----

----

| Nevada                                                         | 88-0409170                        |
|----------------------------------------------------------------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |

| Large accelerated filer  o | Accelerated filer  o              |
|--------------------------------------|---------------------------------------------|
| Non-accelerated filer  o   | Smaller reporting company  ý |

----

|                                     |                                                                                        | Page   |
|------------------------------------------|---------------------------------------------------------------------------------------------|--------|
| PART I.  FINANCIAL INFORMATION |
|                                     |                                                                                        |   |
| Item 1.                                  | Financial Statements:                                                                       |   |
|                                     |                                                                                        |   |
|                                     | Consolidated Balance Sheets                                                                 | 2      |
|                                     |                                                                                        |   |
|                                     | Consolidated Statements of Operations                                                       | 3      |
|                                     |                                                                                        |   |
|                                     | Consolidated Statements of Cash Flows                                                       | 4      |
|                                     |                                                                                        |   |
|                                     | Notes to Consolidated Financial Statements                                                  | 5      |
|                                     |                                                                                        |   |
| Item 2.                                  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16     |
|                                     |                                                                                        |   |
| Item 3.                                  | Quantitative and Qualitative Disclosures about Market Risk                                  | 20     |
|                                     |                                                                                        |   |
| Item 4T.                                 | Controls and Procedures                                                                     | 21     |
|                                     |                                                                                        |   |
|                                     |                                                                                        |   |
| PART II.  OTHER INFORMATION    |
|                                     |                                                                                        |   |
| Item 1.                                  | Legal Proceedings                                                                           | 22     |
|                                     |                                                                                        |   |
| Item 1A.                                 | Risk Factors                                                                                | 22     |
|                                     |                                                                                        |   |
| Item 2.                                  | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 22     |
|                                     |                                                                                        |   |
| Item 3.                                  | Defaults Upon Senior Securities                                                             | 22     |
|                                     |                                                                                        |   |
| Item 4.                                  | Submission of Matters to a Vote of Security Holders                                         | 22     |
|                                     |                                                                                        |   |
| Item 5.                                  | Other Information                                                                           | 22     |
|                                     |                                                                                        |   |
| Item 6.                                  | Exhibits                                                                                    | 23     |
|                                     |                                                                                        |   |
| SIGNATURES                               | 24                                                                                          |

----

| ENERGY COMPOSITES CORPORATION                        |   |        |        |   |         |   |
|------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|
| CONSOLIDATED BALANCE SHEETS                          |   |        |        |   |         |   |
|                                                 |   | (Unaudited) |        |   | (Audited)    |   |
|                                                 |   | March 31,   |        |   | December 31, |   |
|                                                 |   | 2010        |        |   | 2009         |   |
| ASSETS                                               |   |        |        |   |         |   |
| Current assets:                                      |   |        |        |   |         |   |
| Cash                                                 |   | $           | 85,888      |   |         | $      | 281,809 |   |
| Accounts receivable, net of allowance for doubtful   |   |        |        |   |         |   |   |   |
| accounts of $135,000 in 2010 and $191,000 in 2009    |   |        | 994,068     |   |         |   | 2,512,934 |   |
| Accounts receivable - related party                  |   |        | 831         |   |         |   | 1,860 |   |
| Inventories, net                                     |   |        | 846,373     |   |         |   | 592,987 |   |
| Other current assets                                 |   |        | 87,523      |   |         |   | 120,123 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Total current assets                                 |   |        | 2,014,683   |   |         |   | 3,509,713 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Property and equipment, net                          |   |        | 5,888,501   |   |         |   | 5,914,803 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Intangible assets, net                               |   |        | 56,095      |   |         |   | 58,218 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Total assets                                         |   | $           | 7,959,279   |   |         | $      | 9,482,734 |   |
|                                                 |   |        |        |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)       |   |        |        |   |         |   |   |   |
|                                                 |   |        |        |   |         |   |   |   |
| Current liabilities:                                 |   |        |        |   |         |   |   |   |
| Current portion of long-term debt obligations        |   | $           | 533,551     |   |         | $      | 533,545 |   |
| Lines of credit - bank                               |   |        | 83,476      |   |         |   | 117,512 |   |
| Short-term notes payable                             |   |        | 1,300,000   |   |         |   | 1,720,000 |   |
| Accounts payable                                     |   |        | 539,502     |   |         |   | 468,374 |   |
| Accounts payable - related party                     |   |        | 112,043     |   |         |   | 188,356 |   |
| Accrued expenses                                     |   |        | 310,454     |   |         |   | 259,549 |   |
| Accrued payroll and payroll taxes                    |   |        | 400,658     |   |         |   | 288,782 |   |
| Customer deposits                                    |   |        | 76,769      |   |         |   | 84,399 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Total current liabilities                            |   |        | 3,356,453   |   |         |   | 3,660,517 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Long-term debt obligations, net of current portion   |   |        | 5,344,096   |   |         |   | 5,363,986 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Total liabilities                                    |   |        | 8,700,549   |   |         |   | 9,024,503 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Stockholders' equity (deficit) :                     |   |        |        |   |         |   |   |   |
| Common stock - $.001 par value; 100,000,000 shares   |   |        |        |   |         |   |   |   |
| authorized, 42,132,486 and 42,115,205 shares issued  |   |        |        |   |         |   |   |   |
| and outstanding, respectively                        |   |        | 42,132      |   |         |   | 42,115 |   |
| Additional paid-in capital                           |   |        | 10,562,381  |   |         |   | 10,365,292 |   |
| Accumulated deficit                                  |   |        | (11,345,783 | )      |         |   | (9,949,176 | ) |
|                                                 |   |        |        |   |         |   |   |   |
| Total stockholders' equity (deficit)                 |   |        | (741,270    | )      |         |   | 458,231 |   |
|                                                 |   |        |        |   |         |   |   |   |
| Total liabilities and stockholders' equity (deficit) |   | $           | 7,959,279   |   |         | $      | 9,482,734 |   |

