**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington
      D.C., 20549**





**FORM
      10-KSB**





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


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





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


**For
      the transition period from to**





**Commission
      File No. 000-51656**





**ECCO
      ENERGY CORP.**


**(Exact
      name of registrant as specified in its charter)**




Delaware
            
            87-0469497(State
                of other jurisdiction of incorporation)
            
            (I.R.S.
                Employer Identification No.)955
                Dairy AshfordSuite
                206Houston,
                TX
            
            77079(Address
                of Principal Executive Office)
            
            (Zip
                Code)








Registrant’s
      telephone number, including area code: (713) 771-5500





**Securities
      registered pursuant to Section 12 (b) of the Act:**


NONE





**Securities
      registered pursuant to Section 12 (g) of the Act:**


Common
      Stock $0.001 par value













Check
      whether the issuer (1) 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
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirement for the past 90 days. Yes [ Ö **** ]
      No [
      ]





Check
      if
      there is no disclosures of delinquent filers in response to Item 405 of
      Regulations S-B not contained in this form, and no disclosure will 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-KSB or any
      amendment to this Form 10-KSB[ Ö **** ]


Indicate
      by checkmark whether the registrant is a shell company (as defined in Rule
      12b-2
      of the Exchange Act). Yes [ } No [ Ö **** ]





The
      issuer’s total revenues for the year ended December 31, 2006 were
      $485,685.





The
      aggregate market value of the Common Stock held by non-affiliates of the
      registrant (treating all executive officers and directors of the registrant,
      for
      this purpose, as if they may be affiliates of the registrant) was approximately
      $575,626 as of March 6, 2007, based upon a closing price of $0.15 on that
      date.





Applicable
      Only to Corporate Registrants


State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date:


Class        Outstanding
      as of March 6, 2007


Common
      Stock, $0.001 par value        9,048,003





Documents
      Incorporated by Reference


If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (i) any annual report to security holders; (ii)
      any proxy or information statement; and 9iii) any prospectus filed pursuant
      to
      Rule 424(b) or (c) of the Securities Act of 1933 (the “Securities Act”). The
      listed documents should be clearly described for identification purposes (e.g.
      annual report to security holders for fiscal year ended December 24,
      1990).


Not
      applicable.





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [ Ö **** ]










**INDEX**





ITEM
      1.
      DESCRIPTION OF BUSINESS





ITEM
      2.
      DESCRIPTION OF PROPERTY





ITEM
      3.
      LEGAL PROCEEDINGS





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





ITEM
      5.
      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





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





ITEM
      7.
      FINANCIAL STATEMENTS





CONSOLIDATED
      BALANCE SHEETS





CONSOLIDATED
      STATEMENTS OF OPERATIONS




CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ EQUITY





CONSOLIDATED
      STATEMENTS OF CASH FLOWS





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS





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




ITEM
      8A.
      CONTROLS AND PROCEDURES





ITEM
      8B.
      OTHER INFORMATION





ITEM
      9.
      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
      AND CORPORATE GOVERNANCE; COMPLIANCE


WITH
      SECTION 16(a) OF THE EXCHANGE ACT




ITEM
      10.EXECUTIVE COMPENSATION





ITEM
      11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STGOCKHOLDER MATTERS





ITEM
      12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
      DIRECTOR INDEPENDENCE





ITEM
      13.EXHIBITS





ITEM
      14.PRINCIPAL ACCOUNTANT FEES AND SERVICES





SIGNATURES











**FORWARD
      LOOKING STATEMENTS**





The
      statements included or incorporated by reference in this Annual Report, other
      than statements of historical fact, are forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Act of 1934, as amended. In some cases, you can identify
      forward-looking statements by the words “anticipate,” “estimate,” “expect,”
“objective,” “projection,” “forecast,” “goal,” and similar expressions. Such
      forward-looking statements include, without limitation, the statements herein
      and therein regarding the timing of future events regarding the operations
      of
      the Company and its subsidiaries. Although the Company believes that the
      expectations reflected in these forward-looking statements are reasonable,
      it
      can give no assurance that such expectations will prove to have been correct.
      The Company’s actual results could differ materially from those anticipated in
      these forward-looking statements as a result of many factors including without
      limitation the following risk factors:





-
            the
                cyclical nature of the natural gas and oil
                industries




-
            our
                ability to obtain additional
                financing





-
            our
                ability to successfully and profitably find, produce and market oil
                and
                natural gas





-
            uncertainties
                associated with the United States and worldwide
                economies





-
            substantial
                competition from larger companies





-
            the
                loss of key personnel





-
            operating
                interruptions (including leaks, explosions and lack of rig
                availability)





as
      well
      as other such risk factors set forth below.





**Available
      Information**





ECCO
      Energy Corp. files annual, quarterly, current reports, proxy statements, and
      other information with the Securities and Exchange Commission (the
“Commission”). You may read and copy documents referred to in this Annual Report
      on Form 10-KSB that have been filed with the Commission at the Commission’s
      Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain
      information on the operation of the Public Reference Room by calling the
      Commission at 1-800-SEC-0330. You can also obtain copies of our Commission
      filings by going to the Commission’s website at http://www.sec.gov





**ITEM
      1. DESCRIPTION OF BUSINESS**





**BUSINESS
      DEVELOPMENT**





**ECCO
      Energy Corp.**





We
      were
      incorporated under the laws of the State of Utah in 1989 under the name
“Bluefield Enterprises Inc.” During July 1992, we merged with Optical Express
      Inc. wherein our name as changed to “Optical Express Inc.” During August 1993,
      we then merged with The AppleTree Companies, Inc., whereby we were
      reincorporated as a Delaware corporation and the operating subsidiary of The
      AppleTree Company, Inc. and our name was changed to J R Bassett Optical Inc.
      During April 1997, The AppleTree Companies, Inc. filed chapter 11 Bankruptcy
      in
      the U.S. Bankruptcy Court for the Eastern District of Virginia. The U.S.
      Bankruptcy Court subsequently approved the sale of 28,367,500 shares of J R
      Bassett Optical Inc. owned by record by The AppleTree Companies, Inc. to Robert
      E. Williams.





On
      October 19, 2005, Robert E. Williams and Samuel Skipper entered into a stock
      purchase agreement pursuant to which Robert E. Williams sold to Samuel Skipper
      approximately 28,800,000 shares of common stock of J R Bassett Optical Inc.
      and
      our name was subsequently changed to Samurai Energy Corp. On June 30, 2006,
      Samurai Energy Corp. (“Samurai”), ECCO Energy Corp. (“ECCO”) and SEI Acquisition
      Corp., the wholly owned subsidiary of Samurai (“SEI”), entered into an agreement
      and plan of merger (the “Merger Agreement”). In accordance with the terms and
      provisions of the Merger Agreement and Nevada law: (i) each three shares of
      ECCO
      were exchanged for one fully paid non-assessable share of the common stock
      of
      Samurai, pursuant to which Samurai issued an aggregate of 1,415,999 shares
      of
      its common stock to the shareholders of ECCO.; (ii) the separate corporate
      existence of SEI ceased; and (iii) ECCO was the surviving entity. After
      completion of the transactions contemplated by the Merger Agreement, ECCO became
      a wholly-owned subsidiary of Samurai and Samurai merged with and into ECCO
      for
      the purpose of reincorporating under the laws of Nevada. On August 28, 2006,
      the
      reincorporation became effective resulting in Samurai continuing its corporate
      existence in the State of Nevada under the name ECCO Energy Corp.(“ECCE”).




The
      acquisition has been accounted for as a business combination between entities
      under common control similar to a pooling of interest. Prior to the Merger
      Agreement, Samurai and ECCO were controlled by the same management group and
      had
      certain common ownership interests in their respective common stock. Therefore,
      ECCE recorded the acquisition of ECCO at the carrying value of the assets
      acquired with no adjustment for the fair value of the assets
      acquired.





We
      are
      currently an independent oil and gas company actively engaged in oil and gas
      development, exploration and production with properties and operational focus
      in
      the Gulf Coast Region. Our strategy is to grow our asset base by purchasing
      producing assets at a discount to reserve value, increasing the production
      rate
      of reserves, and converting proved developed non-producing reserves to proved
      developed producing reserves. Acquisitions to date have provided producing
      assets. Our principal assets are oil and gas properties, including a 69% working
      interest in the Wilson properties. As of the date of this Annual Report, we
      also
      intend to enter into the alternative fuel industry.





Effective
      March 14, 2007, our shares of common stock commenced trading on the
      Over-the-Counter Bulletin Board under the symbol: ECCE.OB. Please note that
      throughout this Annual Report, and unless otherwise noted, the words “we,”
“our,” “us,” the “Company” or “ECCE” refers to ECCO Energy Corp.





**ECCO
      Biofuels, Inc.**





ECCO
      Biofuels, Inc. ("ECCO Biofuels") was incorporated under the laws of the State
      of
      Texas on September 26, 2006 to offer plant operators the option of financing
      100% of the construction of biodiesel plants, and is our wholly-owned
      subsidiary. We believe that the financing package created by ECCO Biofuels
      is
      unique to the industry and reflects the confidence that we have in biodiesel
      products as well as a commitment to the success and profitability of biodiesel
      plants. We will require significant additional financing in order to enter
      the
      alternative fuel industry.





**Transfer
      Agent**





Our
      transfer agent is Atlas Stock Transfer, Salt Lake City, UT.





**CURRENT
      BUSINESS OPERATIONS**





**Oil
      and Gas**




We
      are an
      oil and gas exploration and development company engaged in the exploration
      and
      development of properties in the United States. Our strategy is to acquire
      oil
      and gas properties that are thought to contain economic quantities of oil and
      gas and have undergone some degree of exploration but have not yet been drilled.
      To date, we have acquired interests in 330 gross acres of located in the State
      of Texas. These properties are producing.





We
      plan
      to target additional exploration and developmental properties for acquisition.
      Our ability to complete any acquisitions will be subject to our obtaining
      sufficient financing and our being able to conclude agreements with the property
      owners on terms that are acceptable to us. These potential acquisition
      properties have not yet been specifically identified. We plan to conduct
      exploration and developmental programs on these properties with the objective
      of
      ascertaining whether any of these properties contain economic reserves of oil
      and gas that are prospective for drilling. There is no assurance that
      commercially viable oil and gas reserves exist on any of these future
      properties, and a great deal of further exploration and development may be
      required before a final evaluation as to the economic and legal feasibility
      for
      our future exploration is determined.








**Biodiesel**





We
      also
      intend to enter the biodiesel industry by creating financing packages and offers
      for biodiesel plant operators. Biofuels refer to alternative fuels derived
      from
      agricultural and other natural or renewable sources and not from petroleum
      or
      other fossil fuels. We believe that a variety of factors are contributing to
      an
      increasing awareness of and demand for alternatives to petroleum-based fuels.
      Such factors include, but are not limited to, the following:





·
            macroeconomic
                factors affecting the global supply of and demand for oil, including
                significantly increased demand for oil from developing countries
                whose
                economies are growing at high rates, such as China and India, coupled
                with
                uncertain supplies of oil from stable sources throughout the
                world;





·
            in
                the United States and other developed countries throughout the world,
                historically and persistently high prices for gasoline and other
                petroleum-based products due in large part to the macroeconomic factors
                discussed above; and





·
            in
                the United States, an increasing number of local, state, and federal
                policies and initiatives aimed at reducing the dependence on imported
                sources of oil, particularly oil imported from unstable regions of
                the
                world such as the Middle East.






**OIL
      AND GAS PROPERTIES**





On
      July
      12, 2006, as part of the merger described above, ECCE acquired through the
      merger of ECCO an additional 32% working interest in oil and gas producing
      properties located in Nueces County, Texas. As of the date of this Annual
      Report, our total working interest in the Wilson properties is 69%. A
      description of the lease and properties is as follows:





**Wilson
      Lease**





(1)
            Oil,
                Gas and Mineral Lease dated January 13, 1934 from Ellen C. Wilson
                to S. F.
                Hurlbut recorded in Volume 15, Page 608 of the Oil & Gas Lease Records
                of Nueces County, Texas insofar and only insofar as to 250 acres,
                more or
                less, being the eastern 250 acres of the northern 250 acres of the
                434.59
                acre tract set aside to Leonora Bernard and more fully described
                in that
                certain Partition Decree of the Estate of W. W. Wright, Deceased,
                recorded
                in Book “H”, Page 313 of the Minutes of District Court of Nueces County,
                Texas.





(2)
            Oil,
                Gas and Mineral Lease dated December 9, 1950 from the State of Texas
                to F.
                William Carr recorded in Volume 116, Page 100 of the Oil & Gas Leases
                Records of Nueces County, Texas insofar and only insofar as to 5
                acres,
                more or less, being out of Tract 5 of the Nueces River containing
                80
                acres, said 5 acre tract being more fully described in that certain
                Gas
                Unit Pooling Agreement dated November 28, 1966 for the Wilson-State
                Gas
                Unit recorded in Volume 263, Page 126 of the Oil & Gas Lease Records
                of Nueces County, Texas, including all producing, non-producing and
                shut-in oil and gas wells (hereinafter called “Wells”) located on and/or
                associated with said Leases, together with all mineral leasehold
                estates
                and working interests created by such Leases, together with any interests
                in contracts, agreements, pipelines, pipeline right-of-ways or easements
                affecting or relating to said Leases and all material, fixtures,
                personal
                property and equipment associated with such
                Wells.





We
      completed the work overs during December 2005 and, as of the date of this Annual
      Report, intend to allow the Wells to continue to produce at their current
      production levels.





**Oil
      and Gas Exploration Regulation**





Our
      oil
      and gas exploration and development activities are, or will be, subject to
      extensive laws and regulations governing prospecting, development, production,
      exports, taxes, labor standards, occupational health, waste disposal, protection
      and remediation of the environment, protection of endangered and protected
      species, drilling safety, toxic substances and other matters. Oil and gas
      exploration is also subject to risks and liabilities associated with pollution
      of the environment and disposal of waste products occurring as a result of
      exploration, development and production. Compliance with these laws and
      regulations may impose substantial costs on us and could subject us to
      significant potential liabilities. Changes in these regulations could require
      us
      to expend significant resources to comply with new laws or regulations or
      changes to current requirements and could have a material adverse effect on
      our
      business operations.





