| [X] | Quarterly                report under Section 13 or 15(d) of the Securities Exchange Act of                1934                for the quarterly period ended March 31,                2007 |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| [                  ] | Transition                report under Section 13 or 15(d) of the Exchange Act for the transition                period from __________ to                __________. |
|--------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ENCOMPASS      HOLDINGS, INC.**

| **NEVADA**                                                                                  |   | **95-4756822**                                                    |
|---------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) |   | (I.R.S.                EmployerIdentification                No.) |

**1005      Terminal Way, Suite 110, Reno, Nevada 89502**

**(775)      324-8531**

----

**TABLE      OF CONTENTS**

| ITEM                1.                         | FINANCIAL                STATEMENTS                                                                                                                                |   |
|------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                           |                                                                                                                                                               |   |
|                                           | Consolidated                Unaudited Balance Sheets as of March 31, 2007                and June 30, 2006                                                         | 3      |
|                                           |                                                                                                                                                               |   |
|                                           | Consolidated                Unaudited Statements of Operations for the                three and nine months ended March 31, 2007 and March 31,                2006 | 4      |
|                                           |                                                                                                                                                               |   |
|                                           | Consolidated                Unaudited Statement of Cash Flows for the                three and nine months ended March 31, 2007 and March 31,                2006. | 5      |
|                                           |                                                                                                                                                               |   |
|                                           | Notes                to Consolidated Financial                Statements                                                                                           | 7      |
|                                           |                                                                                                                                                               |   |
| ITEM                2.                         | MANAGEMENT'S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION                AND RESULTS OF OPERATIONS                                                | 11     |
|                                           |                                                                                                                                                               |   |
| ITEM                3.                         | CONTROLS                AND PROCEDURES                                                                                                                             | 13     |
|                                           |                                                                                                                                                               |   |
| **PART                II - OTHER INFORMATION** |
|                                           |                                                                                                                                                               |   |
| ITEM                6.                         | EXHIBITS                                                                                                                                                           | 14     |
|                                           |                                                                                                                                                               |
| SIGNATURES                                     | 15                                                                                                                                                                 |

