can be and help make themcontributing members of our society. A corollary to this is to increaseawareness of all Americans that we will become a stronger nation and abetter people when we learn to regard those with specials needs aspeople to be respected, not problems to be confronted. That is anunderpinning of everything that EP does.

In2006, we completed the investment, building, and implementation of adynamic growth strategy to increase revenues and profitability for 2007and beyond, with a three-point initiative:

1.

Weare emphasizing our core publishing operations, including advertising,subscription growth, and the development of our custom communicationsand special project capabilities. We have augmented our staff with thispurpose in mind, and have begun a considerable commitment to expandingour existing database as well as building new credible databases in themedical, education, financial services, mobility, and augmentativecommunications fields.

-29-

----

2.

We have increased the growth and strength of our Joint Venture with Vemics, Inc., called **EP***LiveOnline*TM,diversifying from the clinical and medical arenas into financialplanning, education, assistive technology, and augmentativecommunications and mobility, as well as human resource management. Wehave expanded the network of sites we have been building anddiversified into other areas besides healthcare. Included in ourexpansion is the U.S. Military as a major focus of our activities.Efforts and services are currently under way with the Army, and willexpand under an approved initiative to the Air Force in 2007. Proposalshave been submitted to the Navy and Marine Corps as well as to theNational Guard and Reserves and the Coast Guard.

3.

Leverageour strength in key Web-based communication programs such as thedevelopment of specific disability topics directed to specificdisability organizations: e.g. – EP on CP (Cerebral Palsy); EP onEpilepsy; EP on Mobility; etc. Because of our unique, time-tested, andstrong relationships with key disability-related organizations and ourreputation with medical thought and opinion leaders in the field, webelieve this will be a natural course for us to follow, once weimplement our new, expanded Web site, scheduled for launch in May 2007.

Thefirst-quarter 2007 operating results reflect comparable revenues to2006 as well as a significant improvement in profitability. Indeed,revenues in 2007 include only a portion of the revenues for ourDisability Awareness NightTM (DANTM) Program.  We are inreceipt of a signed contract and payment from our lead nationalsponsor, MassMutual, for the 2007 DAN Program, but a substantialportion of these revenues and costs will be posted in the second andthird quarters of 2007. Management forecasts significant growthbeginning in the second quarter of 2007 for EP’s core services,consisting of ad revenue, custom communications, and EPGL specialproject segments, as well as our innovative, online, interactiveeducational programs. Examples of our growth to date and future plansfollow:

Special Projects:

Disability Awareness NightTM (DANTM)

TheDisability Awareness Night campaign has grown substantially since itslaunch in 2002. In 2002, we started with two teams, the New YorkYankees and the Boston Red Sox. In 2003, participation expanded to 14teams. In 2004, we grew to 27 teams, and in 2005, we held DAN events in31 stadiums, including the Hall of Fame Game in Cooperstown, New York.In 2005 and 2006, we experienced the participation of our lead sponsorMassachusetts Mutual Life Insurance Company whose Special*Care*program has made a significant contribution to the field ofdisabilities and whose financial commitment to the DAN Program has beensubstantial. We also benefited from additional sponsorship provided byother international corporations such as Genzyme, ShirePharmaceuticals, CVS, and Volvo. In 2007, we have already secured thecontractual participation of our national Dan sponsor, MassachusettsMutual Life Insurance and three regional sponsors, and we believe wewill surpass revenues achieved in prior years. In addition, we havecontracted for and received sponsorship for a racing event to be heldon Sunday, July 1, 2007, at the New Hampshire International Speedway inLoudon, New Hampshire. This event will also be featured as a Day ofMilitary Distinction, during which we will honor wounded soldiers whoare recovering from injuries sustained in Iraq and Afghanistan. Thesesoldiers will be flown to this new DAN event by our sponsor MassMutualand honored on the track just prior to the NASCAR Nextel Cup Race. Itis anticipated that General Staff Officers and other militarydignitaries from Walter Reed Army Medical Center will be on hand forthese ceremonies.

