UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington D.C., 20549





FORM 10-K





xANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2010





o 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





EAGLE FORD OIL & GAS CORP.


(Exact name of registrant as specified in its charter)





Nevada

75-2990007(State of other jurisdiction of incorporation)

(I.R.S. Employer Identification No.)3315 Marquart StSuite 206Houston, TX

77027(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





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.o Yes     x  No





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.o Yes     x  No





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes     o No





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  o Yes    o No





Indicate by check mark if disclosure if delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K  x





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer  o
Accelerated filer oNon-accelerated filer    o
Smaller reporting company x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).o Yes     x No





The number of outstanding shares of common stock, as of April 15, 2011, was 3,006,418.







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As of June 30, 2010, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $1,127,409 based on the closing sale price of $0.70 on such date as reported on the Over-the Counter Bulletin Board.


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Table of Contents





ITEM 1. DESCRIPTION OF BUSINESS

4ITEM 1A.  RISK FACTORS

12ITEM 1B.  UNRESOLVED STAFF COMMENTS

21ITEM 2. DESCRIPTION OF PROPERTY

21ITEM 3. LEGAL PROCEEDINGS

21ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

21ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

22ITEM 6. SLECTED FINANCIAL DATA

24ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

24ITEM 8. FINANCIAL STATEMENTS

28CONSOLIDATED BALANCE SHEETS

F-3CONSOLIDATED STATEMENTS OF OPERATIONS

F-4CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

F-5CONSOLIDATED STATEMENTS OF CASH FLOWS

F-6NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

F-8ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND    FINANCIAL DISCLOSURE

29ITEM 9A. CONTROL AND PROCEDURES

29ITEM 9B. OTHER INFORMATION

30ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND    CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

31ITEM 11. EXECUTIVE COMPENSATION

32ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS

33ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

33ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

34ITEM 15. EXHIBITS

34SIGNATURES

35


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FORWARD LOOKING STATEMENTS





The statements included or incorporated by reference in this Annual Report of Eagle Ford Oil & Gas Corp. (“ECCE” or “Company”), 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. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements.  The Company is under no duty to update any of the forward-looking statements after the date of this report to conform its prior statements to actual results.  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)





This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Item 1. Description of the Business”, “Item 1.A. Risk Factors,” and “Item 6.-Management’s Discussion and Analysis” of this Annual Report.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.





Available Information





The Company files annual, quarterly, current reports, proxy statements, and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy documents referred to in this Annual Report on Form 10-K that have been filed with the SEC at the SEC’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 SEC at 1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the SEC’s website at http://www.sec.gov.




ITEM 1.
DESCRIPTIONOF BUSINESS





OVERVIEW





Eagle Ford Oil & Gas Corp. 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 Eagle Ford Shale Region of South Texas.  ECCE’s strategy is to grow its asset base and become profitable by purchasing or investing in oil and gas drilling projects in the Eagle Ford shale region of Texas.





On June 21, 2010, ECCE changed our corporate name from ECCO Energy Corp. to Eagle Ford Oil & Gas Corp. The name change was made pursuant to Nevada Revised Statutes. The board of directors approved the name change and received the written consent of officers, directors, and affiliates that represent a majority of our outstanding shares of common stock and other voting interests.


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OUR OPERATIONS





In August 2010, ECCE purchased a farm-in of a 1% working interest in 2,300 acres and the drilling of two wells in the Eagle Ford Shale formation located in Live Oak County in South Texas for $250,000.  The Dena Forehand #2H and the Kellam#2H were drilled and completed during November and December 2010.  Production began on these properties during November and December 2010 respectively.  However, full production will not be available until the operator connects to a larger pipeline in April 2011.  Eagle Ford Oil & Gas will continue to participate in the drilling of additional wells in this lease and anticipates a total of 14 wells will be drilled over the next 48 months. Eagle Ford will need to obtain additional capital to meet any future drilling in this field.  There is no assurance that the Company will be able to raise those funds and ECCE has no estimated costs or timeframe for the drilling of these additional wells.Should the first two wells not show the anticipated economic results, the Company is under no obligation to continue its investment in the property.





During 2010, ECCE attempted to rework Well 502 at the Wilson Field property.  The attempt was not successful.  ECCE spent $119,165 on the attempt and capitalized $52,165 of that amount.   In January 2010, ECCE also incurred expenses of $42,334 in the plugging of an abandoned well on the property.  Subsequent to the failure to rework Well 502, ECCE made the determination to sell the Wilson Field properties to focus our efforts on properties in the Eagle Ford Shale region. After an examination of results from surrounding wells, ECCE determined that the Wilson Field property was impaired and had a net realizable value of $88,177 based on the liabilities assumed by the buyer on the sale of the Wilson Properties in August 2010.  This resulted in an impairment charge of $769,743 during the year ended December 31, 2010.