----

| ENERGY COMPOSITES CORPORATION                                                        |   |                                      |       |   |   |   |
|--------------------------------------------------------------------------------------|--------|-------------------------------------------|------------|--------|--------|--------|
| CONSOLIDATED STATEMENTS OF OPERATIONS                                                |   |                                      |       |   |   |   |
|                                                                                 |   |                                      |       |   |   |   |
|                                                                                 |   |                                      |       |   |   |   |
|                                                                                 |   | (Unaudited)                               |       |
|                                                                                 |   | For the Three Months Ended March 31, |       |
|                                                                                 |   | 2010                                      |       |   | 2009   |   |
|                                                                                 |   |                                      |       |   |   |   |
|  Revenue                                                                        |   | $                                         | 759,605    |   |   | $      | 2,412,669 |   |
|                                                                                 |   |                                      |       |   |   |   |   |   |
|  Cost of goods sold                                                             |   |                                      | 731,911    |   |   |   | 1,968,202 |   |
|                                                                                 |   |                                      |       |   |   |   |   |   |
|             Gross profit |   |                                      | 27,694     |   |   |   | 444,467 |   |
|                                                                                 |   |                                      |       |   |   |   |   |   |
| Selling, general and administrative expenses                                         |   |                                      | 1,182,437  |   |   |   | 892,316 |   |
|                                                                                 |   |                                      |       |   |   |   |   |   |
|  Loss from operations                                                           |   |                                      | (1,154,743 | )      |   |   | (447,849 | ) |
|                                                                                 |   |                                      |       |   |   |   |   |   |
| Other income (expense):                                                              |   |                                      |       |   |   |   |   |   |
| Interest expense                                                                     |   |                                      | (242,040   | )      |   |   | (1,174,538 | ) |
| Interest income                                                                      |   |                                      | 176        |   |   |   | 7,745 |   |
|                                                                                 |   |                                      |       |   |   |   |   |   |
|  Total other income (expense)                                                   |   |                                      | (241,864   | )      |   |   | (1,166,793 | ) |
|                                                                                 |   |                                      |       |   |   |   |   |   |
| Loss before provision (benefit) for income taxes                                     |   |                                      | (1,396,607 | )      |   |   | (1,614,642 | ) |
|                                                                                 |   |                                      |       |   |   |   |   |   |
| Income tax benefit                                                                   |   |                                      | -          |   |   |   | (624,000 | ) |
|                                                                                 |   |                                      |       |   |   |   |   |   |
| Net loss                                                                             |   | $                                         | (1,396,607 | )      |   | $      | (990,642 | ) |
|                                                                                 |   |                                      |       |   |   |   |   |   |
| Net loss per common share - basic and diluted                                        |   | $                                         | (0.03      | )      |   | $      | (0.02 | ) |
|                                                                                 |   |                                      |       |   |   |   |   |   |
|                                                                                 |   |                                      |       |   |   |   |   |   |
| Weighted average shares outstanding - basic and diluted                              |   |                                      | 42,130,064 |   |   |   | 41,931,223 |   |

