| [X] | Quarterly                report under Section 13 or 15(d) of the Securities Exchange Act of                1934                for the quarterly period ended December 31,                2006 |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

| ITEM                1.                     | FINANCIAL                STATEMENTS                                                                                                                                         |   |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                       |                                                                                                                                                                        |   |
|                                       | Consolidated                Unaudited Balance Sheets as of December 31, 2006 and December 31,                2005                                                           | 3      |
|                                       |                                                                                                                                                                        |   |
|                                       | Consolidated                Unaudited Statements of Operations for the Quarters ended December                31,                2006 and December 31, 2005                 | 4      |
|                                       |                                                                                                                                                                        |   |
|                                       | Consolidated                Unaudited Statement of Cash Flows for the Quarters ended December                31, 2006                and six months ended December 31, 2005 | 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                2.                     | UNREGISTERED                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                                                                  | 13     |
|                                       |                                                                                                                                                                        |   |
| ITEM                5.                     | OTHER                EVENTS                                                                                                                                                 | 13     |
|                                       |                                                                                                                                                                        |   |
| ITEM                6.                     | EXHIBITS                                                                                                                                                                    | 15     |
|                                       |                                                                                                                                                                        |
| SIGNATURES                                 | 16                                                                                                                                                                          |

----

**ENCOMPASS      HOLDINGS, INC.**

|                                                                                                                                                                                                                                                                                                                             |   | December                  31,2006 |        | June                  30,2006 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|-------------------------------|--------|
| **Assets**                                                                                                                                                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                                                                                                                             |   |                              |        |                          |   |
| Current                  assets:                                                                                                                                                                                                                                                                                                 |   |                              |        |                          |   |
|     Cash                                                                                                                                                                                                                                                                                                     |   | $                                 | 42,177      |                          | $      | 42,062 |   |
|                      Inventories                                                                                                                                                                                                                                                                                  |   |                              | 26,750      |                          |   | - |   |
|     Prepaid                    expenses                                                                                                                                                                                                                                                                      |   |                              | 176,372     |                          |   | 225,916 |   |
|     Net                  current assets of discontinued operations                                                                                                                                                                                                                                           |   |                              | 514,743     |                          |   | 619,565 |   |
|         Total                  current assets                                                                                                                                                                                                                                            |   |                              | 760,042     |                          |   | 887,543 |   |
| Equipment,                    net                                                                                                                                                                                                                                                                                                |   |                              | 3,936,459   |                          |   | 4,025,203 |   |
| Equipment                  of discontinued operations, net                                                                                                                                                                                                                                                                       |   |                              | 8,851,483   |                          |   | 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                                                                                                                                                                                                                                      |   |                              | 348,260     |                          |   | 420,392 |   |
|         Total                  other assets                                                                                                                                                                                                                                              |   |                              | 4,828,260   |                          |   | 4,900,392 |   |
|                                                                                                                                                                                                                                                                                                                             |   | $                                 | 18,376,244  |                          | $      | 19,151,849 |   |
|                                                                                                                                                                                                                                                                                                                             |   |                              |        |                          |   |   |   |
| **Liabilities                  and Stockholders' Equity**                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                             |   |                              |        |                          |   |   |   |
| Current                  liabilities:                                                                                                                                                                                                                                                                                            |   |                              |        |                          |   |   |   |
|     Accounts                  payable                                                                                                                                                                                                                                                                        |   | $                                 | 439,331     |                          | $      | 499,477 |   |
|     Accrued                  liabilities                                                                                                                                                                                                                                                                     |   |                              | 1,040,876   |                          |   | 866,303 |   |
|     Long-term                  debt due within one year                                                                                                                                                                                                                                                      |   |                              | 2,960,000   |                          |   | 2,990,000 |   |
|     Loans                  payable                                                                                                                                                                                                                                                                           |   |                              | 270,595     |                          |   | 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                                                                                                                                                                                                                                                                  |   |                              | 806         |                          |   | 6,371 |   |
|     Net                  current liabilities of discontinued operations                                                                                                                                                                                                                                      |   |                              | 3,811,624   |                          |   | 4,462,069 |   |
|         Total                  current liabilities                                                                                                                                                                                                                                       |   |                              | 8,551,196   |                          |   | 8,990,880 |   |
| Long-term                  debt to related parties                                                                                                                                                                                                                                                                               |   |                              | 50,000      |                          |   | 50,000 |   |
| Long-term                  debt                                                                                                                                                                                                                                                                                                  |   |                              | 2,656,612   |                          |   | 1,700,000 |   |
| Accrued                  Interest                                                                                                                                                                                                                                                                                                |   |                              | 244,949     |                          |   | 71,847 |   |
| Net                  liabilities of discontinued operations                                                                                                                                                                                                                                                                      |   |                              | 1,064,691   |                          |   | 245,777 |   |
| Minority                  interest                                                                                                                                                                                                                                                                                               |   |                              | 5,288,892   |                          |   | 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) |   |                              | 48,404      |                          |   | 28,820 |   |
|     Convertible                  promissory note and accrued interest                                                                                                                                                                                                                                        |   |                              | 107,140     |                          |   | 107,140 |   |
|     Additional                  paid in capital                                                                                                                                                                                                                                                              |   |                              | 35,353,776  |                          |   | 34,810,660 |   |
|     Retained                  deficit                                                                                                                                                                                                                                                                        |   |                              | (34,989,616 | )                             |   | (32,160,221 | ) |
|         Total                  stockholders' equity                                                                                                                                                                                                                                      |   |                              | 519,904     |                          |   | 2,786,599 |   |
|                                                                                                                                                                                                                                                                                                                             |   | $                                 | 18,376,244  |                          | $      | 19,151,849 |   |