-30-

----

Educational Online Programming

Beginningin December 2005 and through 2006, we launched over twelve live,online, interactive, TV-quality educational programs under unrestrictededucational grants from major pharmaceutical companies and othersources. In 2007, we have contracted to implement a minimum of sixprograms on spasticity management plus several others dealing withtopics such as Epilepsy, Hyperbaric Oxygen Therapy, Attention DeficitDisorder/Attention Deficit Hyperactivity Disorder (ADD/ADHD), AutismSpectrum Disorders, Respite Care, Asthma, and Expanded NewbornScreening utilizing Tandem Mass Spectronomy (MS/MS). Further growth andadditional topics are planned for the third and fourth quarters.

United States. Military: Exceptional Family Transition Training (EFTT) Program

Inlate 2006, we executed a U.S. Army Cooperative Research Agreemententitled the Exceptional Family Transition Training (EFTT) Program foran appropriation of $830,650, the bulk of which has already beenreceived in 2007. These funds are being used to provide education andinformational programs for military families caring for loved ones withdisabilities and special needs on selected bases around the world, aswell as for the delivery of Continuing Medical Education (CME) credits,via accredited online, interactive programs, to Army Medical Corpsphysicians and Continuing Education Units (CEU) to allied healthcareprofessionals. The Company has received the first three payments underthis agreement, with the fourth and final payment scheduled for July2007. The funds are being used to deliver three measurable efforts onbehalf of Army families and healthcare professionals caring forchildren and adults with disabilities and special needs, includingsoldiers returning from Iraq and Afghanistan with limb loss and otherdisabling conditions. These efforts include the following:

·

Workis underway toward the development of very specific educational contentused for training purposes of Army Medical Corps Staff –physicians, nurses, occupational and physical therapists, speech andlanguage pathologists – and families and caregivers in the arenaof developmental disabilities. This curriculum, which will include sixprograms delivered to eight major Army Base Installations withsignificant teaching hospital facilities, will be facilitated byEP’s contacts in science and medicine, and education andtraining, as well as parents throughout the country. The programs willalso be offered in collaboration with accreditation entities providedby various major medical schools and professional medical societiessuch as the American Academy of Developmental Medicine and Dentistry(AADMD). We expect the first of these programs to begin in July 2007,and run consecutively until the end of calendar year 2007. We willdeliver online, interactive content via our Joint Venture with Vemics,Inc., entitled **EP***LiveOnline*TM. Of course,civilians will also benefit from this effort, as the programs will bedistributed simultaneously to all interested individuals,organizations, professional medical societies, and various otherentities with whom EP works. The content remains the proprietarycontent of EPGL and will be disseminated simultaneously to our variousnetworks built over the past year. It will then be stored for access onthe EP Web site at http://www.eparent.com.

·

BaseLibrarians at our target installations have been contacted, and theavailable EP Bookstore List has been disseminated for their selectionprocess of books to be shipped to each facility. We expect to receiveall requests by the end of May 2007. Shipments have already begun fororders received to date. Exceptional Family Member Program (EFMP)Managers, the points of contact for families with a loved one with adisability or special need on each installation, will be able to selecta specific dollar amount of books and use these to begin the process ofsetting up a disability library on the installation for access bymilitary families caring for loved ones with special needs.

-31-

----

·

EP’sJanuary 2007 Annual Resource Guide includes a Special Army Sectionentitled Community of One ~ From Our Families...To Your Families.In addition, the 2007 Annual Resource Guide was the largestissue/reference tool ever published by EP, and included tabs andspecial advertising-supported inserts. Most importantly, Dr. MargaretGiannini, Director of the Office on Disabilities for Health and HumanServices (HHS), specifically requested that EP print and publish aConsumer Edition of the People’s Piece of the SurgeonGeneral’s Call to Action to Improve the Health and Wellness ofPersons with Disabilities. We did exactly that with funding fromMassMutual. Beginning in February 2007, EP launched its specialMilitary Insert that appears in each issue of the magazine and willappear through calendar year 2007.