----

| ENERGY COMPOSITES CORPORATION                                   |   |                                           |       |   |   |   |
|-----------------------------------------------------------------|--------|------------------------------------------------|------------|--------|--------|--------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS                           |   |                                           |       |   |   |   |
|                                                            |   | (Unaudited)For the Three MonthsEnded March 31, |       |
|                                                            |   | 2010                                           |       |   | 2009   |   |
| Cash flows from operating activities:                           |   |                                           |       |   |   |   |
| Net loss                                                        |   | $                                              | (1,396,607 | )      |   | $      | (990,642 | ) |
| Adjustments to reconcile net loss to net cash                   |   |                                           |       |   |   |   |   |   |
| provided by (used in) operating activities:                     |   |                                           |       |   |   |   |   |   |
| Depreciation and amortization                                   |   |                                           | 114,443    |   |   |   | 103,765 |   |
| Gain on sale of assets                                          |   |                                           | -          |   |   |   | (150 | ) |
| Amortization of debt discount for imputed interest              |   |                                           | 1,027      |   |   |   | 948 |   |
| Amortization of discount for warrants and beneficial conversion |   |                                           |       |   |   |   |   |   |
|    feature on convertible debt                   |   |                                           | 128,104    |   |   |   | 1,049,213 |   |
| Stock issued for interest payments                              |   |                                           | 18,156     |   |   |   | 36,840 |   |
| Stock issued for compensation                                   |   |                                           | 9,375      |   |   |   | 110,000 |   |
| Stock option compensation expense                               |   |                                           | 144,575    |   |   |   | - |   |
| Deferred income taxes                                           |   |                                           | -          |   |   |   | (624,000 | ) |
| Changes in operating assets and liabilities:                    |   |                                           |       |   |   |   |   |   |
| Accounts receivable, net                                        |   |                                           | 1,518,866  |   |   |   | 863,974 |   |
| Accounts receivable - related party                             |   |                                           | 1,029      |   |   |   | - |   |
| Inventories, net                                                |   |                                           | (253,386   | )      |   |   | 280,476 |   |
| Other current assets                                            |   |                                           | 32,600     |   |   |   | 33,646 |   |
| Accounts payable                                                |   |                                           | 71,128     |   |   |   | (696,876 | ) |
| Accounts payable - related party                                |   |                                           | (76,313    | )      |   |   | 68,116 |   |
| Accrued expenses                                                |   |                                           | 50,905     |   |   |   | (13,891 | ) |
| Accrued payroll and payroll taxes                               |   |                                           | 111,876    |   |   |   | 36,462 |   |
| Customer deposits                                               |   |                                           | (7,630     | )      |   |   | (378,749 | ) |
|                                                            |   |                                           |       |   |   |   |   |   |
| Net cash provided by (used in) operating activities             |   |                                           | 468,148    |   |   |   | (120,868 | ) |
|                                                            |   |                                           |       |   |   |   |   |   |
| Cash flows from investing activities:                           |   |                                           |       |   |   |   |   |   |
| Purchase of property and equipment                              |   |                                           | (86,018    | )      |   |   | (75,130 | ) |
| Proceeds from sale of property and equipment                    |   |                                           | -          |   |   |   | 150 |   |
|                                                            |   |                                           |       |   |   |   |   |   |
| Net cash used in investing activities                           |   |                                           | (86,018    | )      |   |   | (74,980 | ) |
|                                                            |   |                                           |       |   |   |   |   |   |
| Cash flows from financing activities:                           |   |                                           |       |   |   |   |   |   |
| Net borrowings (repayments) from lines of credit - bank         |   |                                           | (34,036    | )      |   |   | - |   |
| Financing costs paid for long-term debt                         |   |                                           | -          |   |   |   | (3,320 | ) |
| Net borrowings (repayments) from short-term notes payable       |   |                                           | (420,000   | )      |   |   | 200,000 |   |
| Payments on long-term debt                                      |   |                                           | (124,015   | )      |   |   | (102,025 | ) |
|                                                            |   |                                           |       |   |   |   |   |   |
| Net cash provided by (used in) financing activities             |   |                                           | (578,051   | )      |   |   | 94,655 |   |
|                                                            |   |                                           |       |   |   |   |   |   |
| Net decrease in cash and cash equivalents                       |   |                                           | (195,921   | )      |   |   | (101,193 | ) |
|                                                            |   |                                           |       |   |   |   |   |   |
| Cash and cash equivalents:                                      |   |                                           |       |   |   |   |   |   |
| Beginning of period                                             |   |                                           | 281,809    |   |   |   | 2,985,289 |   |
|                                                            |   |                                           |       |   |   |   |   |   |
| End of period                                                   |   | $                                              | 85,888     |   |   | $      | 2,884,096 |   |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