----

**ENCOMPASS      HOLDINGS, INC.**

|                                                                                                      |   | Three                  months endedDecember                  31 |       | Six                  months endedDecember                  31 |   |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|------------|---------------------------------------------------------------|--------|
|                                                                                                      |   | 2006                                                            |       | 2005                                                          |   | 2006 |   | 2005 |   |
|                                                                                                      |   |                                                            |       |                                                          |   |    |   |   |   |
|                                                                                                      |   |                                                            |       |                                                          |   |    |   |   |   |
| Revenues                                                                                                  |   | $                                                               | -          |                                                          | $      | - |   | $ | 16,200 |   | $ | - |   |
| Cost                  of goods sold                                                                       |   |                                                            | -          |                                                          |   | - |   |   | 20,000 |   |   | - |   |
| Gross                  profit                                                                             |   |                                                            | -          |                                                          |   | - |   |   | (3,800 | )  |   | - |   |
| Operating                  expenses:                                                                      |   |                                                            |            |                                                          |   |  |   |   |   |   |   |   |   |
|                      General and administrative                                            |   |                                                            | 723,030    |                                                          |   | 477,078 |   |   | 1,327,120 |   |   | 952,189 |   |
|                      Research and development                                              |   |                                                            | 101,026    |                                                          |   | 457,926 |   |   | 154,849 |   |   | 458,573 |   |
|                                                                                                      |   |                                                            | 824,056    |                                                          |   | 935,004 |   |   | 1,485,769 |   |   | 1,410,762 |   |
| Net                  loss from operations                                                                 |   |                                                            | (824,056   | )                                                             |   | (935,004 | ) |   | (1,485,769 | )  |   | (1,410,762 | )  |
| Other                  income (expenses):                                                                 |   |                                                            |            |                                                          |   |  |   |   |   |   |   |   |   |
|     Change                  in fair value of derivative liabilities                   |   |                                                            | (1,438     | )                                                        |   | (24,174 | ) |   | 3,952 |   |   | (32,982 | )  |
|     Interest                  expense, net                                            |   |                                                            | (136,184   | )                                                             |   | (18,899 | ) |   | (247,133 | )  |   | (19,261 | )  |
|     Other                                                                             |   |                                                            | -          |                                                          |   | (1,227 | )  |   | 80,000 |   |   | (1,227 | ) |
|                                                                                                      |   |                                                            | (137,622   | )                                                             |   | (44,350 | ) |   | (163,181 | ) |   | (53,520 | )  |
|                                                                                                      |   |                                                            |            |                                                          |   |  |   |   |   |   |   |   |   |
| Net                  income from continuing operations before provision for income                  taxes |   |                                                            | (961,678   | )                                                             |   | (979,354 | ) |   | (1,648,950 | ) |   | (1,464,282 | )  |
| Provision                  for income taxes                                                               |   |                                                            | 3,141      |                                                          |   | 12,000 |   |   | 3,141 |   |   | 12,000 |   |
|                                                                                                      |   |                                                            |       |                                                          |   |   |   |   |   |   |   |   |   |
| Net                  loss from continuing operations                                                      |   |                                                            | (964,819   | )                                                             |   | (991,354 | ) |   | (1,652,091 | ) |   | (1,476,282 | )  |
|                                                                                                      |   |                                                            |            |                                                          |   |  |   |   |   |   |   |   |   |
| Net                loss of discontinued operations, net of                provision for income taxes      |   |                                                            | (623,033   | )                                                        |   | (202,823 | )  |   | (1,177,304 | )  |   | (592,250 | )  |
|                                                                                                      |   |                                                            |            |                                                          |   |  |   |   |   |   |   |   |   |
| Net                  loss                                                                                 |   | $                                                               | (1,587,852 | )                                                             | $      | (1,194,177 | ) | $ | (2,829,395 | )  | $ | (2,068,532 | ) |
|                                                                                                      |   |                                                            |       |                                                          |   |   |   |   |   |   |   |   |   |
| Net                  loss per common share                                                                |   |                                                            |       |                                                          |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                                            |       |                                                          |   |   |   |   |   |   |   |   |   |
|                      Continuing operations                                                 |   | $                                                               | (.024      | )                                                             | $      | (.101 | ) | $ | (.048 | ) | $ | (.173 | ) |
|                      Discontinued operations                                               |   |                                                            | (.016      | )                                                             |   | (.021 | ) |   | (.044 | ) |   | (.069 | ) |
|                                                                                                      |   |                                                            |       |                                                          |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   | $                                                               | (.040      | )                                                             | $      | (.122 | ) | $ | (.092 | ) | $ | (.242 | ) |