Exploration,
      development and production activities are subject to certain environmental
      regulations which may prevent or delay the commencement or continuance of our
      operations. In general, our exploration, development and production activities
      are subject to certain federal, state and local laws and regulations relating
      to
      environmental quality and pollution control. Such laws and regulations increase
      the costs of these activities and may prevent or delay the commencement or
      continuance of a given operation. Compliance with these laws and regulations
      has
      not had a material effect on our operations or financial condition to date.
      We
      may be subject to legislation regarding emissions into the environment, water
      discharges and storage and disposition of hazardous wastes. In addition,
      legislation has been enacted which requires well and facility sites to be
      abandoned and reclaimed to the satisfaction of state authorities. However,
      such
      laws and regulations are frequently changed and we are unable to predict the
      ultimate cost of compliance. Generally, environmental requirements do not appear
      to affect us any differently or to any greater or lesser extent than other
      companies in the industry and our current operations have not expanded to a
      point where either compliance or cost of compliance with environmental
      regulation is a significant issue for us. Costs may increase with the increasing
      scale and scope of exploration, development and production operations.





Oil
      and
      gas exploration and development operations are subject to comprehensive
      regulation which may cause substantial delays or require capital outlays in
      excess of those anticipated causing an adverse effect on our business
      operations. Oil and gas exploration and development operations are subject
      to
      federal, state, and local laws relating to the protection of the environment,
      including laws regulating removal of natural resources from the ground and
      the
      discharge of materials into the environment. Oil and gas exploration and
      development operations are also subject to federal, state, and local laws and
      regulations which seek to maintain health and safety standards by regulating
      the
      design and use of drilling methods and equipment. Various permits from
      government bodies are required for drilling operations to be conducted; no
      assurance can be given that such permits will be received. Environmental
      standards imposed by federal, state, or local authorities may be changed and
      any
      such changes may have material adverse effects on our activities. Moreover,
      compliance with such laws may cause substantial delays or require capital
      outlays in excess of those anticipated, thus causing an adverse effect on us.
      Additionally, we may be subject to liability for pollution or other
      environmental damages which we may elect not to insure against due to
      prohibitive premium costs and other reasons. As of the date of this Annual
      Report, other than with respect to the posting of a performance
      bond,  we
      have
      not been required to spend material amounts on compliance with environmental
      regulations. However, we may be required to do so in future and this may affect
      our ability to expand or maintain our operations. Environmental regulation
      is
      discussed in further detail in the following section.





**Environmental
      Regulation**





Our
      activities will be subject to existing federal, state and local laws and
      regulations governing environmental quality and pollution control. Our
      operations will be subject to stringent environmental regulation by state and
      federal authorities including the Environmental Protection Agency (“EPA”). Such
      regulation can increase the cost of such activities. In most instances, the
      regulatory requirements relate to water and air pollution control measures.




**Waste
      Disposal**





The
      Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes,
      affect minerals exploration and production activities by imposing regulations
      on
      the generation, transportation, treatment, storage, disposal and cleanup of
      “hazardous wastes” and on the disposal of non-hazardous wastes. Under the
      auspices of the EPA, the individual states administer some or all of the
      provisions of RCRA, sometimes in conjunction with their own, more stringent
      requirements.




**Comprehensive
      Environmental Response, Compensation and Liability**





The
      federal Comprehensive Environmental Response, Compensation and Liability Act
      (“CERCLA”) imposes joint and several liability for costs of investigation and
      remediation and for natural resource damages, without regard to fault or the
      legality of the original conduct, on certain classes of persons with respect
      to
      the release into the environment of substances designated under CERCLA as
      hazardous substances (“Hazardous Substances”). These classes of persons or
      potentially responsible parties include the current and certain past owners
      and
      operators of a facility or property where there is or has been a release or
      threat of release of a Hazardous Substance and persons who disposed of or
      arranged for the disposal of the Hazardous Substances found at such a facility.
      CERCLA also authorizes the EPA and, in some cases, third parties to take actions
      in response to threats to the public health or the environment and to seek
      to
      recover the costs of such action. We may also in the future become an owner
      of
      facilities on which Hazardous Substances have been released by previous owners
      or operators. We may in the future be responsible under CERCLA for all or part
      of the costs to clean up facilities or property at which such substances have
      been released and for natural resource damages.




**Air
      Emissions**





Our
      operations are subject to local, state and federal regulations for the control
      of emissions of air pollution. Major sources of air pollutants are subject
      to
      more stringent, federally imposed permitting requirements. Administrative
      enforcement actions for failure to comply strictly with air pollution
      regulations or permits are generally resolved by payment of monetary fines
      and
      correction of any identified deficiencies. Alternatively, regulatory agencies
      could require us to forego construction, modification or operation of certain
      air emission sources.




**Clean
      Water Act**





The
      Clean
      Water Act (“CWA”) imposes restrictions and strict controls regarding the
      discharge of wastes, including mineral processing wastes, into waters of the
      United States, a term broadly defined. Permits must be obtained to discharge
      pollutants into federal waters. The CWA provides for civil, criminal and
      administrative penalties for unauthorized discharges of hazardous substances
      and
      other pollutants. It imposes substantial potential liability for the costs
      of
      removal or remediation associated with discharges of oil or hazardous
      substances. State laws governing discharges to water also provide varying civil,
      criminal and administrative penalties and impose liabilities in the case of
      a
      discharge of petroleum or it derivatives, or other hazardous substances, into
      state waters. In addition, the EPA has promulgated regulations that may require
      us to obtain permits to discharge storm water runoff. In the event of an
      unauthorized discharge of wastes, we may be liable for penalties and costs.
      Management believes that we are in substantial compliance with current
      applicable environmental laws and regulations.





**BIODIESEL
      PLANTS**





Our
      wholly-owned subsidiary, ECCO Biofuels will operate as a vertically integrated
      biodiesel plant manufacturer, plant operator, fuel producer and fuel
      distributor.





ECCO
      Biofuels’ engineers will design the schematics and operations for the plants
      that will be built by our own fabrication specialists locally and shipped by
      rail or truck to their final destinations. Each plant will be specifically
      engineered for the region it will operate in to take advantage of local
      feedstocks. Using local feedstocks will not only benefit local farmers but
      will
      help keep prices down for the end consumer by eliminating unnecessary
      transportation costs.





All
      fuel
      produced from plants operated by ECCO Biofuels will be sold through ECCO
      Biofuels which will act as the fuel distributor. ECCO Biofuels will arrange
      for
      all of the fuel produced from each plant to be sold locally through fuel
      terminals to local users.





The
      first
      terminal ECCO Biofuels will have in operation will allow local fuel purchasers
      to fill tanker trucks onsite 24 hours a day, seven days a week through an
      automated rack system. By having operating terminals ECCO Biofuels plans to
      bring the biodiesel industry closer to the operations of the existing diesel
      industry and cut prices through efficiencies in transportation
      logistics.





ECCO
      Biofuels is a member of the National Biodiesel Board and the Biodiesel Coalition
      of Texas. ECCO Biofuels attended the National Biodiesel Conference in San
      Antonio Texas in February 2007 and plans to attend the Biodiesel Coalition
      of
      Texas Conference in September 2007 in Austin, Texas as well as the National
      Biodiesel Conference in Florida in 2008.




**MATERIAL
      AGREEMENTS**





**Wittenburg
      Consulting Agreement**





On
      January 1, 2006, we entered into a consulting agreement with Michael Wittenburg
      (the “Wittenburg Consulting Agreement”). In accordance with the terms and
      provisions of the Wittenburg Consulting Agreement: (I) we shall issue to Mr.
      Wittenburg an aggregate of 40,000 shares of our restricted common stock; and
      (ii) Mr. Wittenburg shall perform such consulting services involving general
      business matters and other business consulting as mutually agreed upon. See
      “Item 5. Market for Common Equity and Related Stockholder Matters.”





**Seligman
      Consulting Agreement**





On
      January 1, 2006, we entered into a consulting agreement with Larry Seligman
      (the
“Seligman Consulting Agreement”). In accordance with the terms and provisions of
      the Seligman Consulting Agreement: (i) we shall issue to Mr. Seligman an
      aggregate of 60,000 shares of our restricted common stock; and (ii) Mr. Seligman
      shall perform such consulting services involving general business matters and
      other business consulting as mutually agreed upon. See “Item 5. Market for
      Common Equity and Related Stockholder Matters.”





On
      June
      26, 2006, we filed an S-8 Registration Statement under the Securities Act of
      1933, as amended, to register the aggregate 100,000 shares issued under the
      respective consulting agreements.




**EMPLOYEES**





Samuel
      Skipper is our President and Chief Executive Officer and John Vise is our Chief
      Financial Officer. These individuals are primarily responsible for all our
      day-to-day operations. Other services may be provided by outsourcing and
      consultant and special purpose contracts. We currently employ four persons
      on a
      full time basis and contract with approximately one individual for ongoing
      services provided to us.








**RISK
      FACTORS**





An
      investment in our common stock involves a number of very significant risks.
      You
      should carefully consider the following risks and uncertainties in addition
      to
      other information in evaluating our company and its business before purchasing
      shares of our common stock. Our business, operating results and financial
      condition could be seriously harmed due to any of the following risks. The
      risks
      described below are all of the material risks that we are currently aware of
      that are facing our company. Additional risks not presently known to us may
      also
      impair our business operations. You could lose all or part of your investment
      due to any of these risks.





**Risks
      Related to the Oil and Gas Industry**





**We
      will need to raise additional financing to complete further exploration and
      enter the alternative fuel industry.**





We
      will
      require significant additional financing in order to continue our exploration,
      development and production activities and our assessment of the commercial
      viability of our properties and to
      enter the alternative fuel industry. Furthermore, if the costs of our planned
      exploration, development and production programs or alternative fuel program
      are
      greater than anticipated, we may have to seek additional funds through public
      or
      private share offerings or arrangements with corporate partners. There can
      be no
      assurance that we will be successful in our efforts to raise these require
      funds, or on terms satisfactory to us. The continued exploration of properties
      and the development of our business will depend upon our ability to establish
      the commercial viability of our oil and gas properties and to ultimately develop
      cash flow from operations and reach profitable operations. Although we have
      generated revenue from operations, we are experiencing a negative cash flow.
      Accordingly, the only other sources of funds presently available to us may
      be
      through the sale of equity. We presently believe that debt financing may not
      be
      an alternative to us. Alternatively, we may finance our business by offering
      an
      interest in prospective oil and gas properties to be earned by another party
      or
      parties carrying out further exploration and development thereof or to obtain
      project or operating financing from financial institutions, neither of which
      is
      presently intended. If we are unable to obtain this additional financing, we
      will not be able to continue our business activities and our assessment of
      the
      commercial viability of our properties. Further, if we are able to establish
      that development of our properties is commercially viable, our inability to
      raise additional financing at this stage would result in our inability to place
      our properties into production and recover our investment.




**Although
      certain of our oil and gas properties contain known reserves, we may not
      discover commercially exploitable quantities of oil or gas on other potential
      oil and gas properties that would enable us to enter into commercial production,
      achieve revenues and recover the money we spend on
      exploration.**




There
      is
      no assurance that any prospective oil and gas exploration and development
      programs will result in establishment of reserves. Although our current oil
      and
      gas properties are in the production stage, future prospective properties may
      be
      only in the development stage and have no known body of reserves. Unproved
      or
      proved reserves on these properties may never be determined to be economical.
      We
      plan to conduct further exploration and development activities on properties,
      which may include the completion of feasibility studies necessary to evaluate
      whether a commercial reserve exists on any of the properties. There is a
      substantial risk that these exploration activities will not result in
      discoveries of commercially recoverable reserves of oil and gas. Any
      determination that properties contain commercially recoverable quantities of
      oil
      and gas may not be reached until such time that final comprehensive feasibility
      studies have been concluded that establish that a reserve is likely to be
      economic. There is a substantial risk that any preliminary or final feasibility
      studies carried out by us will not result in a positive determination that
      such
      properties can be commercially developed.




**Exploration
      activities on oil and gas properties may not be commercially successful, which
      could lead us to abandon our plans to develop the property and our investments
      in exploration.**




Our
      long-term success depends on our ability to establish commercially recoverable
      quantities of oil and gas on our properties that can then be developed into
      commercially viable drilling operations. Oil and gas exploration is highly
      speculative in nature, involves many risks and is frequently non-productive.
      These risks include unusual or unexpected geologic formations, and the inability
      to obtain suitable or adequate machinery, equipment or labor. The success of
      oil
      and gas exploration is determined in part by the following factors:




·  identification
      of potential reserves based on superficial analysis;


·  availability
      of government-granted exploration permits;


·  the
      quality of management and geological and technical
      expertise; and


·  the
      capital available for exploration and development.




Substantial
      expenditures are required to establish proven and probable reserves through
      drilling and analysis, and to develop the drilling and processing facilities
      and
      infrastructure at any site chosen. Whether a property will be commercially
      viable depends on a number of factors, which include, without limitation, the
      particular attributes of the property, such as size, grade and proximity to
      infrastructure; oil and gas prices, which fluctuate widely; and government
      regulations, including, without limitation, regulations relating to prices,
      taxes, royalties, land tenure, land use, importing and exporting of oil and
      gas
      and environmental protection. We may invest significant capital and resources
      in
      exploration activities and abandon such investments if we are unable to identify
      commercially exploitable oil and gas reserves. The decision to abandon a project
      may reduce the future trading price of our common stock and impair our ability
      to raise financing. We cannot provide any assurance to investors that we will
      discover or acquire any oil and gas reserves in sufficient quantities on any
      properties to justify commercial operations. Further, we will not be able to
      recover the funds that we may spend on exploration if we are not able to
      establish commercially recoverable quantities of oil and gas.





**We
      will
      require additional funding in the future.**





Based
      upon our historical losses from operations, we will require additional funding
      in the future. If we cannot obtain capital through financings or otherwise,
      our
      ability to execute our oil and gas programs and/or alternative resource programs
      will be greatly limited. Our current plans require us to make capital
      expenditures for the development of our oil and gas properties. Historically,
      we
      have funded our operations through the issuance of equity and short-term debt
      financing arrangements. We may not be able to obtain additional financing on
      favorable terms, if at all. Our future cash flows and the availability of
      financing will be subject to a number of variables, including potential
      production and the market prices of oil and gas, and our potential success
      in
      the alternative fuel industry. Additional financing could lead to a diversion
      of
      cash flow to satisfy debt-servicing obligations and create restrictions on
      business operations. If we are unable to raise additional funds, it would have
      a
      material adverse effect upon our operations.




