**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D. C. 20549**

**FORM 10-KSB**

(Mark One)

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

**For the fiscal year ended December 31, 2006**

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

For the transition period from ___________ to ___________

Commission file number: 000-30797

**EP GLOBAL COMMUNICATIONS, INC.**

(Name of Small Business Issuer in its charter)

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

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

**(814) 361-3860**

Issuer’s Telephone Number

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

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

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

(Title of class)           |

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

Yes [X]   No [  ]

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

Yes [  ]   No [X]

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

Registrant's revenues for its most recent fiscal year were $2,566,004.

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

As of April 10, 2007 the Company had 116,065,818 common shares outstanding.

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**Forward-Looking Statements**

Certaininformation contained herein should be considered“forward-looking statements” within the meaning of thePrivate Securities Litigation Reform Act of 1995 which is subject to anumber of risks and uncertainties. The preparation of forward-lookingstatements requires the use of estimates of future revenues, expenses,activity levels and economic and market conditions, many of which areoutside the control of EP Global Communications, Inc., (the Company).Specific factors that could cause actual results to differ materiallyfrom those set forth in the forward-looking statements include:economic conditions; labor costs; competitive pressures on pricing;consumer perceptions of the Company’s products; other operationalmatters discussed herein; and other risks and uncertainties. Otherfactors and assumptions not identified above are also involved in thepreparation of forward-looking statements, and the failure of suchother factors and assumptions to be realized may also cause actualresults to differ materially from those discussed.

**EP GLOBAL COMMUNICATIONS, INC.**

**TABLE OF CONTENTS**

|   | Part I   | Item 1.  Description Of Business                                                                                                                                                 | 2      |
|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |     | Item 2.  Description Of Property                                                                                                                                                 | 11     |
|   |     | Item 3.  Legal Proceedings                                                                                                                                                       | 12     |
|   |     | Item 4.  Submission Of Matters To A Vote Of Security Holders                                                                                                                     | 13     |
|   |     |                                                                                                                                                                                  |   |
|   | Part II  | Item 5.  Market For Common Equity And Related Stockholder Matters                                                                                                                | 13     |
|   |     | Item 6.  Management’s Discussion And Analysis Of Plan Of  Operation                                                                                                   | 15     |
|   |     | Item 7.  Financial Statements                                                                                                                                                    | 25     |
|   |     | Item 8. Change In And Disagreements With Accountants On Accounting And

             Financial Disclosure                                          | 25     |
|   |     | Item 8a.  Controls And Procedures                                                                                                                                                | 25     |
|   |     |                                                                                                                                                                                  |   |
|   | Part III | Item 9.  Directors, Executive Officers, Promoters And Control Persons; Compliance

               With Section 16(A) Of The Exchange Act | 26     |
|   |     | Item 10.  Executive Compensation                                                                                                                                                 | 30     |
|   |     | Item 11.  Security Ownership Of Certain Beneficial Owners And Management                                                                                                         | 32     |
|   |     | Item 12.  Certain Relationships And Related Transactions                                                                                                                         | 34     |
|   |     | Item 13.  Exhibits And Reports On Form 8-K                                                                                                                                       | 35     |
|   |     | Item 14.  Principal Accountant Fees And Services                                                                                                                                 | 35     |
|   |     |                                                                                                                                                                                  |   |
|   |     | Signatures                                                                                                                                                                            | 37     |
|   |     |                                                                                                                                                                                  |   |

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**PART I**

**ITEM 1. DESCRIPTION OF BUSINESS.**

**Background**

Wewere incorporated in the State of Delaware in November 1999, under thename East Coast Airlines, Inc. (“ECA”), which wasestablished to become a fully certified Federal Aviation RegulationPart 121 air carrier. The original business plan was to providescheduled air service to small and medium-sized markets that hadexperienced either a total or partial loss of air service as a resultof shifts in emphasis by major airlines and their regionalcounterparts. We expected to operate as an independent carrier andserve select markets in the Northeast United States.

InJune 2000, we filed a Form 10-SB Registration Statement with the SEC toregister our common stock under the Securities Act of 1933, as amended(the “1933 Act”), which became effective in July 2000. Thetragic events of September 11, 2001, severely affected the airlineindustry and impeded ECA’s efforts to finance its business plan.In the months following September 11, 2001, security concerns causedairline ridership to plummet, and as a consequence reduced, inmanagement's opinion, the potential for a successful launch of theairline. The ensuing decline in the United States economy also createda significant impairment to the successful implementation of ouroriginal business plan.

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

OnNovember 28, 2003, pursuant to unanimous adoption by the Boards ofDirectors of Psy-Ed Corporation (Psy-Ed) and East Coast Airlines, Inc.,the companies entered into a Share Acquisition Agreement thatauthorized ECA to offer 173 shares of our common stock for each shareof Psy-Ed common stock held of record by all Psy-Ed Stockholders.

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

Psy-EdStockholders were offered 173 of our common shares for each commonshare of Psy-Ed owned of record. We reduced our outstanding commonshares to 7,265,932 from 19,113,400 common shares. We amended ourCertificate of Incorporation, increasing our authorized common sharesfrom 20,000,000 to 60,000,000. We changed our corporate name to“EP Global Communications, Inc.,” our present name. Themembers of the Board of Directors of ECA resigned, and the nominees ofPsy-Ed were appointed to the Board of Directors of the new parentcompany, EP Global Communications, Inc., with Joseph M. Valenzano, Jr.,becoming our President and CEO. Psy-Ed became our wholly ownedsubsidiary corporation.

Psy-EdStockholders owning 75,208 of the Psy-Ed common shares exchanged theirPsy-Ed common shares for our common shares. We issued an aggregate of13,010,984 common shares to the Psy-Ed Stockholders. The share exchangeresulted in Psy-Ed Shareholders owning approximately 65% of ouroutstanding common stock. Psy-Ed has become our wholly ownedsubsidiary. 

Thecurrent board of directors consists of the following members, ratifiedby a shareholders vote in December 2006:  (1) Joseph M. Valenzano,Jr.; (2) Donald Chadwick; (3) Dr. David Hirsch; (4) William Bliel; (5)Rear Admiral Raymond C. Smith (Retired); and (6) Diane Jones. 

**About Us**

Havingcompleted this acquisition, we became a global communications companydedicated to providing information for people with disabilities andspecial health care needs. Our mission is to provide practical adviceand emotional support to families and caregivers of children and adultswith disabilities and special health care needs and to the physicians,allied health care professionals and teachers involved in their careand development. This now includes our work with the United StatesMilitary and its Exceptional Family Member Program (EFMP), under acontract with the United States Army entered into in late 2006.

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Our 36-year-old flagship publication, *Exceptional Parent* (*EP*)magazine, provides the foundation of what we do. In 2003,we received the New Freedom Initiative Award from the Jim MullenFoundation in Chicago, symbolic of the Best Publication and Web Site inthe Nation for People with Special Needs. *EP* magazine was alsothe recipient of Three Gold Medals for Editorial Excellence from FOLIO:at the Magazine Publishers Association Awards Dinner in New York, andthree Gold Medals for Excellence in Journalism from the Consumer HealthPublishing Association of America for our work in the areas ofEpilepsy, Newborn Screening, and Mitochondrial and Metabolic Disorders.In November 2003, *EP* magazine received the DistinguishedService Award from the Epilepsy Foundation of New Jersey for our workon behalf of people with epilepsy. Joseph M. Valenzano, Jr., ourPresident and CEO, is the recipient of numerous awards for his effortson behalf of people with disabilities and special needs, including theDistinguished Service Award from the Fragile X Foundation, given to himby General James L. Jones, former Commandant of the Marine Corps andretired Supreme Allied Commander of NATO Forces. Mr. Valenzano has alsoreceived citations from Senator Frank Lautenberg of New Jersey for hiswork in autism and is the recipient of the 2007 Theresa FoundationAward, which will be conferred on him in May 2007. Working with theleaders in the field, we have established strategic relationships withmajor professional medical societies and lay organizations servingpeople with special needs.

Overthe years, we have focused our editorial content on the key issuesaffecting our audience and have worked to provide them with importantinformation on topics such as the spectrum of autistic disorders; theIndividuals with Disabilities Education Act (IDEA) Reauthorization; theNo Child Left Behind Act; epilepsy and complex seizure disorders;Attention Deficit Hyperactivity Disorder (ADHD); and the latestdevelopments in mobility, assistive technology, and communicationdevices. Among many other features, we have produced a Consumers Guideto Assistive Technology and A Consumers Guide to Mobility, and haveconducted a twelve-part educational series on epilepsy that has spannedtwo calendar years and will conclude in September 2007.

Wealso expanded our coverage of key areas in the disabilities arena withadded columns, including Tech-Scapes and IDEA Notebook, as well ascontinuing series on autism, financial planning, and adaptive physicalsports and recreation for people with disabilities. In addition, wehave continued our efforts to expand awareness of the benefits ofexpanded newborn screening using tandem mass spectrometry (MS/MS). OurPresident and CEO, Joseph M. Valenzano, Jr., and our Editor in Chief,Rick Rader, MD, are frequent speakers on this subject at majorprofessional medical society and consumer disabilities conferencesacross the nation. We have also recommended that expanded newbornscreening be embraced by the U.S. Military, eliciting the support ofthe Exceptional Family Member Program (EFMP) and additional supportthrough meetings with military health care professionals. We wereinstrumental in pushing this forward in the state of Tennessee. Inearly 2006, the American Society for Medical Genetics came forward witha position and recommendation that all newborns be screened for allknown inborn errors of metabolism, and this has helped move theadoption of MS/MS forward in some states. But there still exist greatdisparities, which we hope through persistent education and awarenessto help eliminate.

In2006, we expanded our unique Disability Awareness NightTM(DANTM) Program to both Major League and Minor League Baseballteams. Thirty-six DAN events were held in 2006, including our secondannual Disability Awareness Night of Military Distinction, at the Hallof Fame Game, in Cooperstown, New York, in partnership with theNational Baseball Hall of Fame. In 2007, we will produce approximately40 such DAN events, including our third annual Disability AwarenessNight of Military Distinction Hall of Fame Game in Cooperstown, on May21. The DAN Program began with just two teams in 2002, the New YorkYankees and the Boston Red Sox, and has enjoyed significant growthsince then, with a major National Sponsor, Massachusetts Mutual LifeInsurance Company, and other regional Sponsors such as CVS, Genzyme,Volvo, and Shire Pharmaceuticals. Each DAN event includes a pre-gameceremony honoring people who, by virtue of how they have lived theirlives in the face of adversity, or by how they have dedicated theirlives to helping others, serve as an inspiration for all of us. Theseindividuals are honored on the field in a brief ceremony just prior tothe singing of the National Anthem.  Past honorees includeindividuals such as General James L. Jones, former 32nd Commandant ofthe Marine Corps and retired Supreme Allied Commander of NATO Forces;his wife Diane Jones; and their daughter Jennifer, who has Fragile X.General Jones and his wife Diane are steadfast supporters of themilitary Exceptional Family Member Program (EFMP). Other past DANhonorees include Eunice Kennedy Shriver, founder of InternationalSpecial Olympics; Travis Roy; Dr. Darryl De Vivo, world-renownedspecialist in the field of mitochondrial and metabolic disorders; PieroRinaldo, MD, PhD, Director of the Human Genetics Department at the MayoClinic and a pioneer in the field of expanded newborn screening;actress Geri Jewell; and others.  In early 2007, we have expandedinto race tracks associated with NASCAR, as a new venue, are testmarketing programs with two NBA teams, and are evaluating thefeasibility of expanding into other sports venues.