----

**ENCOMPASS      HOLDINGS, INC.**

|                                                                                                                                                                                                                                                                                                                     |   | March                31,2007 |        | June                30,2006 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|-----------------------------|--------|
| **Assets**                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                     |   |                         |        |                        |   |
| Current                assets:                                                                                                                                                                                                                                                                                           |   |                         |        |                        |   |
|     Cash                                                                                                                                                                                                                                                                                             |   | $                            | (27,031     | )                           | $      | 42,062 |   |
|                    Inventories                                                                                                                                                                                                                                                                            |   |                         | 26,750      |                        |   | - |   |
|     Prepaid                expenses                                                                                                                                                                                                                                                                  |   |                         | 132,149     |                        |   | 225,916 |   |
|     Net                current assets of discontinued operations                                                                                                                                                                                                                                     |   |                         | 364,638     |                        |   | 619,565 |   |
|         Total                current assets                                                                                                                                                                                                                                      |   |                         | 496,506     |                        |   | 887,543 |   |
| Equipment,                net                                                                                                                                                                                                                                                                                            |   |                         | 3,911,460   |                        |   | 4,025,203 |   |
| Equipment                of discontinued operations, net                                                                                                                                                                                                                                                                 |   |                         | 8,674,668   |                        |   | 9,338,711 |   |
| Other                assets:                                                                                                                                                                                                                                                                                             |   |                         |        |                        |   |   |   |
|     Deposits                & other                                                                                                                                                                                                                                                              |   |                         | 3,000       |                        |   | 3,000 |   |
|                    Demonstration rotary engines not held for sale                                                                                                                                                                                                                                         |   |                         | 2,310,000   |                        |   | 2,310,000 |   |
|                    Rotary engine intellectual assets                                                                                                                                                                                                                                                      |   |                         | 2,167,000   |                        |   | 2,167,000 |   |
|    Net                other assets of discontinued operations                                                                                                                                                                                                                                             |   |                         | 348,801     |                        |   | 420,392 |   |
|         Total                other assets                                                                                                                                                                                                                                        |   |                         | 4,828,801   |                        |   | 4,900,392 |   |
|                                                                                                                                                                                                                                                                                                                     |   | $                            | 17,911,436  |                        | $      | 19,151,849 |   |
|                                                                                                                                                                                                                                                                                                                     |   |                         |        |                        |   |   |   |
| **Liabilities                and Stockholders' Equity**                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                     |   |                         |        |                        |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                                                                                      |   |                         |        |                        |   |   |   |
|     Accounts                payable                                                                                                                                                                                                                                                                  |   | $                            | 581,871     |                        | $      | 499,477 |   |
|     Accrued                liabilities                                                                                                                                                                                                                                                               |   |                         | 1,043,201   |                        |   | 866,303 |   |
|     Long-term                debt due within one year                                                                                                                                                                                                                                                |   |                         | 2,960,000   |                        |   | 2,990,000 |   |
|     Loans                payable                                                                                                                                                                                                                                                                     |   |                         | 238,095     |                        |   | 95,000 |   |
|     Notes                payable and accrued interest subject to conversion into                       an indeterminable number of shares of common stock                                                                                                         |   |                         | 27,964      |                        |   | 71,660 |   |
|     Derivative                liabilities                                                                                                                                                                                                                                                            |   |                         | 541         |                        |   | 6,371 |   |
|     Net                current liabilities of discontinued operations                                                                                                                                                                                                                                |   |                         | 4,137,113   |                        |   | 4,462,069 |   |
|         Total                current liabilities                                                                                                                                                                                                                                 |   |                         | 8,988,785   |                        |   | 8,990,880 |   |
| Long-term                debt to related parties                                                                                                                                                                                                                                                                         |   |                         | 75,000      |                        |   | 50,000 |   |
| Long-term                debt                                                                                                                                                                                                                                                                                            |   |                         | 2,980,252   |                        |   | 1,700,000 |   |
| Accrued                Interest                                                                                                                                                                                                                                                                                          |   |                         | 401,598     |                        |   | 71,847 |   |
| Net                liabilities of discontinued operations                                                                                                                                                                                                                                                                |   |                         | 867,589     |                        |   | 245,777 |   |
| Minority                interest                                                                                                                                                                                                                                                                                         |   |                         | 5,306,746   |                        |   | 5,306,746 |   |
| Net                capital deficiency:                                                                                                                                                                                                                                                                                   |   |                         |        |                        |   |   |   |
|     Preferred                stock; $.001 par value; authorized 200,000 shares;                       outstanding 200,000 shares                                                                                                                                  |   |                         | 200         |                        |   | 200 |   |
|     Common                stock; $.001 par value; authorized 500,000,000                       shares; issued and outstanding 48,404,481 shares                (28,820,035                       shares at June 30, 2006) |   |                         | 54,321      |                        |   | 28,820 |   |
|     Convertible                promissory note and accrued interest                                                                                                                                                                                                                                  |   |                         | 100,000     |                        |   | 107,140 |   |
|     Additional                paid in capital                                                                                                                                                                                                                                                        |   |                         | 35,504,219  |                        |   | 34,810,660 |   |
|     Retained                deficit                                                                                                                                                                                                                                                                  |   |                         | (36,367,274 | )                           |   | (32,160,221 | ) |
|         Total                stockholders' equity                                                                                                                                                                                                                                |   |                         | (708,534    | )                           |   | 2,786,599 |   |
|                                                                                                                                                                                                                                                                                                                     |   | $                            | 17,911,436  |                        | $      | 19,151,849 |   |