**As
      part of our growth strategy, we intend to acquire additional oil and gas
      properties** .





As
      part
      of our growth strategy, we intend to acquire additional oil and gas production
      properties. Current and subsequent acquisitions may pose substantial risks
      to
      our business, financial condition, and results of operations. In pursuing
      acquisitions, we will compete with other companies, many of which have greater
      financial and other resources to acquire attractive properties. Even if we
      are
      successful in acquiring additional properties, some of the properties may not
      produce positive results of exploration, or we may not complete exploration
      of
      such prospects within specified time periods that may cause the forfeiture
      of
      the lease in that prospect. There can be no assurance that we will be able
      to
      successfully integrate acquired properties, which could result in substantial
      costs and delays or other operational, technical, or financial problems.
      Further, acquisitions could disrupt ongoing business operations. If any of
      these
      events occur, it would have a material adverse effect upon our operations and
      results from operations.




**We
      are a new entrant into the oil and gas exploration and development industry
      without profitable operating history.**





Our
      recent activities have been limited to organizational efforts, obtaining working
      capital and acquiring and developing a very limited number of properties. As
      a
      result, there is limited information regarding production or revenue generation.
      Further, our future revenues may be limited.





The
      business of oil and gas exploration and development is subject to many risks
      and
      if oil and gas is found in economic production quantities, the potential
      profitability of future possible oil and gas ventures depends upon factors
      beyond our control. The potential profitability of oil and gas properties if
      economic quantities of oil and gas are found is dependent upon many factors
      and
      risks beyond our control, including, but not limited to: (i) unanticipated
      ground conditions; (ii) geological problems; (iii) drilling and other processing
      problems; (iv) the occurrence of unusual weather or operating conditions and
      other force majeure events; (v) lower than expected reserve quantities; (vi)
      accidents; (vii) delays in the receipt of or failure to receive necessary
      government permits; (viii) delays in transportation; (ix) labor disputes; (x)
      government permit restrictions and regulation restrictions; (xi) unavailability
      of materials and equipment; and (xii) the failure of equipment or drilling
      to
      operate in accordance with specifications or expectations.





**Our
      drilling operations may not be successful.**





In
      the
      event we acquire additional oil and gas properties, we intend to test certain
      zones in wellbores already drilled on the properties and if results are positive
      and capital is available, drill additional wells and begin production operations
      from existing and new wells. There can be no assurance that such well
      re-completion activities or future drilling activities will be successful,
      and
      we cannot be sure that our overall drilling success rate or our production
      operations within a particular area will ever come to fruition and, if it does,
      will not decline over time. We may not recover all or any portion of our capital
      investment in the wells or the underlying leaseholds. Unsuccessful drilling
      activities would have a material adverse effect upon our results of operations
      and financial condition. The cost of drilling, completing, and operating wells
      is often uncertain, and a number of factors can delay or prevent drilling
      operations including: (i) unexpected drilling conditions; (ii) pressure or
      irregularities in geological formations; (iii) equipment failures or accidents;
      (iv) adverse weather conditions; and (iv) shortages or delays in availability
      of
      drilling rigs and delivery of equipment.





**Prospects
      that we decide to drill may not yield natural gas or oil in commercially viable
      quantities.**





We
      describe some of our current prospects in this Annual Report. Our prospects
      are
      in various stages of preliminary evaluation and assessment and we have not
      reached the point where we will decide to drill at all on the subject prospects.
      However, the use of seismic data, historical drilling logs, offsetting well
      information, and other technologies and the study of producing fields in the
      same area will not enable us to know conclusively prior to drilling and testing
      whether natural gas or oil will be present or, if present, whether natural
      gas
      or oil will be present in sufficient quantities or quality to recover drilling
      or completion costs or to be economically viable. In sum, the cost of drilling,
      completing and operating any wells is often uncertain and new wells may not
      be
      productive.





**We
      may be unable to identify liabilities associated with the properties or obtain
      protection from sellers against them.**





One
      of
      our growth strategies is to capitalize on opportunistic acquisitions of oil
      and
      natural gas reserves. However, our reviews of acquired properties are inherently
      incomplete because it generally is not feasible to review in depth every
      individual property involved in each acquisition. A detailed review of records
      and properties may not necessarily reveal existing or potential problems, nor
      will it permit a buyer to become sufficiently familiar with the properties
      to
      assess fully their deficiencies and potential. Further, environmental problems,
      such as ground water contamination, are not necessarily observable even when
      an
      inspection is undertaken. We may not be able to obtain indemnification or other
      protections from the sellers against such potential liabilities, which would
      have a material adverse effect upon our results of operations.





**The
      potential profitability of oil and gas ventures depends upon global political
      and market related factors beyond our control.**





World
      prices and markets for oil and gas are unpredictable, highly volatile,
      potentially subject to governmental fixing, pegging, controls, or any
      combination of these and other factors, and respond to changes in domestic,
      international, political, social, and economic environments. Additionally,
      due
      to worldwide economic uncertainty, the availability and cost of funds for
      production and other expenses have become increasingly difficult, if not
      impossible, to project. These and other changes and events may materially affect
      our financial performance. The potential profitability of oil and gas properties
      is dependent on these and other factors beyond our control.





**Production
      or oil and gas resources if found are dependent on numerous operational
      uncertainties specific to the area of the resource that affects its
      profitability.**





Production
      area specifics affect profitability. Adverse weather conditions can hinder
      drilling operations and ongoing production work. A productive well may become
      uneconomic in the event water or other deleterious substances are encountered
      which impair or prevent the production of oil and/or gas from the well.
      Production and treatments on other wells in the area can have either a positive
      or negative effect on our production and wells. In addition, production from
      any
      well may be unmarketable if it is impregnated with water or other deleterious
      substances. The content of hydrocarbons is subject to change over the life
      of
      producing wells. The marketability of oil and gas from any specific reserve
      which may be acquired or discovered will be affected by numerous factors beyond
      our control. These factors include, but are not limited to, the proximity and
      capacity of oil and gas pipelines, availability of room in the pipelines to
      accommodate additional production, processing and production equipment operating
      costs and equipment efficiency, market fluctuations of prices and oil and gas
      marketing relationships, local and state taxes, mineral owner and other
      royalties, land tenure, lease bonus costs and lease damage costs, allowable
      production, and environmental protection. These factors cannot be accurately
      predicted and the combination of these factors may result in us not receiving
      an
      adequate return on our invested capital.





**We
      are dependent upon transportation and storage services provided by third
      parties.**





We
      are
      dependent on the transportation and storage services offered by various
      interstate and intrastate pipeline companies for the delivery and sale of our
      oil and gas supplies. Both the performance of transportation and storage
      services by interstate pipelines and the rates charged for such services are
      subject to the jurisdiction of the Federal Energy Regulatory Commission or
      state
      regulatory agencies. An inability to obtain transportation and/or storage
      services at competitive rates could hinder our processing and marketing
      operations and/or affect our sales margins.





**Our
      results of operations are dependent upon market prices for oil and gas, which
      fluctuate widely and are beyond our control.**





If
      and
      when production from oil and gas properties is reached, our revenue,
      profitability, and cash flow depend upon the prices and demand for oil and
      natural gas. The markets for these commodities are very volatile and even
      relatively modest drops in prices can significantly affect our financial results
      and impede our growth. Prices received also will affect the amount of future
      cash flow available for capital expenditures and may affect our ability to
      raise
      additional capital. Lower prices may also affect the amount of natural gas
      and
      oil that can be economically produced from reserves either discovered or
      acquired. Factors that can cause price fluctuations include: (i) the level
      of
      consumer product demand; (ii) domestic and foreign governmental regulations;
      (iii) the price and availability of alternative fuels; (iv) technical advances
      affecting energy consumption; (v) proximity and capacity of oil and gas
      pipelines and other transportation facilities; (vi) political conditions in
      natural gas and oil producing regions; (vii) the domestic and foreign supply
      of
      natural gas and oil; (viii) the ability of members of Organization of Petroleum
      Exporting Countries to agree to and maintain oil price and production controls;
      (ix) the price of foreign imports; and (x) overall domestic and global economic
      conditions.





The
      availability of a ready market for our oil and gas depends upon numerous factors
      beyond our control, including the extent of domestic production and importation
      of oil and gas, the relative status of the domestic and international economies,
      the proximity of our properties to gas gathering systems, the capacity of those
      systems, the marketing of other competitive fuels, fluctuations in seasonal
      demand and governmental regulation of production, refining, transportation
      and
      pricing of oil, natural gas and other fuels.





**The
      oil and gas industry in which we operate involved many industry related
      operating and implementation risks that can cause substantial losses, including,
      but not limited to, unproductive wells, natural disasters, facility and
      equipment problems and environmental hazards.**





Our
      drilling activities are subject to many risks, including the risk that we will
      not discover commercially productive reservoirs. Drilling for oil and natural
      gas can be unprofitable, not only from dry holes, but from productive wells
      that
      do not produce sufficient revenues to return a profit. In addition, our drilling
      and producing operations may be curtailed, delayed or canceled as a result
      of
      other drilling and production, weather and natural disaster, equipment and
      service failure, environmental and regulatory, and site specific related
      factors, including but not limited to: (i) fires; (ii) explosions; (iii)
      blow-outs and surface cratering; (iv) uncontrollable flows of underground
      natural gas, oil, or formation water; (v) natural disasters; (vi) facility
      and
      equipment failures; (vii) title problems; (viii) shortages or delivery delays
      of
      equipment and services; (ix) abnormal pressure formations; and (x) environmental
      hazards such as natural gas leaks, oil spills, pipeline ruptures and discharges
      of toxic gases.





If
      any of
      these events occur, we could incur substantial losses as a result of: (i) injury
      or loss of life; (ii) severe damage to and destruction of property, natural
      resources or equipment; (iii) pollution and other environmental damage; (iv)
      clean-up responsibilities; (v) regulatory investigation and penalties; (vi)
      suspension of our operations; or (vii) repairs necessary to resume
      operations.





If
      we
      were to experience any of these problems, it could affect well bores, gathering
      systems and processing facilities, any one of which could adversely affect
      our
      ability to conduct operations. We may be affected by any of these events more
      than larger companies, since we have limited working capital.





**The
      oil and gas industry is highly competitive and there is no assurance that we
      will be successful in acquiring leases.**





The
      oil
      and natural gas industry is intensely competitive, and we compete with other
      companies that have greater resources. Many of these companies not only explore
      for and produce oil and natural gas, but also carry on refining operations
      and
      market petroleum and other products on a regional, national or worldwide basis.
      These companies may be able to pay more for productive oil and natural gas
      properties and exploratory prospects or define, evaluate, bid for and purchase
      a
      greater number of properties and prospects than our financial or human resources
      permit. In addition, these companies may have a greater ability to continue
      exploration activities during periods of low oil and natural gas market prices.
      Our larger competitors may be able to absorb the burden of present and future
      federal, state, local and other laws and regulations more easily than we can,
      which would adversely affect our competitive position. Our ability to acquire
      additional properties and to discover reserves in the future will be dependent
      upon our ability to evaluate and select suitable properties and to consummate
      transactions in a highly competitive environment. In addition, because we have
      fewer financial and human resources than many companies in our industry, we
      may
      be at a disadvantage in bidding for exploratory prospects and producing oil
      and
      natural gas properties.





**The
      marketability of natural resources will be affected by numerous factors beyond
      our control, which may result in us not receiving an adequate return on invested
      capital to be profitable or viable.**





The
      marketability of natural resources which may be acquired or discovered by us
      will be affected by numerous factors beyond our control. These factors include
      market fluctuations in oil and gas pricing and demand, the proximity and
      capacity of natural resource markets and processing equipment, governmental
      regulations, land tenure, land use, regulation concerning the importing and
      exporting of oil and gas and environmental protection regulations. The exact
      effect of these factors cannot be accurately predicted, but the combination
      of
      these factors may result in us not receiving an adequate return on invested
      capital to be profitable or viable.





**Oil
      and gas operations are subject to comprehensive regulation which may cause
      substantial delays or require capital outlays in excess of those anticipated
      causing an adverse effect on our business operations.**





Oil
      and
      gas operations are subject to federal, state, and local laws relating to the
      protection of the environment, including laws regulating removal of natural
      resources from the ground and the discharge of materials into the environment.
      Oil and gas operations are also subject to federal, state, and local laws and
      regulations which seek to maintain health and safety standards by regulating
      the
      design and use of drilling methods and equipment. Various permits from
      government bodies are required for drilling operations to be conducted; no
      assurance can be given that such permits will be received. Environmental
      standards imposed by federal, provincial, or local authorities may be changed
      and any such changes may have material adverse effects on our activities.
      Moreover, compliance with such laws may cause substantial delays or require
      capital outlays in excess of those anticipated, thus causing an adverse effect
      on us. Additionally, we may be subject to liability for pollution or other
      environmental damages which we may elect not to insure against due to
      prohibitive premium costs and other reasons. To date we have not been required
      to spend material amounts on compliance with environmental regulations. However,
      we may be required to do so in future and this may affect our ability to expand
      or maintain our operations.





In
      general, our exploration and production activities are subject to certain
      federal, state and local laws and regulations relating to environmental quality
      and pollution control. Such laws and regulations increase the costs of these
      activities and may prevent or delay the commencement or continuance of a given
      operation. Compliance with these laws and regulations has not had a material
      effect on our operations or financial condition to date. Specifically, we are
      subject to legislation regarding emissions into the environment, water
      discharges and storage and disposition of hazardous wastes. In addition,
      legislation has been enacted which requires well and facility sites to be
      abandoned and reclaimed to the satisfaction of state authorities. However,
      such
      laws and regulations are frequently changed and we are unable to predict the
      ultimate cost of compliance. Generally, environmental requirements do not appear
      to affect us any differently or to any greater or lesser extent than other
      companies in the industry.





We
      believe that our operations comply, in all material respects, with all
      applicable environmental regulations. We need insurance to protect our self
      against risks associated with the leases obtained. The leases allow for entry
      onto the properties for the purposes of oil and gas exploration. The insurance
      we require relates solely to developments on the properties for the purposes
      of
      oil and gas exploration.





