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EX-32.2 - EGPI FIRECREEK, INC.v181274_ex32-2.htm
EX-31.1 - EGPI FIRECREEK, INC.v181274_ex31-1.htm
EX-21.1 - EGPI FIRECREEK, INC.v181274_ex21-1.htm
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 

FORM 10-K

 
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
For the fiscal year ended December 31, 2009
or
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
For the transition period from __________________ to __________________
 
Commission File No. - 000-32507
 

 
EGPI FIRECREEK, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Nevada
88-0345961
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
 
6564 Smoke Tree Lane Scottsdale, AZ 85253
 (Address of Principal Executive Offices) (Zip Code)
 
(480) 948-6581
 (Registrants Telephone Number, Including Area Code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Name of Each Exchange On Which Registered
Common Stock, $0.001 par value
 
None
 
Securities registered pursuant to Section 12(g) of the Act:
 
None
(Title of Class)
 

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes o No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large Accelerated Filer o
Accelerated Filer o
   
Non-Accelerated Filer o
Smaller Reporting Company x
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
 
The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant on the last business day of the registrant’s most recently completed second fiscal quarter (based on the closing sale price as reported by the National Quotation Bureau) was approximately $643,562.
 
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
As of March 31, 2009, the registrant had 76,460,069 shares of its $0.001 par value common stock issued and outstanding. There are  no shares of Series A, B preferred stock issued and outstanding, and 5,000 shares of its Series C preferred stock issued and outstanding at $0.001 par value for each of the Series of Preferred, and no shares of non-voting common stock issued and outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE
 


EGPI FIRECREEK, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
INDEX

PART I
   
   
 
   
   
Item 1.
Description of Business
 
4
Item 1A.
Risk Factors
 
13
Item 1B.
Unresolved Staff Comments
 
20
Item 2.
Description of Property
 
20
Item 3.
Legal Proceedings
 
27
Item 4.
Submission of Matters to a Vote of Security Holders
 
27
 
     
   
PART II
   
   
 
   
   
Item 5.
Market for Common Equity and Related Stockholder Matters
 
27
Item 6. 
Selected Financial Data
 
 39
Item 7.
Management’s Discussion and Analysis or Plan of Operation  
 
39
Item 8.
Financial Statements and Supplementary Data
 
F-1-24
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
44
Item 9AT.
Controls and Procedures  
 
44
Item 9B.
Other Information  
 
45
 
     
   
PART III
   
   
 
   
   
Item 10.
Directors, Executive Officers, Corporate Governance
 
47
Item 11.
Executive Compensation
 
49
Item 12.
Security Ownership of Certain Beneficial Owners and Management  
 
50
Item 13.
Certain Relationships And Related Transactions, And Director Independence
 
52
Item 14.
Principal Accountant Fees and Services  
 
56
       
PART IV
     
       
Item 15.
Exhibits, Financial Statement Schedules
 
57
 
     
   
 
SIGNATURES  
 
61


 
This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company has based these forward-looking statements on the Company’s current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us and the Company’s subsidiaries that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a material difference include, but are not limited to, those discussed elsewhere in this Annual Report, including the section entitled “Risks Particular to the Company’s Business” and the risks discussed in the Company’s other Securities and Exchange Commission filings. The following discussion should be read in conjunction with the Company’s audited Consolidated Financial Statements and related Notes thereto included elsewhere in this report.

PART I

ITEM 1 - DESCRIPTION OF BUSINESS
 
HISTORY
 
EGPI Firecreek, Inc. (the “Company”, “EGPI”, “we”, “us” or “our” ) was incorporated in the state of Nevada on October 4, 1995 as Sterling Market Positions, Inc. with 10,000,000 shares of $.001 par value common stock authorized. Effective June 24, 1999, the Company changed its name to Energy Producers, Inc. and increased its authorized common shares to 50,000,000 with a par value of $0.001. The Company’s principal place of business is 6564 Smoke Tree Lane, Scottsdale, AZ 85253.
 
On August 25, 1999, the Company was acquired by Energy Producers Group, Inc., and its wholly owned subsidiary, Producers Supply, Inc. The purpose of the acquisition and reverse merger was to become an oil and gas company, and later diversify. The Company focused its business on oil and gas exploration and acquiring existing production with proven reserves.
 
On December 31, 2005 the board of directors of the Company authorized the disposal of the Company’s wholly owned subsidiary marine sales segment assets and operations International Yacht Sales Group, Ltd. located in Torquay Devon, United Kingdom.
 
In March 2006 the Company through its wholly owned subsidiary Firecreek Petroleum, Inc, (“Firecreek”), began production and sale of natural gas from completed wells located in Sweetwater County, Wyoming.
 
On December 13, 2006, the Company increased its total authorized capital stock from 980,000,000 shares to 1,300,000,000.
 
On July 1, 2007 the Company through its wholly owned subsidiary Firecreek began production and sale of oil from the Fant Ranch Unit located in Knox County, Texas.

On July 3, 2008 the Company through its wholly owned subsidiary Firecreek began production and sale of oil and gas from the J.B. Tubb leasehold estate located in Ward County, Texas.

Effective on October 8, 2008 the Company affected a one (1) for two hundred (200) reverse stock split whereby, as of the Record Date, for every two hundred shares of common stock then owned, each shareholder received one share of common stock.

On October 30, 2008 the Company’s wholly owned subsidiary Firecreek sold its 50% undivided interest in the Ten Mile Draw natural gas leases in Sweetwater County, Wyoming.

On December 2, 2008 as a result of a default notice received October 24, 3008 on Promissory Notes and Debentures held by Dutchess Private Equities Fund, Ltd (“Dutchess”), all of the assets were transferred or disposed of.

On May 18, 2009 The Company entered into a Stock Acquisition Agreement relating to the assignment and sale of Firecreek Petroleum, Inc., a Delaware corporation (“FPI”).

On May 21, 2009 the Company acquired M3 Lighting, Inc. (“M3”) as a wholly owned subsidiary via reverse triangular merger with a subsidiary of the Company. The Company was determined to be the acquirer in the transaction for accounting purposes. M3 principally brings key Management, strategic relationships, and is a distributor of commercial and decorative lighting to the trade and direct to retailers.  As part of the Merger the Company effected a name change for its wholly owned subsidiary Malibu Holding, Inc. to Energy Producers, Inc. (“EPI”) as a conduit for its oil and gas activities, and the Company commenced focusing on two lines of business.

On November 4, 2009 the Company acquired all of the issued and outstanding capital stock of South Atlantic Traffic Corporation, a Florida corporation (“SATCO”). SATCO has been in business since 2001 and has several offices throughout the Southeast United States. SATCO carries a variety of products and inventory geared primarily towards the transportation industry.

4

 
On December 31, 2009, the Company’s wholly owned subsidiary Energy Producers, Inc. acquired 50% working interests and corresponding 32% net revenue interests in oil and gas leases, reserves, and equipment located in Shackelford, Callahan, and Stephens counties, West Central Texas. The Company entered into a turnkey work program included for three wells located on the leases.
 
Overview
 
EGPI Firecreek Inc. was formerly known as Energy Producers, Inc., an oil and gas production company focusing on the recovery and development of oil and natural gas. The Company focused on oil and gas activities for development of interests held that were acquired in Texas and Wyoming for the production of oil and natural gas through December 2, 2008.

Based on our earlier initiation of a program to review domestic oil and gas prospects and targets in fiscal year 2005, we acquired non-operating oil and gas interests in a project under the prospect named Ten Mile Draw (“TMD”) located in Sweetwater County, Wyoming USA for the development and production of natural gas. We commenced with natural gas production beginning approximately March 2006 forward in the TMD. Later on in July, 2007, the Company acquired and began production of oil at the 2,000 plus acre Fant Ranch Unit in Knox County, Texas. We entered a rehabilitation program on the Fant Ranch in January 2008. This was followed by the acquisition and commencement of oil and gas production at the J.B. Tubb Leasehold Estate located in the Amoco Crawar Field in Ward County, Texas in March, 2008. Throughout 2008, the Company sought to continue expansion and growth for oil and gas development in its core projects area. This strategy was centered on rehabilitation and production enhancement techniques, utilizing modern management and technology applications in upgrading certain proven reserves. The Company successfully increased production and revenues derived from its properties and in late 2008, the Company then retired the majority (over 90%) of its debt through the disposition of those improved properties.

In early 2009, based on the continued economic downturn, credit decline, struggling financial markets and the implementation of the federal stimulus package for infrastructure projects, the Company embarked on two lines of business as a strategic plan in part then transitioning from an emphasis on the oil and gas focused business to that of an acquisition strategy focused on the transportation industry serving federal DOT and state/local DOT agencies. In addition, the acquisition targets being reviewed by the Company also had a presence in the telecommunications and general construction industries. The acquisition strategy focuses on vertically integrating manufacturing entities, distributors and construction groups. In May 2009, the Company acquired M3 Lighting Inc. (M3) as the flagship subsidiary with key additional management team to begin this process, and as a result on November 4, 2009, the Company acquired all of the capital stock of South Atlantic Traffic Corporation, a Florida corporation, which distributes a variety of products geared primarily towards the transportation industry where it derives its revenues.
 
Through 2009 we continued our previous decisions to limit and wind down the historical pursuit of our oil and gas projects overseas in Central Asian and European countries. However, in late 2009 and in 2010, the Company began pursuing a reentry to the oil and gas industry and again as part of our strategic plans. The Company is currently a party to a pending agreement to acquire an entity that owns approximately 2,100 miles of a pipeline system initially used as a crude oil transportation system by Koch Industries. As of the date of this report we have not closed this potential acquisition and there can be no assurance we will close on this acquisition. On December 31, 2009, the Company, through its wholly-owned subsidiary, Energy Producers, Inc., effectively acquired a 50% working interest and corresponding 32% revenue interest in certain oil and gas leases, reserves and equipment located in West Central Texas.

For further information related to the our history please see information in our Form 10K and Form 10KSB Reports, as amended, filed on March 23, 2010, and July 24, 2008, respectively.

RECENT DEVELOPMENTS

On May 18, 2009 the Company and Firecreek Global, Inc., entered into a Stock Acquisition Agreement (the “FPI Agreement”), relating to the Firecreek Global, Inc.’s (“Assignee”) acquisition of all of the issued and outstanding shares of the capital stock of our then-subsidiary, Firecreek Petroleum, Inc., a Delaware corporation (“FPI”). For further information can be found in our current Report on Form 8-K filed on May 20, 2009, and elsewhere in this Report.

On May 21, 2009, EGPI Firecreek, Inc., a Nevada corporation (the “Company” or “Registrant”), Asian Ventures Corp., a Nevada corporation (the “Subsidiary”), M3 Lighting, Inc., a Nevada corporation (“M3”), and Strategic Partners Consulting, L.L.C., a Georgia limited liability company (“Strategic Partners”) executed and closed a Plan and Agreement of Triangular Merger (the “Plan of Merger”), whereby M3 merged into the Subsidiary, a wholly-owned subsidiary of the Company (the “Merger”).   Further information can be found in our Current Report on Form 8-K, filed with the Commission on May 27, 2009, as amended. Amendment No. 1 and No. 2 to the May 27, 2009 current Report on Form 8-K were filed on June 24 and August 4, 2009, respectively and as further listed in this Report in the section on “The Business” or elsewhere in this document. 

Effective on November 4, 2009, the Company acquired all of the issued and outstanding capital stock of South Atlantic Traffic Inc., a Florida corporation (“SATCO”).  For further information please see our Current Report on Form 8-K filed November 12, 2009, and Form 8-K Amendment No. 1, filed January 22, 2010 and as further listed in this Report in the section on “The Business” and elsewhere in this document.

As of December 18, 2009, the Company entered into a pending agreement (the “Sierra Agreement”) to acquire all of the issued and outstanding membership interests of Sierra Pipeline, LLC, a Nevada limited liability Company (“Sierra”). For additional information please see our Current Report on Form 8-K, as amended, filed on December 29, 2009 and January 6, 2009 and as further listed in this Report in the section on “The Business” or elsewhere in this document.

5

 
On December 31, 2009, the Company through its wholly owned subsidiary Energy Producers, Inc. acquired interests in Oil and Gas Leases (the “Assignment”), along with a Turn Key work program for three wells, from Whitt Oil & Gas, Inc., (“Whitt”) a Texas corporation. We acquired 50% working interests and corresponding 32% net revenue interests in oil and gas leases, reserves, and equipment on 240 Acres in Shackelford, Callahan, and Stephens counties, West Central Texas. For additional information please see our Current Report on Form 8-K, as amended, filed on December 29, 2009 and January 6, 2009. See also additional information listed under the heading “Description of Properties” located in this prospectus and as further listed in this Report in the section on “The Business” or elsewhere in this document.

As of January 15, 2010, the Company entered into a pending agreement to acquire all of the issued and outstanding capital stock of Southwest Signal, Inc., a Florida corporation (“SWSC”). Southwest Signal, Inc., was established in 2000 and is engaged in all facets of the United States Intelligent Traffic Systems (ITS) / Department of Transportation (DOT) Industry. The Company also provides services to leading private sector clients such as Wal-Mart, Lowes and Home Depot in addition to large private developers.  Southwest Signal, Inc. also participates in maintenance and general bids for city, county and state funded DOT projects. The corporate headquarters are located in Tampa Florida. For further information please see our Current Report on Form 8-K filed on January  22, 2009, and February 8, 2010,  as amended, and as further listed in this Report in the section on “The Business” or elsewhere in this document.

On March 3, 2010, the Company executed a Stock Purchase Agreement with the stockholders of Redquartz LTD, a company formed and existing under the laws of the country of Ireland.  Redquartz LTD has been in business for 45 years, is known internationally and is our entrance into the European markets with respect to Intelligent Traffic Systems (ITS) and the transportation industry as well as expanding our relationship recently established with Cordil, Inc. for the products sold by South Atlantic Traffic, Inc. (SATCO), a wholly owned subsidiary of the Company. For further information please see our Current Report on Form 8-K filed on March 11, 2010,  and as provided elsewhere in this document. The unit purchased by the Company has no assets and will result in additional debt burden to the Company.
 
The Company has been making presentations to asset-based lenders and other financial institutions for the purpose of (i) expanding and supporting our growth potential by development of its new line of operations for M3, and SATCO, or acquisitions by the Company that are vertically related to M3, and SATCO, such as SWSC and (ii) building new infrastructure for its oil and gas operations in 2009. The Company throughout its first quarter of operations for 2010 has been pursuing projects for acquisition and development of select targeted oil and gas proved producing properties with revenues, having upside potential and prospects for enhancement, rehabilitation, and future development. These prospects are primarily located in Eastern Texas, and in other core areas of the Permian Basin.

The Company’s goal is to rebuild our revenue base and cash flow; however, the Company makes no guarantees and can provide no assurances that it will be successful in these endeavors.  

THE BUSINESS
 
The Company beginning May 20, 2009 has been building and integrating two line segments of operations and facilitating plans including i) development and redeployment of our oil and gas infrastructure which we are currently focused on building our oil and gas operations domestically, and,  ii) generating business geared to Department of Transportation (DOT) application including Intelligent Lighting Systems (ITS)  inventory and systems sales to DOT and also distribution of commercial decorative lighting to the trade and direct to retailers.

Oil and Gas Units (line segment of operations) Transitioning Stage

Our goal through this line of business is to become an independent oil and gas company engaged in the exploration, development and exploitation of crude oil and natural gas properties primarily in the United States. We have focused our activities on projects based in i) the Permian Basin areas of Texas, and ii) surrounding States and regions in the U.S. for activities related to oil and gas production, and related business and other opportunities.  

Our business and our ability to acquire mineral rights, targeted rehabilitation projects with upside potential, and participate in drilling activities are due primarily to the relationships we have developed over the years with our operating partners, and key industry advisors.  We believe our competitive advantage lies in our ability to locate good potential oil and gas property acquisitions, resource plays, and other business opportunities and interests located primarily in Texas and surrounding States.

Acquisition of 50% Oil and Gas Working Interests, Callahan, Stephens, and Shakelford Counties, Texas, Three Well Program

Effective December 31, 2009, the Company through its wholly owned subsidiary Energy Producers, Inc. closed an Acquisition Agreement including an Assignment of Interests in Oil and Gas Leases (the “Assignment”), with Whitt Oil & Gas, Inc., (“Whitt”) a Texas corporation acquiring 50% working interests and corresponding 32% net revenue interests in oil and gas leases representing the aggregate total of 240 acre leases, reserves, three wells, and equipment located in Callahan, Stephens, and Shakelford Counties, West Central Texas.

6

 
Purchase and Work Program Costs Associated With Our Acquired Interests in the Texas, Three Well Program

Pursuant to the Assignment, the Company paid to Whitt the total of two hundred twenty five thousand ($225,000) dollars for the leases, equipment, and a turnkey work program included for three wells located on the leases. Of the $225,000 we have allocated $163,500 for the leases and $61,500 for the existing equipment according to our share.

Whitt Oil and Gas, Inc. is the operator for the Company’s non operated interests and has commenced with work programs to rehabilitate the three wells which began in January 2010 with the goal to restore production and be online as soon as possible. The Assignment through closing is less all credited taxes including State, County, and or other due and owing by Whitt through the oil transfer effective date of December 1, 2009 to the Company.  Operations upon the transfer effective date will be handled by an Operating Agreement between the Company and Whitt.

The rehabilitation and enhancement programs include well repairs followed by frac treatment for each well, namely the McWhorter No. 1 Well with perforations in the Bend Conglomerate Formation at 4,060 to 4,068 feet, the Young No. 3 Well to produce at 2,530 feet depth in the Palo Pinto Lime, and the Boyett Well, to produce in the Caddo Lime at approximately 3,400 feet. For additional information please see our Current Report on Form 8-K, as amended, filed on December 29, 2009 and January 6, 2009. See also additional information listed under the heading “Description of Properties”, “Supplemental Oil and Gas Information” and listed in “Notes to the Consolidated Financial Statements” further in this Report.