|     |   |          |   |           |   | Percentage of |
|----------|--------|---------------|--------|----------------|--------|---------------|
|     |   | Percentage of |   | Trade Accounts |
|     |   | Total Sales   |   | Receivable     |
| Customer |   | 2010          |   | 2009           |   | 2010          |   | 2009 |
| 1        |   | 25.1%    |   | -%             |   | 17.6%         |   | -% |
| 2        |   | 19.8          |   | -              |   | 8.5           |   | - |
| 3        |   | 1.3           |   | 60.3           |   | 15.8          |   | 49.2 |
| 4        |   | 3.6           |   | 11.8           |   | 9.7           |   | 2.1 |
| 5        |   | -             |   | 10.6           |   | -             |   | - |
|     |   | 49.8%         |   | 82.7%          |   | 51.6%         |   | 51.3% |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

|                 |   | March 31, 2010 |    |   | December 31, 2009 |   |
|----------------------|--------|----------------|---------|--------|-------------------|--------|
| Raw materials        |   | $              | 422,251 |   |              | $      | 312,710 |   |
| Work in progress     |   |           | 424,122 |   |              |   | 289,731 |   |
| Finished goods       |   |           | -       |   |              |   | - |   |
| Obsolescence reserve |   |           | -       |   |              |   | (9,454 | ) |
| Total                |   | $              | 846,373 |   |              | $      | 592,987 |   |

|                           |   | March 31, 2010 |       |   | December 31, 2009 |   |
|--------------------------------|--------|----------------|------------|--------|-------------------|--------|
| Land and improvements          |   | $              | 82,572     |   |              | $      | 82,572 |   |
| Buildings and improvements     |   |           | 3,832,085  |   |              |   | 3,787,784 |   |
| Machinery and equipment        |   |           | 2,503,805  |   |              |   | 2,496,015 |   |
| Vehicles and trailers          |   |           | 369,717    |   |              |   | 369,717 |   |
| Computer equipment             |   |           | 241,214    |   |              |   | 224,166 |   |
| Furniture and office equipment |   |           | 125,085    |   |              |   | 108,206 |   |
|                           |   |           | 7,154,478  |   |              |   | 7,068,460 |   |
| Less accumulated depreciation  |   |           | (1,265,977 | )      |              |   | (1,153,657 | ) |
| Net property and equipment     |   | $              | 5,888,501  |   |              | $      | 5,914,803 |   |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

|                          |   | March 31, 2010 |    |   | December 31, 2009 |   |
|-------------------------------|--------|----------------|---------|--------|-------------------|--------|
| Non-compete agreement         |   | $              | 5,000   |   |              | $      | 5,000 |   |
| Customer list                 |   |           | 74,434  |   |              |   | 74,434 |   |
| Deferred financing costs      |   |           | 69,338  |   |              |   | 69,338 |   |
|                          |   |           | 148,772 |   |              |   | 148,772 |   |
| Less accumulated amortization |   |           | (92,677 | )      |              |   | (90,554 | ) |
| Net intangible assets         |   | $              | 56,095  |   |              | $      | 58,218 |   |

| 2010 - remaining |   | $      | 6,168  |   |
|------------------|--------|--------|--------|--------|
| 2011             |   |   | 7,045  |   |
| 2012             |   |   | 5,396  |   |
| 2013             |   |   | 4,872  |   |
| 2014             |   |   | 4,522  |   |
| Thereafter       |   |   | 28,092 |   |
|             |   |   |   |   |
| Total            |   | $      | 56,095 |   |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