----

**ENCOMPASS          HOLDINGS, INC.**

|                                                                                                                                      |   | Three                    months endedDecember                    31 |       | Six                    months endedDecember                    31 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|------------|-------------------------------------------------------------------|--------|
|                                                                                                                                      |   | 2006                                                                |       | 2005                                                              |   | 2006 |   | 2005 |   |
| Cash                      flows from operating activities:                                                                                |        |                                                                |            |                                                              |        |   |  |  |   |
|                                                                                                                                      |   |                                                                |       |                                                              |   |    |   |   |   |
|                        Net loss                                                                                            |   | $                                                                   | (1,587,852 | )                                                            | $      | (1,194,177 | )  | $ | (2,829,395 | )  | $ | (2,068,532 | )  |
|                          Adjustment to reconcile net loss to net cash (used in) operating                      activities: |   |                                                                |       |                                                              |   |   |   |   |   |   |   |   |   |
|                            Provision for uncollectible accounts                                        |   |                                                                | 16,200     |                                                              |   | - |   |   | 16,200 |   |   | - |   |
|                            Depreciation & amortization                                             |   |                                                                | 88,744     |                                                              |   | - |   |   | 88,744 |   |   | - |   |
|                          Provision for income taxes                                                    |   |                                                                | 3,141      |                                                              |   | - |   |   | 3,141 |   |   | - |   |
|                          Minority interest                                                             |   |                                                                | (18,173    | )                                                            |   | - |   |   | (17,854 | )  |   | - |   |
|                          Change in fair value of derivative liabilities                                |   |                                                                | 1,438      |                                                              |   | 24,174 |   |   | (5,565 | )  |   | 32,982 |   |
|                          Shares issued in exchange for services                                        |   |                                                                | 168,878    |                                                              |   | 469,988 |   |   | 168,878 |   |   | 806,757 |   |
|                          Loss on disposal of equipment                                                 |   |                                                                | -          |                                                              |   | 1,277 |   |   | - |   |   | 1,277 |   |
|                          Changes in assets and liabilities:                                            |   |                                                                |       |                                                              |   |   |   |   |   |   |   |   |   |
|     Other                  assets                                                                                     |   |                                                                | (12,063    | )                                                                 |   | 60,628 |   |   | 22,794 |   |   | 8,677 |   |
|                          Accounts payable                                                              |   |                                                                | 83,984     |                                                              |   | (304,496 | )  |   | (60,146 | )  |   | (38,010 | ) |
|                          Accrued liabilities                                                           |   |                                                                | 556,359    |                                                              |   | 125,765 |   |   | 515,416 |   |   | 113,452 |   |
|                                                                                                                                      |   |                                                                | (699,344   | )                                                                 |   | (816,841 | ) |   | (2,097,787 | ) |   | (1,143,397 | )  |
|                                                                                                                                      |   |                                                                |       |                                                              |   |   |   |   |   |   |   |   |   |
| Cash                    flow from discontinued operations                                                                                 |   |                                                                | 181,698    |                                                              |   | 78,694 |   |   | 707,361 |   |   | 615,273 |   |
| Cash                    flows from investing activities:                                                                                  |   |                                                                |       |                                                              |   |   |   |   |   |   |   |   |   |
|                            Advances received from (paid                    to) related parties         |   |                                                                | -          |                                                              |   | 120,578 |   |   | - |   |   | 53,358 |   |
|                          Discontinued operations                                                       |   |                                                                | 318,404    |                                                              |   | 159,768 |   |   | 72,132 |   |   | 55,828 |   |
|                                                                                                                                      |   |                                                                | 318,404    |                                                              |   | 280,346 |   |   | 72,132 |   |   | 109,186 |   |
| Cash                  flows from financing activities:                                                                                    |   |                                                                |       |                                                              |   |   |   |   |   |   |   |   |   |
|                            Proceeds from long-term debt                                                |   |                                                                | 250,000    |                                                              |   | 1,000,000 |   |   | 1,050,000 |   |   | 1,000,000 |   |
|                          Principal payments on long-term debt                                          |   |                                                                | -          |                                                              |   | (85,292 | ) |   | - |   |   | (88,757 | ) |
|        Proceeds                  from sale of                  common stock                            |   |                                                                | -          |                                                              |   | - |   |   | 260,000 |   |   | - |   |
|                          Discontinued operations                                                       |   |                                                                | (21,591    | )                                                                 |   | (127,926 | ) |   | 8,409 |   |   | (170,614 | )  |
|                                                                                                                                      |   |                                                                | 228,409    |                                                              |   | 786,782 |   |   | 1,318,409 |   |   | 740,629 |   |
|    Net                  change in cash                                                                                     |   | $                                                                   | 29,167     |                                                              | $      | 328,981 |   | $ | 115 |   | $ | 321,691 |   |