Ouraccredited online, interactive seminar capability as well as our printand publishing capabilities will be used for the EFTT programthroughout all of 2007. The project also includes a continuation of theprogram in 2007, at a funding level of $799,000, for expansion to theAir Force. Based on the success of our programs to date, expansion ofthis initiative is possible to the other branches of the service (Navyand Marine Corps, National Guard and Reserves, as well as CivilianEmployees of the U.S. Military), and we are actively pursuing thisexpansion.

Strategic Initiatives:

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

American Academy of Developmental Medicine and Dentistry (AADMD)

Further internal growth is expected to result from *Exceptional Parent* (*EP*)magazine being designated as the official publication of the AmericanAcademy of Developmental Medicine and Dentistry (AADMD), a professionalmedical society and national organization of doctors and dentists whohave dedicated their efforts to providing “best practices”advice to caregivers on how to medically and dentally care for thespecial needs individual. Beginning with the July 2005 issue of *EP*magazine and continuing to the present, AADMD is providingpeer-reviewed articles for the magazine and the opportunity forphysicians to secure up to 2 credit hours of Continuing MedicalEducation (CME) per issue by completing a test that follows eachdesignated article. Management believes that *EP* magazine is thefirst special-interest consumer publication in America to ever offerCME credits to physicians. Our relationship with the AADMD is inaddition to relationships we enjoy with numerous disabilities groupsthroughout the United States as well as with medical societies such asthe Child Neurology Society (CNS).

Itshould also be noted that the AADMD and EPGL have an agreement toco-produce online seminars in 2006 and 2007. No other entity has thisopportunity. The AADMD fully endorses the work of EPGL and of EPGL andVemics, Inc., in their Joint Venture, relating to technologyexclusivity in health care.

Ofadditional significance is that our chief executive officer anddirector, Joseph M. Valenzano, Jr., is the only non-physician to hold aboard seat on the AADMD. Mr. Valenzano currently chairs the ExecutiveAdvisory Board of the AADMD.

United States. Military: Exceptional Family Transition Training (EFTT) Program

Fundsreceived from the EFTT Program Appropriation have been used to provideongoing education for military families and physicians caring forchildren with disabilities and special health care needs. We have hiredveterans and civilian staff to assist in the implementation of thisproject and expect expansion into other areas of the military withfunding requests already approved for the Air Force and an expanded 

-32-

----

programsubmitted for 2008 for the Navy-Marine Corps, National Guard andReserves. Preliminary discussions are also underway with the U.S. CoastGuard, which falls under the Office of Homeland Security.

Itis our intent with the EFTT Program to build upon our existingrelationships within the military community to bring timely andmeaningful educational content both in print and on a Web-baseddelivery system to families and also to the physicians charged withtheir care. In this regard, we have already begun the process ofexploring ways in which we can deliver high-quality educational contentfocused in the chronic disability and special needs area in cooperationwith eight military installations, all of which have large-scaleteaching hospitals and medical facilities. These facilities includeDewitt Hospital, at Fort Belvoir, Virginia; Brooke Army Medical Center,at Fort Sam Houston, Texas; Madigan Army Medical Center, at Fort Lewis,Washington; Blanchfield Army Community Hospital, at Fort Campbell,Kentucky; Womack Army Medical Center, at Fort Bragg, North Carolina;Schofield Barracks, in Honolulu, Oahu, Hawaii; Kaiserslautern, inGermany; and several medical centers at Fort Drum, New York, along withthe Uniformed Medical Services School in Bethesda, Maryland. Thisinitiative represents a Cooperative Agreement with the U.S. Army in theamount of $830,650, and such revenues would be recognized in accordancewith the Company’s existing accounting policy, which is toidentify revenue streams consistent with our core services:subscriptions, page advertising, and special projects/customcommunications and online Web-based programming. 

Wehave recently hired new sales staff capable of marketing the completepackage of services the company now offers, both via print and online.These new sales personnel are receiving ongoing training to implementeffective sales strategies and outcomes for EP. One of our new salesrepresentatives is covering the Southwestern Sales territory and isbased in Dallas, Texas. Our other new sales representative is coveringthe Northeastern and Southeastern territories and is based in LaurysStation, Pennsylvania.