|                                                                                                                                                                                                                               |   | March 31, 2010 |      |   | December 31, 2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|------------------------|--------|
| NPESB - a term loan secured by 15 ton deck crane, interest rate of 7.25%, due October 2010, monthly payments of $948                                                                                                               |   | $                   | 4,096     |   |                   | $      | 6,827 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| NPESB – a term loan secured by all general business assets of AFT and unlimited continuing guarantee of ECC; interest rate of 6.75%, due on demand, monthly payments of $898                                                 |   |                | 42,356    |   |                   |   | 44,355 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| NPESB - an industrial revenue bond term loan, secured by equipment and unlimited continuing guarantee of ECC; contains restrictive financial covenants, interest rate of 5.75%, due July 2014, monthly payment of $7,266           |   |                | 330,647   |   |                   |   | 347,525 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| NPESB - an industrial revenue bond term loan, secured by equipment and unlimited continuing guarantee of ECC; contains restrictive financial covenants, interest rate of 5.75%, due July 2014, monthly payment of $7,266           |   |                | 324,593   |   |                   |   | 341,559 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| City of Wisconsin Rapids, a term loan, secured by all assets and unlimited continuing guarantee of ECC; contains various operating covenants, interest rate 2%, due April 2012, monthly payment of $4,499                          |   |                | 382,364   |   |                   |   | 393,935 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| Yale Financial Services, a capital lease term loan, secured by two Yale forklifts, interest rate 7.7%, due October 2010, monthly payment of $657                                                                                   |   |                | 4,487     |   |                   |   | 6,350 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| City of Wisconsin Rapids, a $75,000 term loan, secured by ECC and AFT guarantees; imputed interest at 8% resulting in an original issue discount with an unamortized balance of $22,249 at March 31, 2010, balloons in August 2014 |   |                | 52,751    |   |                   |   | 51,724 |   |
| NPESB – an industrial revenue bond term loan, secured by real estate, ECC and AFT guarantees; contains restrictive financial covenants, interest rate of 5.50%, due July 2027, monthly payment of $20,776                    |   |                | 2,764,544 |   |                   |   | 2,788,630 |   |
| M&W LLC (related party) – an unsecured term loan, interest rate of 4.775%, due December 2015, quarterly payment of $24,493                                                                                               |   |                | 983,566   |   |                   |   |   996,340 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| NPESB – a term loan secured by all general business assets of AFT and an unlimited continuing guarantee of ECC; due January 2012, interest rate of 6.75%, monthly payments of $13,405                                        |   |                | 276,367   |   |                   |   | 311,514 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| Convertible notes payable ($1,370,000 face value) – see Note 7                                                                                                                                                               |   |                | 711,876   |   |                   |   | 608,772 |   |
|                                                                                                                                                                                                                               |   |                | 5,877,647 |   |                   |   | 5,897,531 |   |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| Less current portion of long-term obligations                                                                                                                                                                                      |   |                | (533,551  | )      |                   |   | (533,545 | ) |
|                                                                                                                                                                                                                               |   |                |      |   |                   |   |   |   |
| Total long-term debt obligations, net of current portion                                                                                                                                                                           |   | $                   | 5,344,096 |   |                   | $      | 5,363,986 |   |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

| 2010 - remaining |   | $      | 409,530   |   |
|------------------|--------|--------|-----------|--------|
| 2011             |   |   | 1,873,380 |   |
| 2012             |   |   | 631,588   |   |
| 2013             |   |   | 337,056   |   |
| 2014             |   |   | 268,492   |   |
| Thereafter       |   |   | 3,015,725 |   |
|             |   |   |      |   |
| Total            |   | $      | 6,535,771 |   |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

| Balance at January 1, 2008                                                                 |   | $      | -          |   |
|--------------------------------------------------------------------------------------------|--------|--------|------------|--------|
|                                                                                       |   |   |       |   |
| Plus: gross proceeds received in 2008                                                      |   |   | 6,370,000  |   |
|                                                                                       |   |   |       |   |
| Less: value assigned to:                                                                   |   |   |       |   |
| Warrants                                                                                   |   |   | (4,068,422 | )      |
| Beneficial conversion feature allotted to:                                                 |   |   |       |   |
| Additional paid-in capital                                                                 |   |   | (1,412,578 | )      |
| Deferred income tax liability                                                              |   |   | (889,000   | )      |
| Sub-total of assigned values                                                               |   |   | (6,370,000 | )      |
|                                                                                       |   |   |       |   |
| Plus: accretion of original issue discount from warrants and beneficial conversion feature |   |   | 5,583,772  |   |
|                                                                                       |   |   |       |   |
| Less: conversion of debt to common stock                                                   |   |   | (4,975,000 | )      |
|                                                                                       |   |   |       |   |
| Balance at December 31, 2009                                                               |   |   | 608,772    |   |
|                                                                                       |   |   |       |   |
| Plus: accretion of original issue discount from warrants and beneficial conversion feature |   |   | 128,104    |   |
|                                                                                       |   |   |       |   |
| Less: conversion of debt to common stock                                                   |   |   | (25,000    | )      |
|                                                                                       |   |   |       |   |
| Balance at March 31, 2010 (face value of $1,370,000)                                       |   | $      | 711,876    |   |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