The Material terms of the Operating Agreement with the Company include
 
Pursuant to the AAPL form operating agreement Whitt is an independent contractor and operates the subject properties on a contract basis for our share of Working Interests (50%). Whitt will furnish the monthly Lease Operation Expense and various activity reports to the Company’s wholly owned subsidiary Energy Producers, Inc. Upon successful commencement of production, run checks (payments) expected from future sales of oil and gas are to be sent to the operator from the purchasers for oil and gas produced. Conoco is initially designated as the gatherer for the oil and Taurus for the natural gas.  Whitt is to administrate monthly activities, and after payment of management, consulting, and lease-operating expenses (LOE’s), Whitt will collect and compile the Joint Interest Billing (JIB) Statements and prepares those certain reports and financial statements related to production income and expenses for monthly delivery to Company’s accounting for compilation along with its share of the payment to be received according to its interests.
 
Pending Acquisition of Sierra Pipeline, LLC

As of December 18, 2009, the Company entered into an agreement (the “Sierra Agreement”) with Mr. Don Tyner (“Seller”) to acquire all of the issued and outstanding membership interests of Sierra Pipeline, LLC, a Nevada limited liability Company (“Sierra”). If acquired, the Company, through Sierra, will own approximately 2100 miles of a pipeline system that was initially installed and used as a crude oil transportation system by Koch Industries (the “Sierra Pipeline”).  There are no known environmental issues with the pipeline system.  The rights of way and easements associated with the asset have been recorded in each of the applicable county courthouses. As of the date of this report we have not closed on this acquisition and there is significant doubt that we will close on this acquisition.

Purchase Costs Relative to the Pending Acquisition of Sierra Pipeline, LLC

The Company issued 2,500,000 shares of the Company’s common stock to the member(s) of Sierra in connection with the acquisition which are to be registered on a best efforts basis. The estimated fair value of the shares has been determined by management to be $250,000. Unless mutually agreed in writing, the agreement contemplates a March 5, 2010 closing of the transaction. A (i) $2,500,000 cash payment and (ii) 2,500,000 additional shares of the Company’s common stock (the “Closing Shares”) are due from the Company on the closing date if not earlier terminated by the Company on or before March 1, 2010, or the Seller on or before March 4, 2010, in accordance with a recent second extension granted. The Company has not yet closed the transaction and remains on a day to day basis, extended until closed or terminated by the seller. We are in the process of reviewing verbal and written financing arrangements, with no assurance as of yet we will be able to obtain satisfactory arrangements for financing our acquisition of Sierra, or if we do it will be timely. The Company and Seller have verbally agreed to continue in good faith but to notify one another if our intent is to withdraw or Seller wishes to terminate. The Company upon a closing of the transaction, if any, is obligated to use its best efforts to issue and register the Closing Shares as described above.  Given the substantial doubt that exists regarding our completion of this acquisition, the shares granted have been expensed during the period ended December 31,2009.

About the Sierra Pipeline, LLC, Pending Acquisition, and Business Plans

The Company, if successful in closing this transaction, plans to utilize the pipeline assets to gather natural gas, develop gas production in adjoining areas along the pipelines, and develop other opportunities within the approximate 2,100 miles of right-of-ways.

7

 
The right of way and easements associated with the Sierra Pipeline have a significant footprint and, if the Sierra Agreement closes, may create intangible value for the Company through its newly acquired subsidiary. Other known transportation companies have acquired and recompleted idle wellbores, transported gas, divested idle segments of pipeline and rights of way and divested pipelines and/or production operations.  The Company believes that, through Sierra and other acquisition targets, it may be able to execute on one or more of these business strategies.

The pipeline gathering system is located throughout Northeastern and Central Oklahoma where most of the lines are concentrated, as well as, in Southeast Kansas, and Southwestern Indiana states. The pipeline gathering system consists of pipeline ranging in size from 2” up to 12” in diameter.

According to various data and third party reports, there are currently thousands of existing well bores and/or wells adjacent to the pipeline gathering system. The wells may be candidates for transportation agreements to transport the gas to major buyers such as Williams, ONEOK, and Mustang, all of whom operate pipelines which cross the Sierra pipeline gathering system at various locations. There may also be opportunities for outright purchases of the well bores and/or wells that could potentially enhance the overall value of the pipeline gathering system. Additionally, the pipeline gathering system is located in a prime geographical area for new shallow natural gas wells to be drilled. The footprint of this pipeline offers an excellent opportunity to have transportation available for newly developed gas reserves. The area in Northeast Oklahoma near this pipeline system has been very productive of coal bed methane gas for many years. The most cost effective method of extracting these reserves has been the recompletion of older idle wellbores versus newly drilled wells. The coal seams in this area are shallow (less than 1500’) and the success rates have been excellent. Sierra has approximately 778 miles of pipe in Creek, Nowata, Tulsa, and Washington Counties in Oklahoma. Based on independent review, there are over 27,000 idle wellbores in these 4 counties. There may also be conventional gas reserves to be developed in this area as well. In addition to the potential for recompletion of idle wellbores the Company will look at a segment of its operations for the development of business related to third party gas transportation. Part of the initial development work will be to identify these opportunities. Other potential Pipeline business activities will be related to divestment of idle segments of the gathering system. There should be opportunities to resell portions of the system to third parties. Another initial task on this project would be to identify other midstream companies with assets in proximity to this system. Further down the road there are potentials, once sizable cash flow is developed, to sell this project. According to information we have collected, a very similar company had only activated 430 miles of their system when they sold to a larger purchaser for $95MM and this did not include any production. The annual multiples of cash flow paid for these pipeline systems run from 6 to 10 years, normally. There are also other opportunities for another business development plan to explore farming out the production play to a larger producer once the acreage is acquired.

New policies as well as the environmental push for vehicles and businesses to run on compressed natural gas (CNG) may cause natural gas prices to increase which could in turn stimulate increases in domestic production and exploration.

Competition for natural gas supplies is based primarily on the location of gas gathering facilities and gas processing plants, operation efficiency and reliability, and the ability to obtain a satisfactory price for products recovered. Competitive factors include availability of capacity, proximity to supply and industry marketing centers, cost efficiency and reliability of service, Competitors include: other large natural gas gatherers that gather, process and market natural gas and major integrated oil companies; medium and large sized independent exploration and production companies; major interstate and intrastate pipelines; and large number of smaller gas gatherers of varying financial resources and experience.

The pipeline gathering system, we believe, is competitive and marketable with other comparable properties in the marketplace. Through research and data collected it is reasoned that a pipeline as extensive as the Sierra Pipeline would require marketing and exposure of 12 to 18 months to establish its fair value premise and its potentials.

For additional information please see our Current Report on Form 8-K, filed on December 29, 2009.

The Company makes no guarantees and can provide no assurances that it will be successful in acquiring the Sierra Pipeline, LLC interests, or if it is able to acquire the Sierra interests that it will be successful in these endeavors.  

Sale/Assignment of 100% Stock of FPI Subsidiary

On May 18, 2009 the Company entered into a Stock Acquisition Agreement (the “FPI Agreement”), relating to the Firecreek Global, Inc.’s (“Assignee”) acquisition of all of the issued and outstanding shares of the capital stock held in our subsidiary, Firecreek Petroleum, Inc., a Delaware corporation (“FPI”). Assignee’s acquisition of FPI stock (the “Assignment”) included all of the assets and debt attributable to FPI from the Company’s books and consolidated financial statements. In addition, the Company, and Assignee executed a right of first refusal agreement attached as Exhibit to the FPI Agreement, granting to the Company the right of first refusal, for a period of two (2) years after Closing, to participate in certain overseas projects in which Assignee may have or obtain rights related to Assignors’ previous activities in certain areas of the world. For further information can be found in our current Report on Form 8-K filed on May 20, 2009. For further information with respect to the historical activities of the Company related to the FPI subsidiary, please also see information in our Form 10K and Form 10KSB Reports, as amended, filed on March 23, 2010, and July 24, 2008, respectively.

Competition

The oil and gas industry is highly competitive. As a new independent domestic producer entering the oil and gas business, the Company will not initially own and may never own any refining or retail outlets and may have little control over the price it will receive for planned crude oil production. Although management has established relationships in its proposed acquisition activities, significant competition by individual producers and operators or major oil companies exists. Integrated and independent companies and individual producers and operators are active bidders for desirable oil and gas properties. Many of these competitors have greater financial resources than the Company currently has now or may have in the near future.
 
8

 
Sales and Marketability

Oil and Gas Working Interests, Three Well Program, Callahan, Stephens, and Shakelford Counties, West Central Texas

Our oil production is expected to be sold at prices tied to the spot oil markets.  Our natural gas production is expected to be sold under short-term contracts and priced based on first of the month index prices or on daily spot market prices.  We rely on our operating partner to market and sell our production.  Our operating partner Whitt Oil and Gas, Inc. is a privately owned exploration and production company.  We do not believe the loss of any single operator would have a material adverse effect on our Company
 as a whole.

Historically the marketability of the Company’s crude oil has not posed a problem for us.  Crude oil can be easily sold wherever it is produced in the state(s) that the Company operates subject to the transportation cost. For example, the crude oil produced by the Company via certain of its oil and gas interests which were disposed of on December 2, 2008 had been transported by truck.  During 2010 we will again expect to commence sales of oil via truck and via pipeline for natural gas. Overall, natural gas can be considered more difficult to sell since transportation requires a pipeline.  In some of the areas that the Company has previously pursued or expects to pursue new drilling activity for natural gas in the future, there can be delays because of the unavailability of a pipeline. No assurance can be given that natural gas wells drilled by the Company, if any, will be placed on line in a timely manner after the well is drilled and completed.

TMD Project, Wyoming

Through its Disposition, October 30, 2008

The Company through its then Firecreek unit commenced selling natural gas during 2006 through the interests it held in the leases, wells, and equipment in the TMD. A Gas Purchase Agreement was entered into November 11, 2005 by Emerald Operating Company (“Emerald”) as “Producer”, and Western Gas Resources, Inc. (“Western”). Effective January 1, 2006, Newport, the Company’s Operator for its interests in the TMD Project and Western, signed a Ratification Agreement, adopting the Gas Purchase Agreement as the agreement between them covering gas purchases, pursuant to which Newport became the “Producer”. Newport is the operating partner for our non operated interests owned in the TMD. The Gas Purchase Agreement had a term of three years, continuing thereafter until either party gives written notice of termination at least thirty days prior to the expiration of the primary term or any extension of the primary term. Payments relative to the Company’s receipt from Newport, based on Gas received to the pipeline were estimated to be a standard 45-60 days following monthly settlement and calculation by Western. The British Thermal Unit (BTU) content of our gas produced in the TMD workover wells tested above standard. Through Newport we were entitled to receive bonus payment adjustment increase for sales of gas, less gathering fees, as applicable, in accordance with the then terms and calculations of the Gas Purchase Agreement. Prices paid by Western accordingly were adjusted for a BTU content of each zone as well as the liquids revenue received. The Company believes it had no commitment that obligated us to produce any set amount of natural gas.
 
Fant Ranch Unit, Texas

Through its Disposition, December 2, 2008
 
The Company received, through December 2, 2008, its monthly payment for the Fant Units production of oil in Knox County, Texas by division order with BML Inc. to Success Oil Co., Inc. BML purchases all of the Companys crude oil pertaining to its interests owned based on a month-to-month contract, which could then be terminated upon thirty (30) days notice by either party. A division order is a contract for the sale of oil, by the holder of a revenue interest in well or property, to the purchaser.  It lists the names of revenue interest owners of a producible oil well or wells, along with the respective share of production revenues, and directs the purchaser to distribute the proceeds of production sales, accordingly. The Company received according to its interests for the oil sold to BML, through December 2, 2008, the average of the Plains price for the oil in for the month sold, adjusted by Platt pricing, less a transportation cost for the oil of $1.75 per barrel. The Company had no commitment that obligated us to produce any set amount of oil.  

Wyoming Regulations

Any oil undertaking within the State of Wyoming requires obtaining the necessary permits and approvals from the Wyoming Oil and Gas Conservation Commission (“WOGCC”). Once a lease is obtained, an operator’s agreement must be on file with the WOGCC. In addition, federal regulations including those governed by the Environmental Protection Agency must be strictly followed (see additional discussion addressing the regulatory environment governing oil & gas drilling and production found under “Business Risks”; “Governmental Regulation”). We believe our operator Newport has obtained all necessary permits to operate the two workover wells associated with the Company’s interests in TMD project held by Firecreek prior to October 30, 2008.
 
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Texas Regulations
 
Any oil undertaking with the State of Texas requires obtaining necessary permits and approvals from the Railroad Commission of Texas (“RRC”). Once a lease is obtained an operator’s agreement must be on file with the RRC.  Federal regulations including those governed by the Environmental Protection Agency must also be strictly followed (see additional discussion addressing the regulatory environment governing oil & gas drilling and production found under “Business Risks”; “Governmental Regulation”). We believe our operators through the date of this Report, both previous and current, have obtained and or filed all necessary permits and reports to operate the wells and maintain compliance associated with the Company’s interests in Fant Ranch Unit, and J.B. Tubb Leasehold Estate held by Firecreek prior to December 3, 2008, and thereafter though our Energy Producers, Inc. subsidiary via our acquisition of the Whitt Oil and Gas, Inc. three well program interests on December 31, 2009 forward.  

Financial Information about Segments and Geographic Areas

We have not segregated our operations into geographic areas given the fact that all of our proposed production activities for closed transactions to date occur within the Permian Basin of West Central Texas.

Future Development Contemplated,

J.B. Tubb Leasehold Estate, AMOCO CRAWAR FIELD, Ward County, Texas

As part of the disposition of its assets the Company and Dutchess entered into an Oil and Gas Property Participation and Rights Agreement (“Participation Agreement”), whereby Dutchess granted EGPI, under certain circumstances listed therein the participation agreement, a right of first refusal, as provided in Section VIII of that certain participation agreement between Success Oil Co. and EGPI and its wholly-owned subsidiary, Firecreek Petroleum, Inc., dated January 3, 2008.
 
Overseas Project Activity Development in Central Asian and European Countries
 
Strategic Alliance with Sahara Group
 
For historical information regarding the Sahara Group please see the section titled “The Business” and other information contained in Form 10-KSB, as amended, filed April 14, 2006, in Form 10-KSB/A (Amendment No. 3), filed April 11, 2008.
 
In 2008 and 2009, the Company focused on its domestic US oil and gas operations or rebuilding these operations, respectively. There was no further activity with the Sahara group in Russia, Kazakhstan, Ukraine and Turkey, with the exception of the sale of certain opportunity rights relative to access of projects in Ukraine. For historical information please also see “The Business” and other information contained in Form 10-KSB, Amendment No. 1, filed on July 24, 2008, and in Form 10-KSB/A (Amendment No. 3), as amended filed April 11, 2008. 
 
Status of Firecreek’s Overseas Project Activity
 
For current status of Firecreek please see information in this section The Business under above sub heading Sale/Assignment of 100% Stock of FPI Subsidiary. For historical information please also see The Business and other information contained in Form 10-KSB, Amendment No. 1, filed on July 24, 2008, and in Form 10-KSB/A (Amendment No. 3), as amended filed April 11, 2008. 

Entry and Eventual Stability In The Oil And Gas Business Will Be Dependent Largely On Our Ability To Acquire Significant Financing Amounts
 
The Company’s entry and eventual stability in the oil and gas business will be dependent largely on our ability to continuously acquire significant financing amounts, and other potential financing providers, to carry out and implement its plans (see “Management Discussion and Analysis”, “Business Risks”, and “Liquidity and Capital Resources” sections).
 
The Company and its Energy Producers, Inc. unit are presently in different stages of review and discussion, gathering data and information, and any available reports on other potential field acquisitions, work over programs, and new drilling projects, located in Texas, Louisiana, New Mexico, and other productive regions and areas in the U.S. However, no assurances can be given by the Company that will be successful in pursuing these other prospects.
 
Successful negotiations for acquisitions, confidentiality, timing and the Company’s financial capabilities will continue to play a significant role in any success of both current and future operations for the Company activities, including its subsidiary operations, and or any future planned subsidiary or special purpose entity (SPE) operations which in the future may exist.
 
From time to time Management will examine oil and gas operations in other geographical areas for potential acquisition and joint venture development.

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Signalization and Lighting Units (line segment of operations) Geared to the Transportation Industry (DOT and ITS)

Completion of Recent Merger Acquisition with M3 Lighting, Inc.

On May 21, 2009, EGPI Firecreek, Inc., a Nevada corporation (the Company or Registrant), Asian Ventures Corp., a Nevada corporation (the Subsidiary), M3 Lighting, Inc., a Nevada corporation (M3), and Strategic Partners Consulting, L.L.C., a Georgia limited liability company (Strategic Partners) executed and closed a Plan and Agreement of Triangular Merger (the Plan of Merger), whereby M3 merged into the Subsidiary, a wholly-owned subsidiary of the Company (the Merger).  

Purchase Costs of the Merger Acquisition with M3 Lighting, Inc. (M3)

Effective May 22, 2009, the Company effected via a triangular merger between M3, and Asian Ventures Corp. (a wholly-owned subsidiary of the Company), whereby M3 was merged into Asian Ventures and whereupon Asian Ventures changed its name to M3 Lighting, Inc. In the course of this acquisition by a wholly owned subsidiary of our Company, M3 stockholders exchanged all outstanding common shares for EGPI common shares, and all M3 common shares were cancelled.M3 had no operations and therefore the Company did not receive a step up in basis pursuant to SFAS 141R as M3 did not meet the definition of a business. The value of this transaction was based upon the cash and net assets acquired at cost basis. Further information can be found along with copy of the Plan of Merger attached as an exhibit to our Current Report on Form 8-K, filed with the Commission on May 27, 2009, as amended. Amendment No. 1 and No. 2 to the May 27, 2009 current Report on Form 8-K were filed on June 24 and August 4, 2009, respectively. 