**See          accompanying notes.**

----

**ENCOMPASS      HOLDINGS, INC.**

|                                                                                                  |   | Three                months endedMarch                31 |       | Nine                months endedMarch                31 |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|------------|---------------------------------------------------------|--------|
|                                                                                                  |   | 2007                                                     |       | 2006                                                    |   | 2007 |   | 2006 |   |
|                                                                                                  |   |                                                     |            |                                                    |   |  |   |   |  |   |   |  |   |
|                                                                                                  |   |                                                     |            |                                                    |   |  |   |   |  |   |   |  |   |
| Revenues                                                                                              |   | $                                                        | -          |                                                    | $      | - |   | $ | 16,200 |   | $ | - |   |
| Cost                of goods sold                                                                     |   |                                                     | -          |                                                    |   | - |   |   | 20,000 |   |   | - |   |
| Gross                profit                                                                           |   |                                                     | -          |                                                    |   | - |   |   | (3,800 | ) |   | - |   |
| Operating                expenses:                                                                    |   |                                                     |       |                                                    |   |   |   |   |  |   |   |  |   |
|                    General and administrative                                          |   |                                                     | 723,960    |                                                    |   | 814,227 |   |   | 2,068,853 |   |   | 1,819,344 |   |
|                    Research and development                                            |   |                                                     | 48,563     |                                                    |   | 41,480 |   |   | 203,412 |   |   | 500,053 |   |
|                                                                                                  |   |                                                     | 772,523    |                                                    |   | 855,707 |   |   | 2,272,265 |   |   | 2,319,397 |   |
| Net                loss from operations                                                               |   |                                                     | (772,523   | )                                                       |   | (855,707 | ) |   | (2,276,065 | ) |   | (2,319,397 | ) |
| Other                income (expenses):                                                               |   |                                                     |       |                                                    |   |   |   |   |  |   |   |  |   |
|     Change                in fair value of derivative liabilities                 |   |                                                     | 266        |                                                    |   | 0 |   |   | 4,217 |   |   | (54,334 | ) |
|     Interest                expense, net                                          |   |                                                     | (150,172   | )                                                       |   | 13,503 |   |   | (397,305 | ) |   | 34,847 |   |
|     Other                                                                         |   |                                                     | 2,326      |                                                    |   | (22,837 | ) |   | 82,326 |   |   | (1,277 | ) |
|                                                                                                  |   |                                                     | (147,581   | )                                                       |   | (9,334 | ) |   | (310,762 | ) |   | (20,764 | ) |
|                                                                                                  |   |                                                     |       |                                                    |   |   |   |   |  |   |   |  |   |
| Net                income from continuing operations before provision for income                taxes |   |                                                     | (920,104   | )                                                       |   | (843,257 | ) |   | (2,586,826 | ) |   | (1,736,965 | ) |
| Provision                for income taxes                                                             |   |                                                     | -          |                                                    |   | - |   |   | (3,141 | ) |   | (12,000 | ) |
|                                                                                                  |   |                                                     |            |                                                    |   |  |   |   |  |   |   |  |   |
| Net                loss from continuing operations                                                    |   |                                                     | (920,104   | )                                                       |   | (843,257 | ) |   | (2,589,967 | ) |   | (1,748,965 | ) |
|                                                                                                  |   |                                                     |       |                                                    |   |   |   |   |  |   |   |  |   |
| Net                loss of discontinued operations, net of provision for income                taxes  |   |                                                     | (457,556   | )                                                       |   | (21,784 | ) |   | (1,634,860 | ) |   | (603,196 | ) |
|                                                                                                  |   |                                                     |       |                                                    |   |   |   |   |  |   |   |  |   |
| Net                loss                                                                               |   | $                                                        | (1,377,660 | )                                                       | $      | (865,041 | ) | $ | (4,224,827 | ) | $ | (2,352,161 | ) |
|                                                                                                  |   |                                                     |            |                                                    |   |  |   |   |  |   |   |  |   |
| Net                loss per common share                                                              |   |                                                     | (.027      | )                                                       |   | (.058 | ) |   | (.106 | ) |   | (.235 | ) |
|                                                                                                  |   |                                                     |            |                                                    |   |  |   |   |  |   |   |  |   |
|                    Continuing operations                                               |   | $                                                        | (.018      | )                                                       | $      | (.057 | ) | $ | (.065 | ) | $ | (.175 | ) |
|                    Discontinued operations                                             |   |                                                     | (.009      | )                                                       |   | (.001 | ) |   | (.041 | ) |   | (.060 | ) |
|                                                                                                  |   |                                                     |            |                                                    |   |  |   |   |  |   |   |  |   |
|                                                                                                  |   | $                                                        | (.027      | )                                                       | $      | (.058 | ) | $ | (.106 | ) | $ | (.235 | ) |