|                           |   | March 31, |     |
|--------------------------------|--------|-----------|----------|
|                           |   | 2010      |     |   | 2009 |   |
| Currently payable (refundable) |   | $         | -        |   |   | $ | - |   |
| Deferred tax benefit           |   |      | (547,000 | ) |   |   | (624,000 | ) |
| Valuation allowance            |   |      | 547,000  |   |   |   | - |   |
| Total income tax benefit       |   | $         | -        |   |   | $ | (624,000 | ) |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

|                                           |   | March 31, 2010 |       |   | December 31, 2009 |   |
|------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
| Current deferred tax assets                    |   | $              | 140,000    |   |              | $      | 143,000 |   |
| Long-term deferred tax assets                  |   |           | 3,869,000  |   |              |   | 3,319,000 |   |
| Valuation allowance on net deferred tax assets |   |           | (4,009,000 | )      |              |   | (3,462,000 | ) |
| Net deferred tax assets                        |   | $              | -          |   |              | $      | - |   |

| 2010 - remaining |   | $      | 41,574  |   |
|------------------|--------|--------|---------|--------|
| 2011             |   |   | 46,376  |   |
| 2012             |   |   | 28,517  |   |
| 2013             |   |   | 4,597   |   |
| 2014             |   |   | -       |   |
|             |   | $      | 121,064 |   |

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

|                |   | Three Months Ended March 31, 2010 |      |
|---------------------|--------|-----------------------------------|-----------|
|                |   | Products &                    |      |   | Service & |   |   |   |   |
|                |   | Components                        |      |   | Installation |   |   | Total |   |
| Net sales           |   | $                                 | 626,212   |   |   | $ | 133,393 |   |   | $ | 759,605 |   |
| Cost of sales       |   |                              | 582,462   |   |   |   | 149,449 |   |   |   | 731,911 |   |
| Gross profit (loss) |   | $                                 | 43,750    |   |   | $ | (16,056 | ) |   | $ | 27,694 |   |
|                |   |                              |      |   |   |   |   |   |   |   |   |   |
|                |   | Three Months Ended March 31, 2009 |      |
|                |   | Products &                    |      |   | Service & |   |   |   |   |   |
|                |   | Components                        |      |   | Installation |   |   | Total |   |
| Net sales           |   | $                                 | 2,230,617 |   |   | $ | 182,052 |   |   | $ | 2,412,669 |   |
| Cost of sales       |   |                              | 1,775,822 |   |   |   | 192,380 |   |   |   | 1,968,202 |   |
| Gross profit (loss) |   | $                                 | 454,795   |   |   | $ | (10,328 | ) |   | $ | 444,467 |   |

|                                               |   | 2010   |       |   | 2009   |   |
|----------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Basic earnings (loss) per share calculation:       |   |   |       |   |   |   |
| Net income (loss) to common shareholders           |   | $      | (1,396,607 | )      |   | $      | (990,642 | ) |
| Weighted average of common shares outstanding      |   |   | 42,130,064 |   |   |   | 41,931,223 |   |
| Basic net earnings (loss) per share                |   | $      | (0.03      | )      |   | $      | (0.02 | ) |
|                                               |   |   |       |   |   |   |   |   |
| Diluted earnings (loss) per share calculation:     |   |   |       |   |   |   |   |   |
| Net income (loss) to common shareholders           |   | $      | (1,396,607 | )      |   | $      | (990,642 | ) |
| Weighted average of common shares outstanding      |   |   | 42,130,064 |   |   |   | 41,931,223 |   |
| Convertible debentures (1)                         |   |   | -          |   |   |   | - |   |
| Warrants (2)                                       |   |   | -          |   |   |   | - |   |
| Options (3)                                        |   |   | -          |   |   |   | - |   |
| Diluted weighted average common shares outstanding |   |   | 42,130,064 |   |   |   | 41,931,223 |   |
|                                               |   |   |       |   |   |   |   |   |
| Diluted net income (loss) per share                |   | $      | (0.03      | )      |   | $      | (0.02 | ) |