The Business and Strategy of M3 Lighting, Inc. (M3)

M3 specializes in the areas of lighting industry sales, design, product development, and sourcing, contracting and capital markets.   M3 has a presence in the U.S. and Asia. With a sales representative in China and offices in the U.S., the M3 team through this footprint, as required, can effectively monitor price competition, expediting product shipments and grow the business through sales.  M3 can import both finished goods and sub-assemblies for domestic final assembly. Through its experience, knowledge and contacts in the lighting and DOT industry, M3 created a business plan to create a vertical rollup and stream of acquisitions targeted strategically for the Company that included manufactures, distributors and contractors. This change in strategy allowed the management and key decision makers at M3 more time to focus on potential acquisitions who they had done business with for numerous years. Focusing on the Obama Infrastructure Stimulus funding that is being released for roadwork throughout the country; M3 is pursing companies that are involved in the lighting, traffic signs/signals and ITS components of the industry.  M3 is also actively pursuing federal contracts to provide lighting and contracting through our partnership with CST Federal who are a disabled veteran’s agency that bids government contracts.  Future acquisitions in the DOT construction industry are expected to provide a labor force for the maintenance and remediation services the Company plans on providing.  Further information can be found along with copy of the Plan of Merger attached as an exhibit to our Current Report on Form 8-K, filed with the Commission on May 27, 2009, as amended. Amendment No. 1 and No. 2 to the May 27, 2009 current Report on Form 8-K were filed on June 24 and August 4, 2009, respectively. 
 
Acquisition of South Atlantic Traffic, Inc. (SATCO)

Effective as of November 4, 2009, the Company entered into a stock purchase agreement pursuant to which it acquired all of the issued and outstanding capital stock of South Atlantic Traffic Corporation, a Florida corporation (“SATCO”). In the course of this acquisition, SATCO stockholders exchanged all outstanding common shares for cash consideration, the Company’s common shares and sellers’ notes. SATCO has been in business since 2001 and has several offices throughout the Southeast United States. A copy of the Agreement was attached as an exhibit to our Current Report filed with the Commission on November 12, 2009.The acquisition has been accounted for as a purchase under accounting principles generally accepted in the United States (GAAP). Under the purchase method of accounting, in accordance with Statement of Financial Accounting Standards No. 141(R), Business Combinations, the assets and liabilities of SATCO are recorded as of the acquisition date at their respective fair values, and consolidated with the Company’s assets and liabilities.

Purchase Costs for the Acquisition of South Atlantic Traffic, Inc. (SATCO)

The acquisition was effected via a stock purchase agreement between Satco and EGPI. In the course of this acquisition, Satco stockholders exchanged all outstanding common shares for $600,000 cash consideration, 2,908,000 EGPI common shares with and a contingent equity make whole liability provision valued at $1,163,220, and $295,173 in notes to the sellers’ all together in the aggregate totaling $2,058,373. For the cash consideration paid to SATCO, SATCO and the Company by its further entry into a Continuing Guarantee and Waiver, entered into an accounts receivable based credit facility (Loan) (also known as Factor and Security Agreement) with Creative Capital Associates, Inc., Silver Spring Maryland (proposal and term sheet), in conjunction with Benefactor Funding Corp. a Colorado corporation (factor lender). This factoring line has been paid off,  retired and cancelled prior to the date of this Report. The Company is actively seeking replacement accounts receivable line of credit for SATCO which is important for the growth of this unit.

The Business of SATCO

SATCO carries a variety of products and inventory geared primarily towards the transportation industry, which generated over $15 million in revenues for 2008. SATCO offers a comprehensive selection of transportation products ranging from loop sealant, traffic signal equipment, traffic and light poles, data/video systems and ITS surveillance systems.. SATCO works closely with DOT agencies, local traffic engineers, contractors, and consultants to customize high quality traffic control systems.
 
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 SATCO’s representatives have 120 years of collective experience distributing traffic products throughout the Southeastern U.S. The company’s success in the industry is a direct result of SATCO’s dedication to providing quality products, at competitive prices, with service after the sale. In addition, SATCO’s ongoing relationships within the traffic industry allow the company to procure and provide specialty items on an as needed basis.
 
SATCO has recently entered into an exclusive Distributor Agreement with a manufacturer of industrial wireless data radio modem communication networks with optional embedded GPS radio location monitoring technologies. SATCO has also entered into a distribution agreement with a company that manufactures spun concrete poles, high quality decorative outdoor lighting fixtures, fabricated metal poles, arms, and site furnishings. The additional lines will augment and align with SATCOs existing products offering of traffic and intelligent transportation products currently represented.

SATCO maximizes it efficiency in delivering quality products to valued customers by implementing various distribution strategies and capitalizing on developed relationships within the transportation industry. One of the distribution strategies implemented is SATCO’s concentration on an exclusive region – Southeastern United States. Focusing on a specific region to operate within the industry allows SATCO to maintain a smaller sales staff, consequently reducing overhead while at the same time fostering a more personalized relationship with its customers. To further reinforce SATCO’s reputation as a trusted and experienced distributor of top-quality products in the transportation industry, the management team of SATCO has pursued and executed agreements with multiple manufacturers of top-line transportation, signalization and lighting products to operate as the exclusive distributor of those products in our respective region. SATCO was able to position itself in this manner due to key relationships that SATCO’s management team has developed throughout its extensive experience within the industry. In addition, SATCO follows up with personalized customer service on each order to ensure that the needs of its customers and vendors is met.

Due to the personal nature of these business relationships between SATCO’s management team and several other businesses in the transportation industry, SATCO believes it is able to competitively negotiate pricing with its vendors and keep costs down. At the same time, SATCO capitalizes on those same relationships with customers who value SATCO’s performance and unmatched customer service at a premium. This helps increase margins and profitability, and allows SATCO to operate at a very competitive level within the industry while constantly positioning itself for future growth.

See also additional information listed under the heading “Description of Properties” located further in this Report, and in our Current Report on Form 8-K filed November 12, 2009, and Form 8-K Amendment No. 1, filed January 22, 2010. See also “Description of Properties” and “Certain Relationships and Related Transactions” for further discussion.

Pending Acquisition of Southwest Signal, Inc.

As of January 15, 2010, the Company entered into an agreement with Kevin and Pamela Fitzgerald (the “Seller(s)”) to acquire all of the issued and outstanding capital stock of Southwest Signal, Inc., a Florida corporation (“SWSC”).

Purchase Costs for the Proposed Acquisition of Southwest Signal, Inc (SWSC)., Pending

The Company has closed into escrow One Million Dollar ($1,000,000.00) deposit to the sellers toward the acquisition of SWSC. The balance of the purchase price of Two Million Three Hundred Thousand Dollars ($2,300,000.00) is due on or before February 25, 2009, and is now on a day to day basis, extended by the SWSC Sellers. The Company has not yet closed the transaction and remains on a form of day to day verbal extension basis until closed or terminated by the SWSC. The Company and the Sellers have verbally agreed to continue in good faith but to notify one another if our intent is to withdraw or the Sellers wish to terminate. We are in the process of reviewing verbal and written financing arrangements, with no assurance as of yet we will be able to obtain satisfactory arrangements for financing our acquisition of SWSC, part or all, or if we do that it will be timely in a manner acceptable to the Sellers. Regarding the deposit made by the Company to the sellers toward the SWSC acquisition: The Company entered into an Agreement on January 15, 2010 for a direct financial obligation or an off balance sheet financing arrangement by the Company, along with the Seller and other parties. The amount of $1,000,000.00 (net of $925,000.00 less origination fee thereon) was paid to SWSC through the issuance and sale to St. George Investments, LLC, an Illinois limited liability company, of a secured promissory note and a convertible promissory note. The terms of the Financing are reflected in i) a Note Purchase Agreement ii) a Secured Promissory Note, iii) a Convertible Promissory Note, iv) a Letter of Credit, v) a Registration Rights Agreement, and vi) a Funding and Letter of Credit Agreement, and all other agreements, instruments and documents executed and delivered thereon by the Company. For further information please see information and exhibits furnished in our Current report on form 8-K, as amended, filed with the SEC on January 22, and February 8, 2010, respectively. 

The Business of Southwest Signal, Inc (SWSC)., Pending

Southwest Signal, Inc., was established in 2000 and is engaged in all facets of the United States Intelligent Transportation System / Department of Transportation Industry. The Company also provides services to leading private sector clients such as Wal-Mart, Lowes and Home Depot in addition to large private developers.  Southwest Signal, Inc. also participates in maintenance and general bids for city, county and state funded DOT projects. The corporate headquarters are located in Tampa Florida.

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Services include the installation and maintenance of traffic control devices, variable message signs, and associated hardware and software for the control of these devices.  The Company also installs and maintains highway lighting and private sector lighting and security cameras along with the associated hardware and software associated with these installations.. The Audited results for the years ended December 31, 2008 and 2007 reflected Revenues of $14.3MM and $14.2 MM respectively, with EBITDA of $1.2MM for the years ended December 31, 2008 and  December 31, 2007 $1.1MM.

Acquisition of Redquartz  LTD, (RQTZ)

On March 3, 2010, the Company executed a Stock Purchase Agreement with the stockholders of Redquartz LTD, a company formed and existing under the laws of the country of Ireland.

Purchase Costs for the Acquisition of Redquartz LTD (RQTZ)

The Company issued 100,000 shares of its restricted common stock in exchange for 100% of the issued and outstanding shares of common stock, par value $0.01 per share, of the Company. All assets and liabilities, other than the Shareholder Notes Payable, of the company were transferred to the Sellers. The Shareholder Notes Payable acquired in the acquisition issued by Redquartz LTD in the aggregate total 3,252,055 Euros.

The Business of Redquartz LTD (RQTZ)

Redquartz LTD has been in business for 45 years, is known internationally and is our entrance into the European markets with respect to Intelligent Traffic Systems (ITS) and the transportation industry as well as expanding our relationship recently established with Cordil, Inc. for the products sold by South Atlantic Traffic, Inc. (SATCO), a wholly owned subsidiary of the Company. For further information please see our Current Report on Form 8-K filed on March 11, 2010.

Entry and Eventual Stability In The Signalization and Lighting Units, Geared to the Transportation Industry (DOT and ITS) Will Be Dependent Largely On Our Ability To Acquire Significant Financing Amounts
 
The Company’s entry and eventual stability in the lighting, signalization, and transportation industry segment of operations geared to DOT and ITS business will be dependent largely on our ability to continuously acquire significant financing amounts, and other potential financing providers, to carry out and implement its plans (see “Management Discussion and Analysis”, “Business Risks”, and “Liquidity and Capital Resources” sections).
 
The Company and its M3, SATCO, and Redquartz units, and other unit(s) pending, are presently in different stages of review and discussion, gathering data and information, and any available reports on other potential acquisitions, and targeted roll up candidates, in the U.S. and overseas in Europe. However, no assurances can be given by the Company that will be successful in pursuing and closing these other candidates or activities.
 
Successful negotiations for acquisitions, confidentiality, timing and the Company’s financial capabilities will continue to play a significant role in any success of both its current and future operations for the Company activities, including its subsidiary operations, and or any future planned subsidiary or special purpose entity (SPE) operations which in the future may exist.


RISKS RELATED TO OUR BUSINESS
 
We incurred historical losses and have a working capital deficit. As a result, we may not be able to generate profits, support our operations, or establish a return on invested capital.
 
We had a net loss on continuing operations in the fiscal year ended December 31, 2009 of $53,408,479 and a net gain on continuing operation in fiscal year ended December 31, 2008 of $1,145,717. As of December 31, 2009, we had a working capital deficit of $3,041,776. In addition, we expect to increase our infrastructure and operating expenses to fund our anticipated growth. As a result, we may not be able to generate profits in 2010 or thereafter and may not be able to support our operations or otherwise establish a return on invested capital. We cannot assure you that any of our business strategies will be successful or that significant revenues or profitability will ever be achieved or, if they are achieved, that they can be consistently sustained or increased on a quarterly or annual basis.
 
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We Expect Our Operating Losses To Continue
 
The Company expects to incur increased operating expenses during fiscal year 2010. The amount of net losses and the time required for the Company to reach and sustain profitability are uncertain. The likelihood of the Company’s success must be considered in light of the problems, expenses, difficulties, and delays frequently encountered in connection with a new business, including, but not limited to, uncertainty as to development and acquisitions and the time required for the Company’s planned production to become available in the marketplace. There can be no assurance that the Company will ever generate increased product revenue or achieve profitability at all or on any substantial basis.
 
Our Level Of Indebtedness May Affect Our Business.
 
Our level of indebtedness could have important consequences for our operations, including:
 
We may need to use a large portion of our cash flow to repay principal and pay interest on our current and anticipated debt, which will reduce the amount of funds available to finance our operations and other business activities;
 
Our debt level may make us vulnerable to economic downturns and adverse developments in our businesses and markets; and
 
Our debt level may limit our ability to pursue other business opportunities, borrow money for operations or capital expenditures in the future or implement our business strategy.

We expect to obtain the funds to pay our expenses and to pay principal and interest on our debt by utilizing cash flow from operations. Our ability to meet these payment obligations will depend on our future financial performance, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions in the markets in which we operate. We cannot be certain that our future cash flow from operations will be sufficient to allow us to pay principal and interest on our debt and meet our other obligations. If cash flow from operations is insufficient, we may be required to refinance all or part of our existing debt, sell assets, and borrow more money or issue additional equity.
 
We have a limited amount of cash and are likely to require additional capital to continue our operations.
 
We have a limited amount of available cash and will likely require additional capital to successfully implement our business plan; There can be no assurance that we will be able to obtain additional funding when needed, or that such funding, if available, will be obtainable on terms acceptable to us. In the event that our operations do not generate sufficient cash flow, or we cannot obtain additional funds if and when needed, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of all or a substantial portion of their investment.

Production Risks

All of the Company’s current and proposed oil and gas activities would be subject to the risks normally incident to the exploration for, and development and production of, natural gas and crude oil. These include, but are not limited to, blowouts, cratering and fires, each of which could result in damage to life and property. In accordance with customary industry practices, the Company plans to maintain future insurance for its proposed operations against some, but not all, of the risks. Losses and liabilities arising from such events could reduce revenues and increase costs to the Company to the extent not covered by insurance.
 
Risks And Uncertainties Can Impact Our Growth
 
There are several risks and uncertainties, including those relating to the Company’s ability to raise money and grow its business and potential difficulties in integrating new acquisitions for the oil and gas sector of operations, especially as they pertain to foreign markets and market conditions. These risks and uncertainties can materially affect the results predicted. Other risks include the Company’s limited operating history, the limited financial resources, domestic or global economic conditions, activities of competitors and the presence of new or additional competition, and changes in federal or state laws and conditions of equity markets.
 
The Company’s future operating results over both the short and long term will be subject to annual and quarterly fluctuations due to several factors, some of which are outside the control of the Company. These factors include but are not limited to fluctuating market demand for our services, and general economic conditions.
 
Governmental Regulation
 
Effect of Probable Governmental Regulation on the Business Domestically and in Foreign Countries
 
As we expand our efforts to develop our business, we will have to remain attentive to relevant federal and state regulations. We intend to comply fully with all laws and regulations, and the constraints of federal and state restrictions could impact the success of our efforts.
 
Our oil and gas business and services may become established in multiple states and foreign countries. These jurisdictions may claim that we are required to qualify to do business as a foreign corporation in each such state and foreign country. New legislation or the application of laws and regulations from jurisdictions in this area could have a detrimental effect upon our business. We cannot predict the impact, if any, that future regulatory changes or developments may have on our business, financial condition, or results of operation.
 
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The Company and its current and future operations are subject to federal, state and local laws, and regulations and ordinances relating to the production and sale of oil and gas. Some of the laws that the Company is subject to include the Clean Air Act, the Clean Water Act, and the Endangered Species Act. Other laws and regulations include laws governing allowable rates of production, well spacing, air emissions, water discharges, marketing, pricing, taxes, and use restrictions and other laws relating to the petroleum industry. For example, coal bed methane wells are being highly regulated for disposing of produced fresh water on the surface. The EPA is requiring that the fresh water meet more stringent standards than before, and can require the water be injected underground making drilling these wells potentially uneconomical. As another example, Governmental regulation may delay drilling in areas that have endangered species. Therefore, if the Company were to undertake a drilling program in such an area by a proposed development project in the future, no assurance could be given that such delays would not become more expensive. Regulations may have a negative financial impact on us depending on the compliance costs.
 
Any failure to obtain, or delays in obtaining regulatory approvals by the Company or its operators, could delay or adversely affect the Company’s ability to generate revenues. These laws and regulations could impose substantial liabilities for the Company if it fails to comply. Further, there can be no assurance that the Company through its contract operators will be able to obtain necessary regulatory approvals for any of its future activities including those which may be proposed for the further development of oil and gas. Although the Company does not anticipate problems satisfying any of the regulations involved, the Company cannot foresee the possibility of new regulations, which could adversely affect the business of the Company.
 
Environmental regulations and taxes imposed by state governments in a jurisdiction wherein oil and gas properties are located impose a burden on the cost of production. Of the gross production revenues, severance and ad valorem taxes in Wyoming for oil and gas amount to approximately 12%.
 
Environmental requirements do have a substantial impact upon the energy industry. Generally, these requirements do not appear to affect the proposed Company operations any differently, or to any greater or lesser extent, than other companies in the domestic industry as a whole. The Company will establish policies and procedures for compliance with environmental laws and regulations affecting its proposed operations. The Company believes that compliance with environmental laws and regulations will not have a material adverse effect on the Company’s operations or financial condition. There can be no assurances, however, that changes in or additions to laws or regulations regarding the protection of the environment will not have such an impact in the future.

 At this time no regulatory or additional regulatory approvals are necessary and, to the best knowledge of the officers, we have complied with all laws, rules and regulations.
 
Cost And Effects Of Compliance With Environmental Laws
 
Our business will be subject to regulation under the state and federal laws regarding environmental protection and hazardous substances control with respect to its current and future oil and gas operations. We are unaware of any bills currently pending in Congress that could change the application of such laws so that they would affect us.
 