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EPGlobal Communications, Inc. (EPGL), and Vemics, Inc., have a JointVenture agreement wherein EPGL is the exclusive provider of live,online, interactive, TV-quality educational systems in the disabilitiesarena wordwide. Vemics is the creator of this proprietary technologythat offers the ability to do live, online, point-to-point educationalprograms, accessing and including up to as many as ninetysites/locations simultaneously. In 2006, supported by a pharmaceuticalcompany, we delivered four such programs, dealing with SpasticityManagement. In 2007, we will deliver six such programs, each focusingon areas of spasticity diagnosis and management, and again supported bya pharmaceutical company. Additionally, we have expanded this resourceinto other subject areas, delivering programs in the financial servicessector, and on Hyperbaric Oxygen Therapy and epilepsy. All of ourprograms delivered into the clinical arena include valuable ContinuingMedical Education (CME) Credits and often Continuing Education Units(CEU) for allied health care professionals and educators. Our system ofproviding these high-quality online CME/CEU-accredited seminars allowsthem to be digitized and stored electronically for future access on ourWeb site, http://www.eparent.com. These programs are focusedexclusively in the arena of chronic life-long disabilities andconditions as opposed to disease states. This delivery systemrepresents a unique and valuable way to expand knowledge in this field,filling a major void that exists because of the lack of such trainingin the nation’s medical schools. Over the past two years, we havedelivered a total of 12 online seminars dealing with a range of topicssuch as childhood movement disorders; the management and control ofrefractory seizures in people with mental retardation and developmentaldisabilities; managing pediatric gait deficiencies utilizing dynamicbracing; attention deficit hyperactivity disorder (ADHD); lysosomalstorage disorders; and newborn screening. The four online seminars onspasticity and movement disorders were endorsed by the Child NeurologySociety (CNS) as well as the American Academy of Developmental Medicineand Dentistry (AADMD). It is important to note that in July 2005, theAADMD formally recognized *EP* magazine as the officialpublication of the AADMD. Of additional significance is that we nowalso offer CME accreditation through *EP* magazine itself, making *EP*the only special-interest consumer publication in the nation to bearthe endorsement of a professional medical society and to offer CategoryI CME accreditation for physicians. It is a level of respect and honorwe value immensely, and it offers us the opportunity to expand ourprograms into the mainstream pharmaceutical and medical equipmentarenas.

In *EP’s*January 2005 Annual Resource Guide, EP was designated as the exclusivepublisher of The President’s Report on People with IntellectualDisabilities, through the President’s Committee for People withIntellectual Disabilities (PCPID) – formerly known as thePresident’s Committee on People with Mental Retardation, completewith the seal of the office of the President of the United States ofAmerica, which appears on the cover of the 2005 Annual Resource Guide.In 2007, we were asked by Dr. Margaret Giannini of the Health and HumanServices Office on Disability to publish the Consumer Edition of theSurgeon General’s Report “To Improve the Health andWellness of Persons with Disabilities.” The full text of thisreport was printed in its entirety in our January 2007 Annual ResourceGuide and has received wide acclaim.

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

| – | Anauthoritative, proprietary monthly publication read by physicians,educators, nurses, therapists and families alike and endorsed byprofessional medical societies and lay organizations, offering CategoryI CME accreditation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| – | ACustom Communications Business with the capability of producingclinical (and other) publications on a wide range of disorders.Examples of these include: A Primary Care Physicians Guide toMitochondrial and Metabolic Disorders; A Parent’s Guide toMitochondrial and Metabolic Disorders; End Stage Renal Disease: APrimer for Nurses, Dieticians, Physicians and Patients; What FamiliesNeed to Know About Childhood Seizures; Epilepsy: New Patterns of Carefor the Twenty-First Century; Childhood Movement Disorders; PositivePerspectives for Cerebral Palsy; Oral Health Care for People withDisabilities; Universal Newborn Screening (which has won world-wideacclaim); New Hope for People with Epilepsy: The Vagus NerveStimulator; and many others |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| – | AWeb site (http://www.eparent.com) with over 2.0 million visits permonth and which is presently undergoing a redesign with significantimprovements scheduled for launch in May 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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| – | Weparticipate in a Joint Venture with Vemics, Inc., (Vemics stands forvisually Enhanced Multi-Point  Interactive  CommunicationsSystem) which is rapidly becoming embraced by major companies andorganizations.  That Joint Venture is known as **EP***LiveOnline*TM. In addition to the clinical seminars we have done and continue todo, our systems have been purchased by the Secretary of Education forthe State of Pennsylvania and installed in 29 District Offices; byMassachusetts Mutual Life Insurance Company for its General Agentoffices and headquarters locations and by various other research basedentities, all of whom have found the use of the system an effectivecommunications tool which reduces substantially the need for excessiveand costly travel.  Indeed, our own company utilizes the Vemicstechnology for online sales meetings and on occasion to interact withBoard Members and to conduct interviews.                                                                                                                                                                                                                                                               |
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| – | Areference library – The EP Bookstore - available for sale to thepublic with one of the largest arrays of disability and special needsbooks in the industry (over 1,800 titles)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| – | StrategicAlliances with virtually every major professional society andconsumer/family support group/organization and association in the fieldincluding: The American Academy of Pediatrics (AAP); the ChildNeurology Society (CNS); the American Academy of Developmental Medicineand Dentistry (AADMD); the International Medical Dystonia ResearchFoundation; Spina Bifida Association of America; Special OlympicsInternational; United Cerebral Palsy Foundation for Education andResearch; Governmental bodies such as: The National Institutes ofHealth; the Centers for Disease Control & Prevention; U.S.Department of Education and the Office of Special Education andRehabilitation; Department of Defense and the U.S. Military ExceptionalFamily Member Program (EFMP); the Military Child Education Coalition;the International Dyslexia Association; the National Multiple SclerosisSociety; Family Voices; Fragile X Foundation; Cure Autism Now; AutismSociety of America; National Alliance for Autism Research; EpilepsyFoundation; Children with Attention Deficit Hyperactivity Disorder; anda host of other organizations and associations whose reach into thespecial health care needs market is enormous. |

Thebusiness mission of EP Global Communications, Inc. is to continue togrow as a multi-media communications company leveraging its corestrengths and serving the needs of specific Professional Medical,Healthcare, Technology, Financial Planning and Consumer target-nichemarket segments in the disabilities and special needs arena frominfancy to geriatrics.  Our goal is simply to make a positivedifference in the lives of people with disabilities and special needsand all those who are involved in their care and development.Tactically, we seek to accomplish this by utilizing a multi-mediaapproach to communications that includes print, online/interactiveservices and the Internet, customized reports, exhibits, conferences,and books. (See our Circle Business Strategy, illustration right.)

**Products and Services**

The following is a list of our products and services:

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

**Disability Awareness NightTM (DANTM) Programs at Major and Minor League Baseball Stadiums:** This program generates revenue. Each of these DAN Events issponsored on a national basis by a leading sponsor, MassMutualFinancial Group followed by regional and local sponsorships.  In2006 for example, total revenues from this effort aggregatedapproximately $400,000. We have executed the sponsorship agreement withour lead sponsor for 2007 and have commitments from other sponsors thatwill yield revenues well in excess of $400,000 in 2007. This does notinclude any sponsorship revenues from other venues such as the NBA andNHL, as well as various tracks running NASCAR races – we are inthe process of financial arrangements to associate ourselves withcertain NASCAR tracks.

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**EP Bookstore:** The EP Bookstore houses approximately 1,800 disability-specificbooks and videotapes dealing with a wide range of disability topics. We have been building this base for quite some time and are nowpoised to leverage its growth with some targeted marketing to specificmarket segments such as military bases and libraries across the nation.

**Custom Publishing & Contract Publishing**: Over the years, we have assembled educational editorial seriespublished in EP Magazine, had them reviewed by a panel of clinicalthought and opinion leaders, edited and packaged into stand alonemonographs focused on a specific subject area and distributed to keytarget market segments mutually identified by a project sponsor andourselves.  All of this work is completely funded underunrestricted educational grants secured from major pharmaceuticalcompanies, medical equipment device manufacturers, consumer packagedgoods companies and financial services companies.  In the medicalarena, at all times, we adhere to strict ACCME Standards for medicaleducation and strict standards that ensure the separation of that whichis educational and that which is promotional in nature.  Anexample, purely for illustrative purposes, might proceed along thefollowing lines:

Aseries is published on a given subject, e.g. movement disorders orinfantile spasms,  featuring the very best medical and scientificresearch authorities we can identify. The series might be three, fouror six consecutive articles in EP magazine, each one focused on aspecific area.

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

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

Theproject will be produced and implemented as a turn-key project anddisseminated to a target audience that is likely to include physicians,allied health care professionals and consumers and likely to alsoinclude the endorsement and support of major consumer and professionalorganizations.

**Online Interactive Educational Seminars:  **Another element in our product mix is **EP***LiveOnline*TM,a Joint Venture between EPGL and Vemics, Inc., providing live,interactive, 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 20 such seminars over the past threeyears and now are poised to offer these in concert with professionalmedical societies such as the AADMD.  The fact that all of theseseminars offer CME accreditation for physicians usually without fees,coupled with the fact that attendees and presenters/faculty do not haveto travel but can instead participate from the comforts of their homesor offices, help to reduce costs and improve efficiency and educationalresults.  To our knowledge, no other company in the United Statesoffers the kind of comprehensive authoritative educational programmingfocused exclusively on chronic life long conditions as we do. Inaddition, we do this by offering online real time live interactive TVquality manner utilizing proprietary software and delivered over theInternet. Finally, all content is archived and stored electronicallyfor future use and dissemination 

**Competition**

The following publications represent competition:

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

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

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

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(4)Challenge Publications, Ltd./PALAESTRA; Audience – People withdisabilities participating in Sports, Physical Education, andRecreation; Coaches

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

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

(7)New Mobility  Magazine - primarily a dealer oriented publicationwith limited editorial and focused exclusively on mobility issues

Thereare no other competitors doing Disability Awareness Night Programs,Custom Clinical Monographs or online interactive CME accreditededucational programs and none that are endorsed by a professionalmedical society.

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

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

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

The following medical education companies are our competition:

AAF-MED

CME and CE accredited provider

660 White Plains Rd., Ste. 535

Tarrytown, NY  10591

1-800-247-7615

www.aafmed.com

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

Academy for Healthcare Education

Division of The Impact Group

330 Madison Ave., 21st Floor

New York, NY 10017

212-490-2300

www.ahe.edu

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

Advanstar Medical Economics

Five Paragon Drive

Montvale, NJ  07645

888-581-8052

www.advanstarhealthcare.com

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

Alpha & Omega Worldwide, LLC

370 Campus Drive

Somerset, NJ 08873

888-999-9672

www.alpha-and-omega-llc.com

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

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Center for Bio-Medical Communication, Inc.

433 Hackensack Avenue

9th Floor

Hackensack, NJ  07601

201-342-5300

www.cbcbiomed.com

A full service medical education (CME) provider

The Chatham Institute

26 Main Street, 3rd Floor

Chatham, NJ  07928-2402

800-381-4012

Accredited provider of medical, pharmacy and nursing continuing education.

CPE Communications

84 Headquarters Plaza

West Tower, 6th Floor

Morristown, NJ  07960

973-971-0700

www.cpeducate.com

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

DiMedix, LLC

34 Mountain Blvd.

Suite 202

Warren, NJ  07059

800-465-8870

www.dimedix.com

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

The Hatherleigh Company, Ltd.

800-367-2550

5-22 46th Avenue

Suite 200

Long Island City, NY  11101

800-367-2550

www.hatherleigh.com

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

Health Learning Systems

155 Route 46 West

Wayne, NJ  07470

973-785-8500

www.commonhealth.com

Creates comprehensive and groundbreaking medical education solutions.