When
      and
      if we are convinced that our current leases or those subsequently acquired
      are
      capable of hydrocarbon production and sales, and we plan to drill more than
      one
      well, we intend to maintain a $2,000,000 per year limit policy on bodily injury
      and general liability with regard to risks incurred for the drilling of up
      to 25
      wells. This will allow for our growth to contain non contract labor that would
      require us to carry such additional insurance for risks pertaining to oil and
      gas exploration conducted directly by us. Such a policy would include coverage
      for numerous locations for pollution, environmental damage, chemical spills
      and
      commercial general liability, fire, and personal injury. Such a policy will
      not
      be required until such time and date as we believe that we will begin a
      sustained drilling and operating program, and that at least one well has been
      drilled and is producing to justify and warrant further drilling and a sustained
      drilling and operating program.





**Any
      change to government regulation/administrative practices may have a negative
      impact on our ability to operate and our profitability.**





The
      laws,
      regulations, policies or current administrative practices of any government
      body, organization or regulatory agency in the United States or any other
      jurisdiction, may be changed, applied or interpreted in a manner which will
      fundamentally alter our ability to carry on business. The actions, policies
      or
      regulations, or changes thereto, of any government body or regulatory agency,
      or
      other special interest groups, may have a detrimental effect on us. Any or
      all
      of these situations may have a negative impact on our ability to operate and/or
      our profitably.





**We
      may be unable to retain key employees or consultants or recruit additional
      qualified personnel.**





Our
      extremely limited personnel means that we would be required to spend significant
      sums of money to locate and train new employees in the event any of our
      employees resign or terminate their employment with us for any reason. Due
      to
      our limited operating history and financial resources, we are entirely dependent
      on the continued service of Samuel Skipper, our Chief Executive Officer, and
      John Vise, our Chief Financial Officer. Further, we do not have key man life
      insurance on either of these individuals. We may not have the financial
      resources to hire a replacement if one or both of our officers were to die.
      The
      loss of service of either of these employees could therefore significantly
      and
      adversely affect our operations.





**Nevada
      law and our articles of incorporation may protect our directors from certain
      types of lawsuits.**





Nevada
      law provides that our officers and directors will not be liable to us or our
      stockholders for monetary damages for all but certain types of conduct as
      officers and directors. Our Bylaws permit us broad indemnification powers to
      all
      persons against all damages incurred in connection with our business to the
      fullest extent provided or allowed by law. The exculpation provisions may have
      the effect of preventing stockholders from recovering damages against our
      officers and directors caused by their negligence, poor judgment or other
      circumstances. The indemnification provisions may require us to use our limited
      assets to defend our officers and directors against claims, including claims
      arising out of their negligence, poor judgment, or other
      circumstances.





**Risks
      Related to the Biodiesel Industry**




**We
      may not be able to implement and successfully market our financing packages
      to
      operators to build, own and operate commercial-scale Biodiesel plants, which
      would prevent us from achieving profitability.**




Our
      financing strategy relates to the development of a commercial-scale biodiesel
      plant for the production of biodiesel for commercial distribution and sale.
      We
      plan to grow our business by offering and marketing our financing packages.
      We
      believe that there is increasing competition for suitable production sites.
      We
      may not find suitable candidates or other suitable expansion
      opportunities.




**The
      concentration of our efforts towards developing financing packages for the
      construction of biodiesel plants could increase our losses, especially if demand
      for biodiesel declines.**




If
      we are
      successful in marketing our financing packages for the production of biodiesel
      plants, our revenue will be derived primarily from the finance charges
      associated with the marketing of these packages which, in turn, depends upon
      the
      success of the biodiesel plants and sales of biodiesel. An industry shift away
      from biodiesel or the emergence of new competing products may reduce the demand
      for biodiesel. A downturn in the demand for biodiesel would significantly and
      adversely affect any sales and/or profitability of any biodiesel plants we
      finance.




**The
      market price of biodiesel is volatile and subject to significant fluctuations,
      which may cause profitability from the production of biodiesel to fluctuate
      significantly and potentially decrease the returns on our
      investments.**




We
      believe that the production of biodiesel is expanding rapidly. There are a
      number of new plants under construction and planned for construction throughout
      the United States. We expect existing biodiesel plants to expand by increasing
      production capacity and actual production. Therefore, we believe that our
      financing packages will be in demand. However, increases in the demand for
      biodiesel may not be commensurate with increasing supplies of biodiesel. Thus,
      increased production of biodiesel may lead to lower biodiesel prices thus
      decreasing the overall profitability of plants we finance. We cannot predict
      the
      future price of biodiesel. Any material decline in the price of biodiesel will
      adversely affect any sales and/or profitability of the plants we finance and
      thus have a material affect on our business operations and results of operation
      and financial condition.





**Risks
      Related to Our Common Stock**





**Sales
      of a substantial number of shares of our common stock into the public market
      by
      stockholders may result in significant downward pressure on the price of our
      common stock and could affect your ability to realize the current trading price
      of our common stock.**





Sales
      of
      a substantial number of shares of our common stock in the public market by
      stockholders could cause a reduction in the market price of our common stock.
      As
      of the date of this Annual Report, we have 9,048,003 shares of common stock
      issued and outstanding. As of the date of this Annual Report, there are
      8,135,062 outstanding shares of our common stock that are restricted securities
      as that term is defined in Rule 144 under the Securities Act of 1933, as amended
      (the “Securities Act”). Although the Securities Act and Rule 144 place certain
      prohibitions on the sale of restricted securities, restricted securities may
      be
      sold into the public market under certain conditions.





Any
      significant downward pressure on the price of our common stock as stockholders
      sell their shares of our common stock could encourage short sales by others.
      Any
      such short sales could place further downward pressure on the price of our
      common stock.





**The
      trading price of our common stock on the OTC Bulletin Board will fluctuate
      significantly and stockholders may have difficulty reselling their
      shares.**





Effective
      March 14, 2007, our shares of common stock commenced trading on the
      Over-the-County Bulletin Board. There is a volatility associated with Bulletin
      Board securities in general and the value of your investment could decline
      due
      to the impact of any of the following factors upon the market price of our
      common stock: (i) disappointing results from our discovery or development
      efforts; (ii) failure to meet our revenue or profit goals or operating budget;
      (iii) decline in demand for our common stock; (iv) downward revisions in
      securities analysts' estimates or changes in general market conditions; (v)
      technological innovations by competitors or in competing technologies; (vi)
      lack
      of funding generated for operations; (vii) investor perception of our industry
      or our prospects; and (viii) general economic trends.





In
      addition, stock markets have experienced price and volume fluctuations and
      the
      market prices of securities have been highly volatile. These fluctuations are
      often unrelated to operating performance and may adversely affect the market
      price of our common stock. As a result, investors may be unable to sell their
      shares at a fair price and you may lose all or part of your
      investment.





**Additional
      issuance of equity securities may result in dilution to our existing
      stockholders.**





Our
      Articles of Incorporation authorize the issuance of 75,000,000 shares of common
      stock. Common stock is our only authorized class of stock. The board of
      directors has the authority to issue additional shares of our capital stock
      to
      provide additional financing in the future and the issuance of any such shares
      may result in a reduction of the book value or market price of the outstanding
      shares of our common stock. If we do issue any such additional shares, such
      issuance also will cause a reduction in the proportionate ownership and voting
      power of all other stockholders. As a result of such dilution, your
      proportionate ownership interest and voting power will be decreased accordingly.
      Further, any such issuance could result in a change of control.





**Our
      common stock is classified as a “penny stock” under SEC rules which limits the
      market for our common stock.**





The
      SEC
      has adopted rules that regulate broker-dealer practices in connection with
      transactions in "penny stocks." Penny stocks generally are equity securities
      with a price of less than $5.00 (other than securities registered on certain
      national securities exchanges or quoted on the NASDAQ system, provided that
      current price and volume information with respect to transactions in such
      securities is provided by the exchange or system). Penny stock rules require
      a
      broker-dealer, prior to a transaction in a penny stock not otherwise exempt
      from
      those rules, to deliver a standardized risk disclosure document prepared by
      the
      SEC, which specifies information about penny stocks and the nature and
      significance of risks of the penny stock market. A broker-dealer must also
      provide the customer with bid and offer quotations for the penny stock, the
      compensation of the broker-dealer, and sales person in the transaction, and
      monthly account statements indicating the market value of each penny stock
      held
      in the customer's account. In addition, the penny stock rules require that,
      prior to a transaction in a penny stock not otherwise exempt from those rules,
      the broker-dealer must make a special written determination that the penny
      stock
      is a suitable investment for the purchaser and receive the purchaser's written
      agreement to the transaction. These disclosure requirements may have the effect
      of reducing the trading activity in the secondary market for stock that becomes
      subject to those penny stock rules. If a trading market for our common stock
      develops, our common stock will probably become subject to the penny stock
      rules, and shareholders may have difficulty in selling their
      shares.





**ITEM
      2. DESCRIPTION OF PROPERTY**





We
      lease
      our principal office space located at 955 Dairy Ashford, Suite 206, Houston,
      Texas 77079 on a month to month basis, which lease is cancelable with a thirty
      day notice. We also lease office space in Corpus Christi on a month to month
      basis. During fiscal year ended December 31, 2006, aggregate rent expense was
      $27,635. The office space cost in Houston is $1,930 per month and the office
      space cost in Corpus Christi is $400 per month.





**ITEM
      3. LEGAL PROCEEDINGS**





Management
      is not aware of any legal proceedings contemplated by any governmental authority
      or any other party involving us or our properties. As of the date of this Annual
      Report, no director, officer or affiliate is (i) a party adverse to us in any
      legal proceeding, or (ii) has an adverse interest to us in any legal
      proceedings. Management is not aware of any other legal proceedings pending
      or
      that have been threatened against us or our properties.





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





**INFORMATION
      STATEMENT**





The
      Board
      of Directors approved the execution of the Merger Agreement based upon review
      and evaluation of a wide variety of factors and their determination that it
      would be in the best interests of the shareholders. In accordance with the
      terms
      and provisions of the Merger Agreement, the Board of Directors further
      determined that it would be in the best interests of the Company and its
      shareholders to seek approval of a reincorporation under the laws of the State
      of Nevada pursuant to the merger with and into our wholly-owned subsidiary
      and
      the corresponding name change to reflect the proposed future business
      operations.





The
      Board
      of Directors authorized and directed the submission of an Information Statement
      pursuant to Section 14(c) of the Securities Exchange Act of 1934, as amended
      (the "Information Statement"). The definitive Information Statement was filed
      with the Securities and Exchange Commission on August 8, 2006. The Information
      Statement was circulated to our shareholders in connection with the taking
      of
      corporate action without a meeting upon the written consent of ten (10) or
      less
      shareholders holding of record a majority of the outstanding shares of our
      common stock (the "Written Consent"). As of July 24, 2006 (the "Record Date"),
      there were 9,048,003 shares of our common stock issued and
      outstanding.





The
      matters upon which action was taken effective August 28, 2006 pursuant to the
      Written Consent included: (i) the approval of the Merger Agreement; and (ii)
      the
      approval to continue our corporate existence in the State of Nevada under the
      name ECCO Energy Corp.







**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND RECENT SALE
      OF**


**UNREGISTERED
      SECURITIES**





Subsequent
      to consummation of the Merger Agreement, our shares of common stock has traded
      on the Pink Sheets under the symbol: ECCE.PK”. Effective March 14, 2007, our
      shares of common stock commenced trading on the Over-the-Counter Bulletin Board
      under the symbol: ECCE.OB”. The market for our common stock is and will be
      limited and can be volatile. The following table sets forth the high and low
      bid
      prices relating to our common stock on a quarterly basis for the periods
      indicated as compiled by Pink Sheets LLC. These quotations reflect inter-dealer
      prices without retail mark-up, mark-down, or commissions, and may not reflect
      actual transactions.


**Month
                  Ended**
              **High
                  Bid**
              **Low
                  Bid**December
                  31, 2006
              $0.95
              $0.95September
                  30, 2006
              $1.10
              $0.60


As
      of
      March 1, 2007, we had 173 shareholders of record, which does not include
      shareholders whose shares are held in street or nominee names.





**DIVIDEND
      POLICY**





No
      dividends have ever been declared by the Board of Directors on our common stock.
      Our losses do not currently indicate the ability to pay any cash dividends,
      and
      we do not indicate the intention of paying cash dividends either on our common
      stock in the foreseeable future. We intend to apply our earnings, if any, in
      expanding our operations and related activities. The payment of cash dividends
      in the future will be at the discretion of the Board of Directors, our financial
      condition and other facts deemed relevant by our Board of Directors. In
      addition, our ability to pay dividends may be limited under future loan
      agreements, which restrict or prohibit the payment of dividends.





**SECURITIES
      AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS**





As
      of the
      date of this Annual Report, we have one equity compensation titled the 2005
      Directors, Officers and Consultants Stock Option, Stock Warrant and Stock Awards
      Plan (the “Plan”). On December 14, 2005, our Board of Directors approved and
      adopted the Plan. The Plan provides for the issuance of 100,000 shares of common
      stock, warrants, options, preferred stock or any combination thereof. The shares
      subject to the Plan shall consist of authorized but unissued shares of common
      stock and such number of shares shall be and reserved for sale for such purpose.





The
      purpose of the Plan is to maintain our ability to attract and retain highly
      qualified and experienced directors, employees and consultants and give to
      such
      directors, employees and consultants a continued proprietary interest in our
      success.





The
      Plan
      will be administered by our Board of Directors who shall have sole and absolute
      discretion authorizing, determining and designating those persons who are to
      receive common stock, warrants, options, preferred stock or any combination
      thereof. As of December 31, 2006, we had entered into two consulting agreements
      for a consulting fee of 60,000 shares and 40,000 shares of common stock,
      respectively, of which these shares were issued under our Plan.





**RECENT
      SALES OF UNREGISTERED SECURITIES**





As
      of the
      date of this Annual Report and during fiscal year ended December 31, 2006,
      to
      provide capital, we sold stock in private placement offerings, issued stock
      in
      exchange for our debts or pursuant to contractual agreements as set forth
      below.