Risk Factors Affecting Our Future Results Of Operations For The Company
 
Due to the Company’s limited operating history, it is difficult to predict future revenues accurately. This may result in one or more future quarters where the Company’s financial results may fall below the expectation of management and investors. However firmly management may believe in its prospects, the Company could fail. Operating results may vary, depending upon a number of factors, many of which are outside the Company’s control. Material factors expected to impact the Company’s operating results include, legal costs associated with registration of options and other filing requirements, expansion activities, increased interest and expenses for borrowings and possible hiring of additional full time employees. Every investor should evaluate the risks, uncertainties, expenses and difficulties frequently encountered by companies in the early stage of development. The past performance of the Company cannot be used to predict the future performance.
 
Lack Of Experience
 
Certain of our management may only devote a small percentage of their time to Company business. This lack of specific training, and experience for integration of the oil and gas sector coupled with working in the regulatory environment and less than full time effort in certain cases will probably cause management to miss opportunities that more experienced managers would recognize and take advantage of. Management’s decisions and choices may not be well thought out and operations and earnings and ultimate financial success may suffer irreparable harm. Additionally, these individuals have not previously worked together. If senior executives and managers are unable to work effectively as a team, business operations could be considerably disrupted.
 
Oil And Gas Prices Fluctuate Widely, And Low Prices For An Extended Period Of Time Are Likely To Have A Material Adverse Impact On Our Business
 
Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing prices for natural gas and, to a lesser extent, oil. Declines in oil and natural gas prices may materially adversely affect our financial condition, liquidity, ability to obtain financing and operating results. Lower oil and gas prices also may reduce the amount of oil and gas that we can produce economically. Historically, oil and gas prices and markets have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile.

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Prices for oil and natural gas are subject to wide fluctuations in response to relatively minor changes in the supply of and demand for oil and gas, market uncertainty and a variety of additional factors that are beyond our control. These factors include:
 
 
·
The domestic and foreign supply of oil and natural gas.
 
 
·
The level of consumer product demand.
 
 
·
Weather conditions.
 
 
·
Political conditions in oil producing regions, including the Middle East.
 
 
·
The ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls.
 
 
·
The price of foreign imports.
 
 
·
Actions of governmental authorities.
 
 
·
Domestic and foreign governmental regulations.
 
 
·
The price, availability and acceptance of alternative fuels.
 
 
·
Overall economic conditions.
 
These factors make it impossible to predict with any certainty the future prices of oil and gas.  
 
Drilling natural gas and oil wells is a high-risk activity.
 
Our growth is materially dependent upon the success of our drilling program. Drilling for natural gas and oil involves numerous risks, including the risk that no commercially productive natural gas or oil reservoirs will be encountered. The cost of drilling, completing and operating wells is substantial and uncertain, and drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors beyond our control, including:

·
unexpected drilling conditions, pressure or irregularities in formations;
 
·
equipment failures or accidents;
 
·
adverse weather conditions;
 
·
compliance with governmental requirements; and

·
shortages or delays in the availability of drilling rigs or crews and the delivery of equipment.
 
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Our future drilling activities may not be successful and, if unsuccessful, such failure will have an adverse affect on our future results of operations and financial condition. Our overall drilling success rate or our drilling success rate for activity within a particular geographic area may decline. We may ultimately not be able to lease or drill identified or budgeted prospects within our expected time frame, or at all. We may not be able to lease or drill a particular prospect because, in some cases, we identify a prospect or drilling location before seeking an option or lease rights in the prospect or location. Similarly, our drilling schedule may vary from our capital budget. The final determination with respect to the drilling of any scheduled or budgeted wells will be dependent on a number of factors, including:
 
·
the results of exploration efforts and the acquisition, review and analysis of the seismic data
 
·
the availability of sufficient capital resources to us and the other participants for the drilling of the prospects
 
·
the approval of the prospects by other participants after additional data has been compiled
 
·
economic and industry conditions at the time of drilling, including prevailing and anticipated prices for natural gas and oil and the availability of drilling rigs and crews
 
·
our financial resources and results; and
 
·
the availability of leases and permits on reasonable terms for the prospects.
 
These projects may not be successfully developed and the wells, if drilled, may not encounter reservoirs of commercially productive natural gas or oil.

Reserve estimates depend on many assumptions that may prove to be inaccurate. Any material inaccuracies in our reserve estimates or underlying assumptions could cause the quantities and net present value of our reserves to be overstated.

Reserve engineering is a subjective process of estimating underground accumulations of natural gas and crude oil that cannot be measured in an exact manner. The process of estimating quantities of proved reserves is complex and inherently uncertain, and the reserve data included in this document are only estimates. The process relies on interpretations of available geologic, geophysic, engineering and production data. As a result, estimates of different engineers may vary. In addition, the extent, quality and reliability of this technical data can vary. The differences in the reserve estimation process are substantially due to the geological conditions in which the wells are drilled. The process also requires certain economic assumptions, some of which are mandated by the Securities and Exchange Commission, such as natural gas and oil prices. Additional assumptions include drilling and operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserve estimate is a function of:

 
·
the quality and quantity of available data;
 
 
·
the interpretation of that data;

 
·
the accuracy of various mandated economic assumptions; and

 
·
the judgment of the persons preparing the estimate.

Results of drilling, testing and production subsequent to the date of an estimate may justify revising the original estimate. Accordingly, initial reserve estimates often vary from the quantities of natural gas and crude oil that are ultimately recovered, and such variances may be material. Any significant variance could reduce the estimated quantities and present value of our reserves.
 
Our future performance depends on our ability to find or acquire additional natural gas and oil reserves that are economically recoverable.
 
In general, the production rate of natural gas and oil properties declines as reserves are depleted, with the rate of decline depending on reservoir characteristics. Unless we successfully replace the reserves that we produce, our reserves will decline, eventually resulting in a decrease in natural gas and oil production and lower revenues and cash flow from operations. Our future natural gas and oil production is, therefore, highly dependent on our level of success in finding or acquiring additional reserves. We may not be able to replace reserves through our exploration, development and exploitation activities or by acquiring properties at acceptable costs. Low natural gas and oil prices may further limit the kinds of reserves that we can develop economically. Lower prices also decrease our cash flow and may cause us to decrease capital expenditures.
 
Exploration, development and exploitation activities involve numerous risks that may result in dry holes, the failure to produce natural gas and oil in commercial quantities and the inability to produce discovered reserves fully. We are continually identifying and evaluating opportunities to acquire natural gas and oil properties. We may not be able to consummate any acquisition successfully, to acquire producing natural gas and oil properties that contain economically recoverable reserves, or to integrate the properties into our operations profitably.
 
17

 
Seasonality
 
Demand for natural gas has historically been seasonal, with peak demand and typically higher prices occurring during the colder winter months.
 
Regulation of Oil and Natural Gas Exploration and Production
 
Exploration and production operations are subject to various types of regulation at the federal, state and local levels. This regulation includes requiring permits to drill wells, maintaining bonding requirements to drill or operate wells, and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties on which wells are drilled, and the plugging and abandoning of wells. Our operations are also subject to various conservation laws and regulations. These include the regulation of the size of drilling and spacing units or proration units, the density of wells that may be drilled in a given field and the unitization or pooling of oil and natural gas properties. Some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibiting the venting or flaring of natural gas and impose certain requirements regarding the ratability of production. The effect of these regulations is to limit the amounts of oil and natural gas we can produce from our wells, and to limit the number of wells or the locations where we can drill. Because these statutes, rules and regulations undergo constant review and often are amended, expanded and reinterpreted, we are unable to predict the future cost or impact of regulatory compliance. The regulatory burden on the oil and gas industry increases the cost of doing business and, consequently, affects profitability. We do not believe, however, that we are affected differently by these regulations than others in the industry.
 
We have limited control over the activities on properties we do not operate.
 
Other companies operate some of the properties in which we have an interest. We have limited ability to influence or control the operation or future development of these non-operated properties or the amount of capital expenditures that we are required to fund with respect to them. The failure of an operator of our wells to perform operations adequately, an operator’s breach of the applicable agreements or an operator’s failure to act in ways that are in our best interest could reduce our production and revenues. Our dependence on the operator and other working interest owners for these projects and our limited ability to influence or control the operation and future development of these properties could materially adversely affect the realization of our targeted returns on capital in drilling or acquisition activities and lead to unexpected future costs.
 
Requirement For Additional Capital
 
The Company believes that additional debt or equity financing will be necessary to develop its planned activities through the next twelve to twenty four months. However, no assurance can be given that all or a significant portion of any debt or equity financing will be consummated, or that any changes in the Company’s operations and expansion plans would not consume available resources more rapidly than anticipated. The Company will need substantial funding to support the long-term expansion, development, and marketing of its business and subsidiary operations.
 
To the extent that the Company’s capital resources, including the proceeds of any offering, are insufficient to meet current or planned requirements, the Company will continue to seek additional funds through equity or debt financing, collaborative, or other arrangements with corporate partners, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has no effective or approved current arrangement with respect to such additional financing that is either secured or finalized at this time. Even though the Company has existing prospects for general or project financing, the outcome may change, be delayed, or may not be conclusive, therefore financing is not assured or guaranteed. Financing to be potentially obtained from prospects is not assured or guaranteed until actually consummated and financing actually provided.
 
Need For Expansion
 
The Company expects expansion will be required to address potential growth. This need for expansion will continue to place a significant strain on the management and financial resources of the Company. Failure to manage growth could disrupt the operations and ultimately prevent the Company from generating expected revenues. The Company’s business strategy includes entering into business partnerships and may include acquiring future businesses, such as, existing production or products, technology and acquisitions related to oil and gas or other resources, oil and gas field operations, and engineering. Other areas of future operations may include real estate, land and commercial development, technology and facilities, and fuel cell technology. The Company may be unable to complete suitable business partnerships and acquisitions on commercially reasonable terms, if at all. Competition could impair the Company’s ability to pursue these aspects successfully of this business strategy.
 
Business partnerships or acquisitions could disrupt ongoing business, distract management and employees and increase expenses. If the Company makes an acquisition, it could face difficulties assimilating that company’s personnel and operations. Key personnel of the acquired company may decide not to work for the Company. Acquisition of additional services or technologies also involves risk of incompatibility and lack of integration into existing operations. If the Company finances the acquisitions by issuing equity securities, this could dilute existing stockholders positions. Additionally, funding instruments may have rights, preferences or privileges senior to, or more favorably than, those of the Company’s stockholders.
 
18

 
Limited Financial Data
 
As a result of its limited operating history, the Company has limited historical financial data upon which to forecast revenues and results of operation. The actual effect of these factors on the price of stock will be difficult to assess. Results of operation may fall well below the expectations of securities analysts and investors, and the trading price of the Company’s common stock may drop.

Estimating Inaccuracies
 
There are numerous uncertainties inherent in estimating quantities of proven reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the Company. Reserve engineering is a subjective process of estimating underground accumulations of crude oil, condensate and natural gas liquids that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the amount and quality of data and of engineering and geological interpretation. Estimates by different engineers may vary. Results of drilling, testing and production after the date of an estimate may justify revision of such estimates. Reserve estimates are often different from the quantities ultimately recovered including the continual possibility of failure to find oil or gas and the drilling of a dry hole, and concentrations of oil in unexpected differing amounts on certain holes or targets drilled.
 
Declining Reserves

Volumes of proposed oil and gas reserves acquired by the Company will decline as reserves are depleted. Reserve volumes generated from future activities of the Company are highly dependent upon the level of success in acquiring or finding additional reserves.
 
Key Officers Management Services Were Provided By Outside Consulting Firms, And Individuals Contributing Additional Key Officers Management Services, During Fiscal Year Ended December 31, 2009and continuing on into 2010.
 
Key management services were provided by outside consulting firms owned by key Officers and/or current Directors, , or through other outside arrangements Such Officers and Directors include Dennis R. Alexander, Chairman, CEO and CFO, Melvena Alexander, Co-Treasurer, Secretary and Comptroller, David H. Ray, Executive Vice President, Director, and Treasurer, Brandon D. Ray, Executive Vice President of Finance and Director. Other key services were provided by four or more, Executive Officers, Directors, consultants and advisors, and various subcontractors, which managed the business of the Company.  These include one or more of the following named Officers or Directors, namely, Larry W. Trapp, Executive Vice President, and Director, Mike Trapp, Director, and as of May 21, 2009, Michael Kocan, President and Director, Robert Miller, Executive Vice President and Director. Accordingly, the loss of the services of any key individual or other person or individual filling a key role from time to time could have an effect on the development of the Company’s business. The Company may hire future employees and additional employees not provided through outside consulting firms, and depend on their services, the loss of which may affect the development of the Company’s business and could adversely affect the conduct of our business. The Company has not applied for key-man life insurance and the Company has not obtained insurance covering the possibility that any of its key officers and management personnel might become disabled or otherwise unable to render services to the Company. The success of the Company is also dependent upon its ability to attract, contract with and retain highly qualified technical, managerial and marketing personnel. The Company faces competition for such personnel from other companies, many of which have significantly greater resources than the Company. There can be no assurance that the Company will be able to recruit and retain such personnel.
 
Officers And Directors Beneficially Own And Represent Approximately 29.74% Of the Company’s Issued and Outstanding Common Stock And Have Additional Votes and Voting Power
 
The executive officers and directors of the Company currently beneficially own and represent approximately 29.74% of our outstanding common stock, along with additional votes and voting power through issuance of 5,000 shares of the EGPI Series C Preferred Stock.  As a result these stockholders may, as a practical matter, be able to influence all matters requiring stockholder approval including the election of directors, merger or consolidation and the sale of all or substantially all of our assets.  This concentration of ownership may delay, deter or prevent acts that would result in a change of control, which in turn could reduce the market price of our common stock.
 
Penny Stock As A Risk
 
Definition And Rule Reference: The Securities and Exchange Commission has adopted Rule 3a51-1 of General Rules and Regulations, Promulgated under the Securities and Exchange Act of 1934, which established the definition of a “penny stock”, for the purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share, or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that broker or dealer approve a person’s account for transactions in penny stocks; and, (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
 
Future sales of our Shares of Common Stocks in the public market could lower our share price.
 
We may sell additional Shares of Common Stock in subsequent offerings. We may also issue additional Shares of Common Stock to finance future acquisitions, including acquisitions larger than those we have done in the past. We cannot predict the size of future issuances of our Shares of Common Stock or the effect, if any, that future issuances and sales of our Shares of Common Stock will have on the market price of our Shares of Common Stock. Sales of substantial amounts of Shares of Common Stock, or the perception that such sales could occur, may adversely affect prevailing market prices for our Shares of Common Stock.
 
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Obligations And Contingencies
 
The Company is liable for future restoration and abandonment costs associated with oil and gas properties owned or newly acquired by the Company. These costs include future site restoration and plugging costs of wells. The cost of future abandonment of producing wells has not been determined the date of this report. Management believes that these costs will not have a material adverse effect upon its financial position or results of operations.

Other

The Company’s corporate parent operations during fiscal year ended 2009 did not retain any employees. Individual consulting firms owned by four key officers/directors along with four or more additional key officers/directors contributing time and effort managed the day-to-day operations of our Company. We have accounting consultants, legal consultants, oil and gas technical team consultants and engineers available for project purposes on a part time basis; one advisor assists us with project evaluations and business development, information and research, technical writing and presentation. The Company will consider full time employees upon sufficient capitalization and cash flow which may include accounting systems and data processing coordinator, oil and gas staff analyst and coordinator, financing officer; assistant to executive officers, and other. Future performance will be substantially dependent on the continued services of management and the ability to retain and motivate them. The loss of the services of any officers or senior managers could affect activities of our business and its operations until additional personnel can be retained and trained to perform some of the management tasks. At the present time the Company does not have long-term employment agreements with any key personnel and does not maintain any life insurance policies.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.
Glossary of Oil and Gas Terms.
 
Barrel: Equal to 42 U.S. gallons.
 
Basin: A depressed sediment-filled area, roughly circular or elliptical in shape, sometimes very elongated. Regarded as a good area to explore for oil and gas.
 
British thermal unit, (BTU): A measure of the heating value of a fuel.
 
Completion: The installation of permanent equipment for the production of oil or gas.
 
Field: A geographic region situated over one or more subsurface oil and gas reservoirs encompassing at least the outermost boundaries of all oil and gas accumulations known to be within those reservoirs vertically projected to the land surface.
 
Fracturing: The application of hydraulic pressure to the reservoir formation to create fractures through which oil or gas may move to the wellbore.
 
Improved Oil Recovery (“IOR”): Effort to improve or enhance oil recovery that does not include secondary or tertiary basic recovery methods. In most oil fields, only a fraction of the oil can be produced by natural reservoir pressure and by conventional methods such as pumping. The remaining, or residual, oil can be recovered only by using recovery methods that restore pressure and fluid flow in underground formations through the introduction of water, gas, chemicals, or heat into the reservoir.
 
License: Formal or legal permission to explore for oil and gas in a specified area.
 
Log: Io conduct a survey inside a borehole to gather information about the subsurface formations; the results of such a survey. Logs typically consist of several curves on a long grid that describe properties within the wellbore or surrounding formations that can be interpreted to provide information about the location of oil, gas, and water. Also called well logs, borehole logs, wireline logs.
 
Mcf: Is a thousand cubic feet of natural gas.
 
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Mineral interest: The ownership of rights to gas, oil, or other minerals as they naturally occur in place, at or below the surface of a tract of land. Ownership of the minerals carries with it the right to make such reasonable use of the surface as may be necessary to explore for and produce the minerals. Only the mineral owner (or fee owner) may execute an oil or gas lease conveying his interest in a tract of land.   
 
Oil: Crude oil or condensate.
 
Operator: An individual, company, trust, or foundation responsible for the exploration, development, and production of an oil or gas well or lease.
 
Productive: Able to produce oil and/or gas.
  