Impact Communications

330 Madison Ave., 21st Floor

New York, NY  10017

800-490-2300

www.impactgroup1.com

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

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Thomson Interphase

5 Paragon Drive

Montvale, NJ  07646-1742

201-358-7400

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

IntraMed

230 Park Avenue South

New York, NY  10003-1566

212-614-3800

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

Network for Continuing Medical Education

One Harmon Plaza

Secaucus, NJ  07094

800-223-0433

www.ncme.com

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

Spectrum Healthcare Communications

1140 Route 22 East. Ste. 201

Bridgewater, NJ  08807

800-922-0949

www.impactgroup1.com

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

Althoughthe above companies may be deemed to be our competition, none of theabove companies focus on chronic life long conditions and disabilitiesin the manner that we do.  None offer content that spans thespectrum of disabilities from infancy to seniors nor the multi-mediaapproach used in disseminating this content. In addition, EP magazineis the only special-interest consumer publication serving the specialneeds marketplace that has been accorded the privilege of offeringContinuing Medical Education (CME) credits to physicians, and that isendorsed by a professional medical society. Both of these distinctionshave been conferred by the American Academy of Developmental Medicineand Dentistry (AADMD).

**Material Agreements**

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

(2)EBSCO (Elton B. Stephens Company) Publishing, Inc., License Agreement– we executed this agreement on October 1, 2005 but have notreceived an executed agreement from EBSCO Publishing, Inc. Thisagreement is for a 3-year term with successive one year renewals unlesseither party provides notice of non-renewal 90 days prior to theexpiration of the present term. This agreement provides a license forthe content of our publications to be disseminated by EBSCO Publishing,Inc. EBSCO agrees to pay us royalties, on a quarterly basis, equal to20% of the net revenue collected on products sold by them.

(3)Previously, Booke and Company, Inc. Investor Relations Agreement– The arrangement with Booke and Company has officially ended,effective December 31, 2006.

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(4)Vemics, Inc. Agreement – On December 8, 2005, we entered into anexclusive Joint Venture agreement (the Agreement) with Vemics, Inc.(Vemics), whereby Vemics and EP will undertake to jointly provide anInternet-based, online interactive TV-quality communication system forthe delivery of educational/training content and business meetings.Pursuant to the Agreement, we will (i) market and resell Vemicsservices to our customers and sponsors in the special needs market;and, (ii) utilize exclusively the Vemics system in providing ourcustomers and sponsors with live, online, interactive Internet-basededucational/training content and business meetings. Vemics hasappointed us to act as its exclusive global representative in thiscapacity, and has granted us a license to provide Vemics services,software, and documentation to our customers. Vemics will provide uswith sales and marketing literature, as well as training sessions forour sales and technical personnel. Vemics will also provide customersupport services to our customers and to us.  Vemics and EP willshare equally among the profits after all direct expenses are paid,from fees paid by our customers and sponsors in connection with theservices rendered as provided by the Agreement. EP GlobalCommunications, Inc., will report all revenues as a component of itsfinancial reporting. The agreement shall remain in force until November1, 2007 (the Initial Term).  Upon the expiration of the InitialTerm, the Agreement will automatically renew for one additional term ofthree years (Renewal Term) unless and until either party notifies theother party of termination, in writing.  The Agreement may beterminated by either party upon default or insolvency of the otherparty.

(5)ProCirc, LLC. Circulation Services Agreement – Effective November11, 2005, we signed a Circulation Services Agreement with ProCirc, LLCwhereby ProCirc will perform circulation services for us.  Theagreement commenced on December 1, 2005 and terminates on November 30,2006. It shall automatically renew for successive one-year periodsstarting on December 1, 2006, unless either party terminates theAgreement on 90 days prior written notice before the end of any term.We are required to pay ProCirc the sum of $7,000 per month for basicservices under the agreement for the first 12 months of the agreement. The ProCirc Agreement was renewed for one year at a rate of$5,500 per month and expires on November 30, 2007.

(6)On November 28, 2006, the Company entered into an agreement with theUnited States Army for a U.S. Army Research Project, entitledExceptional Family Training and Transitioning Program, focusing oneducation and training in the developmental and special healthcareneeds arena. The contract, which is worth over $800,000, will be paidin installments and will be effective from December 1, 2006 throughDecember 31, 2007. Under the terms of the agreement, EP GlobalCommunications Inc., will be working with the U.S. Army Medical Corps(USA-Medical Corps) and the Exceptional Family Member Program(USA-EFMP) Managers and Families by providing a special U.S. Armysection of *Exceptional Parent* (*EP*) magazine, developingand implementing a series of online Continuing Medical Education (CME)and Continuing Education Units (CEU)-accredited live, online,interactive, TV-quality seminars on a variety of disability-specifictopics and by providing selections from the EP Bookstore to bedelivered to specified U.S. Army installations and special needsfamilies.

Uponcommencement following a needs assessment meeting with representativesof the Department of Defense (DoD) Exceptional Family Member Program(EFMP), U.S. Army, USA Medical Corps, and other interested parties, EPGlobal Communications, Inc., and USA-EFMP are implementing anddistributing plan goals. Up to eight military installations with largehospital and rehabilitation facilities are identified as the target DoDrecipients of this information, and these centers will be key sites formeasuring the effectiveness of this research undertaking. Beginning inJanuary 2007, EPGL delivered its annual resource guide, and beginningin February 2007, EPGL began delivering copies of EP to the designatedmilitary installations.

EPGlobal will also be working with the USA-EFMP Managers, USA MedicalCorps, and professional medical societies such as the American Academyof Developmental Medicine and Dentistry (AADMD) in developing andexecuting up to six Continuing Medical Education (CME) and ContinuingEducation Units (CEU)-accredited live, online, interactive, TV-qualityseminars to EFMP families, Army Medical Staff and others in the arenaof developmental disabilities. The topics and focus of these seminarswill be determined by the special needs assessment by the USA-EFMPdelegates, who will be working in concert with EP GlobalCommunications, Inc., and its associated partners, AADMD, and Vemics,Inc.

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

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

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

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

InAugust 2006, we completed a secondary financing agreement with NIR,LLC, by executing a securities purchase agreement with the followingentities: AJW Partners, LLC; AJW Offshore, Ltd.; AJW QualifiedPartners, LLC; and New Millenium Capital Partners II, LLC. Under thesecurities purchase agreement, we will issue up to $2,600,000 incallable secured convertible notes. The notes are convertible intoshares of our common stock. The conversion price is based on the lesserof $0.05 or the average of the lowest three intra-day trading pricesduring the 20 trading days immediately prior to the conversion date,discounted by 40%. The timing of the conversion is at the option of theholder. The notes are secured by a grant of a general security interestin all of our assets both tangible and intangible. In addition, we areto issue stock purchase warrants convertible into shares of our commonstock on a one-for-one basis. The exercise price is $.01, and the termof the warrants is five years.

Todate, we have received net proceeds of $1,300,000 of the $2,000,000committed, with the balance to be paid to us in equal installments of$100,000 through November 2007, under the terms of the securitiespurchase agreement, which represents the total commitment for fundingfrom the group identified above.

**Governmental Regulation**

Our business is not subject to any governmental regulations.

**Intellectual Property**

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

**Employees**

Asof April 14, 2007, we have 24 full-time employees and 4 part-timeemployees. We have never had a work stoppage, and no employees arerepresented under collective bargaining agreements. We consider ourrelations with our employees to be good. We have entered into anemployment agreement with our chief executive officer and director.

**ITEM 2. DESCRIPTION OF PROPERTY**

Weconsolidated our office space in 2006 into one central location fromwhich our business is conducted. We currently operate our business fromone (1) corporate office located as follows: (1) corporate headquartersat 416 Main Street, Johnstown, Pennsylvania 15901, telephone number(814) 361-3860.  The lease agreement for this space is fromDecember 1, 2006 through December 31, 2009. The monthly base rentpayment for the initial year of the lease is $3,400. During theprevious year, our monthly rent payments for base rent and additionalrent were 

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approximately $7,500 per month. This lease is in the name of EP Global Communications, Inc., doing business as *Exceptional Parent* (*EP*)magazine, our wholly owned subsidiary. In August 2006, thecompany’s office space was consolidated, merging the former NewJersey location with the Johnstown location, into the one (1) office inJohnstown, representing a significant savings in rent and overheadcosts.  In December 2006, the Johnstown office was relocated from551 Main Street, Johnstown, to its present location at 416 Main Street,Johnstown, resulting in additional rent and overhead cost savings. Themonthly base rent payment for the previous Johnstown office at 551 MainStreet, for the period November 1, 2005 through October 1, 2006 was$6,262.75. EP also has a lease for one (1) apartment located asfollows: (1) apartment at 335 Bloomfield Street, Apartment #3,Johnstown, Pennsylvania 15904. The lease agreement for this space isfrom January 16, 2007 through December 31, 2007. This apartment servesas a cost-saving measure for offsite employees who need to travel toand do business in the Johnstown office at various times during theyear. The fixed monthly cost of this rental unit is $495, with $500having been initially paid as a security deposit, refundable in totalat the end of the lease term if no damages have been incurred. Thisinvestment allows EP to avoid variable and expensive hotel costs.

**ITEM 3. LEGAL PROCEEDINGS.**

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

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 that further litigation should result in the ultimatedismissal of this Chapter 7 Trustee Claim.  The Company has madeall timely filings with the court and to date has heard nothing furtherwith regard to the position 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

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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 toany adverse findings although it is impossible to assert at this timethat there is any certainty with respect to this position.

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

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

Therewere no matters submitted to security holders in the fourth quarter ofthe Company’s fiscal year other than the AnnualShareholder’s Meeting held at the Sunnehanna Country Club inJohnstown, Pennsylvania, on December 7, 2006, at which time thecompany’s board of directors was elected for an additionalone-year term and the appointment of the Company’s independentauditors, Malin, Bergquist, and Company, LLP.

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

**Market Information**

Ourcommon stock is currently traded on the OTC Bulletin Board under thesymbol “EPGL.” Our common stock has been quoted on the OTCBulletin Board since December 15, 2004.  The following table setsforth the range of high and low bid quotations for each of the fourquarters of calendar years 2005 and 2006. These quotations as reportedby the OTC Bulletin Board reflect inter-dealer prices without retailmark-up, mark-down, or commissions, and may not necessarily representactual transactions.

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

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|   | 2006 | First  | $.04  | $.009 |
|--------|------|--------|-------|-------|
|   | 2006 | Second | $.020 | $.005 |
|   | 2006 | Third  | $.011 | $.005 |
|   | 2006 | Fourth | $.013 | $.002 |

**Holders**

Asof April 10, 2007 in accordance with our transfer agent records, we had172 shareholders of record. Such shareholders of record held116,065,818 shares of our common stock.   