**Preferred
      Stock**





On
      July
      17, 2006, in connection with the merger, ECCE issued 100,000 shares of preferred
      stock to Samuel M. Skipper, a preferred shareholder of ECCO and Chief Executive
      Officer of ECCE. The preferred stock of ECCO was valued at $27,000 and recorded
      as compensation expense. The preferred stock is entitled to the number of votes
      equal to all votes of other security holders plus one vote. As a result, Mr.
      Skipper has voting control of ECCE.





**Common
      Stock**





On
      January 1, 2006, ECCE entered into two consulting agreements for a consulting
      fee of 60,000 shares and 40,000 shares of common stock, respectively. The
      combined market value of the 100,000 shares was $10,000 as of January 1, 2006,
      based upon a closing price of $0.10 on that date.





On
      January 17, 2006, ECCE issued 1,350,000 shares of common stock to Samurai
      Energy, L.L.C., a related party, realizing cash proceeds of
      $90,000.





On
      June
      19, 2006, ECCE purchased and cancelled 62,000 shares of common stock from
      William Mullen for $37,000.





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





The
      summarized financial data set forth below is derived from and should be read
      in
      conjunction with our audited consolidated financial statements for fiscal years
      ended December 31, 2006 and 2005, including the notes to those financial
      statements which are included in this Annual Report. The following discussion
      should be read in conjunction with our audited financial statements and the
      related notes that appear elsewhere in this Annual Report. The following
      discussion contains forward-looking statements that reflect our plans, estimates
      and beliefs. Our actual results could differ materially from those discussed
      in
      the forward looking statements. Factors that could cause or contribute to such
      differences include, but are not limited to those discussed below and elsewhere
      in this Annual Report, particularly in the section entitled "Risk Factors".
      Our
      audited financial statements are stated in United States Dollars and are
      prepared in accordance with United States Generally Accepted Accounting
      Principles.





**RESULTS
      OF OPERATION**




We
      have
      incurred recurring losses to date. Over the next twelve months our strategy
      is
      to grow our asset base by acquiring producing properties and investing in
      working interest in non-operated properties. In addition, we plan to use
      innovative and sound engineering principles to enhance existing production.
      We
      will acquire operated as well as non-operated properties that meet or exceed
      our
      rate of return criteria. For acquisitions of properties with additional
      development, exploitation and exploration potential, our focus has been on
      acquiring operated properties so that we can better control the timing and
      implementation of capital spending. We will sell properties when management
      is
      of the opinion that the sale price realized will provide an above average rate
      of return for the property or when the property no longer matches the profile
      of
      properties we desire to own.





Our
      current operations are expected to generate sufficient cash flow from operating
      activities to meet our current working capital requirements. The execution
      of
      our growth strategy is dependent on a number of factors including oil and gas
      prices, the availability of oil and gas properties that meet our economic
      criteria and the availability of funds on terms that are acceptable to us,
      if at
      all. There is no assurance that these factors will occur. We expect we will
      require additional capital to meet our long term operating requirements. We
      expect to raise additional capital through, among other things, the sale of
      equity or debt securities.





**Fiscal
      Year Ended December 31, 2006 Compared to Fiscal Year Ended December 31,
      2005**





Our
      net
      loss for fiscal year ended December 31, 2006 was approximately ($234,923)
      compared to a net loss of ($45,756) during fiscal year ended December 31, 2005
      (an increase of $189,167). During fiscal year ended December 31, 2006, we
      generated revenue of $485,685 compared to revenue of $435,893 generated during
      fiscal year ended December 31, 2005 (an increase of $49,792). The increase
      in
      revenues during fiscal year ended December 31, 2006 compared to fiscal year
      ended December 31, 2005 was attributable to an increase in gas and oil sales
      resulting from the successful work-over of the Wilson State Track 5-2 in
      December 2005, of which gas sales increased by approximately $18,162 as a result
      of 15,055 additional MCF produced and oil sales increased by approximately
      $31,631 as a result of the 509 additional barrels produced.





During
      fiscal year ended December 31, 2006, we incurred operating expenses of $682,296
      compared to $478,820 incurred during fiscal year ended December 31, 2005 (an
      increase of $203,476). These operating expenses incurred during fiscal year
      ended December 31, 2006 consisted of: (i) salaries and compensation expense
      of
      $260,983 (2005: $134,795); (ii) professional and consulting fees of $170,917
      (2005: $90,282); (iii) depreciation and depletion of $96,154 (2005: $67,374);
      (iv) general and administrative expenses of $85,304 (2005: $53,638); and (v)
      lease operating expenses of $68,938 (2005: $132,731). Interest expense of
      $38,312 (2005: $2,829) also increased during fiscal year ended December 31,
      2006.





Salaries
      and compensation expenses, professional and consulting fees, and general and
      administrative expenses incurred during fiscal year ended December 31, 2006
      increased, respectively, primarily due to the increase in operating costs
      associated with the increased development of our oil and gas properties, related
      infrastructure and overall corporate activity. Consulting fees of $66,000 were
      paid to a reserve engineer, legal and consulting fees of $16,500 were paid
      in
      connection with the acquisition of oil and gas properties, compensation to
      our
      employees and consultants of $37,000 were paid with shares of our stock, and
      accounting and audit fees of $22,500 were paid. General and administrative
      expenses generally include corporate overhead, financial and administrative
      contracted services, marketing, and consulting costs.





Depreciation
      and depletion of oil and gas properties increased during fiscal year ended
      December 31, 2006 primarily due to the increase in gas (15,055 mcf) and oil
      (509
      bbl) production from the work-over of the Wilson State Track 5-2 together with
      an increase of $12,619 in the cost basis of the properties resulting from the
      successful work-over. Interest expense also increased resulting from the
      long-term debt incurred in 2005 for the purchase of our Wilson properties.





Our
      lease
      operating expenses decreased, however, during fiscal year ended December 31,
      2006 primarily attributable to lower operating and pumper fees of $14,000,
      lower
      processing fess of $9,500 and decreases in workovers of $36,800.




Of
      the
      $682,296 incurred as operating expenses, $189,200 of those expenses entailed
      compensation to our executive officers or directors. See “Item 10. Executive
      Compensation.”





Our
      net
      loss during fiscal year ended December 31, 2006 was ($234,923) or ($0.03) per
      share compared to a net loss of ($45,756) or ($0.01) per share during fiscal
      year ended December 31, 2005.





**LIQUIDITY
      AND CAPITAL RESOURCES**





**Fiscal
      Year Ended December 31, 2006**





At
      December 31, 2006, our current assets were $1,512 and our current liabilities
      were $256,740, which resulted in a working capital deficiency of ($255,228).
      At
      December 31, 2006, current assets were comprised of: cash and cash equivalents.
      At December 31, 2006, current liabilities were comprised of: (i) $146,456 in
      accounts payable-related parties; (ii) $81,387 in current maturities of
      long-term debt; (iii) $18,897 in accounts payable - trade; and (iv) $10,000
      in
      accrued expenses.





At
      December 31, 2006, our total assets were $792,791 comprised of: (i) $1,512
      in
      current assets; (ii) $945,152 in oil and gas properties; (iii) $8,039 in
      equipment less accumulated depletion and depreciation of ($164,252); and (iv)
      $2,340 in deposits. The slight decrease in total assets during fiscal year
      ended
      December 31, 2006 from fiscal year ended December 31, 2005 was primarily due
      to
      the increase in accumulated depletion of oil and gas properties.





At
      December 31, 2006, our total liabilities were $298,140 comprised of: (i)
      $256,740 in current liabilities; and (ii) $41,400 in asset retirement
      obligation. The increase in liabilities during fiscal year ended December 31,
      2006 from fiscal year ended December 31, 2005 was primarily due to the increase
      in current liabilities in accounts payable - related parties.





Stockholders’
      equity decreased from $639,574 for fiscal year ended December 31, 2005 to
      $494,651 for fiscal year ended December 31, 2006.





**Cash
      Flows from Operating Activities**





During
      fiscal year ended December 31, 2006, net cash decreased by $2,011 consisting
      of
      $40,399 provided by operations, which was offset by $12,619 used in investing
      activities for capitalized work-overs and $29,791 used in financing activities
      principally to repay debt.





For
      fiscal year ended December 31, 2006, net cash flow provided by operating
      activities was $40,399 consisting primarily of a net loss of ($234,923). Net
      cash flow provided by operating activities was adjusted by: (i) $96,154 for
      the
      non-cash expense of depreciation, depletion and amortization; (ii) $139,014
      for
      the increase in accounts payable; (iii) $37,000 for the valuation of stock
      issued for services; and (iv) $8,544 for the decrease in prepaid expenses.





For
      fiscal year ended December 31, 2005, net cash flow used in operating activities
      was $(187,270), consisting primarily of a net loss of ($45,756) The change
      in
      net cash flows used in operating activities during fiscal year ended December
      31, 2006 from fiscal year ended December 31, 2005 was affected primarily by
      the
      volume and price we receive for the sale of our gas and oil production. For
      fiscal year ended December 31, 2006, we sold an additional 15,055 MCF at an
      average price of $6.62 per MCF offset by an average price decrease for 2006
      of
      $1.62 per mcf and an additional 509 barrels of oil at an average price of $57.26
      per barrel plus an average price increase for 2006 of $5.86 per bbl resulting
      in
      an increase to revenue of $49,792.





**Cash
      Flows from Investing Activities**





For
      fiscal year ended December 31, 2006, net cash flows used in investing activities
      was ($12,619) consisting of the capitalized work-overs in our oil and gas
      properties compared to net cash flows used in investing activities of ($68,614)
      for fiscal year ended December 31, 2005.





**Cash
      Flows from Financing Activities**





We
      have
      financed some of our operations from the issuance of equity and debt
      instruments. For fiscal year ended December 31, 2006, net cash flows used in
      financing activities was ($29,791) compared to net cash flows provided by
      financing activities of $259,043 for fiscal year ended December 31, 2005,
      pertaining primarily to proceeds received from the sale of our common stock
      offset by payments of ($79,974) on long term debt and ($37,000) for cancellation
      of common stock.




We
      expect
      that working capital requirements will continue to be funded through a
      combination of our future revenues, existing funds and further issuances of
      securities. Our working capital requirements are expected to increase in line
      with the growth of our business.





**PENDING
      ACQUISITIONS AND FUNDING**





During
      May 2006, we entered into two separate purchase and sale agreements. As of
      the
      date of this Annual Report, we intend to close the two separate acquisitions
      under the respective purchase and sale agreements as follows: (i) Ronald E.
      Reece M.D. Revocable Trust of 2000 to acquire its 20% working interest in the
      E.C. Wilson and Wilson State Tract Leases for the issuance of 135,032 shares
      of
      our restricted common stock and a promissory note in the principal amount of
      $205,548; subject to adjustment for production activity since the date of the
      agreement and (ii) Wild Tree Enterprises to acquire its 11% working interest
      in
      the E.C. Wilson and Wilson State Tract Leases for the issuance of 64,968 shares
      of our restricted common stock and a promissory note in the principal amount
      of
      $94,452; subject to adjustment for production activity since the date of the
      agreement. We believe that consummation of these two acquisitions will result
      in
      our ownership of a 100% working interest in the E.C. Wilson and Wilson State
      Tract Leases.





Existing
      working capital, future revenues, further advances and debt instruments, and
      anticipated cash flow are expected to be adequate to fund our operations over
      the next twelve months. Generally, we have financed operations to date through
      generation of revenues from operations and with proceeds from the private
      placement of equity and debt instruments and funding from related parties.
      Management anticipates additional increases in operating expenses and capital
      expenditures relating to: (i) oil and gas operating properties; (ii) possible
      drilling initiatives on current properties and future properties; and (iii)
      future property acquisitions. We intend to fund these expenses with further
      issuances of securities, and debt issuances. Thereafter, we expect we will
      need
      to raise additional capital and generate revenues to meet long-term operating
      requirements. Additional issuances of equity or convertible debt securities
      will
      result in dilution to our current shareholders. Further, such securities might
      have rights, preferences or privileges senior to our common stock. Additional
      financing may not be available upon acceptable terms, or at all. If adequate
      funds are not available or are not available on acceptable terms, we may not
      be
      able to take advantage of prospective new business endeavors or opportunities,
      which could significantly and materially restrict our business
      operations.





During
      fiscal year ended December 31, 2006, we engaged in a private placement offering
      under Regulation D of the Securities Act. Pursuant to the terms of the private
      placements, we issued an aggregate of 1,350,000 shares of our restricted common
      stock for aggregate proceeds of $90,000.





**MATERIAL
      COMMITMENTS**





As
      of the
      date of this Annual Report, we have a material commitment for fiscal year ended
      December 31, 2007, which consists of a promissory note payable to a related
      party in the principal amount of $155,000 (the “Promissory Note”). The terms of
      the Promissory Note require us to make monthly payments of $7,150, including
      principal and interest at 10% per annum. The Promissory Note is due December
      7,
      2007 and is unsecured.





**PURCHASE
      OF SIGNIFICANT EQUIPMENT**





W e
      do not
      intend to purchase any significant equipment during the next twelve
      months.











**OFF-BALANCE
      SHEET ARRANGEMENTS**





As
      of the
      date of this Annual Report, we do not have any off-balance sheet arrangements
      that have or are reasonably likely to have a current or future effect on our
      financial condition, changes in financial condition, revenues or expenses,
      results of operations, liquidity, capital expenditures or capital resources
      that
      are material to investors.





**RECENT
      ACCOUNTING PRONOUNCEMENTS**





In
      December 2004, the FASB issued SFAS No.123R, " *Accounting
      for Stock-Based Compensation* ".
      SFAS
      No.123R establishes standards for the accounting for transactions in which
      an
      entity exchanges its equity instruments for goods or services. This Statement
      focuses primarily on accounting for transactions in which an entity obtains
      employee services in share-based payment transactions. SFAS No.123R requires
      that the fair value of such equity instruments be recognized as expense in
      the
      historical financial statements as services are performed. Prior to SFAS
      No.123R, only certain pro forma disclosures of fair value were required. ECCE
      adopted SFAS No. 123R as of January 1, 2006. As of December 31, 2006, we have
      not issued any options or warrants.