Proved reserves: Estimated quantities of crude oil, condensate, natural gas, and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in the future from known reservoirs under existing conditions using established operating procedures and under current governmental regulations.
 
Proved undeveloped reserves: Economically recoverable reserves estimated to exist in proved reservoirs, which will be recovered from wells, drilled in the future.
 
Reserves: The estimated value of oil, gas and/or condensate, which is economically recoverable.
 
Tons: A ton of oil is equal to 7.29 barrels of oil.
 
Working interest: The percentage of the operating, drilling, completing and reworking costs that the Company is required to pay. The net revenue interest is the percentage of the revenues that the Company receives from the sale of oil that is produced from the wells.
 
Working interest on a “Third for Quarter Basis”: The non-operator usually will pay all costs attributable to restoring the well or wells to production and will own 75% of the working interest in the well or wells; The operator receives the remaining 25% working interest as a free carried working interest.
 
Recompletion: The completion for production of an existing well bore in another formation from that in which the well has been previously completed.
 
Severance: The owner of all rights to a tract of land (vertically or horizontally). In horizontal severance, for example, if he chooses to sell all or part of the mineral rights, two distinct estates are created: the surface rights to the tract of land and the mineral rights to the same tract. The two estates may change hands independently of each other. Severed mineral rights may be restricted as to mineral type, or limited by depth, in which case the landowner retains the rights to minerals other than those severed, and to depth intervals other than those severed.
 
Workover: Operations on a producing well to restore or increase production. A workover may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons.
 
The Company may participate in the drilling of a well or wells if it is able to successfully acquire attractive oil and gas leases with substantially proven undeveloped reserves, a preferred majority or suitable working interest being available, and can obtain or provide financing or market an interest on terms acceptable to the Company.

Oil and Gas Properties, Leases, and Interests

Acquisition of 50% Oil and Gas Working Interests, Callahan, Stephens, and Shakelford Counties, West Central Texas

On December 22, 2009, the Company through its wholly owned subsidiary Energy Producers, Inc. entered into an Agreement for the Assignment of Interests in Oil and Gas Leases (“Assignment”), with Whitt Oil & Gas, Inc., (“Whitt”) a Texas corporation acquiring 50% working interests and corresponding 32% net revenue interests in oil and gas leases, reserves, and equipment. The leases, equipment, and a turnkey work program relate to three wells located on the leases representing the aggregate total of 240 Acres in Shackelford, Callahan, and Stephens counties, West Central Texas. The program also includes the right but not the obligation to drill four more wells in the future. The acquired leases and the property to which they relate are identified below:

1.            That certain Oil, Gas and Mineral Lease dated September 17, 2007, by and between Eugene Bell, Lessor, and E & D Bell, LLC, Lessee and that certain Oil, Gas and Mineral Lease dated September 17, 2007, by and between Harold Elledge, Lessor, and E & D Bell, LLC, Lessee each covering the following two (2) parcels of land in Callahan County, Texas:

Tract I: Being 40 acres as near as is practicable in the form of a square around the LCS Production of McWhorter #1 well, Callahan County, Texas.

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Tract II: Being 40 acres as near as is practicable in the form of a square around the Ratex Energy, Inc. No. 3 Young well, Callahan County, Texas.

2.            Those two certain Oil and Gas Leases dated December 18, 2009, by and between Juanita B. Boyett Trust, Jearl Silas Boyett, Executor, Lessor, and Whitt Oil &. Gas, Inc., Lessee,  to the extent, and to the extent only, that said lease covers all of the Southeast One-fourth (SE/4) of Section 55, B.A.L., A-2746, Stephens and Shackelford Counties, Texas.

The following wells are located on the leases identified, above:

1.            McWhorter No. Well, Texas Lease I.D. 27348, Callahan County, Texas.

2.            Young No. 3 Well, Texas Lease I.D. 26519, Callahan County, Texas.

3.            Boyett Well, Texas, API #42-417-37567, Shackelford County, Texas.

A mineral interest is the ownership of rights to gas, oil, or other minerals as they naturally occur in place, at or below the surface of a tract of land. Ownership of the minerals carries with it the right to make such reasonable use of the surface as may be necessary to explore for and produce the minerals. Only the mineral owner (or fee owner) may execute an oil or gas lease conveying his interest in a tract of land.  Severance:  The owner of all rights to a tract of land (vertically or horizontally).  In horizontal severance, for example, if he chooses to sell all or part of the mineral rights, two distinct estates are created:  the surface rights to the tract of land and the mineral rights to the same tract.  The two estates may change hands independently of each other. Severed minerals rights may be restricted as to mineral type, or limited by depth, (in which case the landowner retains the rights to minerals other than those severed, and to depth intervals other than those severed.)
 
The Company attempts to maintain all of its operating wells in good working condition. Whitt Oil and Gas, Inc. (Whitt) a Texas corporation, and licensed operator, is familiar with the oil and gas business in the area. Whitt will operate the Company’s interests in the properties overseeing production and maintenance activities for its oil wells, equipment and other development activities for the leases.

The Material terms of the Operating Agreement with the Company include:
 
Whitt is an independent contractor and operates the subject properties on a contract basis pursuant to the AAPL form operating agreement according to our share of Working Interests (50%) with a $350 per producing well per month overhead fee and $250.00 pumper fee per well (presently for 3 wells) respectively plus electricity and other intangible repair items.  All other charges whether by Whitt, an affiliate of Whitt or third parties will be the responsibility of the working interest owners of the properties. Whitt will furnish the monthly Lease Operation Expense and various activity reports to the Company’s wholly owned subsidiary Energy Producers, Inc. Upon successful commencement of production, run checks (payments) expected from future sales of oil and gas are to be sent to the operator from the purchasers for oil and gas produced. Conoco is initially designated as the gatherer for the oil.  Whitt is to administrate monthly activities, and after payment of management, consulting, and lease-operating expenses (LOE’s), it collects and compiles the Joint Interest Billing (JIB) Statements and prepares certain reports and financial statements related to production income and expenses for monthly delivery to Company’s accounting for compilation along with its share of the payment to be received according to its interests.

Reserves-Whitt Oil and Gas, Inc. Three Well Program; Oil and Gas Properties, Leases, and Interests
Located in Callahan, Stephens, and Shakelford Counties, West Central Texas

The following table sets forth the estimated total proved developed producing, oil reserves, net to the Company’s interest held by its wholly owned subsidiary Energy Producers, Inc. (EPI). The reserve information is based on excerpts of the independent report prepared by Harper & Associates, Inc., and by its President, Mr. Michael Harper, a registered Professional Engineer in Louisiana #13687 and in Texas # 34481. Mr. Harper is a certified earth scientist, SIPES #2881, and has other memberships in professional associations including Society of Petroleum Engineers (#070557).  Petroleum reserves for certain properties of Energy Producers, Inc. were determined and economic forecasts prepared for the working interests of EPI to estimate proved developed producing reserves and future net revenue from the Whitt three well programs to the subject interests. This evaluation was authorized by EGPI Firecreek, Inc. in behalf of EPI. An independent engineering analysis of data was conducted and reserve estimates and economics determined under constant price and operating cost, re new SEC guidelines. The oil and gas revenue is based on the average of the January through December 2009 prices for each lease. Future prices are held constant with the weighted average for oil ($/Bbl) $58.22 and for gas ($/MCF) $5.39. BTU content, fuel and shrinkage for gas production and the quality of oil production are considered. Well operating expenses were based on the knowledge and experience of the Harper and Associates, Inc. staff in oil operations of the subject counties  for expenses and recurring monthly values including G&A. Operating expenses and investments are not escalated. Production and ad valorem taxes are deducted from revenue.

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The following table below summarizes net proved reserves and cumulative future cash flows (before U.S. federal income tax) undiscounted and discounted at 10% per year:
 
RESERVE SUMMARY
 
PROVED
 
PDP
 
Completions
    3  
Net Oil, Bbls.
    25,364  
Net Gas, MCF
    110,877  
         
Revenue * ($)
       
Oil
    1,379,775  
Gas
    541,644  
   Total
    1,921,419  
         
Operating Expense ($)
    623,364  
         
Investments ($)
    137,500  
         
Future Cum Net Income ($)
    1,160,577  
         
Future Cum Net Income at DF ($)
    748,513  
 

*Revenue is net of severance and ad valorem taxes.

It should be emphasized that with the current economic uncertainties, fluctuation in market conditions could significantly change the economics of the property included in this report. EPI provided operating cost data beginning with their purchase of the property in December 2009. Beginning in January 2010, costs were held constant for the remaining life of the property. State production taxes and average county ad valorem taxes have been deducted at the published rates for Texas as appropriate. Based on information supplied by EPI capital costs were not included in the projection of reserves and economics in this evaluation.
 
There are numerous uncertainties inherent in estimating quantities of proved reserves. The reserves and reservoir predictions are estimates only. There are numerous uncertainties in the estimation of interpretation parameters, including factors such as product prices, product demand, subsurface heterogeneities, and other variables, that are beyond the control of the authors of the report as well as the owners of the subject properties. The estimates in the appraisal are based on various assumptions relating to rates of future production, timing and amount of development expenditures, oil and gas prices, and the results of planned development work. Actual future production rates and volumes, revenues, taxes, operating expenses, development expenditures, and quantities of recoverable oil and gas reserves may vary substantially from those assumed in the estimates. Any significant change in these assumptions, including changes that result from variances between projected and actual results, could materially and adversely affect future reserve estimates. In addition, such reserves may be subject to downward or upward revision based upon production history, results of future development, prevailing oil prices, and other factors.
 
Reservoir engineering and geological interpretation are a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate, performance prediction, or geological analysis is a function of the quality of the available data and of engineering and geological interpretation and judgment. In addition, the impacts of various drilling, completion, and production practices on productivity can be estimated but not fully defined or quantified. As a result, estimates and analyses by different engineers and geoscientists may vary.

Listing for the Equipment items related to the wells on the leases are as follows:

*Recoverable Equipment Inventory

Young Lease (Callahan County)

2 x 210 BBL oil tanks w/connections
1 x 4 x 20’ oil and gas separator
1- American 80 pump jack w/20 hp electric motor
4,000’ D&T-7000# 2 3/8 tubing
4,000’ ¾ rods
4,000’ 4 ½” casing
1-200 bbl open top F.g. water tank
2500’ 2” poly flow line
Well head, I.H. pump, associated equipment

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McWhorter Lease (Callahan County)

1-210 bbl oil tank
1-Oilwell 57 pump jack w/20 hp electric motor
4000’ D&T-7000# 2 3/8” tubing
4000’ 3/4” rods
4000’ 4 ½” casing
Well head, D.H. pump, associated equipment

Boyett Lease (Shackelford County)

1-Oilwell 57 pump jack w/20 hp electric motor
3500’ D&T 7000# 2 3/8” tubing
3500’ ¾” rods
3500’ 4 ½” casing
1-210 bbl oil & water tank
Well head, D. H. pump and associated equipment
 

*Gober Equipment Company of Elbert Texas visually inspected the equipment on the Boyett, Young and McWhorter leases owned by Whitt Oil and gas, Inc. Based on Mr. Gobers determination of market value at present we determined the following allocations of the $225,000 purchase price paid based on our corresponding 50% working interests held by Energy Producers, Inc., :

Allocation of Purchase Price for Whitt Three Well Program /1
       
         
Well leases
 
$
163,500
 
Well equipment
   
61,500
 
   
$
225,000
 
 

/1 Subject to accumulated depreciation and depletion (see Footnote 7. Fixed Assets –net) in the notes the consolidated financial statements further listed in this document.


 
Oil and Gas Properties, Leases, and Interests through December 2, 2008

Knox County, Texas

Disposition as of December 2, 2008
 
In connection with the Default notice received October 24, 2008, and actions of Dutchess Private Equities Fund, Ltd., the 100% Working Interests held in the Fant Ranch Unit was disposed of and is no longer owned by the Company.

Ward County, Texas

Disposition as of December 2, 2008
 
In connection with the Default notice received October 24, 2008, and actions of Dutchess Private Equities Fund, Ltd., the 75% Working Interests held in the J.B. Tubb Leasehold Estate was disposed of and is no longer owned by the Company.
 
Sweetwater County, Wyoming
 
Sale of TMD

On October 30, 2008, the Company and NOC entered into an Agreement for Sale of Mineral Rights and an Assignment and Bill of Sale (collectively, the “Agreements”) relating to the Company’s sale, and NOC’s purchase, of the Company’s fifty percent (50%) undivided interest in the mineral rights created by oil and gas leases on the TMD real property, as described in the Agreements (“Mineral Rights”). Moreover, included in the sale was all of the Company’s interest in a lawsuit currently pending in the Third Judicial District Court of Sweetwater County, Wyoming (case Number Civil C-07-821-R, and styled Newport Oil Corp. v. Inter-Mountain Pipe and Threading Co.) (the “Suit”).The purchase price for these Mineral Rights and Suit was $125,000, payable in cash at closing.
  
A copy of the Agreement for Sale of Mineral Rights and Assignment and Bill of Sale are filed as Exhibits 10.1 and 10.2, respectively in a Current Report on Form 8-K filed on October 31, 2008, incorporated herein by reference.
 
Wells And Acreage
 
In the oil and gas industry and as used herein, the word “gross” well or acre is a well or acre in which a working interest is owned; the number of gross wells is the total number of wells in which a working interest is owned. A “net” well or acre is deemed to exist when the sum of fractional ownership working interests in gross wells or acres equals one. The number of net wells or acres is the sum of the fractional working interests owned in gross wells or acres.
 
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Set forth below is information respecting the developed and undeveloped acreage owned by the Company in Callahan, Stephens and Shackelford Counties, Texas, as of December 31, 2009.

   
Developed Acreage
   
Undeveloped Acreage
 
   
Gross
   
Net
   
Gross
   
Net
 
                         
Callahan County
   
80
     
25.6
     
-0-
     
-0-
 
Stephens and Shackelford Counties
   
40
     
12.8
     
120
     
38.4
 
     
    
     
    
     
    
     
    
 
Total
   
120
     
38.4
     
120
     
38.4
 


On December 2, 2008, in connection with the Default notice received October 24, 2008, and actions of Dutchess Private Equities Fund, Ltd., all oil and gas properties/leasehold interests were foreclosed and no longer owned by the Company.
 
Set fourth below is information respecting the developed and undeveloped acreage owned by the Company in Knox and Ward Counties, Texas, and Sweetwater County, Wyoming. The Company sold its Wyoming interests included in the table below on October 30, 2008 and on December 2, 2008 all of its Texas interests were disposed of:
 
   
Developed Acreage
   
Undeveloped Acreage
 
   
Gross
   
Net
   
Gross
   
Net
 
                         
Sweetwater County, Wyoming, owned through October 30, 2008
   
320
     
160
     
960
     
360
 
Knox County, Texas, owned through December 2, 2008
   
2520
     
1890
     
-0-
     
-0-
 
Ward County, Texas, owned through December 2, 2008
   
40
     
22.5
     
-0-
     
-0-
 
   
                               
Total
   
2880
     
2067.5
     
960
     
360
 
 
Production And Sale Of Oil And Gas

There is no information relating to the Company’s net oil and gas produced from the Company’s properties located in Callahan, Stephens, and Shakelford Counties, West Central Texas after royalties, in Fiscal Year Ended December 31, 2009. Oil and Gas was not yet produced and online and such required tables therefore reflect this.
 
The following table summarizes certain information relating to the Company’s net Natural oil and natural gas produced and from the Company’s property interests held, after royalties, during the periods indicated.
 
   
Year Ended December 31,
 
   
2009
   
*2008
 
               
Average net daily production of oil (Bbl)
   
0
     
30.71
 
Average net daily production of gas (Mcf)
   
0
     
129.05
 
Average sales price of oil ($ per Bbl)
 
$
0
   
$
103.74
 
Average sales price of gas ($ per Mcf)
 
$
0
   
$
8.00
 
Average lifting cost per bbl oil equiv.
 
$
0
   
$
36.96
 
 

*Calculations for 2008 Average net daily production of oil and gas (Mcf) was based on partial year start up activity averages for the Tubb leasehold estate beginning February 2008 and ending 12/2/2008; for TMD, from January 1, 2008 through October 30, 2008, the sale date for the Company’s 50% working interests in the leases and equipment; for Fant Ranch Unit, from January 1, 2008 through December 2, 2008 the date of final disposition for the Company’s 100% Working Interests in the leases and equipment.

Out Corporate offices are located in Scottsdale, Arizona, and our wholly-owned subsidiary Firecreek Petroleum, maintained an office in Fort Worth, Texas, but moved its operations primarily to Scottsdale, Arizona during second quarter of operations in 2006. Please see also “Certain Relationships and Related Transactions” for further discussion.
 
25

 
The Chief Executive Officer of the Company provided corporate office space through 2007 and 2008 at no charge. There is no further agreement in place to pay for the premises. At December 31, 2008 through May 31, 2009 the premises continue to be provided free of charge. Please see “Certain Relationships and Related Transactions”.

Exploration and Production
 
The Company did not participate in the drilling, rehabilitation, or reentry of a well or wells from January through April of 2008. The Company participated in a  three well program on the J.B. Tubb leasehold estate located in Ward County Texas for workover, drilling and development programs, bringing three wells online as a result. In addition The Company through the same time period  also completed a successful rehabilitation program for approximately 12 wells located on the Fant Ranch 2,000 plus acre unit, Knox County Texas.
 
The Company, in addition to its present plans contemplated for the Whitt Oil and Gas, Inc. three well program including first right to drill four wells, are to successfully acquire attractive oil and gas leases with substantially proven undeveloped reserves, a preferred majority, or suitable working interest being available, and can obtain or provide financing or market an interest on terms acceptable to the Company.
 