Toimprove efficiency and allow for greater promotion of our magazine tostimulate subscription income, we have outsourced our entirecirculation management to a firm specializing in this arena, ProCirc,based in Miami, Florida. The incremental cost of doing this is notmaterial in relation to the costs to date. Previously, circulationmanagement had been handled internally by our existing staff. Ourbusiness, with its multiple product lines and multimedia approach topublishing and communications, suggests that we might best be able togrow our existing paid circulation base under the direction of anexperienced and professional circulation management team. This team canalso oversee the shift to a smaller, more effective fulfillment firm,one more suited to the nature of our business, which is heavilyinvolved in medical and healthcare-related activities. Accordingly, weare shifting compensation and related expenses to outside professionalcirculation services that have experience in both consumer as well asmedical/professional publishing. The cost differential associated withthis shift, as noted, is negligible but the potential for significantincreases in paid circulation and related development activities, suchas bundled advertising and sponsored bulk distribution of the monthlymagazine, should yield higher revenue performance for us.

Theagreement with ProCirc has been renewed, with refocused direction andeffort. There are incentives built into the agreement to rewardperformance. It is important to note that increases in unit circulationwill also result in increases in advertising, as we will be reaching alarger audience, which should justify increases in ad page sales from alarger number of ad page sales as well as ad page rate increases.

In2007, we have expanded our Disabilities Awareness NightTM(DANTM) programs, principally conducted in major league baseballparks, from 2002 to 2006, and continuing in 2007. Prior to this time,our programs were taking place in a limited number of NationalBasketball Association venues, minor league baseball parks and minorleague hockey arenas. On May 23, 2005, and again in May 2006, inconjunction with the National Baseball Hall of Fame in Cooperstown, NewYork, we hosted prior to the annual Hall of Fame Game a ceremonyhonoring returning disabled veterans from Iraq and Afghanistan. Thiswas done in conjunction with Walter Reed Army Medical Center and itsCommanding General, who presented awards to returning veterans andtheir families selected for the honor. Also at that event, one of thehonorees received his Purple Heart for wounds received in Iraq. In July2007, we will hold our first DAN event at a racetrack, at New HampshireInternational Speedway, in Loudon, New Hampshire, prior to the

-33-

----

NASCARNextel Cup Race. Massachusetts Mutual Life is sponsoring the DAN event.This event will include a Day of Military Distinction, and will involvereturning wounded Soldiers, Sailors, Airmen, and Marines from WalterReed Army Medical Center. We plan to continue this DAN expansion torace tracks associated with NASCAR, and are test-marketing programswith two NBA teams as well as evaluating the feasibility of expandinginto other sports venues such as NCAA Basketball.

Wecontinue to provide education regarding Assistive Technology for peoplewith disabilities, both physical and intellectual (e.g.: cerebral palsyand autism spectrum disorders). This includes the launch of ourConsumer’s Guide to Assistive Technology, written by leadingauthorities in the field.

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

Wecontinue to provide education regarding Mobility, including via theNational Mobility Equipment Dealers Association (NMEDA) Guide toMobility Products, which we publish each year. NMEDA is the leadingnational authority on mobility products and services.

Our revenues are generated from the following activities:

Sale of Advertising Space in Exceptional Parent Magazine

Thisis driven 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 to enhanceawareness and image for their products and services and brandrecognition for their names. Historically, revenues generated from thesale of advertising space have ranged from approximately $1.6 millionto as high as $2.2 million in the past (1998).

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

Thisprogram generates revenue. Each of the DAN events is sponsored on anational basis by a leading sponsor, MassMutual Financial Group,followed by regional and local sponsorships. In 2006, for example,total revenues from this effort aggregated approximately $400,000. Wehave already signed the sponsorship agreement with our lead sponsor for2007, and have commitments from other sponsors that will yield revenueswell in excess of $400,000 in 2007. This does not include anysponsorship revenues from other venues such as NBA games, NHL and MinorLeague Hockey games, nor any added venues associated with NASCAR, whichare still under discussion.

EP Bookstore

TheEP Bookstore houses approximately 2,000 disability specific books,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.