**See          accompanying notes.**

----

**ENCOMPASS      HOLDINGS, INC.**

|                                                                                                                              |       | **Three                  months ended****March                  31** | ** ** | **Nine                  months ended****March                  31** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
|                                                                                                                              | ** ** | ** **                                                           | **2007**   | ** **                                                          | ** ** | **2006** | ** ** | ** ** | **2007** | ** ** | ** ** | **2006** |   |
| Cash                  flows from operating activities:                                                                            |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |   |   |
|                                                                                                                              |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
|                      Net loss                                                                                      |       | $                                                                    | (1,377,660 | )                                                                   | $          | (843,257 | ) | $ | (2,589,967 | ) | $ | (1,748,965 | ) |
|                      Adjustment to reconcile net loss to net cash (used in) operating                  activities: |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
|                          Provision for uncollectible accounts                                  |       |                                                                 | -          |                                                                |       | - |   |   | 16,200 |   |   | - |   |
|                          Depreciation & amortization                                       |       |                                                                 | 24,998     |                                                                |       | - |   |   | 113,742 |   |   | - |   |
|                          Provision for income taxes                                            |       |                                                                 | -          |                                                                |       | - |   |   | 3,141 |   |   | 12,000 |   |
|                          Change in fair value of derivative liabilities                        |       |                                                                 | (266       | )                                                                   |       | 21,353 |   |   | (4,217 | ) |   | 54,334 |   |
|                          Shares issued in exchange for services                                |       |                                                                 | -          |                                                                |       | 4,356 |   |   | 135,616 |   |   | 997,453 |   |
|                          Loss on disposal of equipment                                         |       |                                                                 | -          |                                                                |       | 1,277 |   |   | - |   |   | 1,277 |   |
|                          Changes in assets and liabilities:                                    |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
|                          Prepaid expenses                                                      |       |                                                                 | 44,223     |                                                                |       | (243,458 | ) |   | 62,017 |   |   | (262,351 | ) |
|                          Other assets                                                          |       |                                                                 | -          |                                                                |       | - |   |   | - |   |   | 27,570 |   |
|                          Accounts payable                                                      |       |                                                                 | 142,540    |                                                                |       | 113,364 |   |   | 82,394 |   |   | 75,354 |   |
|                          Accrued liabilities                                                   |       |                                                                 | 173,716    |                                                                |       | 390,645 |   |   | 671,558 |   |   | 277,035 |   |
|                                                                                                                              |       |                                                                 | (992,449   | )                                                                   |       | 228,266 |   |   | (1,509,515 | ) |   | (566,293 | ) |
|                                                                                                                              |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
| Cash                  flow from discontinued operations                                                                           |       |                                                                 | 454,766    |                                                                |       | (843,257 | ) |   | (329,669 | ) |   | (598,001 | ) |
| Cash                  flows from investing activities:                                                                            |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
|                          Advances received from (paid to) related parties                      |       |                                                                 | (4,025     | )                                                                   |       | 27,678 |   |   | 91 |   |   | 46,850 |   |
|                          Discontinued operations                                               |       |                                                                 | -          |                                                                |       | 8,071 |   |   | - |   |   | 55,078 |   |
|                                                                                                                              |       |                                                                 | (4,025     | )                                                                   |       | 35,749 |   |   | 91 |   |   | 101,928 |   |
| Cash                  flows from financing activities:                                                                            |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
|                          Proceeds from long-term debt                                          |       |                                                                 | 425,000    |                                                                |       | 743,000 |   |   | 1,475,000 |   |   | 1,743,000 |   |
|                          Principal payments on long-term debt                                  |       |                                                                 | (32,500    | )                                                                   |       | (64,186 | ) |   | (45,000 | ) |   | (88,757 | ) |
|                          Proceeds from sale of common stock                                    |       |                                                                 | 80,000     |                                                                |       | - |   |   | 340,000 |   |   | - |   |
|                          Discontinued operations                                               |       |                                                                 | -          |                                                                |       | (3,266 | ) |   | 0 |   |   | (173,880 | ) |
|                                                                                                                              |       |                                                                 | 472,500    |                                                                |       | 675,548 |   |   | 1,770,000 |   |   | 1,480,363 |   |
|                      Net change in cash                                                                            |       | $                                                                    | (69,208    | )                                                                   | $          | 96,306 |   | $ | (69,093 | ) | $ | 417,997 |   |

**See          accompanying notes.**

----

|                                                                                     |       | **Three                  months ended****March                  31** | ** ** | **Nine                  months ended****March                  31** | ** ** |
|------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
|                                                                                     | ** ** | **2007**                                                             | ** ** | **2006**                                                            | ** ** | **2007** | ** ** | **2006** |   |
|                                                                                     |       |                                                                 |       |                                                                |       |   |   |   |   |
|                                                                                     |       |                                                                 |       |                                                                |       |    |   |   |   |
| Cash                  at beginning of period                                             |       | $                                                                    | 42,177     |                                                                | $          | 330,789 |   | $ | 42,062 |   | $ | 9,098 |   |
|                                                                                     |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
| Net                  change in cash                                                      |       |                                                                 | (69,208    | )                                                                   |       | 96,306 |   |   | (69,093 | ) |   | 417,997 |   |
|                                                                                     |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
| Cash                  at end of period                                                   |       | $                                                                    | (27,031    | )                                                                   | $          | 427,095 |   | $ | (27,031 | ) | $ | 427,095 |   |
|                                                                                     |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
|                                                                                     |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
| Supplemental                  disclosure of non-cash investing and financing activities: |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
|                                                                                     |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |
| Notes                  payable and accrued interest converted to common stock            |       | $                                                                    | 76,360     |                                                                | $          | 4,356 |   | $ | 169,748 |   | $ | 73,023 |   |
|                                                                                     |       |                                                                 |            |                                                                |       |  |   |   |  |   |   |  |   |