**Dividends**

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

**Recent Sales of Unregistered Securities**

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

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

FiscalYear 2006 – The Company issued the following unregisteredrestricted securities in December 2006 to members of the Board ofDirectors of the company pursuant to Board of Director approval in May2006 and to other individuals and entities as disclosed below:

| – | OnJanuary 11, 2006, we issued 50,000 shares of our restricted commonstock in consideration for professional services rendered to us. Theissuance was valued at $.04 per share or $2,000. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                     |
| – | OnJanuary 11, 2006, we issued 250,000 shares of our restricted commonstock in consideration for discharge of an accrued liability. Theissuance was valued at $.01 per share or $2,500.   |

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|    |                                                                                                                                                                                                            |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| – | OnJanuary 11, 2006, we issued 75,000 shares of our restricted commonstock in connection with a temporary loan to the Company. The issuancewas valued at $.04 per share or $3,000.                               |
|    |                                                                                                                                                                                                            |
| – | OnFebruary 21, 2006, we issued 100,000 shares of our restricted commonstock in consideration for professional services rendered to us. Theissuance was valued at $.025 per share or $2,500.                     |
|    |                                                                                                                                                                                                            |
| – | OnApril 20, 2006, we issued an aggregate of 20,000 shares of ourrestricted common stock in consideration for services rendered asemployees. The issuance was valued at $.008 per share or $160 in theaggregate. |
|    |                                                                                                                                                                                                            |
| – | OnDecember 15, 2006, we issued 2,500,000 shares of our restricted commonstock to members of the Board of Directors of the Company. The issuancewas valued at $.005 per share or $12,500 in the aggregate.       |
|    |                                                                                                                                                                                                            |
| – | OnDecember 15, 2006, we issued 250,000 shares of our restricted commonstock to a former director. The issuance was valued at $.005 per shareor $1,250.                                                          |

Equity Compensation Plan Information

Thefollowing table sets forth certain information as of April 14, 2007,with respect to compensation plans under which our equity securitiesare authorized for issuance:

|   |                           | (a)                                                                                         | (b)                                                                         | (c)                                                                                                                                       |
|--------|--------------------------------|---------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|   |                           | _________________                                                                           | _________________                                                           | _________________                                                                                                                         |
|   |                           | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Numberof securities remaining available for future issuance under equitycompensation plans (excluding securities reflected in column (a)) |
|   |                           |                                                                                        |                                                                        |                                                                                                                                      |
|   | Equity Compensation Plans      | None                                                                                        |                                                                        |                                                                                                                                      |
|   | Approved by                    |                                                                                        |                                                                        |                                                                                                                                      |
|   | Security Holders               |                                                                                        |                                                                        |                                                                                                                                      |
|   |                           |                                                                                        |                                                                        |                                                                                                                                      |
|   | Equity Compensation Plans      | 2,500,000                                                                                   |                                                                        |                                                                                                                                      |
|   | for Current Board of Directors |                                                                                        |                                                                        |                                                                                                                                      |
|   | Not Approved by                |                                                                                        |                                                                        |                                                                                                                                      |
|   | Security Holders               |                                                                                        |                                                                        |                                                                                                                                      |
|   |                           |                                                                                        |                                                                        |                                                                                                                                      |
|   | Equity Compensation Plans      | 250,000                                                                                     |                                                                        |                                                                                                                                      |
|   | for Former Board of Directors  |                                                                                        |                                                                        |                                                                                                                                      |
|   | Not Approved by                |                                                                                        |                                                                        |                                                                                                                                      |
|   | Security Holders               |                                                                                        |                                                                        |                                                                                                                                      |

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

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

Critical Accounting Policies:

Ourdiscussion and analysis of our financial condition and results ofoperations are based upon our financial statements, which have beenprepared in accordance with generally accepted accounting principles inthe United States of America. The preparation of these financialstatements requires us to make estimates and judgments that 

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affectthe reported 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 will globally impact, far into the future, what is done for peoplewith disabilities and special needs and for the families,professionals, and other support people who care for them. 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, www.eparent.com..to belaunched in May 2007) will continue to establish links among familiesand professionals to enhance knowledge bases regarding specificdisabilities 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. *EP*magazine represents the foundation of all that we do. Most of ourefforts up to the beginning of 2007 have been directed to this purpose. Our focus is entirely in the arena of chronic long-termconditions, not disease states.  The significance of this is thatdiseases for the most part can be cured with various medicalinterventions and surgery.  Chronic life-long conditions aredifferent.  There are no cures for these and so the challenge isto improve upon the quality of life and assist people with specialneeds to develop into the very best they can be and help make themcontributing members of our society.  A corollary to this is toincrease awareness of all Americans that we will become a strongernation and a better people when we learn to regard those with specialsneeds as people to be respected, not problems to be confronted. That isan underpinning of everything we do.  

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.

Emphasizeour core publishing operations, including advertising, subscriptiongrowth, and the development of our custom communications and specialproject capabilities.  Augment our staff in this arena and investin building credible databases

2.

Increase growth 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.Expand the “network” of sites we have been building anddiversify into other areas besides healthcare.  Include the U.S.Military as a major focus of our activities

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 wefinalize the new design and implementation of our Web site, scheduledfor launch in May 2007.

 

Managementforecasts significant growth beginning in the second quarter of 2007for EP’s core services, consisting of ad revenue, customcommunications, and EPGL special project segments, as well as ourinnovative, online, interactive educational programs. Examples of ourgrowth to date and future plans follow:

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Special Projects:

DisabilityAwareness NightTM (DANTM) – The Disability AwarenessNight campaign has grown substantially since its launch in2002. In 2002, we started with two teams, the New York Yankees andthe Boston Red Sox. In 2003, participation expanded to 14 teams. In2004, we grew to 27 teams, and in 2005 we held DAN events in 31stadiums, including the Hall of Fame Game in Cooperstown, New York. In2005 and 2006, we experienced the participation of our lead sponsorMassachusetts Mutual Life Insurance Company whose SpecialCare programhas made a significant contribution to the field of disabilities andwhose financial commitment to the DAN Program has been substantial. Wealso benefited from additional sponsorship provided by other nationalentities such as Genzyme, Shire Pharmaceuticals, CVS and Volvo. In2007, we have already secured the contractual participation of ourNational Dan Sponsor, Massachustts Mutual Life Insurance and threeother regional sponsors,, and we believe we will surpass revenuesachieved in prior years.

EducationalOnline Programming – Beginning in December 2005 and through 2006,we launched over twelve live, online, interactive, TV-qualityeducational programs under unrestricted educational grants from majorpharmaceutical companies and other sources.  In 2007, we havecontracted to implement a minimum of six programs on spasticitymanagement plus several others dealing with topics such as Epilepsy,Hyperbaric Oxygen Therapy, Attention Deficit/Hyperactiity Disorders,Autism Spectrum Disorders, Respite Care and Expanded Newborn Screeningutilizing Tandem Mass Spectronomy (MS/MS). 

U.S.Military: Exceptional Family Transition Training (EFTT) Program –In late 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 will be received in2007, and which will be used to provide education and informationalprograms for military families caring for loved ones with disabilitiesand special needs on selected bases around the world, as well as formaking available Continuing Medical Education (CME) credits to ArmyMedical Corps physicians and Continuing Education Units (CEU) to alliedhealthcare professionals. The Company has received the first twopayments under this agreement. The funds are being used to deliverthree measurable efforts on behalf of Army families and healthcareprofessionals caring for children and adults with disabilities andspecial needs, including soldiers returning from Iraq and Afghanistanwith limb loss and other disabling conditions.  These effortsinclude 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 thearena of developmental disabilities. This curriculum, which willinclude six programs delivered to eight major Army Base Installationswith significant 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) and the Child Neurology Society (CNS). We expect the first ofthese programs to begin in May2007, and run consecutively until the endof calendar year 2007. We will deliver online, interactive content viaour Joint Venture with Vemics, Inc., entitled **EP***LiveOnline*TM.Of course, civilians will also benefit from this effort. The contentremains the proprietary content of EPGL and will be disseminatedsimultaneously to our various networks built over the past year. Itwill then be stored for access on the EP Web site athttp://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 receivetheir requests by the end of April, and shipments will commenceimmediately. Exceptional Family Member Program (EFMP) Managers, thepoints of contact for families with a loved one with a disability orspecial need on each installation, will be able to select a specificdollar amount of books and use these to begin the process of setting upa disability library on the installation for access by militaryfamilies caring for loved ones with special needs.  

·

EP’sJanuary 2007 Annual Resource Guide includes a Special Army Section.Beginning in February 2007, EP launched its special military sectionthat will appear in each issue of the magazine through calendar year2007.

-17-

Ouronline seminar capability as well as our print and publishingcapabilities will be used for the EFTT program throughout all of 2007.The project also includes a continuation of the program in 2007, at afunding level of $803,000 for expansion to the Air Force. Based on thesuccess of our programs to date, expansion of this initiative ispossible to the other branches of the service (Navy and Marine Corps,National Guard and Reserves, as well as Civilian Employees of the U.S.Military), and we are actively pursuing this expansion.

 

Strategic Initiatives:

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

 

AmericanAcademy of Developmental Medicine and Dentistry (AADMD) –Agreement to co-produce online seminars in 2006 and 2007. No otherentity has this opportunity. The AADMD is a professional medicalsociety and fully endorses the work of EPGL and EP GlobalCommunications, Inc. and Vemics, Inc. - Relating to technologyexclusivity in health care.

 

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 havehired veterans and 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 submitted for2008 for the  Navy-Marine Corps, National Guard and Reserves.

 

Weare in the midst of hiring new sales staff capable of marketing thecomplete package of services the company now offers, print and online. These new staff personnel will be hired before the end of April2007 and training will commence immediately thereafter.

 

Toimprove efficiency and allow for greater promotion or our magazine tostimulate subscription income we have outsourced our entire circulationmanagement to a firm specializing in this area.   Theincremental cost of doing this is not material in relation to the coststo date.  Previously, circulation management has been handledinternally by our existing staff.  Our business, with its multipleproduct lines and multi-media approach to publishing andcommunications, suggests that we might best be able to grow ourexisting paid circulation base under the direction of an experiencedand professional circulation management team who can also oversee theshift to a smaller more effective fulfillment firm; one more suited tothe nature of our business which is heavily involved in medical andhealthcare-related activities.  Accordingly, we are shiftingcompensation and related expenses to outside professional circulationservices that have experience in both consumer as well asmedical/professional publishing. The cost differential 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, based in Miami, Florida, has been renewed withrefocused direction and effort. There are incentives built intothe agreement to reward performance.  Finally, it is important tonote that increases in unit circulation will also result in increasesin advertising as we will be reaching a larger audience which shouldjustify increases in ad page sales from a larger number of ad pagesales as well as ad page rate increases.

In2007, we have expanded our Disabilities Awareness NightTM(DANTM) programs, principally conducted in major league baseballparks in 2002- 2006.  Prior to this time, our programs were takingplace in National Basketball Association venues, minor league baseballparks and minor league hockey arenas. On May 23, 2005, and again in May2006 in conjunction with the National Baseball Hall of Fame inCooperstown, New York, we hosted prior to the annual Hall of Fame Game,a ceremony honoring returning disabled veterans from Iraq andAfghanistan. This was done in conjunction with Walter Reed Army MedicalCenter and its Commanding General who presented awards to returningveterans and their families selected for the honor. Also at that event,one of the honorees received his Purple Heart for wounds received inIraq. On May 21, 2007, we will hold our third Annual DisabilityAwareness Night of Military Distinction at the Hall of Fame Game inCooperstown. Sponsorship for the event is being provided by MassMutualFinancial Group, Duane Morris and Mountaintop Technologies inJohnstown, Pennsylvania as well as others.

-18-

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Itshould also be noted that further internal growth is expected to resultfrom Exceptional Parent Magazine being designated as the officialpublication of the American Academy of Developmental Medicine andDentistry (“AADMD”), a national organization of over 1,000doctors and dentists who have dedicated their efforts to providing“best practices” advice to caregivers on how to medicallyand dentally care for the special needs individual. Beginning with theJuly 2005 issue of Exceptional Parent Magazine and continuing to thepresent, AADMD is providing articles for the magazine and theopportunity for physicians to secure up to 2 credit hours of ContinuingMedical Education by completing a test that is to follow each article.Management believes that Exceptional Parent Magazine is the firstconsumer publication ever to offer Continuing Medical Education creditsto physicians. Our relationship with the AADMD is in addition torelationships we enjoy with numerous disabilities groups throughout theUnited States as well as with medical societies such as the ChildNeurology Society.

 

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

  

Thefunding received from the EFTT Army program has allowed us to increaseour education and information programs to military families withspecial needs dependents and caregivers. It is our intent to build uponour existing relationships within the military community to bringtimely and meaningful educational content in both print and on a webbased delivery system to these families but also to the physicianscharged with their care.  In this regard, we have already begunthe process of exploring ways in which we can deliver high qualityeducational content focused in the chronic disability and special needsarea in cooperation with eight military bases all of which have largescale teaching hospitals and medical facilities.  These includeWalter Reed Army Medical Center, Brooke Army Medical Center, MadiganHealth Center at Fort Lewis Washington, Fort Campbell, Kentucky, FortBragg, North Carolina, Trippler Medical Facility in Honolulu, Hawaiiand Fort Drum, New York along with and the Uniformed Medical ServicesSchool in Bethesda, Maryland.  This initiative, once operational,would result in increased revenue of the entire $830,650, to berecognized substantially in 2007 from subscriptions, online interactivetraining sessions and custom communication sales. We would account forall revenues consistent with existing accounting policy which is toidentify revenue streams consistent with our core services which aresubscriptions, page advertising, and special projects/customcommunications and online web-based programming. We would also identifythese revenue streams as being generated from military funding so as todistinguish the revenue streams from those funded by privatesponsorship.