Thebulk of our bookstore has been built through negotiating with thirdparty publishers such as Baker and Taylor and McGraw Hill.  Thishas been 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 

-34-

----

libraryof titles in specific disciplines. In the process of building thislibrary, we place importance in understanding the marketingrequirements for reaching this audience and whether or not we believewe can do so effectively through our magazine, web site and contactswithin disability organizations and professional medical societies; andvia distribution and sales at trade shows and conferences.  The EPBookstore also consists of book titles we own outright and exclusively. Examples of such titles include the following: *No Apologies for Ritalin* by Bhushan Gupta, MD; *and Patient Persistence*by Adele Gill, RN, and approximately five other titles.  None hasa material impact taken individually or collectively but the profitmargins earned on these sales are approximately 30% while the profitmargins on other titles are in the vicinity of 10%. Our decision tohave a stake in book publishing is based on the fact that we receivecountless number of requests to publish specific manuscripts as books.While most of these are rejected, the pipeline for such valuableinformation is of high importance to us because some of this can beturned into productive titles we can publish while others can serve asuseful content for some of our other multi media publishing activitiesin print or online.  We do not envision total revenues from ourbook operation to reach levels much beyond $500,000 per year withprofit margins on the order of 15%.

Custom Publishing & Contract Publishing

Overthe years, we have taken educational editorial series published in EPMagazine, had them reviewed by a panel of clinical thought and opinionleaders, edited and packaged into stand alone monographs focused on aspecific subject area and distributed to key target market segmentsmutually identified by a project sponsor and ourselves.  All ofthis work is completely funded under unrestricted educational grantssecured from major pharmaceutical companies, medical equipment devicemanufacturers, consumer packaged goods companies and financial servicescompanies.  At all times, we adhere to strict ACCME Standards formedical education and strict standards that ensure the separation ofthat which is educational and that which is promotional in nature.

Online Interactive Educational Seminars

Another element in our product mix is the **EP***LiveOnline*TMInteractive TV-Quality, Educational Seminars. This is a project thatcapitalizes on the relationships and credibility we have built withmajor professional medical societies as well as lay and consumerorganizations representing the interests of people with disabilities.We have produced a total of twenty such seminars over the past threeyears and now are poised to offer these in concert with professionalmedical societies such as the AADMD, CNF and CNS. The fact that all ofthese seminars offer Continuing Medical Education (CME) accreditationfor physicians, usually without fees, coupled with the fact that thephysicians do not have to travel but can instead participate from thecomfort of their homes or offices, helps to reduce costs and improveefficiency and educational results.  To our knowledge, no othercompany in the United States offers the kind of comprehensive,authoritative, educational programming that is focused exclusively onchronic life-long conditions as we do. In addition, we do this byoffering online, real-time, live, interactive, TV-quality informationutilizing proprietary software and delivered over the Internet. Weexpect to conduct over 20 such seminars in 2007, in combination withour military initiative.  We had four online seminars undercontract as of December 30, 2005 extending through 2006 and actuallydelivered an additional four others in the arena of Hyperbaric OxygenTherapy and Klinefelter Syndrome and other clinical topics. There arealso several other proposals outstanding.

Results of Operations for the Period Ended March 31, 2007

Liquidity and Capital Resources

Thecash flows from operations for the quarter ended March 31, 2007 wereapproximately equal to the operating requirements of the Company.

Withan existing forecast of minimum revenues of $4,000,000 in 2007,management believes that with the operational cash to be generated andthe retained working capital from our recent funding, 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 2007.

-35-

----

 

Atthe present level of operations, working capital requirements tosustain operations approximates $350,000 per month exclusive of anyexisting debt service that approximates an additional $7,000 per month.The company is also benefiting from cost reduction measures implementedin the last quarter of 2006, especially from the elimination of officespace in New Jersey and staff reductions.

Itis management’s estimate that with its existing working capitalresources and with the issuance of an additional $800 thousand ofconvertible notes, we will be able to meet the working capitalrequirements of operations for the coming twelve months of operations.