----

|                                                                                                  |   | Three                  months endedDecember                  31 |    | Six                  months endedDecember                  31 |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|---------|---------------------------------------------------------------|--------|
|                                                                                                  |   | 2006                                                            |    | 2005                                                          |   | 2006 |   | 2005 |   |
|                                                                                                  |        |                                                            |         |                                                          |        |   |  |  |   |
|                                                                                                  |   |                                                            |    |                                                          |   |    |   |   |   |
| Cash                  at beginning of period                                                          |   | $                                                               | 13,010  |                                                               | $      | 1,808 |  | $ | 42,062 |  | $ | 9,098 |   |
|                                                                                                  |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
| Net                  change in cash                                                                   |   |                                                            | 29,167  |                                                          |   | 328,981 |   |   | 115 |   |   | 321,691 |   |
|                                                                                                  |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
| Cash                at end of period                                                                  |   | $                                                               | 42,177  |                                                          | $      | 330,789 |   | $ | 42,177 |   | $ | 330,789 |   |
|                                                                                                  |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
| Supplemental                disclosure of non-cash investing and                financing activities: |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
| Notes                payable and accrued interest converted to                common stock            |   | $                                                               | 43,696  |                                                          | $      | 175,000 |   | $ | 43,696 |   | $ | 175,000 |   |
|                                                                                                  |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
| Accrued                interest on long-tem debt converted to                common stock             |   | $                                                               | 123,388 |                                                          | $      | - |   | $ | 123,388 |   | $ | - |   |

----

**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 $2,750,000 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, December 31, 2006, 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 $70,125. Subsequent to December 31, 2006 the Company has issued                an                additional 2,250,000 common shares for a further reduction of **$**49,500. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**,**

----

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

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

----

|   | Three                months ended December 31: |
|--------|------------------------------------------------|
|   | 2006                                           |   | 2005 |   | Decrease |   | % |
| Sales  | 0                                              |   | 0 |   | N/A |   | N/A |

|   | Six                months ended December 31: |
|--------|----------------------------------------------|
|   | 2006                                         |   | 2005 |   | Increase |   | % |
| Sales  | 16,200                                       |   | 0 |   | 16,200 |   | N/A |

|                    | Three                months ended December 31: |
|------------------------------|------------------------------------------------|
|                         | 2006                                           |   | 2005 |   | Decrease |   | % |
| Cost                of sales | 0                                              |   | 0 |   | 0 |   | N/A |

|                         | Six                months ended December 31: |
|------------------------------|----------------------------------------------|
|                         | 2006                                         |   | 2005 |   | Decrease |   | % |
| Cost                of sales | 20,000                                       |   | 0 |   | 20,000 |   | N/A |

|                                               | Three                months ended December 31: |
|----------------------------------------------------|------------------------------------------------|
|                                               | 2006                                           |   | 2005 |   | Decrease |   | % |
| General                and administrative expenses | 824,056                                        |   | 935,004 |   | 110,948 |   | 11.87% |

|                                               | Six                months ended December 31: |
|----------------------------------------------------|----------------------------------------------|
|                                               | 2006                                         |   | 2005 |   | Increase |   | % |
| General                and administrative expenses | 1,481,969                                    |   | 1,410,762 |   | 71,207 |   | 5.05% |

|                                    | December                31,2006 |   | December                31,2005 |   | Increase |   | %   |
|-----------------------------------------|---------------------------------|--------|---------------------------------|--------|----------|--------|-----|
| Accounts                receivable, net | 16,200                          |   | 0                               |   | 16,200   |   | N/A |

----

ITEM      2. UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

----

*(“1934      Act”) *

----

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. |

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SIGNATURES

| March                21, 2006 | ENCOMPASS                HOLDINGS, INC. |
|-------------------------------|-----------------------------------------|
|                          |                                    |
|                          | By:                                     | /s/                ARTHUR N. ROBINSArthur                N. RobinsChief                Executive Officer |
|                          |                                    |   |
|                          | By:                                     | /s/                LESLIE I. HANDLERLeslie                I. Handler, President |