**ITEM
      7. FINANCIAL STATEMENTS**


**Index
      to Financial Statements**


PageReport
                  of Independent Registered Public Accounting Firm
              F-1Consolidated
                  Balance Sheets at December 31, 2006 and 2005
              F-2Consolidated
                    Statements of Operations for the years ended December 31, 2006
                    and 2005
              F-3Consolidated
                    Statements of Changes in Shareholders’ Equity for the years ended December
                    31, 2006 and 2005
              F-4Consolidated
                    Statements of Cash Flows for the year ended December 31, 2006
                    and 2005
              F-5Notes
                  to Financial Statements
              F-6
                  to 12










**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors


ECCO
      Energy Corp.


Houston,
      Texas





We
      have
      audited the accompanying consolidated balance sheets of ECCO Energy Corp. as
      of
      December 31, 2006 and 2005, and the related consolidated statements of
      operations, shareholders' equity, and cash flows for the two years then ended.
      These financial statements are the responsibility of ECCO Energy Corp.’s
      management. Our responsibility is to express an opinion on these consolidated
      financial statements based on our audits.





We
      conducted our audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of ECCO Energy Corp., as of
      December 31, 2006 and 2005, and the results of its operations and its cash
      flows
      for the years then ended in conformity with accounting principles generally
      accepted in the United States of America.





**MALONE
      & BAILEY, PC**


www.malone-bailey.com


Houston,
      Texas





March
      29,
      2007







F-1


**ECCO
        ENERGY CORP.**
 **CONSOLIDATED
        BALANCE SHEETS**


December
                31,2006
            
            2005**ASSETS****CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
                1,512
            
            $
                3,523Prepaid
                expenses
            
            -
            
            8,544Total
                current assets
            
            1,512
            
            12,067**PROPERTY
                and EQUIPMENT**Oil
                and gas properties, using full cost accounting
            
            945,152
            
            932,533Equipment
            
            8,039
            
            8,039Less
                accumulated depreciation, depletion and amortization
            
            (164,252)
            
            (68,098)Total
                property and equipment
            
            788,939
            
            872,474**OTHER
                ASSETS**Deposits
            
            2,340
            
            1,950**TOTAL
                ASSETS**
            
            $
                792,791
            
            $
                886,491**LIABILITIES
                AND SHAREHOLDERS’ EQUITY****CURRENT
                LIABILITIES**Accounts
                payable-trade
            
            $
                18,897
            
            $
                11,528Accounts
                payable-related parties
            
            146,456
            
            14,811Accrued
                expenses
            
            10,000
            
            15,000Current
                maturities of long-term debt
            
            81,387
            
            79,974Current
                maturities of lease obligation
            
            -
            
            2,049Total
                current liabilities
            
            256,740
            
            123,362**LONG-TERM
                LIABILITIES**Long-term
                debt, net of current maturities
            
            -
            
            81,387Long-term
                lease obligation, net of current maturities
            
            -
            
            768Asset
                retirement obligation
            
            41,400
            
            41,400**TOTAL
                LIABILITIES**
            
            298,140
            
            246,917**SHAREHOLDERS’
                EQUITY**Preferred
                stock, $.001 par value; 10,000,000 shares authorized,100,000
                and 0 shares issued and outstanding
            
            100
            
            -Common
                stock, $.001 par value; 75,000,000 shares authorized,9,048,003
                and 7,460,003 shares issued and outstanding
            
            9,048
            
            7,460Additional
                paid-in-capital
            
            874,223
            
            785,911Retained
                deficit
            
            (388,720)
            
            (153,797)Total
                shareholders’ equity
            
            494,651
            
            639,574**TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY**
            
            $
                792,791
            
            $
                886,491





See
      summary of significant accounting policies and notes to financial
      statements.




F-2


**ECCO
        ENERGY CORP.**


**CONSOLIDATED
        STATEMENTS OF OPERATIONS**


**For
                the Years Ended****December
                31,****2006**
            
            **2005****REVENUE**
            
            $
                485,685
            
            $
                435,893**OPERATING
                EXPENSES**Salaries
                and compensation expense
            
            260,983
            
            134,795Professional
                and consulting fees
            
            170,917
            
            90,282Depreciation
                and depletion
            
            96,154
            
            67,374General
                and administrative expenses
            
            85,304
            
            53,638Lease
                operating expenses
            
            68,938
            
            132,731Total
                operating expenses
            
            682,296
            
            478,820Net
                operating loss
            
            (196,611)
            
            (42,927)**OTHER
                INCOME (EXPENSE)**Interest
                expense
            
            (38,312)
            
            (2,829)Net
                loss
            
            $
                (234,923)
            
            $
                (45,756)Basic
                and diluted net loss per share
            
            $
                (0.03)
            
            $
                (0.01)Weighted
                average shares outstanding
            
            9,013,175
            
            6,565,490




See
      summary of significant accounting policies and notes to financial
      statements.




F-3


**ECCO
        ENERGY CORP.** **CONSOLIDATED
          STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY** For
            the
            Years Ended December 31, 2006 and 2005


Preferred
                Shares
            
            Preferred
                Stock Amount
            
            Common
                Shares
            
            Common
                Stock Amount
            
            Additional
                Paid in Capital
            
            Retained
                Deficit
            
            TotalBalances,
                December 31, 2004
            -
            
            $
                -
            
            5,386,000
            
            $
                5,386
            
            $
                95,614
            
            $(108,041)
            
            $
                (7,041)Stock
                issued for:Cash
            -
            
            -
            
            177,000
            
            177
            
            126,823
            
            -
            
            127,000Acquisition
                of oil and gasproperties
            -
            
            -
            
            1,018,000
            
            1,018
            
            435,988
            
            -
            
            437,006Debt
                conversion
            -
            
            -
            
            129,000
            
            129
            
            128,236
            
            -
            
            128,365Reverse
                merger withJ.R.
                Bassett Optical, Inc.
            -
            
            -
            
            750,003
            
            750
            
            (750)
            
            -
            
            -Net
                loss
            
            
            
            
            
            
            
            
            
            
            (45,756)
            
            (45,756)Balances,
                December 31, 2005
            -
            
            -
            
            7,460,003
            
            7,460
            
            785,911
            
            (153,797)
            
            639,574Stock
                issued for:Cash
            -
            
            -
            
            1,350,000
            
            1,350
            
            88,650
            
            -
            
            90,000Services
            -
            
            -
            
            300,000
            
            300
            
            9,700
            
            -
            
            10,000Purchase
                and cancellation ofcommon
                stock
            -
            
            -
            
            (62,000)
            
            (62)
            
            (36,938)
            
            -
            
            (37,000)Preferred
                stock issued as compensation
            100,000
            
            100
            
            -
            
            -
            
            26,900
            
            -
            
            27,000Net
                loss
            
            
            
            
            
            
            
            
            
            
            (234,923)
            
            (234,923)Balances,
                December 31, 2006
            100,000
            
            $
                100
            
            9,048,003
            
            $
                9,048
            
            $
                874,223
            
            $(388,720)
            
            $
                494,651





See
      summary of significant accounting policies and notes to financial
      statements.




F-4


**ECCO
        ENERGY CORP.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**


**For
                the Years Ended****December
                31,****2006**
            
            **2005**Cash
                flows from operating activities:Net
                loss
            
            $
                (234,923)
            
            $
                (45,756)Adjustments
                to reconcile net loss to netcash
                provided by operating activities:Depreciation,
                depletion and amortization
            
            96,154
            
            67,374Stock
                issued for compensation
            
            27,000
            
            -Stock
                issued for services
            
            10,000
            
            -Changes
                in assets and liabilitiesPrepaid
                expenses
            
            8,544
            
            (8,544)Other
                assets
            
            (390)
            
            (1,950)Accounts
                payable
            
            139,014
            
            (213,394)Accrued
                liabilities
            
            (5,000)
            
            15,000Net
                cash provided by (used in) operating activities
            
            40,399
            
            (187,270)Cash
                flows from investing activities:Investment
                in oil and gas properties
            
            (12,619)
            
            (60,575)Purchase
                of equipment
            
            -
            
            (8,039)Net
                cash used in investing activities
            
            (12,619)
            
            (68,614)Cash
                flows from financing activities:Proceeds
                from sale of common stock
            
            90,000
            
            127,000Purchase
                and cancellation of common stock
            
            (37,000)
            
            -Proceeds
                from issuance of debt
            
            -
            
            100,000Issuance
                of debt for oil and gas properties acquired
            
            -
            
            155,000Debt
                from capital lease
            
            -
            
            3,994Payments
                made on long term debt
            
            (79,974)
            
            (125,774)Payments
                made on capital lease obligation
            
            (2,817)
            
            (1,177)Net
                cash provided by (used in) financing activities
            
            (29,791)
            
            259,043Net
                increase in cash and cash equivalents
            
            (2,011)
            
            3,159Cash
                and cash equivalents, at beginning of year
            
            3,523
            
            364Cash
                and cash equivalents, at end of year
            
            $
                1,512
            
            $
                3,523Supplemental
                cash flow information:Interest
                paid
            
            $
                38,312
            
            $
                2,829Non
                cash investing and financial activities:Debt
                converted to stock
            
            $
                -
            
            $
                128,365Issuance
                of common stock for oil and gas properties acquired
            
            $
                -
            
            $
                437,006Issuance
                of debt for oil and gas properties acquired
            
            $
                -
            
            $
                184,500Liabilities
                assumed for oil and gas properties acquired
            
            $
                -
            
            $
                97,388Asset
                retirement obligation assumed for oil and gas properties
                acquired
            
            $
                -
            
            $
                34,200Asset
                retirement obligation transferred in sale of oil and gas
                properties
            
            $
                -
            
            $
                60,000Debt
                transferred in sale of oil and gas properties
            
            $
                -
            
            $
                24,000Liabilities
                transferred in sale of oil and gas properties
            
            $
                -
            
            $
                89,818Receivables
                assumed in sale of oil and gas properties
            
            $
                -
            
            $
                6,888Assignment
                of oil and gas property
            
            $
                -
            
            $
                155,000Issuance
                of debt for assignment of oil and gas property
            
            $
                -
            
            $
                155,000


See
      summary of significant accounting policies and notes to financial
      statements




F-5




**ECCO
      ENERGY CORP.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**








**1.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





***Organization***





ECCO
      Energy Corp. (“ECCE”) is an independent oil and gas company organized in Nevada
      actively engaged in oil and gas development, exploration and production with
      properties and operational focus in the Texas Gulf Coast Region. ECCE’s strategy
      is to grow its asset base by purchasing producing assets at a discount to
      reserve value, increasing the production rate of reserves, and converting proved
      developed non-producing reserves to proved developed producing reserves.
      Acquisitions to date have provided producing assets.





On
      July
      12, 2006 Samurai Energy Corp., a Delaware corporation (“Samurai”), ECCO Energy
      Corp., a Nevada corporation (“ECCO”), and SEI Acquisition Corp., a Nevada
      corporation and a wholly owned subsidiary of Samurai (“Samurai Sub”) completed
      the transactions contemplated by the Agreement and Plan of Merger (“Agreement”),
      dated June 30, 2006. Under the terms and subject to the conditions set forth
      in
      the Agreement and in accordance with Nevada Law, Samurai Sub merged with and
      into ECCO. As a result of the Merger, each three shares of ECCO common stock
      issued and outstanding converted into the right to receive one fully paid
      non-assessable share of Samurai common stock, the separate corporate existence
      of Samurai Sub ceased, and ECCO was the surviving corporation in the Merger.
      Samurai issued 1,415,999 shares to ECCO shareholders. After completion of the
      transaction, ECCO became a wholly-owned subsidiary of Samurai and Samurai merged
      with and into ECCO, for the sole purpose of reincorporating into Nevada. On
      August 28, 2006, the reincorporation became effective resulting in Samurai
      continuing its corporate existence in the State of Nevada under the name ECCO
      Energy Corp.




The
      acquisition has been accounted for as a business combination between entities
      under common control similar to a pooling of interests. Prior to the merger,
      Samurai and ECCO were controlled by the same management group and had certain
      common ownership interests in their respective common stock. Therefore, ECCE
      recorded the acquisition of ECCO at the carrying value of the assets acquired
      with no adjustment for the fair value of the assets acquired. After the merger
      on July 12, 2006, ECCE had a 69% working interest in the E.C. Wilson and Wilson
      State Tract Leases.





***Use
      of Estimates***





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of
      contingent assets and liabilities at the date of the financial statements and
      that affect the reported amounts of revenues and expenses during the reporting
      period.





***Cash
      and Cash Equivalents***





ECCE
      considers all highly liquid investments with original maturities of three months
      or less at the date of purchase to be cash equivalents.





***Oil
      and Gas Properties***





ECCE
      uses
      the full cost method of accounting for its investments in oil and gas
      properties. Under this method, all acquisition, exploration and development
      costs incurred for the purpose of exploring for and developing oil and natural
      gas are capitalized. Acquisition costs include costs incurred to purchase,
      lease
      or otherwise acquire property. Exploration costs include the costs of drilling
      exploratory wells, including those in progress and geological service costs
      in
      exploration activities. Development costs include the costs of drilling
      development wells and costs of completions and facilities. Costs associated
      with
      production and general corporate activities are expensed in the period incurred.
      Investments in unproven properties and major development projects are not
      amortized until proved reserves associated with the projects can be determined
      or until impairment occurs. At December 31, 2006, ECCE does not believe that
      any
      of its properties are impaired. Net capitalized costs of oil and gas properties
      are limited to the lower of unamortized cost or the cost center ceiling, defined
      as the sum of the present value (10% discount rate) of estimated unescalated
      future net revenue from proved reserves; plus the cost of the properties not
      being amortized, if any; plus the lower of cost or estimated fair value of
      unproved properties included in the costs being amortized, if any; less related
      income tax effects.





Depreciation
      and depletion of oil and gas properties is computed using the unit-of-production
      method based on estimated proven reserves. All costs, including an estimate
      of
      future development, restoration, dismantlement and abandonment costs, are
      included in the depreciable base. The costs of investments in unproved
      properties are excluded from the calculation until the costs are evaluated
      and
      proved reserves established.





***Revenue
      and Cost Recognition***





ECCE
      uses
      the sales method of accounting for natural gas and oil revenues. Under this
      method, revenues are recognized based on the actual volumes of gas and oil
      sold
      to purchasers. The volume sold may differ from the volumes to which ECCE is
      entitled based on our interest in the properties. Costs associated with
      production are expensed in the period incurred.