Results of Operations

Reflectedin the tables that follow are comparisons of revenue and sales andgeneral administrative expenses for the three months ended March 31,2007 and 2006 as well as commentary on significant variations notedbetween the periods.

Revenuesfor the three months ended March 31, 2007, as compared to the sameperiod in 2006, increased by approximately $22,000.  The largestcomponent of the increase was a $109,000 gain in subscription revenue. This gain was a direct result of the U.S. Army contract. Other revenue increased by $79,000 over 2006 and book salesincreased by $8,500 or 68% for the first quarter 2007. Advertising revenue decreased by approximately $86,000 for thequarter and online seminar revenue registered no income for the quarterended March 31, 2007.  Online revenue contracts have been securedby the company and will generate revenues through the remainingquarters of 2007.

Operating Expenses Including Cost of Sales

Forthe quarter ended March 31, 2007, cost of sales increased byapproximately $64,000 as compared to March 31, 2006. The increase isprimarily due to increases in magazine production costs.

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

-36-

----

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

Salariesand benefits decreased by approximately $136,000 for the quarter endedMarch 31, 2007.  This was a result of deferring salary expenserelated to online seminars.  Office expense decreased byapproximately $36,000 over the same period for 2006.  This was dueto the closing of the New Jersey office and relocation of the Johnstownoffice.  Business travel increased approximately $15,000 due toadditional trade shows that were attended in the first quarter of 2007. Overall selling, general and administrative expenses have beenreduced by $116,000 for the quarter ended March 31, 2007.

Interest, Depreciation and Amortization

Interestexpense has increased in the first quarter of 2007 compared to 2006 byapproximately $30,000 due to the increase in NIR funding. Depreciationand amortization expense have increased by approximately $18,000 forthe quarter ended March 31, 2007.

 

Taxes

Wereflected no provision for income taxes in the first three months of2007 because of the availability of a significant net operating losscarryforward 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. TheCompany referred to SFAS 133, “Accounting for DerivativeInstruments and Hedging Activities,” and EITF 00-19“Accounting for Derivative Financial Instruments Indexed to, andPotentially Settled in, a Company’s Own Stock,” indetermining whether the conversion option is an embedded derivativeinstrument. 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 

-37-

----

convertibledebt. The calculated fair value of the convertible debt of $4,463,785was recorded as a long-term liability as of March 31, 2007. Theconvertible debt will be accreted to its face value of $6.3 millionunder the interest method until it is either converted or matures. Asof March 31, 2007, the total accretion was $394,061 (of which $87,200was recorded in the three months ended March 31, 2007). Separately, theholder of the note exercised conversion privileges for 61,260,000shares of common stock, thereby reducing the amount of the debt by$80,026.

Weincurred debt issue costs of $476,000 relating to their convertiblenotes and will be expensed over the term of the convertible debt.

Off Balance Sheet Arrangements

None

**Item 3.  Controls and Procedures**

Evaluation of Disclosure Controls

Duringthe course of the most recent examination of our financial statementsfor the period ended December 31, 2006 by our independent accountants,we were advised of the existence of a material weakness in our internalaccounting controls.  We have since applied the necessarycorrective action and believe this weakness has been remedied.

Managementevaluated the effectiveness of the disclosure controls and proceduresas of April 12, 2006. This evaluation was conducted by the chieffinancial officer (the principal accounting officer).

Disclosurecontrols are controls and other procedures that are designed to ensurethat information that is required to be disclosed in the reports filedpursuant to the Securities Exchange Act of 1934 is recorded, processed,summarized and reported.

Limitations on the Effectiveness of Controls

Managementdoes not expect that the disclosure controls or the internal controlsover financial reporting will prevent all error and fraud. A controlsystem, no matter how well conceived and operated, can provide onlyreasonable, but not absolute, assurance that the objectives of acontrol system are met. Further, any control system reflectslimitations on resources, and the benefits of a control system must beconsidered relative to its costs. These limitations also include therealities that judgments in decision-making can be faulty and thatbreakdowns can occur because of simple error or mistake. Additionally,controls can be circumvented by the individual acts of some persons, bycollusion of two or more people or by management override of a control.A design of a control system is also based upon certain assumptionsabout potential future conditions; over time, controls may becomeinadequate because of changes in conditions, or the degree ofcompliance with the policies, or procedures may deteriorate.