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 and led by John Williams, a noted writer forBusiness Week and USA Today.

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 the leadingnational authority on mobility products and services.

Wehave expanded our sales force with the recent hiring of two new salesrepresentatives, one who will cover the Southwestern Sales territory,and who will be based in Dallas, Texas, and the other who will coverthe Northeastern and Southeastern territories, and who will be based inLaurys Station, Pennsylvania.

Aproposal has been developed and submitted to AOL for the creation of aco-branded Web Channel or Blog on Disabilities and Special Needs.Initial discussions have been held telephonically with executives atAOL, and they have suggested a follow up meeting in Virginia in earlyMarch.

Our revenues are generated from the following activities:

-19-

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Saleof Advertising Space in Exceptional Parent Magazine:  This isdriven by a number of factors, including our editorial content andfocus.  Our customers consist of large Fortune 500 companies: Ford, Chrysler, Kimberly Clark, Novartis Pharmaceuticals, Johnson& Johnson, Massachusetts Mutual Life Insurance Company, Verizon andMerrill Lynch.  All purchase ad space in our publications toenhance awareness and image for their products and services and brandrecognition for their names. Historically, revenues generated from thesale of advertising space have ranged from approximately $1.6 milliondollars to as high as $2.2 million in the past (1998).

DisabilityAwareness NightTM (DANTM) Programs at Major and Minor LeagueBaseball Stadiums: This program generates revenue. Each of these DANEvents is sponsored on a national basis by a leading sponsor,MassMutual Financial Group followed by regional and local sponsorships. In 2006 for example, total revenues from this effort aggregatedapproximately $400,000. We have already signed the sponsorshipagreement with our lead sponsor for 2007 and have commitments fromother sponsors that will yield revenues well in excess of $400,000 in2007. This does not include any sponsorship revenues from other venuessuch as the NBA Games and NHL and Minor League Hockey Games nor theadded venues of NASCAR which are still under discussion.

EPBookstore:  The EP Bookstore houses approximately 1,800 disabilityspecific books, video and tapes dealing with a wide range of disabilitytopics.  We have been building this base for quite some time andare now poised to leverage its growth with some targeted marketing tospecific market segments such as military bases and libraries acrossthe nation. In 2004, library sales amounted to $135,000, which includedretail sales at various trade shows.

Thebulk of our 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 library of titles in specific disciplines.  Inthe process of building this library, we place importance inunderstanding the marketing requirements for reaching this audience andwhether or not we believe we can do so effectively through ourmagazine, web site and contacts within disability organizations andprofessional medical societies; and via distribution and sales at tradeshows and conferences.  The EP Bookstore also consists of booktitles we own outright and exclusively.  Examples of such titlesinclude the following: *No Apologies for Ritalin* by Bhushan Gupta, MD; *and Patient Persistence*by Adele Gill, RN and approximately five other titles.  None havea 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 decisionto have 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%.

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

 

OnlineInteractive Educational Seminars:  Another element in our productmix is the EP OnLine Interactive TV-Quality, Educational Seminars. This is a project that capitalizes on the relationships andcredibility we have built with major professional medical societies aswell as lay and consumer organizations representing the interests ofpeople with disabilities. We have produced a total of twenty suchseminars over the past three years and now are poised to offer these inconcert with professional medical societies such as the AADMD, CNF andCNS.  The fact

-20-

thatall of these seminars offer continuing medical education (CME)accreditation for physicians usually without fees, coupled with thefact that they do not have to travel but can instead participate fromthe comforts of their homes or offices, help to reduce costs andimprove efficiency and educational results.  To our knowledge, noother company in the United States offers the kind of comprehensiveauthoritative educational programming focused exclusively on chroniclife long conditions as we do. In addition, we do this by offeringonline real time live interactive TV quality manner utilizingproprietary software and delivered over the Internet.   Weexpect to conduct over 20 such seminars in 2007 in combination with ourmilitary initiative.  We had four online seminars under contractas of December 30, 2005 extending through 2006 and actually deliveredan addition four others in the arena of Hyperbaric Oxygen Therapy andKlinefelter Syndrome and other clinical topics. There are also severalother proposals outstanding. 

 

Liquidity and Capital Resources

 

Earningswere insufficient in 2005 and 2006 to meet the liquidity needs ofoperations during these periods. These deficits experienced wereaddressed in part through a number of proactive actions taken includingthe conversion of a $350,000 trade payable and $300,000 of other shortterm debt into three year notes effective December 31, 2004.  Eachof these notes will require interest payments only in 2005 at 6% withamortization based on a five year term commencing January 1, 2006 untilthe end of the three year term at which time any remaining balance willbe due.  The Company is current with these obligations.

 

InAugust 2005, we condensed all loans and advances made by JosephValenzano, our officer and director, into an interest bearing note of$225,000 reflecting all advances made to us as through August 2005. The balance at December 31, 2005 was $108,342.  The loanbears interest at the rate of 9.74% per annum and is payable on demand.It is an interest only loan. In 2006, Mr. Valenzano advanced additionalfunding, bringing his loan balance as of December 31, 2006, to $213,581.

Asreflected in our financial statements, our liabilities arecollateralized by our tangible and intangible assets.  Theseassets, stated at their nominal historical cost do not provide adequatecollateral for these liabilities.  However, management believesthat the historical cost of our assets together with the unrecordedvalue of the proprietary mailing lists, professional and consumer,editorial and library content (maintained in digital format) developedover our 36 years of publishing provides substantial collateral inexcess of the amounts owed secured creditors.  The Company has nobank debt of any kind.

OnSeptember 23, 2005, we completed financing agreements by executing asecurities purchase agreement with the following entities: AJWPartners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and NewMillenium Capital Partners II, LLC. Under the securities purchaseagreement, we issued up to $3,720,000 in callable secured convertiblenotes which are convertible into shares of our common stock. Theconversion price is based on the lesser of $0.12 or the average of thelowest 3 intra-day trading prices during the 20 trading daysimmediately prior to the conversion date discounted by 40%. The timingof the conversion is at the option of the holder. The notes are securedby a grant of a general security interest in all of our assets bothtangible and intangible. In addition, our officer and director, JosephValenzano individually pledged 3,371,093 shares of our common stock. In addition, we issued stock purchase warrants convertible intoshares of our common stock on a one for one basis with an exerciseprice of $.15 and the term of the warrants is 5 years.   Aprivate investment firm, Westminster Securities Corporation based inNew York City, received a commission of $240,000 (8% of the netproceeds of $3,000,000) for arranging for this financing.  Wereceived $3,000,000 under the terms of the securities purchaseagreement. We have applied these funds in the manner outlined in thetable below. 

-21-

----

|   | Gross Proceeds Received |  $      3,000,000 |
|--------|-------------------------|-------------------------------------------------|

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

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

|   |   | Prorated Closing Costs and Fees                   |             280,000 |
|--------|--------|---------------------------------------------------|---------------------------------------------------------------------------------|
|   |   | Liquidation of Line of Credit and Other Bank Debt |             470,000 |
|   |   | Pay Down of Trade Debt                            |             735,000 |
|   |   | Pay Down of Private Debt                          |             798,000 |
|   |   | Total Proceeds Utilized                           |          2,283,000                 |
|   |   |                                              |                                                                            |

|   | Net Retained for Operating Expenses |  $         717,000 |
|--------|-------------------------------------|-----------------------------------------------------------------|

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

InAugust, 2006, we completed a secondary financing agreement with NIR,LLC by executing a securities purchase agreement with the followingentities: AJW Partners, LLC, AJW Offshore, Ltd., AJW QualifiedPartners, LLC and New Millenium Capital Partners II, LLC. Under thesecurities purchase agreement, we will issue up to $2,000,000 incallable secured convertible notes. The notes are convertible intoshares of our common stock. The conversion price is based on the lesserof $0.05 or the average of the lowest 3 intra-day trading prices duringthe 20 trading days immediately prior to the conversion date discountedby 40%. The timing of the conversion is at the option of the holder.The notes are secured by a grant of a general security interest in allof our assets both tangible and intangible.  In addition, we areto issue stock purchase warrants convertible into shares of our commonstock on a one for one basis. The exercise price is $.01 and the termof the warrants is 5 years.  

 

Twoprivate investment firms, Westminster Securities Corporation based inNew York City, and Dominick and Dominick , are to receive totalcommissions of $160,000 (8% of the net proceeds of $2,000,000) forarranging for this financing.

 

Todate, we have received net proceeds of $1,300,000 under the terms ofthe securities purchase agreement.  The balance of the funding isbeing paid to the Company in equal monthly installments of $100,000through November, 2007.

 

We have applied the funds received in the manner outlined in the table below.

|   | Gross Proceeds Received |  $     1,300,000 |
|--------|-------------------------|-------------------------------------------|

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

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

|   |   | Prorated Closing Costs and Fees           | 154,000                                                                        |
|--------|--------|-------------------------------------------|--------------------------------------------------------------------------------|
|   |   | Pay Down of Trade Debt                    | 263,000                                                                        |
|   |   | Pay Down of Private Debt                  |             65,000 |
|   |   | Funding of Web Site Development; Staffing | 20,000                                                                    |
|   |   | Total Proceeds Utilized                   | 502,000                                                                   |
|   |   |                                      |                                                                           |

|   | Net Retained for Operating Expenses |  $         798,000 |
|--------|-------------------------------------|-----------------------------------------------------------------|

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

 

Theremaining proceeds will be used to further expand the business byenhancing our marketing brochures; special target promotions of ouronline interactive capabilities and a focused intense effort to addother branches of the military, specifically the Navy and Marine Corpsto our EFTT.

-22-

----

Witha revenue forecast of $4,300,000 in 2007, management believes that withthe operational cash to be generated and the retained working capitalfrom our recent funding as well as other funding from the militaryproject expanding to the Air Force in 2007, to be received, the overallcash requirements of operations are expected to be met. While there isno absolute 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.

 

At the present level of operations, working capital requirements to sustain operations approximates $375,000 per month.

 

Managementbelieves that current cash flows coupled with the added liquidity ofthe EFTT contract and NIR financing are more than adequate to meet theongoing needs of the company, including implementing its plans forexpansion.  

 

Should2007 forecast revenues trend toward 2005/2006 levels, any requirementfor additional liquidity may be provided by a line of credit which theCompany is pursuing.  In addition, the current portion of tradedebt is at a level  where there is room, if necessary, for theCompany to use this vehicle in the short term to provide liquidity to support operations while adjustments are consideredto bring revenues back on plan.  It should be noted that tradedebt has been reduced from $600,000 (pre-funding) to under $200,000(post-funding).  The company feels that its existing operations,bolstered by major contracts with the Army and Air Force and itsgrowing DAN Program are more than sufficient to meet its financialobligations.

 

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

Results of Operations

 

Reflectedin the tables below comparisons of revenue and sales and generaladministrative expenses for the years ended December 31, 2006 and 2005,as well as commentary on significant variations noted between theperiods.