***Concentrations***





Trade
      accounts receivables are generated from companies with significant oil and
      gas
      marketing activities, which would be impacted by conditions or occurrences
      affecting that industry. In 2006, approximately 89% of oil and gas revenues
      were
      attributable to one customer. ECCE performs ongoing credit evaluations of its
      customers and, generally, requires no collateral. ECCE is not aware of any
      significant credit risk relating to its customers and has not experienced any
      credit loss associated with such receivables. Substantially all of the Company’s
      receivables were collected shortly after December 31, 2006. Receivables from
      Samurai Operating Company LLC at December 31, 2006 and 2005, are reflected
      as a
      component of Accounts Payable-related party.





***Income
      Taxes***





ECCE
      recognizes deferred tax assets and liabilities based on differences between
      the
      financial reporting and tax bases of assets and liabilities using the enacted
      tax rates and laws that are expected to be in effect when the differences are
      expected to be recovered. The Company provides a valuation allowance for
      deferred tax assets for which it does not consider realization of such assets
      to
      more likely than not.





***Loss
      per Share***





Basic
      and
      diluted net loss per share calculations are presented in accordance with
      Financial Accounting Standards Statement 128, and are calculated on the basis
      of
      the weighted average number of common shares outstanding during the year. They
      include the dilutive effect of common stock equivalents in years with net
      income.





***New
      Accounting Standards***





In
      December 2004, the FASB issued SFAS No.123R, " *Accounting
      for Stock-Based Compensation* ".
      SFAS
      No.123R establishes standards for the accounting for transactions in which
      an
      entity exchanges its equity instruments for goods or services. This Statement
      focuses primarily on accounting for transactions in which an entity obtains
      employee services in share-based payment transactions. SFAS No.123R requires
      that the fair value of such equity instruments be recognized as expense in
      the
      historical financial statements as services are performed. Prior to SFAS
      No.123R, only certain pro forma disclosures of fair value were required. ECCE
      adopted SFAS No. 123R as of January 1, 2006. As of December 31, 2006, ECCE
      had
      not issued any options or warrants.





**4.**  **LONG-TERM
      DEBT-RELATED PARTY**




Notes
      Payable are from Samurai Energy LLC, a company controlled by ECCE’s President,
      and consists of the following at December 31, 2006 and 2005:




2006
            
            2005Promissory
                note to a related party-payable
                in monthly payments of $7,150including
                principal and interest at 10%due
                December 7, 2007; unsecured
            
            $
                81,387
            
            $
                161,361Less
                current portion
            
            81,387
            
            79,974Long-term
                portion
            
            $
                -
            
            $
                81,387








**5.**  **ASSET
      RETIREMENT OBLIGATION**





In
      2001,
      the FASB issued SFAS 143, “Accounting for Asset Retirement Obligations” which
      was adopted by ECCE in 2004 when ECCE first acquired oil and gas properties.
      SFAS 143 requires entities to record the fair value of a liability for asset
      retirement obligations (“ARO”) in the period in which it is incurred and a
      corresponding increase in the carrying amount of the related long-lived asset.
      The present value of the estimated asset retirement cost is capitalized as
      part
      of the carrying amount of the long-lived asset and is depreciated over the
      useful life of the asset. ECCE accrues an abandonment liability associated
      with
      its oil and gas wells when those assets are placed in service. The ARO is
      recorded at its estimated fair value and accretion is recognized over time
      as
      the discounted liability is accreted to its expected settlement value. Fair
      value is determined by using the expected future cash outflows discounted at
      ECCE’s risk-free interest rate. No market risk premium has been included in
      ECCE’s calculation of the ARO balance. ECCE’s ARO liability at December 31, 2006
      is $41,400.





**6.**  **PREFERRED
      STOCK**





On
      July
      17, 2006, in connection with the merger, ECCE issued 100,000 shares of preferred
      stock to Samuel M. Skipper, a preferred shareholder of ECCO and Chief Executive
      Officer of ECCE. The preferred stock of ECCO was valued at $27,000 and recorded
      as compensation expense. The preferred stock is entitled to the number of votes
      equal to all votes of other security holders plus one vote. As a result, Mr.
      Skipper has voting control of ECCE.





**7.**  **COMMON
      STOCK**





On
      January 1, 2006, ECCE entered into two consulting agreements for a consulting
      fee of 60,000 shares and 40,000 shares of common stock, respectively. The
      combined market value of the 100,000 shares was $10,000 as of January 1, 2006,
      based upon a closing price of $0.10 on that date.





On
      January 17, 2006, ECCE issued 1,350,000 shares of common stock to Samurai
      Energy, L.L.C., a related party, realizing cash proceeds of
      $90,000.





On
      June
      19, 2006, ECCE purchased and cancelled 62,000 shares of common stock from
      William Mullen for $37,000.




**8.**  **DEFERRED
      TAXES**





Deferred
      income taxes are recorded at the maximum effective tax rate. Statement of
      Financial Accounting Standards No. 109 “Accounting for Income Taxes” requires
      that deferred tax assets be reduced by a valuation allowance if it is more
      or
      likely than not that some portion or all of the deferred tax asset will not
      be
      realized.





2006
            
            2005Net
                operating loss
            
            $
                82,200
            
            $
                53,800Less
                valuation allowance
            
            (82,200)
            
            (53,800)Total
            
            $
                -
            
            $
                -





2006
      net
      operating loss carry-forward s
      begin
      to expires in 2024.





**9.**  **COMMITMENTS
      AND CONTINGENCIES**





***Legal
      Proceedings***





ECCE
      is
      not a party to any litigation at December 31, 2006.





***Operating
      Leases***





ECCE
      leases office space in Houston and Corpus Christi, Texas on a month to month
      operating lease cancelable with thirty days written notice. Rent expense was
      $27,635 and $21,357 for the years ended December 31, 2006 and 2005,
      respectively.





***Environmental
      Matters***





ECCE’s
      operations and properties are subject to extensive federal, state, and local
      laws and regulations relating to the generation, storage, handling, emission,
      transportation, and discharge of materials into the environment. Permits are
      required for several of ECCE’s operations and these permits are subject to
      revocation, modification, and renewal by issuing authorities. ECCE’s also is
      subject to federal, state, and local laws and regulations that impose liability
      for the cleanup or remediation of property which has been contaminated by the
      discharge or release of hazardous materials or wastes into the environment.
      Governmental authorities have the power to enforce compliance with their
      regulations, and violations are subject to fines or injunctions, or both.
      Certain aspects of ECCE’s operations may not be in compliance with applicable
      environmental laws and regulations, and such noncompliance may give rise to
      compliance costs and administrative penalties. It is not anticipated that ECCE
      will be required in the near future to expend amounts that are material to
      the
      financial condition or operations, but because such laws and regulations are
      frequently changed and, as a result, may impose increasingly strict
      requirements, ECCE is unable to predict the ultimate cost of complying with
      such
      laws and regulations.





**1** **0.**  **RELATED
      PARTY TRANSACTIONS**




Samurai
      Operating Company L.L.C., a related party, is the operator of the properties
      and
      provides production, engineering and maintenance services. Accordingly, Samurai
      Operating Company L.L.C. charged an operating fee for its services of $16,560
      and $24,840 in 2006 and 2005, respectively.





**11** **.**  **MANAGEMENT”S
      FINANCING PLANS**





Since
      inception, ECCE’s working capital needs have been met through operating
      activities and from financings and loans from its principal shareholder, Sam
      Skipper and related entities. ECCE anticipates that additional financings and
      loans may be required to sustain operations in the future. Accordingly, should
      additional resources be required in 2007, Sam Skipper has committed to provide
      such additional sources of working capital and financing as necessary to meet
      the working capital requirements for 2007.





**12.**  **SUPPLEMENTAL
      OIL AND GAS INFORMATION** -(Unaudited)


Proved
      oil and gas reserve quantities are based on estimates prepared internally by
      ECCE’s engineer in accordance with guidelines established by the Securities
      Exchange Commission (SEC).





There
      are
      numerous uncertainties inherent in estimating quantities of proved reserves
      and
      projecting future rates of production. The following reserve data related to
      the
      properties represents estimates only and should not be construed as being exact.
      The reliability of these estimates at any point in time depends on both the
      quality and quantity of the technical and economic data, the performance of
      the
      reservoirs, as well as extensive engineering judgment. Consequently, reserve
      estimates are subject to revision as additional data becomes available during
      the producing life of a reservoir. The evolution of technology may also result
      in the application of improved recovery techniques, such as supplemental or
      enhanced recovery projects, which have the potential to increase reserves beyond
      those currently envisioned.





Estimates
      of proved reserves are derived from quantities of crude oil and natural gas
      that
      geological and engineering data demonstrate with reasonable certainty to be
      recoverable in future years from known reservoirs under existing operating
      and
      economic conditions and rely upon a production plan and strategy.





Statement
      of Financial Accounting Standards No. 69, Disclosures About Oil and Gas
      Producing Activities (“FAS 69”), requires calculation of future net cash flows
      using a 10% annual discount factor and year-end prices, costs and statutory
      tax
      rates, except for known future changes such as contracted prices and legislated
      tax rates. The average price used was $61.00 per barrel of oil and $7.28 per
      Mcf
      of gas.





Gas
              
              Oil(MMcf)
              
              (MBbls)Total
                  Proved Reserves:Balance,
                  December 31, 2004
              
              430.780
              
              5.001Acquisition
                  of oil and gas properties
              
              354.796
              
              7.749Production
              
              (49.194)
              
              (0.873)Disposal
                  of oil and gas properties
              
              (8.889)
              
              (9.576)Balance,
                  December 31, 2005
              
              727.493
              
              2.301Production
              
              (65.330)
              
              (0.930)Revision
                  of quantity estimates
              
              25.281
              
              1.686Balance,
                  December 31, 2006
              
              687.444
              
              3.057




**Capitalized
      Costs of Oil and Gas Producing Activities**





The
      following table sets forth the aggregate amounts of capitalized costs relating
      to the ECCE's oil and gas producing activities and the related accumulated
      depletion as of December 31, 2006:





**2006**Asset
                retirement obligations
            
            $
                41,400Proved
                properties being depleted
            
            903,752Less
                accumulated depletion
            
            (164,252)Net
                capitalized costs
            
            $
                780,900




**Costs
      Incurred in Oil and Gas Producing Activities**





The
      following table reflects the costs incurred in oil and gas property acquisition,
      exploration and development activities during the years ended December 31,
      2006
      and 2005:





**2006**
            
            **2005**Exploration
                costs
            
            $
                -
            
            $
                -Development
                costs
            
            12,169
            
            60,575$
                12,169
            
            $
                60,575





The
      following disclosures concerning the standardized measure of future cash flows
      from proved oil and gas reserves are presented in accordance with FAS 69. As
      prescribed by FAS 69, the amounts shown are based on prices and costs at the
      end
      of each period and a 10 percent annual discount factor.





Future
      cash flows are computed by applying fiscal year-end prices of natural gas and
      oil to year-end quantities of proved natural gas and oil reserves. Future
      operating expenses and development costs are computed primarily by ECCE’s
      petroleum engineer by estimating the expenditures to be incurred in developing
      and producing ECCE’s proved natural gas and oil reserves at the end of the year,
      based on year end costs and assuming continuation of existing economic
      conditions. Future income taxes are based on currently enacted statutory
      rates.





The
      standardized measure of discounted future net cash flows is not intended to
      represent the replacement costs or fair value of ECCE’s natural gas and oil
      properties. An estimate of fair value would take into account, among other
      things, anticipated future changes in prices and costs, and a discount factor
      more representative of the time value of money and the risks inherent in reserve
      estimates of natural gas and oil producing operation


**Standardized
                  Measure of Discounted Future Net Cash Flow**2006
              
              2005Future
                  cash in flows at December 31,
              $
                  4,907,137
              
              $
                  8,371,196Future
                  costs-Operating
              (862,035)
              
              (932,634)Development
                  and abandonment
              (602,370)
              
              (614,834)Future
                  net cash flows before income taxes
              3,442,732
              
              6,823,728Future
                  income taxes
              (1,204,956)
              
              (2,388,304)Future
                  net cash flows before income taxes
              2,237,776
              
              4,435,424Discount
                  at 10% annual rate
              (754,438)
              
              (1,445,924)Standardized
                  measure of discounted future net cash flows
              $
                  1,483,338
              
              $
                  2,989,500
 
 **The
        following reconciles the change in the standardized measure of discounted
        net
        cash flow for the year ended December 31, 2006 and 2005**
 
 2006
              
              2005Beginning
                  of the year
              $
                  2,989,500
              
              $
                  1,771,397Acquisition
                  of oil and gas properties
              -
              
              718,485Sales,
                  net of production costs
              (485,694)
              
              (290,497)Net
                  change in prices and production costs
              (1,301,289)
              
              918,367Change
                  in future development costs
              12,464
              
              -Revision
                  of quantity estimates
              268,357
              
              -Disposal
                  of oil and gas properties
              (128,252)
              
              (128,252)Ending
                  of year
              $
                  1,483,338
              
              $
                  2,989,500







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





Our
      principal independent accountant from December 8, 2005 to current date is Malone
      & Bailey, PC., Houston, Texas 77042.





**ITEM.
      8A. CONTROLS AND PROCEDURES.**





An
      evaluation was conducted under the supervision and with the participation of
      our
      management, including Samuel Skipper, our Chief Executive Officer (“CEO”) and
      John Vise, our Chief Financial Officer (“CFO”), of the effectiveness of the
      design and operation of our disclosure controls and procedures as of December
      31, 2006. Based on that evaluation, Messrs. Skipper and Vise concluded that
      our
      disclosure controls and procedures were effective as of such date to ensure
      that
      information required to be disclosed in the reports that we file or submit
      under
      the Exchange Act, is recorded, processed, summarized and reported within the
      time periods specified in SEC rules and forms.





Such
      officers also confirm that there was no change in our internal control over
      financial reporting during the quarter ended December 31, 2006 that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.





**ITEM
      8B. OTHER INFORMATION**





Not
      applicable.










**PART
      III**





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





**IDENTIFICATION
      OF DIRECTORS AND EXECUTIVE OFFICERS**





All
      of
      our directors hold office until the next annual general meeting of the
      shareholders or until their successors are elected and qualified. Our officers
      are appointed by our board of directors and hold office until their earlier
      death, retirement, resignation or removal.