**See          accompanying notes.**

----

**ENCOMPASS      HOLDINGS, INC.**

| **1.** | **Summary                of significant accounting                policies** |
|--------|------------------------------------------------------------------------------|

----

**ENCOMPASS      HOLDINGS, INC.**

| **1.** | **Summary                of significant accounting policies                (continued)** |
|--------|------------------------------------------------------------------------------------------|

----

**ENCOMPASS      HOLDINGS, INC.**

| **1.** | **Summary                of significant accounting policies                (continued)** |
|--------|------------------------------------------------------------------------------------------|

| **2.** | **Operations** |
|--------|----------------|

| **3.** | **Notes                payable subject to conversion into an indeterminable number of shares                of                common stock** |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

**ENCOMPASS      HOLDINGS, INC.**

| **3.** | **Notes                payable subject to conversion into an indeterminable number of shares                of                common stock                (continued)** |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

** **
** **

| **4.** | **Long                Term Obligations** |
|--------|------------------------------------------|

|   | Included                in long term debt is $2,980,252 of notes payable to AJW Offshore,                Ltd; AJW                Partners, LLC AJW Qualified Partners, LLC; and Millennium Capital                Partners                II., LLC. The entire amount is convertible in whole or in part into                shares                of common stock of the Company at the option of the Company at a                conversion price equal to the average of the three lowest closing                bid                prices of the Company’s common stock during the 20 trading days prior to                the date of conversion at a discount of                45%. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company also granted AJW Offshore, Ltd; AJW Partners, LLC; AJW Qualified                Partners, LLC; and New Millennium Capital Partners II, LLC warrants                for                the purchase of an aggregate of 3,500,000 shares of common stock                of the                Company at an exercise price equal to $.50 per share. The warrants                are                exercisable in whole or in part and warrants for the purchase of                up to                1,400,000 shares expire on November 29, 2009; warrants for the purchase                of                up to 979,380 shares expire on January 17, 2010 if not exercised:                and                warrants for the purchase of 1,120,620 shares shall expire on August                8,                2010. The Company has reserved 3,500,000 shares of its common stock                for                issuance to these warrant holders. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During                the three months ending, March 31, 2007, as partial repayment of                the cash                advances received from AJW Partners, LLC, AJW Qualified Partners,                LLC, and                New Millennium Capital Partners II, LLC, the company issued 3,250,000                shares of its common stock in return for a principle reduction of                $76,360.                Subsequent to March 31, 2007 the Company has issued an additional                1,750,000 common shares for a further reduction of **$**22,200. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **5.** | **Common                stock** |
|--------|---------------------------------|

----

| **6.** | **Nacio                Systems, Inc. Spin-Off** |
|--------|-------------------------------------------------|

**ITEM      2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION AND RESULTS OF OPERATIONS**

**EXECUTIVE      LEVEL OVERVIEW**

----

**RESULTS      OF OPERATIONS**

**Nine      months and three months ended March 31, 2007 compared to the nine months and      three months ended March 31, 2006:**

|   | **Nine                months ended March 31:** |
|--------|------------------------------------------------|
|   | **2007**                                       |   | **2006** |   | **Increase** |   | **%** |
| Sales  | 16,200                                         |   | 0 |   | 16,200 |   | N/A |

|   | **Three                months ended March 31:** |
|--------|-------------------------------------------------|
|   | **2007**                                        |   | **2006** |   | **Increase** |   | **%** |
| Sales  | 0                                               |   | 0 |   | 0 |   | N/A |

| **  **             | **Nine                months ended March 31:** |
|------------------------------|------------------------------------------------|
|                         | **2007**                                       |   | **2006** |   | **Increase** |   | **%** |
| Cost                of sales | 20,000                                         |   | 0 |   | 20,000 |   | N/A |