 

Sales

 

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

|   |                 | 2006                                |   | 2005                                                                                |
|--------|----------------------|-------------------------------------|--------|-------------------------------------------------------------------------------------|
|   | Revenue:             |                                |   |                                                                                |
|   | Advertising Revenue  |  $    1,581,369 |   |  $    1,662,527                                                 |
|   | Subscription Revenue | 296,044                             |   |           315,579                 |
|   | Online seminars      | 56,545                              |   |             50,000      |
|   | Book Sales           | 43,054                              |   |             36,330      |
|   | Special Projects     | 573,508                             |   |           603,088                 |
|   | Other Revenue        | 15,484                              |   |              3,565 |
|   | Revenue              |  $    2,566,004 |   |  $    2,671,089                                                 |
|   |                 |                                |   |                                                                                |

 

Salesfor the twelve months ended December 31, 2006 as compared to the sameperiod in 2005 decreased, as noted, by approximately $105,000. The netdecrease is principally the result of the decrease in advertising,subscription, and special project revenues of approximately $130,000balanced by increases in other segments, as reflected above.

 

Operating Expenses Including Cost of Sales

 

Costof sales in 2006 increased by approximately $178,000 as compared to2005. The increase is primarily due to the increased cost of producing *Exceptional Parent*(*EP*)magazine as well as the addition of topic-specific inserts (a consciousinvestment in product enhancement) that we incorporated into thepublication in 2006.

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Commentary on the significant variations in selling, general and administrative expense follows the table below.

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

|   |                                               | 2006                                                                |   | 2005                                                          |
|--------|----------------------------------------------------|---------------------------------------------------------------------|--------|---------------------------------------------------------------|
|   | Selling, General and Administrative Expenses:      |                                                      |   |                                                          |
|   | Salaries and Benefits                              |  $       1,016,562               |   |  $      863,347                 |
|   | Legal                                              | 148,700                                                             |   | 279,119                                                       |
|   | Office Expenses                                    | 258,766                                                             |   | 310,807                                                       |
|   | Information Technology                             | 57,936                                                              |   | 79,613                                                        |
|   | Business and Administrative Travel                 | 256,720                                                             |   | 404,813                                                       |
|   | Consultants                                        | 30,121                                                              |   | 95,133                                                        |
|   | Investor Relations                                 | 35,588                                                              |   | 26,025                                                        |
|   | Sales and Marketing                                | 30,525                                                              |   | 37,783                                                        |
|   | Other Professional Fees                            | 132,582                                                             |   | 228,234                                                       |
|   | Other G&A                                      |           282,000 |   |          369,976 |
|   |  Selling, General and Administrative Expenses |  $    2,249,500                                 |   |  $   2,694,850                                 |
|   |                                               |                                                                |   |                                                          |

Salaryand benefits expenses increased by $153,000 as a result of realignmentof several key positions within the company and the hiring of qualifiedindividuals to fill the key roles.

Legal expenses decreased by $131,000. This was a result of litigation expenses in 2005 that were absent in 2006.

Officeexpenses decreased by $52,000 as a result of consolidation of officesin August 2006. This move took place in the second half of 2006 andshould result in even greater expense savings in 2007.

Businessand administrative travel expenses have been reduced by $148,000 due toselective decisions on areas of travel and to management’sinternal control efforts to maintain the most effective cost procedures.

Overall,all selling, general, and administrative expenses decreased by $445,000as a result of management decisions to lower costs, monitor contracts,enforce internal procedures, and designate approval authority onexpense items.  This should continue into 2007.

Taxes

Wereflected no provision for income taxes in the first quarter of 2006because of the availability of a significant net operating loss carriedforward to offset any taxable income.

Debt Expenses 

Inaccordance with Emerging Issues Task Force Topic 00-27 and SFAS 150,“Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity”, the Companyperformed calculations allocating the proceeds from the issuance ofconvertible debt with detachable warrants and the beneficial conversionprivileges to each respective security at their fair values.  The Company referred to SFAS 133, “Accounting forDerivative Instruments and Hedging Activities,” and EITF 00-19,“Accounting for Derivative Financial Instruments Indexed to, andPotentially Settled in, a Company's Own Stock,” in determiningwhether the conversion option is an embedded derivative instrument. In the case of the detachable warrants and the beneficialconversion privileges, the Company concluded the fair value was nil;accordingly, the entire amount recorded as a liability was associatedwith the convertible debt. The calculated fair value of the convertibledebt of $4,156,611 was recorded as a long term liability as of December31, 2006. The convertible debt will be accreted to its face value of$6.3 million under the interest method until it is either converted ormatures. As of December 31, 2006, the total accretion was $316,862.

Weincurred debt issue costs of $452,000 relating to their convertiblenotes and will be expensed over the term of the convertible debt.

-24-

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**ITEM 7. FINANCIAL STATEMENTS**

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

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

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

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

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

**ITEM  8A. CONTROLS AND PROCEDURES**

**Evaluation of disclosure controls and procedures**

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

**Changes in internal controls**

Wehave made significant changes to our internal controls subsequent tothe Evaluation Date.  During the course of the most recentexamination of our financial statements for the period ended December31, 2006, by our independent accountants, we were advised of theexistence of a material weakness in our internal accounting controls.We have since changed staff and added new personnel in the accountingdepartment and believe this weakness will be resolved in 2007.

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**PART III**

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

**Directors and Executive Officers**

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

|   | **Name**                      | **Age** | **Position**                                                                |
|--------|-------------------------------|---------|-----------------------------------------------------------------------------|
|   | Joseph M. Valenzano, Jr.      | 61      | President; Chief Executive Officer; and Director                            |
|   | Donald Chadwick               | 55      | Director                                                                    |
|   | James P. McGinnis             | 53      | Chief Financial Officer; Vice President of Operations; Secretary; Treasurer |
|   | Matthew J. Valenzano          | 35      | Publisher; and Vice President of Sales and Marketing                        |
|   | Dr. David Hirsch              | 59      | Director                                                                    |
|   | William Bleil                 | 65      | Director                                                                    |
|   | Rear Admiral Raymond C. Smith | 63      | Director                                                                    |
|   | Diane Jones                   | 61      | Director                                                                    |
|   |                          |    |                                                                             |
|   | .                             |    |                                                                        |

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

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

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

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

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

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

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

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

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

**Donald S. Chadwick – Director**

DonaldS. Chadwick is our director.  He became our director in 1997. Heis Chairman of the Finance Committee; and a member of our AuditCommittee and Compensation Committee. 

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

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

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

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

**David Hirsch, MD – Director**

Dr. David Hirsch is our director. He became a director in November 2003. He is a member of the Finance Committee.

Apediatric physician, Dr. Hirsch specializes in caring for children withspecial health care needs.  He is presently the Medical Directorfor Maricopa Health Plan, based in Arizona.  He started thisposition in February 2005. In addition, he is also the Medical Directorfor Physicians Review Network, based in Arizona.  He also startedthis position in February 2005. In addition he is presently the MedicalDirector for both Hacienda de Los Ninos (this position commenced in1994) and Hacienda de Los Angeles Skilled Nursing Facility (thisposition commenced in 2001). From 1979 through August 2004, he was apartner in Phoenix Pediatrics, Ltd., located in Phoenix, Arizona.

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Hehas worked with hundreds of children with disabilities throughoutArizona.  Dr. Hirsch is a fellow and is actively involved in theAmerican Academy of Pediatrics (AAP) as a member in the section onNeurology, Home Health Care and Developmental Disabilities.  Dr.Hirsch received three degrees in engineering from Carnegie-MellonUniversity, Pittsburgh, Pennsylvania prior to earning his medicaldegree at the University of Cincinnati in 1975. In 1969, he receivedhis Bachelor Of Science in Mechanical Engineering; in 1970, he receivedhis Master of Science in Mechanical Engineering; and in 1970, he alsoreceived his Master of Science in Biotechnology.  From 1976 to1978, he did his residency in pediatrics at the University of MichiganAffiliated Hospitals.   Dr. Hirsch writes a monthly columncalled “Ask the Doctor” for Exceptional Parent and isactive on several boards of foundations and non-profit organizations. He also serves as a member of Exceptional Parent’sEditorial Advisory Board.  

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

**William J. Bleil – Director**

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

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

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

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

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

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

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

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

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

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

**Diane Jones – Director**

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

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

**James P. McGinnis – Chief Financial Officer / Vice President of Operations / Secretary and Treasurer**

JamesP. McGinnis is our Chief Financial Officer and Vice President ofOperations. He assumed these two positions in October 2006. Mr.McGinnis is also our Secretary and Treasurer, having assumed thesepositions on December 8, 2006.

Mr.McGinnis received a Bachelor’s degree from Indiana University ofPennsylvania in 1975. He previously has worked as Corporate Accountantfor the Institution, and Executive Vice President for Operations, atFirst Federal Savings and Loan of Indiana, in Indiana, Pennsylvania,from 1976 to 1991; Benefits Administrator, dealing with healthcareproviders at Reschini Group, from 1991 to 1995; Controller responsiblefor accounting functions at DDS, Inc., from 1995 to 2001; and GeneralManager overseeing operations, accounting, and safety areas withintrucking at E.S. Adams Trucking, Inc., from 2001 to 2006.

**Matthew J. Valenzano – Publisher / Vice President of Sales and Marketing**

MatthewJ. Valenzano is our Publisher and Vice President of Sales andMarketing.  He became our Vice President of Sales and Marketing inJune 2006 and our Publisher in January 2007.

Mr.Valenzano received a Bachelor of Arts degree in Financial Management,with a minor in Economics, from Dominican College, in 1994. Hepreviously has worked as Sales Representative for the Northeast Regionat *Exceptional Parent*(*EP*) magazine from 2002 to 2006;Group Business Manager at Ziff Davis Media, from 2000 to 2002; BusinessManager at Fairchild Publications from 1999 to 2000; Senior FinancialAnalyst at L.P. Thebault Company, from 1997 to 1999; and Finance andBusiness Manager at *EP*magazine from 1993 to 1997.

**Other**

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

|   | (a)    | Hadany bankruptcy petition filed by or against any business of which suchperson was a general partner or executive officer either at the time ofthe bankruptcy or within two years prior to that time;                                                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                               |
|   | (b)    | Been convicted in a criminal proceeding or subject to a pending criminal proceeding;                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                               |
|   | (c)    | Beensubject to any order, judgment, or decree, not subsequently reversed,suspended or vacated, of any court of competent jurisdiction,permanently or temporarily enjoining, barring, suspending or otherwiselimiting his involvement in any type of business, securities or bankingactivities; and |
|   |   |                                                                                                                                                                                                                                                                                               |
|   | (d)    | Beenfound by a court of competent jurisdiction (in a civil action), theCommission or the Commodity Futures Trading Commission to have violateda federal or state securities or commodities law, and the judgment hasnot been reversed, suspended, or vacated.                                      |

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**Audit Committee and Audit Committee Financial Expert**

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

**Tax Returns and Related Filings**

Beginningin 2006, Malin, Bergquist & Co., LLP assumed responsibility forpreparation of all tax returns and related filings.

**Code of Ethics**

The Company has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer. 

**ITEM 10. EXECUTIVE COMPENSATION**

**Compensation of Executive Officers**

**Summary Compensation Table.**The following information relates to compensation received by ourofficers in fiscal year ending December 31, 2006, 2005, and 2004 whosesalary and compensation exceeded $100,000.