Our
      directors and executive officers, their ages, positions held are as
      follows:





**Name**
            
            **Age**
            
            **Position
                with the Company**Samuel
                Skipper
            
            47
            
            President,
                Chief Executive Officer and a DirectorJohn
                Vise
            
            55
            
            Secretary/Treasurer,
                Chief Financial Officer and a Director





**Business
      Experience**





The
      following is a brief account of the education and business experience of each
      director, executive officer and key employee during at least the past five
      years, indicating each person's principal occupation during the period, and
      the
      name and principal business of the organization by which he or she was employed,
      and including other directorships held in reporting companies.





**Samuel
      M. Skipper** is
      our
      President/Chief Executive Officer and a director. For
      the
      past sixteen years, Mr. Skipper has assisted in the consolidation of private
      and
      public companies and the entry of such companies into the public markets. From
      1998 to 2003, Mr. Skipper was the founder, chairman of the board and the chief
      executive officer of VTEX Energy, Inc., a public oil and gas company with over
      $100 million in assets. From 1990 to 1993, Mr. Skipper was the founder of and
      served as the president and chief executive officer of ImageTrust, Inc. a public
      company in the health care industry. Under his leadership, ImageTrust Inc.
      assembled over $25 million in assets for owned and operated MRI diagnostic
      clinics in South Carolina and Texas. In 1993 Mr. Skipper sold ImageTrust, Inc.
      for seven figures. In 1990, Mr. Skipper served as the founder and the vice
      president of corporate development of Diagnostic Health Corporation (DHC),
      where
      he assisted DHC in the identification and closing of over $100 million of assets
      until DHC’s acquisition by HealthSouth Corporation in 1994.





**John
      M. Vise** is
      our
      Treasurer/Chief Financial Officer and a director. Mr. Vise has over twenty-five
      years experience in financial and operations management. As a consultant
      specializing in financial and administrative operations, Mr. Vise has worked
      with business owners to significantly improve the performance and financial
      condition of their companies. From 1995 to 2000, Mr. Vise was the general
      manager/controller of Advantage Volkswagen/Land Rover Houston dealerships.
      From
      1977 to 1994, Mr. Vise worked for Gulf States Toyota Inc., a private independent
      distributor for Toyota with revenues in excess of $700 million in a five state
      area. During that time, he served as vice president of operations in the
      financial services division. Mr. Vise earned his BBA in accounting from Lamar
      University.





**FAMILY
      RELATIONSHIPS**





There
      are
      no family relationships among our directors or officers.





**INVOLVEMENT
      IN CERTAIN LEGAL PROCEEDINGS**





During
      the past five years, none of our directors, executive officers or persons that
      may be deemed promoters is or have been involved in any legal proceeding
      concerning: (i) any bankruptcy petition filed by or against any business of
      which such person was a general partner or executive officer either at the
      time
      of the bankruptcy or within two years prior to that time; (ii) any conviction
      in
      a criminal proceeding or being subject to a pending criminal proceeding
      (excluding traffic violations and other minor offenses); (iii) being subject
      to
      any order, judgment or decree, not subsequently reversed, suspended or vacated,
      of any court of competent jurisdiction permanently or temporarily enjoining,
      barring, suspending or otherwise limiting involvement in any type of business,
      securities or banking activity; or (iv) being found by a court, the Securities
      and Exchange Commission or the Commodity Futures Trading Commission to have
      violated a federal or state securities or commodities law (and the judgment
      has
      not been reversed, suspended or vacated).





**AUDIT
      COMMITTEE**





As
      of the
      date of this Annual Report, we have not appointed members to an audit committee
      and, therefore, the respective role of an audit committee has been conducted
      by
      our Board of Directors. When established, the audit committee's primary function
      will be to provide advice with respect to our financial matters and to assist
      our Board of Directors in fulfilling its oversight responsibilities regarding
      finance, accounting, tax and legal compliance. The audit committee's primary
      duties and responsibilities will be to: (i) serve as an independent and
      objective party to monitor our financial reporting process and internal control
      system; (ii) review and appraise the audit efforts of our independent
      accountants; (iii) evaluate our quarterly financial performance as well as
      our
      compliance with laws and regulations; (iv) oversee management's establishment
      and enforcement of financial policies and business practices; and (v) provide
      an
      open avenue of communication among the independent accountants, management
      and
      our Board of Directors.





The
      Board
      of Directors has considered whether the regulatory provision of non-audit
      services is compatible with maintaining the principal independent accountant's
      independence.





**COMPLIANCE
      WITH SECTION 16(a) OF THE EXCHANGE ACT**





Section
      16(a) of the Exchange Act requires our directors and officers, and the persons
      who beneficially own more than ten percent of our common stock, to file reports
      of ownership and changes in ownership with the Securities and Exchange
      Commission. Copies of all filed reports are required to be furnished to us
      pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on
      the
      reports received by us and on the representations of the reporting persons,
      we
      believe that these persons have complied with all applicable filing requirements
      during the fiscal year ended December 31, 2006.





**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth the compensation paid to our Chief Executive Officer
      and those executive officers that earned in excess of $100,000 during fiscal
      year ended December 31, 2006 (collectively, the “Named Executive
      Officers”):




**SUMMARY
      COMPENSATION TABLE**


**Name
                    and PrincipalPosition**
                **Year**
                **Salary
                    ($)**
                **Bonus($)**
                **Stock
                    Awards($)**
                **Option
                    Awards($)**
                **Non-Equity
                    Incentive Plan Compensation($)**
                **Non-Qualified**
                  **Deferred
                    Compensation Earnings($)**
                **All
                    Other Compensation($)**
                **Total($)**Samuel
                    Skipper, President/CEO
                2006
                $65,000
                $
                    -
                $
                    27,000
                $
                    -
                $
                    -
                $
                    -
                $
                    -
                $
                    92,000JohnVise,
                    Treasurer/CFO
                2006
                $97,200
                $
                    -
                $
                    -
                $
                    -
                $
                    -
                $
                    -
                $
                    -
                $
                    97,200




(1)This
      amount represents fees paid by us to the Named Executive Officer during the
      past
      year pursuant to services provided in connection with their respective position
      as Chief Executive Officer and Chief Financial Officer.







**STOCK
      OPTIONS/SAW GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 2006**





During
      fiscal year ended December 31, 2006, we did not grant any stock options, stock
      awards or stock warrants to the Named Executive Officers.





**DIRECTOR
      COMPENSATION TABLE**





During
      fiscal year ended December 31, 2006, we did not pay any compensation to our
      directors for their respective position on the Board of Directors.




**Name**
              **Fees
                  Earned or Paid in Cash ($)**
              **Stock
                  Awards ($)**
              **Option
                  Awards ($)**
              **Non-Equity
                  Incentive Plan Compensation ($)**
              **Change
                  in Pension Value and Non-Qualified Deferred Compensation Earnings
                  ($)**
              **All
                  Other Compensation ($)**
              **Total
                  ($)**Samuel
                  Skipper
              $
                  -
              $
                  -
              $
                  -
              $
                  -
              $
                  -
              $
                  -
              $
                  -JohnVise
              $
                  -
              $
                  -
              $
                  -
              $
                  -
              $
                  -
              $
                  -
              $
                  -




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





As
      of the
      date of this Annual Report, the following table sets forth certain information
      with respect to the beneficial ownership of our common stock by each stockholder
      known by us to be the beneficial owner of more than 5% of our common stock
      and
      by each of our current directors and executive officers. Each person has sole
      voting and investment power with respect to the shares of common stock, except
      as otherwise indicated. Beneficial ownership consists of a direct interest
      in
      the shares of common stock, except as otherwise indicated. As of the date of
      this Annual Report, there are 9,048,003 shares of common stock issued and
      outstanding.


**Name
                  and Address of Beneficial Owner**(1)
              **Amount
                  and nature of Beneficial Ownership**(1)
              
              **Percentage
                  of Beneficial Ownership****Directors
                  and Officers:**Samuel
                  Skipper
                955
                  Dairy Ashford, Suite 206
                Houston,
                  TX 77079
              5,120,499
              (2)
              56.59%JohnVise
                14231
                  Kellywood
                Houston,
                  TX 77079
              90,000****All
                  executive officers and directors as a group (2 persons)
              5,210,499
              
              57.58%**Major
                  Shareholders:**Richard
                  A. Bobigian
                15907
                  Chilton Circle
                Spring,
                  TX 77379
              1,180,998
              (3)
              13.05%




*Less
      than one percent.




(1)
            Under
                Rule 13d-3, a beneficial owner of a security includes any person
                who,
                directly or indirectly, through any contract, arrangement, understanding,
                relationship, or otherwise has or shares: (i) voting power, which
                includes
                the power to vote, or to direct the voting of shares; and (ii) investment
                power, which includes the power to dispose or direct the disposition
                of
                shares. Certain shares may be deemed to be beneficially owned by
                more than
                one person (if, for example, persons share the power to vote or the
                power
                to dispose of the shares). In addition, shares are deemed to be
                beneficially owned by a person if the person has the right to acquire
                the
                shares (for example, upon exercise of an option) within 60 days of
                the
                date as of which the information is provided. In computing the percentage
                ownership of any person, the amount of shares outstanding is deemed
                to
                include the amount of shares beneficially owned by such person (and
                only
                such person) by reason of these acquisition rights. As a result,
                the
                percentage of outstanding shares of any person as shown in this table
                does
                not necessarily reflect the person’s actual ownership or voting power with
                respect to the number of shares of common stock actually outstanding
                as of
                the date of this Annual Report. As of the date of this Annual Report,
                there are 9,048,003 shares issued and
                outstanding.




(2)
            This
                figure includes: (i) 2,406,000 shares of common stock held of record
                by
                Mr. Skipper; (ii) 2,611,500 shares of common stock held of record
                by
                Samurai Corp., of which Mr. Skipper is the sole director and president
                and
                has sole dispositive and voting power over the 2,611,500 shares;
                and (iii)
                102,999 shares of common stock held of record by Samurai Energy LLC,
                of
                which Mr. Skipper is the sole manager and has sole dispositive and
                voting
                power over the 102,999 shares.




(3)
            This
                figure includes: (i) 99,999 shares of common stock held of record
                by Mr.
                Bobigian; and (ii) 1,080,999 shares of common stock held of record
                by RAB
                Ventures, Inc., of which Mr. Bobigian is the sole director and president
                and has sole dispositive and voting power over the 1,080,999
                shares.




**CHANGES
      IN CONTROL**





We
      are
      unaware of any contract, or other arrangement or provision, the operation of
      which may at a subsequent date result in a change of control of our
      company.





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





Except
      for the transactions described below, none of our directors, officers or
      principal stockholders, nor any associate or affiliate of the foregoing, have
      any interest, direct or indirect, in any transaction or in any proposed
      transactions, which has materially affected or will materially affect us during
      fiscal years ended December 31, 2007 and 2006.





**SAMURAI
      OPERATING COMPANY LLC**




Samurai
      Operating Company L.L.C., a related party, is the operator of the properties
      and
      provides production, engineering and maintenance services. Accordingly, Samurai
      Operating Company L.L.C. charged an operating fee for its services of $16,560
      and $24,840 in 2006 and 2005, respectively.





**ITEM
      13. EXHIBITS**





The
      following exhibits are filed with this Annual Report on Form
      10-KSB:


**Exhibit
                  Number**
              **Description
                  of Exhibit**3.1
              Articles
                  of Incorporation, as amended(1)3.1.1
              Certificate
                  of Amendment to Articles of Incorporation(2)3.2
              Bylaws(1)4.1
              Form
                  of Common Stock Certificate(1)4.2
              Agreement
                  and Plan of Merger among Samurai Energy Corp. and ECCO Energy Corp.
                  dated
                  June 26, 2000.(2)4.3
              Stock
                  Purchase Agreement dated October 19, 2005 between Robert E. Williams
                  and
                  Samuel M. Skipper.(3)4.4
              Assignment,
                  Conveyance and Bill of Sale with respect to 37% working interest
                  in the
                  Wilson Wells.(3)10.1
              2005
                  Directors, Officers and Consultants Stock Option, Stock Warrants
                  and Stock
                  Awards Plan.(4)10.2
              Consulting
                  Agreement dated January 1, 2006 between ECCO Energy Corp. and Michael
                  Wittenburg.10.3
              Consulting
                  Agreement dated January 1, 2006 between ECCO Energy Corp. and Larry
                  Seligman.18.1
              Change
                  in Accountant to Malone & Balley dated December 8, 2005.(3)31.1
              Certification
                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.31.2
              Certification
                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.32.1
              Certification
                  of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.32.2
              Certification
                  of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.




(1)Incorporated
      by reference to our Registration Statement on Form 8-A filed with the Securities
      and Exchange Commission on December 7, 2005.


(2)Incorporated
      by reference to our Report on Form 8-K filed with the Securities and Exchange
      Commission on June 30, 2006.


(3)Incorporated
      by reference to our Annual Report on Form 10-KSB filed with the Securities
      and
      Exchange Commission on March 20, 2006.


(4)Incorporated
      by reference to our Registration Statement on Form S-8 filed with the Securities
      and Exchange Commission on June 26, 2006.









**ITEM
      14. PRINCIPAL ACCOUNTING FEES AND SERVICES**





During
      fiscal year ended December 31, 2006, we incurred approximately $55,300 in fees
      to our principal independent accountant for professional services rendered
      in
      connection with the audit of our financial statements for the fiscal year ended
      December 31, 2006 and for the review of our financial statements for the
      quarters ended March 31, 2006, June 30, 2006 and September 30, 2006.





During
      fiscal year ended December 31, 2006, we did not incur any other fees for
      professional services rendered by our principal independent accountant for
      all
      other non-audit services which may include, but is not limited to, tax-related
      services, actuarial services or valuation services.




**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.


**ECCO
                  ENERGY CORP.**Dated:
                  March 29, 2007
              By:/s/SAMUEL M. SKIPPERSamuel
                  M. Skipper, President/ChiefExecutive
                  OfficerDated:
                  March 29, 2007
              By:
                  /s/ JOHN VISEJohn
                  Vise, Treasurer/ChiefFinancial
                  Officer