Becauseof the inherent limitations in a cost-effective control system,misstatements due to error or fraud may occur and may not be detected.

-38-

----

Conclusions

Basedupon evaluation of the controls, the chief executive officer and thechief financial officer (principal accounting officer) have concludedthat, subject to the limitations noted above, the disclosure controlsare effective, providing reasonable assurance that material informationrelating to the Company is made known to management on a timely basisduring the period when the reports are being prepared. There were nochanges in the internal controls that occurred during the quartercovered by this report that have materially affected, or are reasonablylikely to materially affect, the internal controls.

**PART II - OTHER INFORMATION**

**Item 1.  Legal Proceedings**

SeeItem 3 of the Company’s 2006 annual report on Form 10KSB as filedwith the Securities and Exchange Commission on April 16, 2007.

JosephBraumstein, Chapter 7 Trustee of The McCabe Group versus Joseph M.Valenzano, Jr. and Psy-Ed Corporation et al. Adversary proceeding No06-01351.  When The McCabe Group (TMG) ceased business operationsin October 2004, it entered into a Chapter 7 liquidation proceeding,under the terms of Title 11 of the U.S. Code (Bankruptcy). The Chapter7 Trustee of TMG, Joseph Braumstein in June 2006 brought a lawsuit inthe U.S. Bankruptcy Court alleging that the Company and its Presidentand CEO, jointly and severally, owed approximately $53,000 for legalfees and expenses to TMG.  The Company and its CEO are vigorouslydefending this complaint. The Company and Counsel believe that furtherlitigation should result in the ultimate dismissal of this Chapter 7Trustee Claim. The Company has made all timely filings with the courtand to date has heard nothing further with regard to the position ofthe court.

Psy-EdCorporation, d/b/a Exceptional Parent, Plaintiff v. Stanley D. Kleinand Kimberly Schive, Superior Court in and for the County of Middlesex,in the Commonwealth of Massachusetts, Civil Action No. 99-6140;Counterclaims Brought by Klein Against Plaintiffs and Third-PartyDirectors (Kenneth Rossano, David Hirsch, MD, Robert Striano, Donald S.Chadwick, C. Kenneth Mehrling and Robert K. Hopkins, Jr.) ofExceptional Parent in Civ. No. 99-6140. This case was commenced onDecember 17, 1999. Psy-Ed is the plaintiff and counter-claimants inthis case. The Company and its president were previously successful indefending an action taken by Ms. Schive in 1996 for wrongfultermination and successfully defended itself in three separate appealsmade by Ms. Schive. At present, most of the claims by Kimberly Schivehave been dismissed and are no longer pending, either in any courtproceeding or before the MCAD. Still pending are her claims for abuseof process and retaliation. The company and its attorney’s feelthat further litigation should result in the ultimate dismissal of herclaims.

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

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

-39-

----

Duringthe non-jury trial held in June of 2006, eight of Klein’s tenclaims against the Company were dismissed. The Company was found liableby the judge with respect to abuse of process in the Schive case andtortuous interference with respect to a promissory note. The balance onthat note was approximately $124,000. The Company intends to rigorouslydefend against the decision and to date no decision with regard to anyaward of damages has been made.  It is the Company’sposition that it will prevail with respect to any adverse findingsalthough it is impossible to assert at this time that there is anycertainty with respect to this position.

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

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

None.

**Item 3. Defaults Upon Senior Securities**

None.

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

None.

**Item 5. Other Information**

None.

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

        A.  Exhibits

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

        B.  Reports on Form 8-K

|   | None   |   |
|--------|--------|--------|
|   |   |   |
|   |   |   |

-40-

----

**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/ James McGinnis

     James McGinnis, Chief Financial Officer, Vice President of Operations  |
|   |                                                                                                                     |

|  |
|--|

|   |         |
|--------|--------------|
| Dated: | May 15, 2007 |

-41-