**SUMMARY COMPENSATION TABLE**

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

|   | Name and Principal Position                                | Year   |  Salary |  Bonus | Other Annual Compensation | Restricted Stock Award(s) | Securities Underlying Options |
|--------|------------------------------------------------------------|--------|--------------|-------------|---------------------------|---------------------------|-------------------------------|
|   |                                                       |   |         |        |                      |                      |                          |
|   | Joseph M. Valenzano, Jr. (1)                               | 2006   | $200,000     | 0           | 0                         | 0                         | 0                             |
|   | President and CEO                                          | 2005   | $150,000     | 0           | 0                         | 0                         | 0                             |
|   |                                                       | 2004   | $150,000     | 0           | 0                         | 0                         | 0                             |
|   |                                                       |   |         |        |                      |                      |                          |
|   | James P. McGinnis                                          | 2006   | $60,000      | 0           | 0                         | 0                         | 0                             |
|   | CFO, Vice President of Operations, Secretary and Treasurer |   |         |        |                      |                      |                          |
|   |                                                       |   |         |        |                      |                      |                          |
|   | Matthew J. Valenzano                                       | 2006   | $84,000      | 0           | 0                         | 0                         | 0                             |
|   | Publisher, VP of Sales and Marketing                       | 2005   | $81,000      | 0           | 0                         | 0                         | 0                             |
|   |                                                       | 2004   | $72,000      | 0           | 0                         | 0                         | 0                             |
|   |                                                       |   |         |        |                      |                      |                          |
|   | Donald S. Chadwick (2)                                     | 2006   | 0            | 0           | 0                         | 0                         | 0                             |
|   | Former Secretary and Treasurer                             | 2005   | $6,200 (2)   | 0           | 0                         | 0                         | 0                        |
|   |                                                       | 2004   | $6,000 (2)   | 0           | 0                         | 1,000 shares (3)          |                          |
|   |                                                       |   |         |        |                      |                      |                          |
|   | Robert Salluzzo (4)                                        | 2006   | $85,000      | 0           | 0                         | 0                         | 0                             |
|   |                                                       | 2005   | $160,000     | 0           | 0                         | 0                         | 0                             |
|   |                                                       | 2004   | $125,000     | 0           | 0                         | 0                         | 0                             |

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(1)In accordance with Mr. Valenzano’s employment agreement datedJune 1, 2005, he is to receive an annual salary of $200,000. Due to ourcash constraints, the actual monthly amount owed to Mr. Valenzano hasnot been able to be paid. Presently, Mr. Valenzano is being paid as ifhis annual compensation is based on an annual salary of $120,000, withan accrual being placed on our records for the monthly difference thatis owed. In this regard, as of December 31, 2006, an accrual ofapproximately $81,930 is reflected on our records for amounts owed butnot yet paid.

(2)As of May 5, 2006, Mr. Chadwick was no longer an officer of thecompany. In 2005, Mr. Chadwick received $4,500 in salary and$1,700 in consulting fees for preparing our tax returns.  In 2004,Mr. Chadwick received $4,700 in salary and $1,300 in consulting feesfor preparing our tax returns.

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

(4)As of August 1, 2006, Mr. Salluzzo was no longer associated as anemployee with the company. In 2005, Mr. Salluzzo received $127,500against a base salary of $160,000. Due to our cash constraints, theactual monthly amount owed to Mr. Salluzzo has not been able to bepaid.  Mr. Salluzzo had been paid as if his annual compensationwas based on an annual salary of $90,000 with an accrual being placedon our records for the monthly difference that is owed. In this regard,as of December 31, 2006, an accrual of approximately $20,360 isreflected on our records for amounts owed but not yet paid.

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

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

 

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

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

**AGGREGATED OPTION EXERCISES IN**

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

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

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

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

**Employment Contracts**

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

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EffectiveJune 1, 2005, we entered into an agreement with Mr. Valenzano toact as our President and Chief Executive Officer; and Publisher ofExceptional Parent Magazine. The term of the agreement expires on June30, 2008. His compensation is as follows: (i) Salary: $200,000 per yearfrom June 1, 2005 through May 31, 2006.  For the periods June 1,2006 through May 31, 2007 and June 1, 2007 through May 31, 2008, Mr.Valenzano’s base salary increases based on the Consumer PriceIndex increase in the preceding year for the New York/MetropolitanArea. Our board of directors may increase his base compensation basedon its evaluation of his performance. The agreement acknowledges thatMr. Valenzano has voluntarily deferred a portion of his compensationowing him. The agreement requires payment of such compensation by nolater than December 31, 2005. If third party financing is secured byus, we are required to pay such amount at such time. Even though wehave recently received financing, such amount has not been paid todate; (ii) stock options: upon execution of the agreement, Mr.Valenzano received 1,500,000 options to purchase our shares of commonstock at a price equal to the fair market value of our stock on theexercise date.  The options are exercisable as cashless options.On each of the first and second anniversaries of the agreement, Mr.Valenzano shall receive an additional 500,000 options on the same termsas the original 1,500,000 (or an aggregate of 1,000,000 options); (iii)Mr. Valenzano will also be eligible to participate in an approvedIncentive Stock Option Plan (which must be implemented by us no laterthan December 31, 2005); a cash incentive plan based on performancecriteria negotiated by our Board of Directors or Compensation Committeeno later than December 31, 2005; life and disability insurancepolicies.  Finally, upon reaching age 65, Mr. Valenzano shall havethe right to sell up to 50% of his equity holdings in us, to us at 80%of fair market value or other reasonable value.  Mr.Valenzano’s employment may be terminated for cause.  Inaddition, if he is disabled for 180 days consecutive business days or210 business days in a 270 business day period, the employmentagreement shall be terminated. Mr. Valenzano can resign from hisposition with us at any time. If he is terminated based on his breach,there is a 2 year non-compete clause which prevents him from competingwith us for a period of 2 years from such termination.

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

**Compensation of Directors**

Directorsare permitted to receive fixed fees and other compensation for theirservices as directors. The Board of Directors has the authority to fixthe compensation of directors. In December 2006, the board ofdirectors, except for Mr. Valenzano, received restricted shares of ourcommon stock for attendance at directors meetings.

**Consulting Agreement with Donald S. Chadwick**

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

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

Thefollowing table sets forth certain information derived from the namedperson, or from the transfer agent, concerning the ownership of commonstock as of April 10, 2007, of (i) each person who is known to us to bethe beneficial owner of more than 5% of the common stock; (ii) alldirectors and executive officers; and (iii) directors and executiveofficers as a group:

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|  

  | **Name and Address of**

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

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

**Class (1)** |
|----------------|-----------------------------------------------|----------------------------------------------------|-------------------------------|
|           |                                          |                                               |                          |
|           | Joseph M. Valenzano, Jr                       | 4,395,441(1)                                       | 3.79%                         |
|           | 6 Pickwick Lane                               |                                               |                          |
|           | Woodcliff Lake, New Jersey 07677              |                                               |                          |
|           |                                          |                                               |                          |
|           | James P. McGinnis                             | 0                                                  | 0*                            |
|           | 285 Ben Franklin Road                         |                                               |                          |
|           | Indiana, PA 15701                             |                                               |                          |
|           |                                          |                                               |                          |
|           | Matthew J. Valenzano                          | 223,144                                            | .19%*                         |
|           | 19 Caldwell Road                              |                                               |                          |
|           | Hewitt, NJ 07421                              |                                               |                          |
|           |                                          |                                               |                          |
|           | Donald Chadwick                               | 1,377,537 (2)                                      | 1.2%                          |
|           | 403 River Oaks Drive                          |                                               |                          |
|           | Rutherford, New Jersey 07070                  |                                               |                          |
|           |                                          |                                               |                          |
|           | William J. Bleil                              | 1,542,240 (3)                                      | 1.3%                          |
|           | 1521 South Shore Drive Erie,                  |                                               |                          |
|           | Pennsylvania 16505                            |                                               |                          |
|           |                                          |                                               |                          |
|           | Raymond C. Smith                              | 501,000                                            | .4%*                          |
|           | 179 Annandale Road                            |                                               |                          |
|           | Pasadena, California 91105                    |                                               |                          |
|           |                                          |                                               |                          |
|           | David Hirsch                                  | 641,130 (4)                                        | .55%*                         |
|           | 602 West Ocotillo Road                        |                                               |                          |
|           | Phoenix, Arizona 85013                        |                                               |                          |
|           |                                          |                                               |                          |
|           | Diane Jones                                   | 500,000 (5)                                        | .43%*                         |
|           | 1800 Dominion Crest Lane                      |                                               |                          |
|           | McLean, VA 22101-4800                         |                                               |                          |
|           |                                          |                                               |                          |
|           | Former Officer                                | 658,783 (6)                                        | .0057%                        |
|           | Robert Salluzzo                               |                                               |                          |
|           | 204 South William Street                      |                                               |                          |
|           | Johnstown, NY 12095                           |                                               |                          |
|           |                                          |                                               |                          |
|           | Current Officers and Directors as a Group (8) | 9,839,275                                          | 8.04%                         |

* Less than 1%

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|   | (1) | Mr.Valenzano’s shareholdings consist of the following: 500,000shares owned individually; 3,871,048 shares held in an IRA account forMr. Valenzano; and 24,393 shares held in an IRA account for PatriciaValenzano, Mr. Valenzano’s wife.                                                                                                                                                                                                   |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2) | Mr.Chadwick’s shareholdings consist of the following: 643,983 sharesheld individually; 12,800 shares held in a profit sharing plan for Mr.Chadwick; and 470,754 shares held in the name of Cardinal EquityAssociates, L.P., a company beneficially owned by Mr. Chadwick. On July28, 2005, Mr. Chadwick purchased 250,000 of our shares of common stock. To date, such shares have not been issued and are not included inthis calculation. |
|   | (3) | Mr.Bleil’s shareholdings consist of the following: 1,483,340 sharesheld individually; 58,900 shares held as trustee for his minorgrandchildren.                                                                                                                                                                                                                                                                                                  |
|   | (4) | Mr.Hirsch’s shareholdings consist of the following: 501,000 sharesheld individually; 24,393 shares held as a custodian for his minorchild, Eythan Hirsch; and 24,393 shares held as a custodian for hisminor child, Nathan Hirsch; and 91,344 shares held by the PhoenixPediatrics Ltd profit Sharing Plan, of which Mr. Hirsch is the trusteeand beneficiary.                                                                                   |
|   | (5) | Mrs. Jones’s shareholdings consist of the following: 500,000 shares held individually.                                                                                                                                                                                                                                                                                                                                                           |
|   | (6) | Mr.Salluzzo’s shareholdings consist of the following: 358,783 sharesheld individually; and 300,000 shares held by his wife, Mary W.Salluzzo.                                                                                                                                                                                                                                                                                                     |

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

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

InOctober 1988, Donald Chadwick, our director, formed Cardinal DebtAssociates, L.P. (Debt) and Cardinal Equity Associates, L.P. (Equity),both of which are business development companies providing capital tosmall growth oriented businesses. In September 2000, Debt provided ashort-term loan and line of credit to Psy Ed Corporation, a companythat we undertook a share exchange transaction with in November 2003.In conjunction with the loan, Equity acquired warrants in Psy Ed. Since such time, the warrants have been exchanged as a result ofthe share exchange with us (previously known as East Coast Airlines)for 220,754 common shares.  We owed Debt $177,000 at the end of2005 ($77,000 was incurred from a loan to Psy-Ed and $100,000 wasincurred from a loan to us). This loan provided for interest only untilthe end of 2005 and is a three-year note. This loan was repaid in 2006.

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

InAugust 2005, we condensed all loans and advances made by JosephValenzano, our officer and director, into an interest bearing note of$225,000 reflecting all advances made to us as through August 2005. The balance at December 31, 2005 was $108,342.  The loanbears interest at the rate of 9.74% per annum and is payable on demand.It is an interest only loan. In 2006, Mr. Valenzano advanced additionalfunding, bringing his loan balance as of December 31, 2006, to $213,581.