Properties and Equipment-M3 Lighting, Inc. (M3), a Wholly Owned Subsidiary of the Company

As of June 1, 2009 the Company’s Southwest Parent headquarters and operations for Energy Producers, Inc. are located at 6564 Smoke Tree Lane, Scottsdale, Arizona 85253. The Secretary, Comptroller, and shareholder of the Company provides approximately 1431 square feet being utilized for the Company charging $1,400 a month on a  contracted basis. Prior to June 1, 2009, the Chief Executive Officer and shareholder of the Company provided corporate office space through 2007 and 2008 at no charge. There was no further agreement in place to pay for the premises. Through May 31, 2009 the premises continued to be provided free of charge. In the event that our facilities in Scottsdale should, for any reason, become unavailable, we believe that alternative facilities are available at competitive rates. Please see “Certain Relationships and Related Transactions” for further discussion.

As of May 22, 2009 our headquarters for the Company’s Eastern based operations and M3 are located at 3400 Peachtree Road, Suite 111 Atlanta, Georgia 30326, and are presently being provided on a co-sharing basis free of charge by officers and shareholders of the Company. The approximate 1,000 square foot premises continue to be provided free of charge as of January 15, 2010. Prior to the acquisition by the Company, in 2008,  M3 relocated its headquarters to co-locate it with that of a company related by common ownership and management. Under this arrangement, M3 received office space and support in addition to shared management in exchange for management fees paid to the related company. Management fees paid to the related company for these services totaled $20,453 during the year ended December 31, 2008. The Company paid a sales commission of $2,031 to a non-employee stockholder/director during the year ended December 31, 2008. In the event that our facilities in Atlanta should, for any reason, become unavailable, we believe that alternative facilities are available at reasonable rates. Please see “Certain Relationships and Related Transactions” for further discussion.

Acquisition of South Atlantic Traffic Corporation (SATCO)

Effective November 4, 2009, the Company acquired South Atlantic Traffic, Inc. (SATCO). The acquisition was effected via a stock purchase agreement between Satco and the Company. In the course of this acquisition, Satco stockholders exchanged all outstanding common shares for cash consideration, EGPI common shares and sellers’ notes.

Purchase Price Allocation Report and Analysis for Certain Intangible Assets acquired by the Company on the acquisition of SATCO

The Company commissioned DS Enterprises, Inc. to provide Valuation Analysis and Purchase Price Allocation Report, along with an Impairment Analysis summary so that we could determine the fair valuation of the assets owned by South Atlantic Traffic, Inc., now a wholly owned subsidiary of the Company.

The Report, issued on April 14, 2010 was performed by Phil Scott, CFA, DS Enterprises, Inc..

Based on the Report the Analysis of Fair Value of Intangible Assets for SFAS 141 the Purchase Price Allocation has been determined to be $2,825,840 which consists of (i) net current tangible assets and liabilities, (ii) total identified intangible assets, (Trade Name and Customer Relationships) and (iii) Goodwill, now wholly owned by the Company.  The Intangible Assets will be amortized over the appropriate lives of the individual assets.

SATCO Impairment Analysis and Report Summary

The Company commissioned DS Enterprises, Inc. to provide an Impairment Analysis and Report Summary on the SATCO long lived Assets including Intangibles –Goodwill and other, including Property, Plant and Equipment.

The Report Summary, issued on March 2, 2010 was performed by Phil Scott, CFA, DS Enterprises, Inc..

26

 
Based on the Report the Report Summary concluded that there were no impairment issues found.

Property and Equipment-South Atlantic Traffic, Inc., (SATCO), a Wholly Owned Subsidiary of the Company

SATCO headquarters are located at 2295 Towne Lake Pkwy. Suite 116 PMB 305Woodstock, GA 30189, with additional satellite offices in offices in Cocoa, FL / Englewood, FL / Woodstock, GA / Charlotte, NC. and Fayetteville N.C. The Company has non-cancelable operating leases, primarily for office space and certain office equipment. The operating leases generally contain renewal options for periods ranging from three months to two years and require the Company to pay all executory costs such as maintenance and insurance. Rental expense for operating leases was approximately $65,840 and $59,478 for the years ended December 31, 2008 and 2007, respectively.

Future minimum lease payments under non-cancelable operating leases  as of December 31, 2008 are as follows:

 
Amount
 
2009
 
$
68,728
 
2010
   
19,504
 
2011
   
2,073
 
2012
   
488
 
   
-
 
   
$
90,793
 

Please see also “Certain Relationships and Related Transactions” for further discussion.
 
ITEM 3. LEGAL PROCEEDINGS

 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
No matters were submitted to a vote of our security holders during the fourth quarter of 2009.
 
PART II
 
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET PRICE AND DIVIDENDS OF COMPANY
 
The Company became available for quotation on the over-the-counter, NASDAQ NQB Pink Sheets initially January 20, 2000.  As of March 14, 2003, the Company’s common stock began trading on the over-the-counter market and prices are reported on the OTC Bulletin Board under the symbol “EFIR.”   The market price of our common stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market, and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our common stock, regardless of our actual or projected performance.

The high and low sales prices for each full quarterly period for the last two complete fiscal years, as reported by the OTC Bulletin Board National Quotation Bureau are set forth below. Such quotations represent prices between dealers, do not include retail markup, markdown or commission, and do not represent actual transactions.
 
2010
   
High
     
Low
 
First Quarter
 
$
0.0600
   
$
0.0070
 
 
 
Year Ended December 31, 2009
 
High
   
Low
 
             
First Quarter
 
$
0.1600
   
$
0.0300
 
Second Quarter
   
0.1200
     
0.0300
 
Third Quarter
   
0.1900
     
0.0500
 
Fourth Quarter
   
   0.0950
     
0.0510
 
 
27

 
Year Ended December 31, 2008
 
High
   
Low
 
             
First Quarter
 
$
0.0057
   
$
0.0009
 
Second Quarter
   
0.0050
     
0.0006
 
Third Quarter
   
0.0025
     
0.0005
 
Fourth Quarter (October 1 through October 7, 2008)
   
0.0070
     
0.0050
 
*Fourth Quarter (October 8 through December 31, 2008)
   
0.2000
     
0.0500
 
 

*Reflects Prices For the Period After a One for Two Hundred (1:200) Reverse Stock Split Effective October 8, 2008.
 
Year Ended December 31, 2007
 
High
   
Low
 
             
First Quarter
 
$
0.0870
   
$
0.0061
 
Second Quarter
   
0.0760
     
0.0031
 
Third Quarter
   
0.0064
     
0.0025
 
Fourth Quarter
   
0.0031
     
0.0007
 

As of March 31,  2010, the Company had issued and outstanding 74,460,069 shares of its common stock held by approximately 1570 holders of record,  no shares of Series A or B preferred stock outstanding, and 5,000 shares of its Series C preferred stock,  issued and outstanding.

We have never declared dividends or paid cash dividends on our common stock and our board of directors does not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.

Securities Authorized for Issuance Under Equity Compensation Plans.
 
The following information is provided for the period ended December 31, 2009, with respect to compensation plans (including individual compensation arrangements) under which equity securities of the issuer are authorized for issuance, aggregated as follows:

(i)
All compensation plans previously approved by security holders; and

(ii)
All compensation plans not previously approved by security holders.

28

 
Equity Compensation Plan Information

Plan category
 
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)(1a.)
   
Weighted average exercise
price of outstanding
options,
warrants and rights
(see footnotes)
(b)(*)(1.a)
   
Number of securities
remaining available for
future
issuance
(c)(1.a)
 
(i) Equity compensation plans
approved by security holders
(Form S-8)
                 
2004 Stock Incentive Plan
   
12,500
   
$
n/a
     
-0-
 
2004 Stock Incentive Plan 2
   
7,000
   
$
n/a
     
-0-
 
2005 Stock Incentive Plan (1)
   
13,000
   
$
8
*
   
6,500
 
2009 Stock Incentive Plan
   
10,000,000
   
$
0.15
     
920,000
 
Total for Plans Filed On Form S-8
   
10,032,500
   
       
926,500
 
                         
Equity compensation plans
approved by security holders 
                       
Tirion Group, Inc. -Warrant (2)(5)
   
10,000
   
$
n/a
     
-0-
 
DLM Asset Management,-Warrant (2)(7)
   
16,750
   
$
12
     
16,750
 
Tirion Group, Inc.-Warrant (2)(7)
   
16,750
   
$
12
     
16,750
 
John R Taylor-Option (4)
   
10,000
   
$
n/a
     
-0-
 
William E. Merritt-Option (4)
   
10,000
   
$
n/a
     
-0-
 
George B. Faulder-Option (4)
   
10,000
   
$
n/a
     
-0-
 
Dr. Mousa Hawamdah-Option (4)
   
10,000
   
$
n/a
     
-0-
 
James Barker-Option (4)
   
5,000
   
$
n/a
     
-0-
 
Charles Alliban-Option (4)
   
10,000
   
$
n/a
     
-0-
 
Dennis R. Alexander-Option (4)
   
10,000
   
$
n/a
     
-0-
 
Gregg Fryett-Option (4)
   
10,000
   
$
n/a
     
-0-
 
Peter Fryett-Option (4)
   
10,000
   
$
n/a
     
-0-
 
Joseph M. Vasquez (10)
   
500,000
   
$
1
     
500,000
 
Barclay Lyons LLC -Warrant (11)
   
1,000,000
   
$
1
     
1,000,000
 
Barclay Lyons LLC -Warrant (12)
   
1,000,000
   
$
1.25
     
1,000,000
 
The Ep Group. -Warrant (11)
   
1,000,000
   
$
1
     
1,000,000
 
The Ep Group. -Warrant (12)
   
1,000,000
   
$
1.25
     
1,000,000
 
War Chest Capital Multi Strategy Fund, LLC -Warrant (11)
   
1,000,000
   
$
1
     
1,000,000
 
War Chest Capital Multi Strategy Fund, LLC -Warrant (12)
   
1,000,000
   
$
1.25
     
1,000,000
 
                         
(ii) Equity compensation plans not approved by security holders
         
           
M. Herzog-Option (3)
   
3,000
   
$
n/a
     
-0-
 
(Mel Herzog and Charlotte Herzog TTEE UA DTD Jan 31, 1994 Herzog Revocable Living Trust JT Grantors)
                       
D. Alexander-Option (3)
   
3,000
   
$
n/a
     
-0-
 
M. Alexander-Option (3)
   
2,500
   
$
n/a
     
-0-
 
D. Kronenberg-Option (3)
   
2,500
   
$
n/a
     
-0-
 
(David J. Kronenberg Assigned to D.J. and S.M. Kronenberg Family LLLP)
                       
L. Trapp-Option (3)
   
3,000
   
$
n/a
     
-0-
 
T. Richards-Option (3)
   
2,500
   
$
n/a
     
-0-
 
Bradley Ray-Option (3)
   
2,500
   
$
n/a
     
-0-
 
Steven Antebi-Warrant (2)
   
20,000
   
$
n/a
     
-0-
 
Sapphire Consultants-Warrant (2)(6)
   
12,500
   
$
4
     
12,500
 
Confin International Inv.-Warrant (2)(6)
   
18,750
   
$
4
     
18,750
 
John Brigandi-Warrant (2)
   
3,125
   
$
4
     
1,560
 
Steven Antebi-Warrant (8)
   
20,000
   
$
n/a
     
-0-
 
Joseph M. Vasquez (9)
   
2,500
   
$
n/a
     
-0-
 
Joseph M. Vasquez (9)
   
2,500
   
$
n/a
     
-0-
 
Joseph M. Vasquez (9)
   
2,500
   
$
n/a
     
-0-
 
Total (1)
   
6,729,375
   
$
1.19
**
   
6,566,310
 
 

(1a.)   Information listed under column (a), (b) and (c) reflects adjustment for 1:200 post reverse split (one (1) share for two hundred (200)) share basis which was effective at October 8, 2008.

(*)     Information listed for column (b) in the table above represents the exercise or strike price for each option or warrant.

(**)   The final Total listed for column (b) in the table above represents the weighted average exercise price for all  options and warrants listed and noted (2), through (11) in the table only.
 
(1) Omitted.

(2) The Company provided warrants to a lender and various consultants during 2005. For further information regarding terms of these warrants to purchase underlying shares of the Company’s common stock issued, please see our Registration Statement on Form SB-2, as amended, and incorporated herein by reference.
 
(3) Represents historical options issued by the Company. For further information regarding terms for these options, please see information furnished in our Form 10-KSB, Amendment No. 3, filed on October 4, 2002, and incorporated herein by reference. As of November 30, 2007 these options have expired.
 
29

 
(4) Represents options issued by the Company as part of the Firecreek Petroleum, Inc. acquisition which vested, becoming available for exercise February 9, 2005. For terms of these options, please see information furnished in a Current Report on Form 8-K/A (Amendment No. 2), filed on September 16, 2004, and incorporated herein by reference. As of February 9, 2009, these options have expired.
 
(5) The strike price for the Tirion warrant is 80% of the average of the then lowest three closing bids for the previous 30 days from the date the warrants are exercised. For further information regarding terms of the warrant please see our Registration Statement on Form SB-2, as amended, and incorporated herein by reference. As of May 19, 2007 these warrants have expired.
 
(6) On March 14, 2006 the Company notified the holders of the warrants that they must exercise their warrants for cash or the Warrants will be cancelled without further notice, 30 days following such notice thereof.
 
(7) Represents an assignment of 3,350,000 shares underlying warrants held by DLM Asset Management, Inc. to Tirion Group, Inc. on February 14, 2006.
 
(8) Represents warrants issued by the Company in behalf of an extension and amendment of a Corporate Advisory Agreement with Steven Antebi, dated January 30, 2006. For further information regarding the terms of the extension and amendment of a Corporate Advisory Agreement, and corresponding warrant agreement please see a Current Report on Form 8-K/A, filed on February 3, 2006, incorporated herein by reference. As of January 30, 2009, these warrants have expired.
 
(9) Represents options issued by the Company on behalf of an Advisory Service Agreement with Joseph M. Vasquez dated March 1, 2006. For further information regarding the terms of the option agreements please see an amended Current Report on Form 8-K/A, filed on March 17, 2006, incorporated herein by reference. These options expired on March 1, 2009.

(10) On February 1, 2009, the Company entered into an Advisory Service Agreement with Joseph M. Vazquez. As part of the terms of the Agreement the Company issued to Mr. Vasquez three year warrants to purchase 500,000 shares at $1.00 per share exercise price for the underlying common shares.

(11) Represents shares of our Common Stock issuable upon the exercise of outstanding three-year warrants. The Warrants issued by the Company were a part of additional consideration for the issuance of three short term 6 month $50,000 secured convertible promissory notes to institutional investors on December 22, 2009. The exercise price for shares of common stock underlying the Warrants is set at $1.00 per share. The Warrants immediately vest on the issue date expiring three (3) years thereafter. Summary information the promissory note issuances are incorporated in a Current Report listed under item 8.01 Other Information on Form 8-K, filed on December 29, 2009.

(12) Represents shares of our Common Stock issuable upon the exercise of outstanding three-year warrants. The Warrants issued by the Company were a part of additional consideration for the issuance of three short term 6 month $50,000 secured convertible promissory notes to institutional investors on December 22, 2009. The exercise price for shares of common stock underlying the Warrants is set at $1.25 per share. The Warrants immediately vest on the issue date expiring three (3) years thereafter. Summary information the promissory note issuances are incorporated in a Current Report listed under item 8.01 Other Information on Form 8-K, filed on December 29, 2009.

Omitted and Not Calculated In The Table Above Issued After December 31, 2009

(13) On January 15, 2010, 2,000,000 shares of our Common Stock are issuable according to a Registration Rights Agreement, and further in behalf of a conversion of callable secured promissory notes having the mandatory registration rights held by St. George Investments, LLC.  The Conversion Price of the notes shall be determined by dividing (a) the Conversion Amount by (b) seventy five percent (75%) of the lower of (i) $0.08 per share, or (ii) the average volume-weighted average price (the “VWAP”) for the three business days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth in a Conversion Notice (the lower of the foregoing, the Conversion Price”). 

RECENT SALES OF UNREGISTERED SECURITIES

During the last three years, the registrant has issued unregistered securities to the persons, as described below.  None of these transactions involved any underwriters, underwriting discounts or commissions, except as specified below, or any public offering, and the registrant believes that each transaction was exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof and/or Regulation D promulgated thereunder.  All recipients had adequate access, though their relationships with the registrant, to information about the registrant. 

Required information has been furnished in current Report on Form 8-K filings and other reports, as amended, during the period covered by this Report and additionally as listed and following:
 

 
*) (**) On March 3, 2010, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person as part of the acquisition of Redquartz LLC.

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
Patrick Kelly (1)
c/o 3400 Peachtree Road S-111
Atlanta, Georgia 30326
 
3/3/10
   
100,000
 
Acquisition Costs
Redquartz LLC.
 
$
2,500
 
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $2,500 of the financing proceeds in the immediately preceding table was used primarily for part of the costs related to the acquisition of Redquartz LLC .

(1)
Mr. Patrick Kelly is a shareholder, and is not an affiliate, director, or an officer of the Company.

 (***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 

 
(*) (**) On March 1, 2010, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons for extension of financial obligations rendered to the Company.

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
Thomas J. Richards (1)
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
3/1/10
   
300,000
 
For extension of financial
obligation due dates
rendered to the Company
 
$
8,100
 
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $8,100 of the financing proceeds in the immediately preceding table was used primarily for extension of financial terms and other consideration .

(1)
Mr. Thomas J. Richards is a shareholder, and is not an affiliate, director, or an officer of the Company.

 (***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 

 
*) (**) On February 23, 2010, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person for advisory services rendered to the Company.

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
James Skalko (1)
3457 Rockcliff Place
Longwood, Fl. 32779
 
2/23/10
   
400,000
 
Advisory Services
 
$
10,000
 
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $10,000 of the financing proceeds in the immediately preceding table was used primarily for advisory services rendered to the Company.

(1)
Mr. James Skalko is a shareholder, and is not an affiliate, director, or an officer of the Company.

 (***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 

 
(*) (**) On February 5, 2010, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following entity for financial advisory services retainer.