|                         | **Three                months ended March 31:** |
|------------------------------|-------------------------------------------------|
|                         | **2007**                                        |   | **2006** |   | **Decrease** |   | **%** |
| Cost                of sales | 0                                               |   | 0 |   | 0 |   | N/A |

|                                               | **Nine                months ended March 31:** |
|----------------------------------------------------|------------------------------------------------|
|                                               | **2007**                                       |   | **2006** |   | **Decrease** |   | **%** |
| General                and administrative expenses | 2,068,853                                      |   | 1,819,344 |   | (249,509) |   | (13.71%) |

|                                               | **Three                months ended March 31:** |
|----------------------------------------------------|-------------------------------------------------|
|                                               | **2007**                                        |   | **2006** |   | **Decrease** |   | **%** |
| General                and administrative expenses | 723,960                                         |   | 814,227 |   | (90,267) |   | (11.09%) |

|                                               | **Nine                months ended March 31:** |
|----------------------------------------------------|------------------------------------------------|
|                                               | **2007**                                       |   | **2006** |   | **Decrease** |   | **%** |
| Research                & Development expenses | 203,412                                        |   | 500,053 |   | (296,641) |   | (59.32%) |

|                                | **March                31,****2007** |   | **March                31,****2006** |   | **Decrease** |   | **%**    |
|-------------------------------------|--------------------------------------|--------|--------------------------------------|--------|--------------|--------|----------|
| Total                current assets | 131,868                              |   | 725,065                              |   | (593,197)    |   | (81.90%) |

|                         | **March                31,****2007** |   | **March                31,****2006** |   | ** ** |   | **%** |
|------------------------------|--------------------------------------|--------|--------------------------------------|--------|------------|--------|-------|
| Equipment                net | 3,911,460                            |   | 0                                    |   |       |   | N/A   |

|                                                             | **March                31,****2007** |   | **March                31,****2006** |   | ** ** |   | **%** |
|------------------------------------------------------------------|--------------------------------------|--------|--------------------------------------|--------|------------|--------|-------|
| Demonstration                rotary engines not held for resale. | 2,310,000                            |   | 0                                    |   |       |   | N/A   |

|                                             | **March                31,****2007** |   | **March                31,****2006** |   | ** ** |   | **%** |
|--------------------------------------------------|--------------------------------------|--------|--------------------------------------|--------|------------|--------|-------|
| Rotary                engine intellectual assets | 2,167,000                            |   | 0                                    |   |       |   | N/A   |

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**ITEM      3.  CONTROLS AND PROCEDURES**

**PART      II - OTHER INFORMATION**

**ITEM      1.  LEGAL      PROCEEDINGS**

----

**ITEM      6.  EXHIBITS**

| ExhibitNumber |                                                                                  | Description                of Document                                                                           |
|---------------|---------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|
|          |                                                                                  |                                                                                                             |
| 3.1           |                                                                                  | Articles                of Incorporation as Amended *                                                            |
| 3.2           |                                                                                  | By                laws *                                                                                         |
| 10.1          |                                                                                  | Manufacturing                Agreement dated October 16, 2006 between Encompass Holdings,                Aqua    |
|          |                                                                                  | Xtremes,                Inc., Xtreme Engines, Inc. and Sumeeko Industries Co.                Ltd.*               |
| 10.2          |                                                                                  | Asset                Acquistion Agreement dated March 28, 2006 between Encompass Holdings,                Inc;   |
|          |                                                                                  | Rotary                Engines, Inc; Rotary Engines Technologies, Inc; Larry Cooper; Scott                Webber; |
|          |                                                                                  | And                Shirley Harmon. *                                                                             |
| 31.1          |                                                                                  | Rule                13a-14(a)/15d-14(a)                Certification                                             |
| 31.2          |                                                                                  | Rule                13a-14(a)/15d-14(a)                Certification                                             |
| 32.1          |                                                                                  | Section                1350                Certification                                                         |
| 32.2          |                                                                                  | Section                1350                Certification                                                         |
| *             | Filed                by reference to a prior filing of the                Registrant. |

----

**SIGNATURES**

| **May                12, 2007** | **ENCOMPASS                HOLDINGS, INC.** |
|---------------------------------|---------------------------------------------|
|                            |                                        |
|                            | By:                                         | /s/                ARTHUR N.                ROBINS                                        Arthur                N. RobinsChief                Executive Officer |