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

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

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

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

            

| EXHIBIT  DESCRIPTION

10.1            Articles of Incorporation and Amendments (1)

10.2            By-Laws (1)

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

10.4            Form of Callable Secured Convertible Note (1)

10.5            Form of Stock Purchase Warrant (1) 

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

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

                     asthe holder (1) 

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

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

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

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

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

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

10.14          Vemics, Inc. Agreement (3)

10.15          Child Neurology Foundation Joint Venture Agreement (3)

10.16          ProCirc Inc. Agreement (3)

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

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

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

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

**Audit Fees**

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

Audit Fees 2006:    $ 32,000

Audit Fees 2005:     $28,678

**Audit-Related Fees**

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

None

**Tax Fees**

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

$10,675

-35-

----

**All Other Fees**

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

$3,096

-36-

-

----

**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  |
|   |                                                                                                                     |
|   |                                                                                                                     |
|   |                                                                                                                     |

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

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

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

     William Bleil, Director                       |
|   |                                                                                           |
|   | /s/ Donald Chadwick

     Donald Chadwick, Director                   |
|   |                                                                                           |
|   | /s/ Dr. David Hirsch

     Dr. David Hirsch, Director                 |
|   |                                                                                           |
|   | _____________________

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

      Raymond C. Smith, Director     |
|   |                                                                                           |
|   |                                                                                           |
|   |                                                                                           |
|   |                                                                                           |
| Dated: | April 16, 2007                                                                                 |

-37-

----

**INDEX**

****

F1

----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

EP Global Communications, Inc.

Wehave audited the accompanying consolidated balance sheet of EP GlobalCommunications, Inc. and subsidiaries (the Company) as of December 31,2006, and the related consolidated statements of operations,stockholders’ deficiency and cash flows for the years endedDecember 31, 2006 and 2005. These financial statements are theresponsibility of the Company’s management. Our responsibility isto express an opinion on these financial statements based on our audit.

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

Inour opinion, such consolidated financial statements present fairly, inall material respects, the financial position of EP GlobalCommunications, Inc. and subsidiaries as of December 31, 2006, and theresults of their operations, stockholders’ deficiency and theircash flows for the years ended December 31, 2006 and 2005 in conformitywith accounting principles generally accepted in the United States ofAmerica.

            Erie, Pennsylvania

            April 13, 2007

F2

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEET**

See accompanying footnotes to financial statements

F3

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEET**

See accompanying footnotes to financial statements 

F4

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

See accompanying footnotes to financial statements

F5

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIENCY**

****

See accompanying footnotes to financial statements

F6

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

statement continued next page

F7

----

**EP GLOBAL COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

****

See accompanying footnotes to financial statements

F8

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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

Basis of Presentation

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

Organization

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

EPpublishes and distributes Exceptional Parent Magazine, an internationalpublication, designed to serve the information needs of families andprofessionals who are involved in the care and development of childrenand adults with disabilities and special health care needs.  EPalso develops and implements online accredited Continued MedicalEducation Programs; has its own library of over 1,800 disability booktitles and publishes clinical monographs which are disseminated tophysicians, researchers and allied health care professionals as well asfamilies and caregivers all over the world.  

Significant Accounting Policies

Principles of Consolidation

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

Use of Estimates

Thepreparation of the consolidated financial statements in conformity withaccounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financialstatements 

F9

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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

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% and 18% of theCompany’s revenue in the years ended December 31, 2006 and 2005,respectively.  There were no other customers that comprisedgreater than 10% of the total company revenues in those years.

Provision for Losses on Uncollectible Receivables

Theprovisions for losses on uncollectible trade receivables are determinedprincipally on the basis of specific identification and past collectionexperiences.  The allowance for doubtful accounts on accountsreceivable balances was approximately $68,400 at December 31, 2006.

Inventories

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

F10

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

Minority Interests

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

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

Revenue Recognition

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

Advertisingrevenue, which consists predominantly of graphic and text displays, isrecorded in the period corresponding to the presentation in thepublication. Online services advertising revenues, primarily derivedfrom the sale of banner advertisements and sponsorships on theCompany's web sites, is recognized in the period the advertising isdisplayed.  The costs to develop this internet income are periodcosts and are expensed when incurred. Print publication advertising andcirculation revenues are recognized, net of agency commissions andestimated returns and allowances, when publications are issued. List rental income is recognized, net of commission, when a listis sold or rented.

Subscriptionincome is recognized based upon the monthly pro-ration of income withinthe reporting period for a given subscription.

Deferredsubscription income, net of agency commission, is recorded whensubscription orders are received.  The Company uses a fulfillmenthouse, which calculates the revenue to be recorded for all periods. Customers generally subscribe to the magazine for three years. Deferred subscription income represents the portion of theprepaid subscription not earned by the Company and paid for in advanceof fulfillment by the Company to the customer.  

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

F11

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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 years endedDecember 31, 2006 or 2005.  See Note 4 for discussion of warrantsissued during 2005 in connection with a debt financing.

Income Taxes

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

F12

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

futureyears to the differences between the financial statement carryingamounts and the tax bases of reported assets 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 year ended December 31, 2006and 2005 diluted (loss) per share, as inclusion of the incrementalshares shown in this calculation would be antidilutive.  Potentialcommon shares used in computing diluted (loss) per share at December31, 2006 relate to common stock warrants convertible into 3,338,000shares of common stock and convertible preferred stock convertible into719,801 shares of common stock.  

Fair Value of Financial Instruments

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

New Financial Accounting Standards** **

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

F13

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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 replacesit with a general exception for exchanges of nonmonetary assets that donot have commercial substance.  A nonmonetary exchange hascommercial substance if the future cash flows of the entity areexpected to change significantly as a result of the exchange. SFAS No. 153 is effective for periods beginning after June 15,2005.  The adoption of SFAS No. 153 had no material effect on theCompany's financial position 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.

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 be 

F14

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

reflectedas an adjustment to the opening balance of retained earnings. Theeffective 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 instruments and otheritems at fair value. The objective is to improve financial reporting byproviding entities with the opportunity to mitigate volatility inreported earnings caused by measuring related assets and liabilitiesdifferently without having to apply complex hedge accountingprovisions. This Statement is expected to expand the use of fair valuemeasurement of accounting for financial instruments. The fair valueoption established by this statement permits all entities to measureeligible items at fair value at specified election dates. 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.

F15

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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 intoanother loan arrangment to provide proceeds of $2.0 million in theaggregate through 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 paid ininstallments 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 2005 have been reclassified to conform to the 2006presentation.  Such reclassifications had no effect on reportedincome.

**2.  Property And Equipment**

Property and equipment at December 31, 2006 consists of the following: 

F16

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

Depreciation expense for the years ended December 31, 2006 and 2005 was $66,538 and $54,602, respectively.

**3.  Accrued Expenses**

Accrued expenses at December 31, 2006 consist of the following: 

**4.  Debt**

Long-Term Debt 

Long-term debt at December 31, 2006 consists of the following:

F17

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

The following are maturities of long-term debt:

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

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

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

F18

----

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

**Notes To Consolidated Financial Statements**

**December 31, 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 $3,227,865 was recorded as a long term liability as of December31, 2006.  The convertible debt will be accreted to its face value of $3.7 million under the interest method until it iseither converted or matures. As of December 31, 2006, the accretion was$278,116, of which  $242, 915 was recorded in calendar year 2006.

Ifthe obligation had been settled on December 31, 2006, the Company wouldhave issued 1,537,078,692  shares of its common stock (with a fairvalue, based solely on the quoted market price per share as of December31, 2006, of $5,380,000).  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 

F19

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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.

ThroughDecember 31, 2006, the Company received proceeds of $ 900,000 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.

A private investment firm is receiving 8% of the amount loaned as the funds are received.

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

Inaccordance with Emerging Issues Task Force Topic 00-27 and SFAS 150,“Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity”, the Companyperformed calculations allocating the proceeds from the issuance ofconvertible debt with detachable warrants and the beneficial conversionprivileges to each respective security at their fair values.  The Company referred to SFAS 133, “Accounting forDerivative Instruments and Hedging Activities,” and EITF 00-19,“Accounting for Derivative Financial Instruments Indexed to, andPotentially Settled in, a Company's Own Stock,” in determiningwhether the conversion option is an embedded derivative instrument. In the case of the detachable warrants and the beneficialconversion privileges, the Company concluded the fair value was nil;accordingly, the entire amount recorded as a liability was associatedwith the convertible debt. The calculated fair value of the convertibledebt of $928,746 was recorded as a long term liability as of December31, 2006.  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 December 31, 2006, the cumulative accretion was$28,746, all of which was recorded in calendar year 2006.

F20

----

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

Ifthe obligation had been settled on December 31, 2006, under the formulafor conversion, the Company would issue approximately 442,260,120 shares of its common stock (with a fair value, based solely onthe quoted market price per share as of December 31, 2006, of $1,547,900).  However, under the terms of the agreement, themaximum number of shares that could be required to be issued is206,666,666, and the maximum number of shares of common stock that areauthorized to be issued 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:

Short-Term debt 

Short-termbank obligations at December 31, 2006, consists of an unsecured line ofcredit with MBNA in the amount of  $17,664, interest at 24.5%.

**5.  Related Party Transactions**

Amounts due to shareholders at December 31, 2006 consists of the following: 

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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 end of 2006. These balances are non-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 assets and liabilities and are measured using the enacted taxrates and laws that are expected to be in effect when the differencesare expected to reverse.  

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

Thereis no provision for income taxes for the years ended December 31, 2006and 2005 as there was no taxable income in either year.

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

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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

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

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

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

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

**7.  Stock Issued for Services**

Forthe year ended December 31, 2006, the Company issued 2,995,000 sharesof the Company's restricted common stock to directors, employees andnon-employees as stock-based compensation in the amount of $21,410,that has been recorded as an expense in the Company’s financialstatements.  Of these amounts, 2,750,000 restricted shares($13,750) were issued to directors of the Company (a related partytransaction).

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

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

**8.  Stockholders' Deficiency**

Common Stock

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

Preferred Stock – Series A

TheCompany is authorized to issue 5,000,000 shares of $ .01 par valuePreferred Stock – Series A.  All the outstanding PreferredStock is fully paid and non-assessable. Each share of the PreferredStock is convertible, at the option of the holder at any time, into 190shares of the Company’s Common Stock.  The holders of SeriesA preferred Stock have the following rights.

Dividends:

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

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

Liquidation Preference:

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

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

Redemption:

Uponthe sale by the Company of its capital stock which results in 51% ofcapital stock being held by persons other than those who held itscapital stock on September 30, 1995 then the Company must offer toredeem the Series A Preferred Stock at a price equal to two times theconversion price of the Series A Preferred Stock (currently $25 pershare).  Notwithstanding the foregoing, if the Company does nothave sufficient funds to redeem the Series A Preferred Stock withoutcausing a material adverse effect on the Company’s  abilityto carry out its business, only the funds that are available that willnot cause such material adverse effect shall be used to redeem theSeries A Preferred Stock.  This redemption requirement willcontinue until such time as all of the shares of Series A PreferredStock have been redeemed.

Conversion:

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

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

Anti-dilution Adjustments:

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

Voting Rights

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

Preferred Stock – Series B

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

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

Dividends:

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

Liquidation Preference:

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

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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

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

Redemption:

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

Conversion:

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

Anti-dilution Adjustments:

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

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

Voting Rights:

Holdersof the Series B Preferred Stock are entitled to vote on all matterssubmitted to the Company’s shareholders for a vote or consent. Each Share of Series B Preferred Stock has voting rights equal tothe number of shares of Common Stock  into which it converts(presently 277 for 1).  Except when a separate class vote isrequired by law, the Series B Preferred Stock will vote with the CommonStock as a single class.

**9. Interest In LLC**

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

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

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

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

InJune of 2005, shortly after a change in senior management at Conemaugh,InforMedx informed the Company that it had reconsidered its continuingparticipation in the joint venture and made a determination thatcontinued participation would not be consistent with Conemaugh’sstrategic goals.  Accordingly, InforMedx returned its one-halfownership of the LLC to the company in exchange for being released frommaking the $110,000 contribution in September 2005.  Consequently,the Company has transferred $100,000 of minority interest to additionalpaid in capital.  Also, the minority interest was further reduced,with an offset to paid in capital, by $7,173.  There are noobligations to InforMedx at December 31, 2006.

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

**10.  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 $53,784 in 2007, $47,340 in 2008, and $48,540 in2009.

 

Legal Proceedings  

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

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 

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

**Notes To Consolidated Financial Statements**

**December 31, 2006**

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.

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