Name and Address (***)
 
Date
  
Share Amount(***)
  
Type of Consideration
  
Fair Market Value of
Consideration
  
Jessup and Lamont Securities Corporation (1)
 
2/5/10
   
500,000
 
Financial Advisory Services
 
$
17,000
 
650 Fifth Avenue, 3rd floor
           
 Retainer
       
New York, NY 10019
                     
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $17,000 of the financing proceeds in the immediately preceding table was used primarily for retainer related to financial advisory services.

(1)
Jesup Lamont Securities Corporation is a shareholder, and is not an affiliate, director, or an officer of the Company.
 
(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 

 
(*) (**) On February 3, 2010, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following entity for document and preparation fees. This issuance has recently been terminated and withdrawn on February 24, 2010.

Name and Address (***)
 
Date
  
Share Amount(***)
  
Type of Consideration
  
Fair Market Value of
Consideration
  
Kodiak Capital Group, LLC, (1)
 
2/3/10
   
1,800,000
 
Document and Preparation
 
$
61,200
 
One Columbus Place, 25th Floor
           
Fees
       
New York, NY 10019
                     
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $61,200 of the financing proceeds in the immediately preceding table was used primarily for document and preparation fees.

(1)
Kodiak Capital Group, LLC is a shareholder, and is not an affiliate, director, or an officer of the Company.
 
(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.

30


On January 15, 2010, the Company entered into an Agreement for a direct financial obligation providing the deposit necessary towards the Company’s acquisition of Southwest Signal, Inc. (SWSC). An amount of $1,000,000.00 (net of $925,000.00 less origination fee thereon) was paid to SWSC through the issuance and sale to St. George Investments, LLC, an Illinois limited liability company, of a secured promissory note and a convertible promissory note (the “Financing”). The terms of the Financing are reflected in i) a Note Purchase Agreement ii) a Secured Promissory Note, iii) a Convertible Promissory Note, iv) a Letter of Credit, v) a Registration Rights Agreement, and vi) a Funding and Letter of Credit Agreement, and all other agreements, instruments and documents being or to be executed and delivered thereon. Approximately 2,000,000 shares of the Company’s Common Stock are issuable according to the Registration Rights Agreement, and further in behalf of a conversion of the form of (callable) secured convertible promissory notes in the amount of $86,000, subject to terms, including terms of default, and further adjustments thereon, and having such mandatory registration rights held by St. George Investments, LLC.  The Conversion Price of the notes shall be determined by dividing (a) the Conversion Amount by (b) seventy five percent (75%) of the lower of (i) $0.08 per share, or (ii) the average volume-weighted average price (the “VWAP”) for the three business days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth in a Conversion Notice (the lower of the foregoing, the Conversion Price”).  For further information please see information and exhibits furnished in our Current report on form 8-K, as amended, filed with the SEC on January 22, and February 8, 2010, respectively.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) for the private placement of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the Investor is an “accredited investor” and/or qualified institutional buyer, the Investor has access to information about the Company and its investment, the Investor will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

As of the date of this report we have not completed our acquisition of SWSC and there can be no assurance that we will be successful in our acquisition of SWSC.
 

 
I.  (*)(**) On January 12, 2010, by majority consent of the Board of Directors, the Registrant approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons for and behalf of consideration as follows:
 
           
Type of
 
Fair Market Value of
 
Name and Address (***)
 
Date
 
Share Amount
 
Consideration
 
Consideration
 
Thomas J. Davis (1)
 
12/14/2009
   
595,238
 
Working Capital
 
$
25,000.00
 
99 Hawley Street Suite 216
           
SATCO Subsidiary
       
Binghamton, Ny 13901
                     
                       
Judd A. Heredos (1)
 
1/4/2010
   
416,800
 
Working Capital
 
$
12,504.00
 
1060 Beckingham Drive
           
SATCO Subsidiary
       
St. Augustine, FL 32092
                     
                       
Mehrdad Tabrizi (1)
 
12/30/2009
   
238,095
 
Working Capital
 
$
10,000.00
 
4500 Columns Drive
           
SATCO Subsidiary
       
Marietta, GA 30067
                     
                       
Herbert Jackenthal (1)
 
12/14/2009
   
33,334
 
Working Capital
 
$
1,000.00
 
37 St. James Drive
           
SATCO Subsidiary
       
Palm Beach Gardens, FL 33418
                     
                       
Geoffrey Peirce Sullivan (1)
 
12/30/2009
   
50,000
 
Working Capital
 
$
1,500.00
 
33 St. James Drive
           
SATCO Subsidiary
       
Palm Beach Gardens, FL 33418
                     
 

(*) Issuances are approved, subject to such persons agreeing in writing to i) comply with applicable securities laws and regulations and make required disclosures; and ii) be solely and entirely responsible for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.
 
(**) $50,004 worth of common stock in the immediately preceding table was used primarily in consideration of working capital requirements for the Company’s wholly owned subsidiary South Atlantic Traffic Corporation (SATCO).

(1) The above named individuals are not affiliates, directors, or officers of the Registrant.

(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.

II. (*) (**) On January 12, 2010, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons for extension of financial obligations rendered and legal and advisory services rendered to the Company, respectively.

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
Thomas J. Richards (1)
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
12/1/09
   
300,000
 
For extension of financial
obligation due dates
rendered to the Company
 
$
25,500
 
                       
Michael Brenner (2)
C/O Michael Brenner,
Attorney At Law
314 Clematis Street
Suite 200
West Palm Beach, Florida 33401
 
1/12/10
   
600,000
 
Legal & Advisory Services
rendered to the Company
 
$
33,000
 
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $58,500 of the financing proceeds in the immediately preceding table was used primarily for extension of financial terms and other consideration , and legal and advisory services rendered to the Company, respectively.

(1)
Mr. Thomas J. Richards is a shareholder, and is not an affiliate, director, or an officer of the Company.
   
(2)
Mr. Michael Brenner is a shareholder, and is not an affiliate, director, or an officer of the Company.

 (***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 

 
On December 22, 2009, the Company issued and sold an aggregate of $150,000 principal amount 6 month convertible promissory notes subject to provisions and adjustments, and cash and or cashless warrants to purchase an aggregate of 6,000,000 shares of its underlying common stock to three Lenders. The Notes and accrued but unpaid interest (appx 20% pre default adj) thereon are convertible at the option of the Lenders into shares of the Company’s common stock. The three Lenders / Investors each purchased a $50,000 Note together in the aggregate $150,000, the total amount. The Notes may not be prepaid in whole or in part, at any time, without the prior written consent of the Lenders.  If the Company doesn’t otherwise pay One Hundred Ten percent (110%) of the value of the Notes when due at the end of six month, the Lenders shall have the right as follows: To demand from the Company One Hundred Ten percent (110%) of the value of the Notes unless otherwise converted pursuant to a default and the Lenders each have rights including, i) to accelerate the maturity of the Notes and demand immediate payment in full, ii) exercise all legally available rights and privileges including the provision that without any further action on the part of Lender, interest will thereafter accrue at the rate equal to the lesser of 36% per annum or the highest rate permitted by applicable law, per annum (the “Default Rate”), until all outstanding principal, interest and fees are repaid in full by Borrower, iii) to convert the outstanding principal and interest of each of the Notes into fully-paid and nonassessable shares of Borrower’s Common Stock at a 50% discount to average “Fair Market Value” (the “Conversion Rate”) at the time of Conversion.  ”Fair Market Value” on a date shall be the average of the daily closing prices for the five (5) consecutive trading days before such date excluding any trades which are not bona fide arm’s length transactions. The closing price for each day shall be (a) if such security is listed or admitted for trading on any national securities exchange, the last sale price of such security, regular way, or the mean of the closing bid and asked prices thereof if no such sale occurred, in each case as officially reported on the principal securities exchange on which such security are listed, or (b) if quoted on NASDAQ or any similar system, and other methods determined in accordance with the terms and provisions of the Notes between the Company and Lenders.
Regarding the cash and or cashless Warrants: Each of the three Lenders received cash and or cashless Warrants to purchase 1,000,000 shares of the Company’s common stock at $1.00 per share exercise price for the underlying common shares, and each of the three Lenders each also received Warrants to purchase 1,000,000 shares of the Company’s common stock at $1.25 per share exercise price relative to the underlying common shares. Terms for all of the Warrants include immediate vesting on the issue date and expire three (3) years thereafter. The Warrants may be exercised by payment of cash or by shares of the Company’s common stock, or any combination of both. The shares are only convertible after maturity or a default at June 22, 2010.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) for the private placement of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the Investor is an “accredited investor” and/or qualified institutional buyer, the Investor has access to information about the Company and its investment, the Investor will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

31

 


I.  (*)(**) On December 18, 2009, by majority consent of the Board of Directors, the Registrant approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons for and behalf of consideration for the Acquisition of Sierra Pipeline, LLC membership interests.
 
Name
 
Date
 
Share Amount(****)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
                       
Don Tyner and Nancy Tyner, JTWROS  (***)(****)/(1)
9807 Highridge Drive
Las Vegas, Nevada 89134
 
12/18/09 to be effective 1/4/2010
   
2,000,000
 
In consideration of
Acquisition of Sierra
Pipeline, LLC Membership
Interests
 
$
160,000
 
                       
Steven Antebi (***)(****)/(2)
10550 Fontenelle Way,
Los Angeles, California, 90077
 
12/18/09
   
500,000
 
In consideration of
Acquisition of Sierra
Pipeline, LLC Membership
Interests
 
$
  40,000
 
 

(*) Issuances are approved, subject to such persons agreeing in writing to i) comply with applicable securities laws and regulations and make required disclosures; and ii) be solely and entirely responsible for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.
 
(**) $200,000 worth of common stock in the immediately preceding table was used primarily in consideration of Acquisition of Sierra Pipeline, LLC Membership Interests.

 
(1)
Don Tyner and Nancy Tyner, JTWROS, are not currently affiliates, directors, or officers of the Registrant.
     
 
(2)
Steven Antebi provides other Business Consulting and advisory services, and is not currently a director, or officer of the Registrant..

(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.

(****) The shares are to be included for registration in a registration statement on a best efforts basis by the Registrant in accordance with the terms of agreement.

II.  (*)(**) On December 18, 2009, by majority consent of the Board of Directors, the Registrant approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person for services rendered.

Name
 
Date
 
Share Amount(****)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
                       
Steven Antebi (***)(****)(1)
10550 Fontenelle Way,
Los Angeles, California, 90077
 
12/18/06
   
3,400,000
 
Consultant/Advisory
 
$
272,000
 
                       
THE ANTEBI 1995 CHILDRENS INSURANCE & OTHER TRUST, PHIL LONDON TTE (***)(****)/(2)
10550 Fontenelle Way,
Los Angeles, California, 90077
 
12/18/09
   
600,000
 
Consultant/Advisory
(Steven Antebi)
 
$
  48,000
 
 

(*) Issuances are approved, subject to such persons agreeing in writing to i) comply with applicable securities laws and regulations and make required disclosures; and ii) be solely and entirely responsible for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.
 
(**) $320,000 worth of common stock in the immediately preceding table was used primarily in consideration of services rendered to the Company.

32

 
 
(1)
Steven Antebi provides other Business Consulting and advisory services, and is not currently a director, or officer of the Registrant.
     
 
(2)
THE ANTEBI 1995 CHILDRENS INSURANCE & OTHER TRUST, PHIL LONDON TTE, are per directive of Steven Antebi, which provides Business Consulting and advisory services, and is not currently a director or officer of the Registrant.

(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.

(****) The shares are to be included for registration in a registration statement on a best efforts basis by the Registrant in accordance with the terms of agreement.
 


(*) (**) On December 18, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons in behalf of loans made to the Company’s wholly owned subsidiary Southwest Atlantic Traffic, Inc. (SATCO).

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
                   
Kelly Davis (1)
 
12/18/2009
   
100,000
 
Grant of Shares in behalf
 
$
9,000
 
1389 Village Park Drive NE
           
Of Loans Made to SATCO
       
Atlanta, GA 30319
                     
                       
Michael Kocan (2)
 
12/18/2009
   
100,000
 
Grant of Shares in behalf
 
$
9,000
 
1200 Northcliff Trace
           
Of Loans Made to SATCO
       
Roswell, GA 30076
                     
                       
Robert S. Miller Jr. (3)
 
12/18/2009
   
100,000
 
Grant of Shares in behalf
 
$
9,000
 
718 Peachtree Hills Circle
           
Of Loans Made to SATCO
       
Atlanta, GA 30305
                     
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $27,000 of the financing proceeds in the immediately preceding table was used primarily for a grant of shares in behalf of loans made to the Company’s wholly owned subsidiary South Atlantic Traffic, Inc. (SATCO).

(1)
Kelly Davis. is a shareholder, and not an officer or director or an affiliate of the Company.
   
(2)
Michael Kocan is a shareholder, and is an Officer and Director of the Company.

(3)
Robert S. Miller Jr. is a shareholder, and is an Officer and Director of the Company.

(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 


I  (*) (**) On November 13, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person or entity for document and preparation fees.

Name and Address (***)
 
Date
  
Share Amount(***)
  
Type of Consideration
  
Fair Market Value of
Consideration
  
Ryan Hodson, (1)
 
11/13/09
   
600,000
 
Document and Preparation Fees
 
$
               40,800
 
One Columbus Place, 25th Floor
                     
New York, NY 10019
                     
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $40,800 of the financing proceeds in the immediately preceding table was used primarily for document and preparation fees.
 
33

 
(1)
Ryan Hodson (nominee of Kodiak Capital Group, LLC) is a shareholder, and is not an affiliate, director, or an officer of the Company.
 
(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.

II  (*) (**) On November 13, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person or entity for document and preparation fees.

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
                   
Vincent & Rees, L..C. (1)
 
11/13/2009
   
140,000
 
Legal and Advisory Services
 
$
9,520
 
175 S. Main Street, 15th Floor
                     
Salt Lake City, UT 84111
                     
                       
Callie Tempest Jones (2)
 
11/13/2009
   
20,000
 
Legal and Advisory Services
 
$
1,360
 
175 S. Main Street, 15th Floor
                     
Salt Lake City, UT 84111
                     
                       
Chase Chandler (3)
 
11/13/2009
   
20,000
 
Legal and Advisory Services
 
$
1,360
 
175 S. Main Street, 15th Floor
                     
Salt Lake City, UT 84111
                     
                       
Lisa Demmons (4)
 
11/13/2009
   
20,000
 
Legal and Advisory Services
 
$
1,360
 
175 S. Main Street, 15th Floor
                     
Salt Lake City, UT 84111
                     
                       
Michael Kocan (5)
 
11/13/2009
   
297,357
 
Exch for Cancellation of
 
$
20,220
 
1200 Northcliff Trace
           
Debt Owed
       
Roswell, GA 30076
                     
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $33,820  of the financing proceeds in the immediately preceding table was used primarily for legal and advisory services, and exchange for cancellation of debt owed, respectively.

(1)
Vincent & Rees L.P. is a shareholder, and provides legal and advisory services to the Company. Vincent and Rees L.P. is not an affiliate of the Company.
   
(2)
Callie Tempest Jones is with the firm Vincent & Rees L.P. and provides legal and advisory services to the Company. Mrs. Jones is a shareholder, and is not an affiliate, officer, or director of the Company.

(3)
Chase Chandler is with the firm Vincent & Rees L.P. and provides legal and advisory services to the Company. Mr. Chandler is a shareholder and is not an affiliate, officer, or director of the Company.
   
(4)
Lisa Demmons is with the firm Vincent & Rees L.P. and provides legal and advisory services to the Company. Mrs. Demmons is a shareholder, and is not an affiliate, officer, or director of the Company.

(5)
Michael Kocan is a shareholder, and an Officer and Director of the Company.

 (***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 


On November 4, 2009, the Company entered into a Stock Purchase Agreement (the “Agreement”) by and among itself, Bob Joyner, a Florida resident (“Joyner”), Stewart Hall, a North Carolina resident (“Hall”), Hunter Intelligent Traffic Systems, LLC, a Georgia limited liability company located at 1021 Golf Estates Drive, Woodstock Georgia 30189 (“Hunter”) and together with Joyner and Hall, hereinafter sometimes referred to individually as a “Seller” and collectively as, (the “Sellers”), and South Atlantic Traffic Corporation, a Florida corporation located at 2295 Towne Lake Pkwy., Suite 116 PMB 305, Woodstock, Georgia, 30189 ( “SATCO”), (the Sellers, the Purchaser, the Corporation collectively referred to as the “Parties”), and whereas the Registrant shall acquire all of the outstanding stock and interests held in SATCO from the Sellers.

34

 
As a result of the Merger, and further, subject to adjustment as described in Item 1.01 of our Current Report on Form 8-K filed with the SEC on November 12, 2009, the SATCO Stockholders received, in exchange for all of their SATCO Common Stock, the aggregate total of 2,908,000 shares of the EGPI Common Stock subject to adjustment and therein the Agreement and further as listed in the above stated Current Report on Form 8-K.
 
The shares were issued in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act.  All of the SATCO Stockholders hold their securities for investment purposes without a view to distribution and had access to information concerning EGPI and our business prospects, as required by the Securities Act.  In addition, there was no general solicitation or advertising for the purchase of the shares of EGPI Common Stock.  Our securities were issued only to accredited investors or sophisticated investors, as defined in the Securities Act with whom we had a direct personal preexisting relationship, and after a thorough discussion.  Finally, our stock transfer agent has been instructed not to transfer any of such shares, unless such shares are registered for resale or there is an exemption with respect to their transfer.
 


(*) (**) On October 1, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person for Investor and Public Relations Services for the Company.

Name and Address (***)
 
Date
  
Share Amount(***)
  
Type of Consideration
  
Fair Market Value of
Consideration
  
Wakabayashi Fund, L.L.C. (1)
 
10/1/09
   
1,500,000
 
Investor / Public Relations
 
$
127,500
 
4-13-20 Mita Minato-Ku
           
services
       
Tokyo, Japan 108-0073
                     
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $127,500 of the financing proceeds in the immediately preceding table was used primarily for Investor and Public Relations Services for the Company.