| (1)   | At March 31, 2010 and 2009, there were outstanding convertible debentures equivalent to 548,000 and 588,000 common shares, respectively.  The convertible debentures are anti-dilutive at March 31, 2010 and 2009 and therefore, have been excluded from diluted earnings per share. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | At March 31, 2010 and 2009, there were outstanding warrants equivalent to 2,548,000 common shares.  The warrants expire 3 years from their 2008 date of issuance. The warrants are anti-dilutive at March 31, 2010 and 2009 and therefore, have been excluded from diluted earnings per share. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ENERGY COMPOSITES CORPORATION              |
|--------------------------------------------|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |

| (3)   | At March 31, 2010 and 2009, there were outstanding option awards equivalent to 430,000 and 0 common shares, respectively.  These options vest ratably over a 4 year period.  The options are anti-dilutive at March 31, 2010 and therefore, have been excluded from diluted earnings per share. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | Three months ended March 31, |   |
|--------------------------------------------------------|--------|------------------------------|--------|
|                                                   |   | 2010                         |   |   | 2009 |   |
| Supplemental disclosure of cash flow information:      |   |                         |   |   |   |   |
| Cash paid for interest                                 |   | $                            | 93,263 |   |   | $ | 103,265 |   |
|                                                   |   |                         |   |   |   |   |   |   |
| Non-cash investing and financing activities:           |   |                         |   |   |   |   |   |   |
| Purchase of property and equipment with long-term debt |   | $                            | -      |   |   | $ | 9,412 |   |
| Debt converted to common stock                         |   | $                            | 25,000 |   |   | $ | 1,025,000 |   |

----

----

|                           |   | Three Months Ended March 31, 2010 |      |
|--------------------------------|--------|-----------------------------------|-----------|
|                           |   | Products &                    |      |   | Service & |   |   |   |   |
|                           |   | Components                        |      |   | Installation |   |   | Total |   |
| Net sales                      |   | $                                 | 626,212   |   |   | $ | 133,393 |   |   | $ | 759,605 |   |
| Cost of sales                  |   |                              | 582,462   |   |   |   | 149,449 |   |   |   | 731,911 |   |
| Gross profit (loss)            |   | $                                 | 43,750    |   |   | $ | (16,056 | ) |   | $ | 27,694 |   |
|                           |   |                              |      |   |   |   |   |   |   |   |   |   |
| Gross profit/(loss) % of sales |   |                              | 7.0       | % |   |   | (12.0 | %) |   |   | 3.6 | % |
|                           |   |                              |      |   |   |   |   |   |   |   |   |   |
|                           |   |                              |      |   |   |   |   |   |   |   |   |   |
|                           |   | Three Months Ended March 31, 2009 |      |
|                           |   | Products &                    |      |   | Service & |   |   |   |   |   |
|                           |   | Components                        |      |   | Installation |   |   | Total |   |
| Net sales                      |   | $                                 | 2,230,617 |   |   | $ | 182,052 |   |   | $ | 2,412,669 |   |
| Cost of sales                  |   |                              | 1,775,822 |   |   |   | 192,380 |   |   |   | 1,968,202 |   |
| Gross profit/(loss)            |   | $                                 | 454,795   |   |   | $ | (10,328 | ) |   | $ | 444,467 |   |
|                           |   |                              |      |   |   |   |   |   |   |   |   |   |
| Gross profit/(loss) % of sales |   |                              | 20.4      | % |   |   | (5.7 | %) |   |   | 18.4 | % |

----

----

----

----

----

| Date             | Persons or Class of Persons | Securities                    | Consideration                                                                                        |
|------------------|-----------------------------|-------------------------------|------------------------------------------------------------------------------------------------------|
| January 1, 2010  | 30 accredited investors     | 7,248 shares of common stock  | $18,120 of accrued interest paid to debenture holders                                                |
| January 22, 2010 | 1 accredited investor       | 10,033 shares of common stock | Conversion of debenture in the principal amount of $25,000 and payment of $82.19 of accrued interest |

----

| RegulationS-K Number | Document                                                                                                                                      |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                  | Articles of Merger effective October 14, 2008 (1)                                                                                             |
| 3.2                  | Amended and Restated Articles of Incorporation effective October 14, 2008 (1)                                                                 |
| 3.3                  | Amended and Restated Bylaws adopted October 14, 2008 (1)                                                                                      |
| 4.1                  | Form of Debenture (2)                                                                                                                         |
| 4.2                  | Form of Warrant (2)                                                                                                                           |
| 10.1                 | Share Exchange Agreement dated June 26, 2008 (3)                                                                                              |
| 10.2                 | First Amendment to Share Exchange Agreement dated August 8, 2008 (4)                                                                          |
| 10.3                 | 2008 Stock Incentive Plan (1)                                                                                                                 |
| 10.4                 | Industrial Development Revenue Bonds, Bond Agreement dated February 28, 2007 (1)                                                              |
| 10.5                 | Industrial Development Revenue Bonds, Promissory Note 2007A dated February 28, 2007 (1)                                                       |
| 10.6                 | Industrial Development Revenue Bonds, Promissory Note 2007B dated February 28, 2007 (1)                                                       |
| 10.7                 | Industrial Development Revenue Bonds, Promissory Note 2007C dated February 28, 2007 (1)                                                       |
| 10.8                 | Industrial Development Revenue Bonds, Credit Agreement dated February 28, 2007 (1)                                                            |
| 10.9                 | Industrial Development Revenue Bonds, Construction Mortgage, Assignment Of Leases And Rents and Fixture Filing dated February 28, 2007 (1)    |
| 10.10                | Industrial Development Revenue Bonds, Security Agreement dated February 28, 2007 (1)                                                          |
| 10.11                | Option Agreement dated June 18, 2008 (1)                                                                                                      |
| 10.12                | Purchase and Supply Agreement dated October 13, 2008 (1)                                                                                      |
| 10.13                | Unsecured Promissory Note dated December 31, 2008 (5)                                                                                         |
| 10.14                | Assignment and Assumption Agreement dated December 31, 2008 (6)                                                                               |
| 10.15                | Amendment to the Credit Agreement dated March 13, 2009 (7)                                                                                    |
| 10.16                | Employee Stock Purchase Plan (8)                                                                                                              |
| 31.1                 | Rule 13a-14(a) Certification of Samuel W. Fairchild                                                                                           |
| 31.2                 | Rule 13a-14(a) Certification of Jeffrey S. Keuntjes                                                                                           |
| 32.1                 | Certification of Samuel W. Fairchild Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2                 | Certification of Jeffrey S. Keuntjes Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

| (1)     | Filed as an exhibit to the Current Report on Form 8-K dated October 14, 2008, filed October 17, 2008. |
|------------------------|-------------------------------------------------------------------------------------------------------|

| (2)     | Filed as an exhibit to the Current Report on Form 8-K dated December 15, 2008, filed December 19, 2008. |
|------------------------|---------------------------------------------------------------------------------------------------------|

| (3)     | Filed as an exhibit to the Current Report on Form 8-K dated June 26, 2008, filed June 27, 2008. |
|------------------------|-------------------------------------------------------------------------------------------------|

| (4)     | Filed as an exhibit to the Definitive Information Statement on Schedule 14C, filed September 24, 2008. |
|------------------------|--------------------------------------------------------------------------------------------------------|

| (5)     | Filed as an exhibit to the Current Report on Form 8-K/A dated December 31, 2008, filed January 26, 2009. |
|------------------------|----------------------------------------------------------------------------------------------------------|

| (6)     | Filed as an exhibit to the Current Report on Form 8-K dated December 31, 2008, filed January 6, 2009. |
|------------------------|-------------------------------------------------------------------------------------------------------|

| (7)     | Filed as an exhibit to the Annual Report for the year ended December 31, 2008 on Form 10-K filed March 31, 2009. |
|------------------------|------------------------------------------------------------------------------------------------------------------|

| (8)     | Filed as an exhibit to the Current Report on Form 8-K dated June 2, 2009, filed June 5, 2009. |
|------------------------|-----------------------------------------------------------------------------------------------|

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|                           | ENERGY COMPOSITES CORPORATION |
|--------------------------------|-------------------------------|
|                           |                          |   |
| Dated:  May 17, 2010 | By:                           |   /s/ Samuel W. Fairchild |
|                           |                          | Samuel W. Fairchild, Chief Executive Officer |
|                           |                          |   |
| Dated:  May 17, 2010 | By:                           |   /s/ Jeffrey S. Keuntjes |
|                           |                          | Jeffrey S. Keuntjes, Vice President – Finance |

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