(1)
Wakabayashi Fund, L.L.C. is a shareholder of the Company, and is not acting as a director, or officer of the Company.
 
(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 


(*) (**) On September 17, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following person for extension of financial obligations rendered (see Items 1.01 and 2.03 above.)

Name and Address (***)
 
Date
  
Share Amount(***)
  
Type of Consideration
  
Fair Market Value of
Consideration
  
Thomas J. Richards (1)
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
9/17/09
   
300,000
 
For extension of financial
obligation due dates
rendered to the Company
 
$
42,000
 
 

(*) Issuances are approved, subject to such person being entirely responsible for his own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $42,000 of the financing proceeds in the immediately preceding table was used primarily for extension of financial terms and other consideration rendered to the Company.
 
(1)
Mr. Thomas J. Richards is a shareholder, and is not an affiliate, director, or an officer of the Company.
 
(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale. 
 
35

 


(*) (**) On July 29, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons for advisory services rendered.

Name and Address (***)
 
Date
  
Share Amount(***)
  
Type of Consideration
  
Fair Market Value of
Consideration
  
CST Group, Inc. (1)
c/o Trump Palace
18101 Collins Avenue Unit #4401
Sunny Isles Beach,
Florida 33160
 
7/29/09
   
238,680
 
For services rendered to the Company or M3 Lighting, Inc.
 
$
16,708
 
                       
Joseph Gourlay (2)
20000 E. Country Club Drive
Miami, Florida
Apt. #410
 
7/29/09
   
238,681
 
For services rendered to the Company or M3 Lighting, Inc.
 
$
16,708
 
 

(*) Issuances are approved, subject to such persons being entirely responsible for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $33,416 of the financing proceeds in the immediately preceding table was used primarily in consideration of services rendered to the Company and/or M3 Lighting, Inc. (“M3”).
 
(1)
Per directive of Mr. Stuart Siller to CST Group, Inc., a shareholder/advisor of the Company.

(2)
Mr. Joseph Gourlay, is a shareholder/advisor of the Company.
 
(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 

   
On May 21, 2009, the Company, Asian Ventures Corp., a Nevada corporation (its wholly owned “Subsidiary”), M3 Lighting, Inc., a Nevada corporation (“M3”), and Strategic Partners Consulting, L.L.C., a Georgia limited liability company (“Strategic Partners”) executed and closed a Plan and Agreement of Triangular Merger (the “Plan of Merger”), whereby M3 merged into the Subsidiary, a wholly-owned subsidiary of the Company (the “Merger”).  As a result of the Merger, the stockholders of M3 (the “M3 Stockholders”) and Strategic Partners received 14,210,809 shares of the common stock of the registrant, no par value per share (the “EGPI Common Stock”) in exchange for all of their listed in our Current Report on Form 8-K, as amended, filed with the SEC on May 27, 2009.

Following the Effective Date, the Company had approximately 23,868,015 shares of the EGPI Common Stock issued and outstanding, owned as follows: (a) 9,547,206 shares owned by the EGPI Stockholders; (b) 11,934,007 shares owned by the M3 Stockholders, subject to adjustment as described in our Current Report on Form 8-K, as amended, filed with the SEC on May 27, 2009, and its sub paragraph five of Para.13. listed under Item 2.01 Completion of Acquisition or Disposition of Assets, therein and elsewhere in that Report; and (c) 2,386,802 shares owned by Strategic Partners as described also therein the above stated Report. 

The shares were issued in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act.  All of the M3 Stockholders and Strategic Partners took their securities for investment purposes without a view to distribution and had access to information concerning EGPI and our business prospects, as required by the Securities Act.  In addition, there was no general solicitation or advertising for the purchase of the shares of EGPI Common Stock and the EGPI Series C Preferred Stock.  Our securities were issued only to accredited investors or sophisticated investors, as defined in the Securities Act with whom we had a direct personal preexisting relationship, and after a thorough discussion.  Finally, our stock transfer agent has been instructed not to transfer any of such shares, unless such shares are registered for resale or there is an exemption with respect to their transfer.
36

 

 
I.  (*) (**) On February 8, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons for services rendered.

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
Jeffrey M. Proper
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
2/8/09
   
250,000
 
For services rendered to the Company or FPI
 
$
15,000
 
                       
Thomas J. Richards
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
2/8/09
   
390,000
 
For services rendered to the Company or FPI
 
$
23,400
 
                       
Larry W. Trapp
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
2/8/09
   
300,000
 
For services rendered to the Company or FPI
 
$
18,000
 
                       
Melvena Alexander
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
2/8/09
   
180,000
 
For services rendered to the Company or FPI
 
$
10,800
 
                       
Joanne M. Sylvanus
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
2/8/09
   
275,000
 
For services rendered to the Company or FPI
 
$
16,500
 
                       
Clifton Onolfo
c/o 6564 Smoke Tree Lane
Scottsdale, Arizona 85253
 
2/8/09
   
150,000
 
For services rendered to the Company or FPI
 
$
9,000
 
 

(*) Issuances are approved, subject to such persons being entirely responsible for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

(**) $92,700 of the financing proceeds in the immediately preceding table was used primarily in consideration of services rendered to the Company and/or Firecreek Petroleum, Inc. (“FPI”).
 
(1) 
Mr. Jeffrey M. Proper, Esq., for legal advisory and consulting services; Mr. Proper is a shareholder.
   
(2)
Mr. Thomas J. Richards, for business and consulting and advisory services; Mr. Richards is a shareholder and an advisor of the Company.

(3) 
Mr. Larry W. Trapp, for business and consulting and advisory services; He is a shareholder, an officer, (Executive Vice President, and Co-Treasurer) and director of the Company and Firecreek Petroleum, Inc.
   
(4) 
Melvena Alexander, for day to day operational services and business provisions; Mrs. Alexander is a shareholder, and an officer (Secretary, Comptroller, and Co Treasurer) of the Company.

(5) 
Joanne M. Sylvanus provides accounting and advisory services to the Company and FPI, and is a shareholder of the Company.
   
(6)
Mr. Cliff Onolfo, Miami Florida, for business and financial advisory services; He is a shareholder and advisor of the Company. The shares are to be held at the Company offices to be released as additional financial success fee compensation. The shares to be returned to Company Treasury if there is no performance completed within 90 days of the date of this Resolution.

(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.
 

 
II. (*) (**) On February 5, 2009, by majority consent of the Board of Directors, the Company approved the following issuances of its restricted common stock, par value $0.001 per share, to the following persons for services rendered.

Name and Address (***)
 
Date
 
Share Amount(***)
 
Type of Consideration
 
Fair Market Value of
Consideration
 
Joseph M. Vazquez III
5324 Pine Tree Drive
Miami Beach, FL. 33140
 
2/5/09
   
340,000
 
For services rendered
 
$
20,400
 
                       
David M. Rees
175 E. 400 South, Suite 2000
Salt Lake City, Utah 84111
 
2/5/09
   
300,000
 
For services rendered
 
$
18,000
 
                       
Callie Tempest Jones
175 E. 400 South, Suite 2000
Salt Lake City, Utah 84111
 
2/5/09
   
25,000
 
For services rendered
 
$
1,500
 
                       
Chase Chandler
175 E. 400 South, Suite 2000
Salt Lake City, Utah 84111
 
2/5/09
   
15,000
 
For services rendered
 
$
900
 
 

(*) Issuances are approved, subject to such persons being entirely responsible for their own personal, Federal, State, and or relevant single or multi jurisdictional income taxes, as applicable.

37

 
(**) $40,800 of the financing proceeds in the immediately preceding table was used primarily in consideration of services rendered to the Company and/or Firecreek Petroleum, Inc. (“FPI”).
 
(1) 
(****) Mr. Joseph M. Vazquez for legal advisory and consulting services, and is a shareholder of the Company.
   
(2)
Mr. David M. Rees  for legal engagement and advisory services with the firm Vincent & Rees. Mr. Rees is a shareholder of the Company.

(3) 
Mrs. Callie Tempest Jones for legal engagement and advisory services with the firm Vincent & Rees, Mrs. Jones is a shareholder of the company.
   
(4) 
Mr. Chase Chandler for legal engagement and advisory services with the firm Vincent & Rees. Mr. Chandler is a shareholder of the Company.

(***) The shares of common stock were issued pursuant to an exemption from registration as provided by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All such certificates representing the shares issued by the Company shall bear the standard 1933 Act restrictive legend restricting resale.



On February 1, 2009, the Company entered into an Advisory Service Agreement with Joseph M. Vazquez pertaining to advising corporate management, strategic planning, corporate development and forecasting, marketing, structuring investor relations programs, contract negotiations and performing general administrative duties. The term of the Agreement is for twelve (12) months (“Initial Term”) which shall automatically be renewed for an additional twelve (12) month period, unless terminated upon prior notice within thirty (30) days before the end of initial term. Pursuant to the Agreement, the Company shall pay $7,500 to Mr. Vazquez for initial set up and travel costs and first months retainer rendered in connection with engagement, and 340,000 restricted shares of common stock. Thereafter, the Company shall pay $5,000 per month during the remaining months of the Initial Term of the Agreement. Further, the Company shall also issue to Mr. Vasquez three year warrants to purchase 500,000 shares at $1.00 per share. Per the terms of the Agreement, Beneficial ownership is not to exceed 4.99%.

A copy of the Advisory Services Agreement is attached as Exhibit 10.33 to a Report on Form 10-K, as amended, filed with the SEC on April 14, 2009. The Advisory Services Agreement was modified to start effective July 1, 2009, and the prior months were forgiven.


 
On March 27 and December 26 of 2007, the Company issued to Dutchess two convertible debentures one with a face value of $140,000 and the other with a face amount $500,000, to pay an incentive fee to the holder of the equity credit line. The debentures became convertible at the date of the issuances and mature in March 27, 2012 and December 26, 2014, respectively. The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) for the private placement of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the Investor is an “accredited investor” and/or qualified institutional buyer, the Investor has access to information about the Company and its investment, the Investor will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities. For terms of the debentures please see information furnished in our Current Reports and Exhibits thereto on Form 8-K filed on March 29, 2007 and January 7, 2008, respectively, incorporated herein by reference.  
 
On June 11, 2007 the Company issued to Dutchess a debenture in the face amount of $2,000,000 for acquisitions and working capital. The Debenture bears interest at 12% per annum and matures on June 11, 2014. For terms of the debenture please see information furnished in our Current Report on Form 8-K, and Exhibits thereto filed on Jun 11, 2007, incorporated herein by reference.
 
On December 26, 2007, EGPI Firecreek, Inc. the Company issued to Dutchess a debenture in the face amount of $2,100,000. The Debenture bears interest at 12% per annum and matures on December 26, 2014. The Company claims an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the Investor is an “accredited investor” and/or qualified institutional buyer, the Investor has access to information about the Company and its investment, the Investor will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities. For terms of the debenture please see information furnished in our Current Report on Form 8-K, and Exhibits thereto filed on January 7, 2008, incorporated herein by reference.
 
38

 
On April 21 and June 29 of 2006, the Company issued to Dutchess convertible debentures with a face value of $171,875 and $300,000 respectively, to pay an incentive fee to the holder of the equity credit line. The debentures became convertible at the date of the issuances and mature in April and June of 2011. The Company claims an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the Investor is an “accredited investor” and/or qualified institutional buyer, the Investor has access to information about the Company and its investment, the Investor will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities. For terms of the debentures please see information furnished in Exhibit “A” to each of Exhibits 99.1 and 99.2 to our Current Reports on Form 8-K filed on April 27, 2006 and June 7, 2006, respectively, incorporated herein by reference.  
 
On November 14 and December 15 of 2005, the Company issued to Dutchess convertible debentures with a face value of $375,000 and $82,500, respectively, to pay an incentive fee to the holder of the equity credit line. The debentures became convertible at the date of the issuances and mature in November and December 2010. The Company claims an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the Investor is an “accredited investor” and/or qualified institutional buyer, the Investor has access to information about the Company and its investment, the Investor will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities. For terms of the debentures please see information furnished in Exhibit “A” to each of Exhibits 10.3, and 99.1 to our Current Reports on Form 8-K filed on November and December 16, 2005, respectively, incorporated herein by reference.
 
 
Not Applicable
 
Summary Results Of Operations
 
Overview
 
You should read the following discussion and analysis in conjunction with the audited Consolidated Financial Statements and Notes thereto, and the other financial data appearing elsewhere in this Annual Report.
 
The information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in the Company’s revenues and profitability, (ii) prospective business opportunities and (iii) the Company’s strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
 

In its 2005 fiscal year, the Company initiated a program to review domestic oil and gas prospects and targets.  As a result, EGPI acquired non-operating oil and gas interests in a project titled Ten Mile Draw (“TMD”) located in Sweetwater County, Wyoming USA for the development and production of natural gas. In July, 2007, the Company acquired and began production of oil at the 2,000 plus acre Fant Ranch Unit in Knox County, Texas. This was followed by the acquisition and commencement of oil and gas production at the J.B. Tubb Leasehold Estate located in the Amoco Crawar Field in Ward County, Texas in March, 2008. The Company successfully increased production and revenues derived from its properties and in late 2008, the Company was able to retire over 90% of its debt through the disposition of those improved properties.

39

 
In early 2009, based on the economic downturn, struggling financial markets and the implementation of the federal stimulus package for infrastructure projects, the Company embarked on a transition from an emphasis on the oil and gas focused business to that of an acquisition strategy focused on the transportation industry serving federal DOT and state/local DOT agencies. In addition, the acquisition targets being reviewed by the Company also had a presence in the telecommunications and general construction industries. The acquisition strategy focuses on vertically integrating manufacturing entities, distributors and construction groups. In May 2009, the Company acquired M3 Lighting Inc. (M3) as the flagship subsidiary with key additional management team to begin this process, and as a result on November 4, 2009, the Company acquired all of the capital stock of South Atlantic Traffic Corporation, a Florida corporation, which distributes a variety of products geared primarily towards the transportation industry where it derives its revenues.

Through 2009 we continued our previous decisions to limit and wind down the historical pursuit of our oil and gas projects overseas in Central Asian and European countries. In late 2009 and in 2010, the Company began pursuing a reentry to the oil and gas industry and again as part of our strategic plans. The Company is currently a party to a pending agreement to acquire an entity that owns approximately 2,100 miles of a pipeline system initially used as a crude oil transportation system by Koch Industries and, on December 31, 2009, the Company, through its wholly-owned subsidiary, Energy Producers, Inc., effectively acquired a 50% working interest and corresponding 32% revenue interest in certain oil and gas leases, reserves and equipment located in West Central Texas.

The Company has been making presentations to asset-based lenders and other financial institutions for the purpose of (i) expanding and supporting our growth potential by development of its new line of operations for M3, and SATCO, or acquisitions by the Company that are vertically related to M3, and SATCO, such as Redquartz, and the pending SWSC and (ii) building new infrastructure for its oil and gas operations in 2009. The Company throughout its first quarter of operations for 2010 has been pursuing projects for acquisition and development of select targeted oil and gas proved producing properties with revenues, having upside potential and prospects for enhancement, rehabilitation, and future development. These prospects are primarily located in Eastern Texas, and in other core areas of the Permian Basin.

The Company’s goal is to rebuild our revenue base and cash flow; however, the Company makes no guarantees and can provide no assurances that it will be successful in these endeavors.  

 One of the ways our plans for growth could be altered if current opportunities now available become unavailable:
 
The Company would need to identify, locate, or address replacing current potential acquisitions or strategic alliances with new prospects or initiate other existing available projects that may have been planned for later stages of growth and the Company may therefore not be ready to activate. This process can place a strain on the Company. New acquisitions, business opportunities, and alliances, take time for review, analysis, inspections and negotiations. The time taken in the review activities is an unknown factor, including the business structuring of the project and related specific due diligence factors.
 
General
 
The Company historically derived its revenues primarily from retail sales of oil and gas field inventory equipment, service, and supply items primarily in the southern Arkansas area, and from acquired interests owned in revenue producing oil wells, leases, and equipment located in Olney, Young County, Texas. The Company disposed of these two segments of operations in 2003. The Company acquired a marine vessel sales brokerage and charter business, International Yacht Sales Group, Ltd. of Great Britain in December 2003 later disposing of its operations in late 2005. In 2009 we disposed of our wholly owned subsidiary Firecreek Petroleum, Inc. (see further information in this report and in our current Report on Form 8-K filed May 20, 2009, incorporated herein by reference). We account for or have accounted for these segments as discontinued operations in the consolidated statements of operations for the related fiscal year. 
 
Sale/Assignment of 100% Stock of FPI Subsidiary

Having disposed of all of the assets of FPI, on May 18, 2009, the Company and Firecreek Global, Inc., entered into a Stock Acquisition Agreement effective the 18 th day of May, 2009, relating to the Assignees acquisition of all of the issued and outstanding shares of the capital stock of Firecreek Petroleum, Inc., a Delaware corporation. Moreover, included and inherent in the Assignment was all of the Company’s debt held in the FPI subsidiary. In addition, the Company, and Assignee executed a right of first refusal agreement attached as Exhibit to the Agreement, granting to the Company the right of first refusal, for a period of two (2) years after Closing, to participate in certain overseas projects in which Assignee may have or obtain rights related to Assignors’ previous activities in certain areas of the world. For further information please see our current Report on Form 8-K filed on May 20, 2009, incorporated herein by reference.

Completion of Recent Merger Acquisition with M3 Lighting, Inc.

On May 21, 2009, EGPI Firecreek, Inc., a Nevada corporation (the “Company” or “Registrant”), Asian Ventures Corp., a Nevada corporation (the “Subsidiary”), M3 Lighting, Inc., a Nevada corporation (“M3”), and Strategic Partners Consulting, L.L.C., a Georgia limited liability company (“Strategic Partners”) executed and closed a Plan and Agreement of Triangular Merger (the “Plan of Merger”), whereby M3 merged into the Subsi