On August 13, 2010, ECCE sold its properties in the Wilson Field, Nueces County, Texas to Samurai Corp for the assumption of liabilities of $88,177.  Samurai Corp. is an affiliated company, owned by Sam Skipper, who was the Vice-Chairman of the Board of Eagle Ford Oil & Gas Corp at the time of the sale.





In October 2008, ECCE acquired a gas pipeline (“Pipeline”) approximately 13 miles in length located in Jefferson and Harrison Counties, Ohio.  The Pipeline was purchased from M- J Oil Company of Paris, Ohio, an unaffiliated third party, by issuing a mortgage note for $1,000,000.  The mortgage note bears an 8% annual interest rate and was due in full on September 30, 2009 and remains unpaid pending negotiations for revised payment terms.  The mortgage is secured by the Pipeline assets.  The pipeline services oil and gas properties owned by Samurai Corp, a company affiliated with our former CEO.





We plan to target additional exploration and developmental properties for acquisition in the Eagle Ford Shale region of Texas. 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.





OIL AND GAS PROPERTIES





LIVE OAK COUNTY, TEXAS





In August 2010, ECCE purchased a farm-in of a 1% working interest in 2,400 acres and the drilling of two wells in the Eagle Ford Shale formation located in Live Oak County in South Texas for $250,000.  The Dena Forehand #2H and the Kellam#2H were drilled and completed, and production began, during November and December 2010.  Eagle Ford Oil & Gas will continue to participate in the drilling of additional wells in this lease and anticipates a total of 14 wells will be drilled over the next 48 months. Eagle Ford will need to obtain additional capital to meet any future drilling in this field.  There is no assurance that the Company will be able to raise those funds and ECCE has no estimated costs or timeframe for the drilling of these additional wells.If the first two wells do not show the anticipated economic results, the Company is under no obligation to continue its investment in the property.





OHIO PIPELINE





In October 2008, ECCE acquired a gas pipeline (“Pipeline”) approximately 13 miles in length located in Jefferson and Harrison Counties, Ohio.  The Pipeline was purchased from M- J Oil Company of Paris, Ohio, an unaffiliated third party, by issuing a mortgage note for $1,000,000.  The mortgage note bears an 8% annual interest rate.  The mortgage is secured by the Pipeline assets.   The mortgage was due on September 30, 2010, at which time, the entire unpaid balance of principal and accrued interest was to have been paid.  The pipeline services oil and gas properties owned by Samurai Corp, an affiliated company


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On February 27, 2009, ECCE entered into an agreement to buy oil and gas producing properties in Ohio, from Samurai Corp, an affiliated company owned by Sam Skipper.  Upon further review, due to market conditions pertaining to the price of oil and gas, both Samurai and ECCE decided that the transaction was not in the best interest of shareholders of either company.  Therefore, on April 13, 2009 the Board of Directors of both companies decided to terminate the transaction.





A review of the pipeline valuation was performed by management.  This was necessary as the asset was not an income producing asset during 2010.  A comparison of replacement cost, comparable market value and comparable earnings potential to other pipelines, showed that the expected realizable value of the asset at December 31, 2009 was $100,000. An impairment charge of $900,000 was recorded during the year ended December 31, 2009.





Due to the failure to complete the transfer of assets from Samurai to ECCE, the covenants of the Pipeline purchase were violated.  On February 28, 2009 M-J Oil Company Inc, of Paris Ohio, obtained a judgment against ECCO Energy for non-compliance with covenants in the original mortgage relating to the purchase of the M-J Oil Company pipeline (“Pipeline”).   We are in negotiations with the M-J Oil Company to remove the judgment and to adjust the mortgage terms, which required full payment on September 30, 2009.  As of this date, we have not reached a satisfactory agreement with the lender.





COMPETITION





We encounter competition from other natural gas and oil companies in all areas of our operations, including the acquisition of exploratory prospects and proven properties. Many of our competitors are large, well-established companies that have been engaged in the natural gas and oil business for much longer than we have and possess substantially larger operating staffs and greater capital resources than we do. Our ability to explore for oil and natural gas reserves and to acquire additional properties in the future will be dependent upon our ability to conduct our operations, to evaluate and select suitable properties and to consummate transactions in this highly competitive environment.  The Company is also affected by competition for drilling rigs and the availability of related equipment.  In the past, the oil and natural gas industry has experienced shortages of drilling rigs, equipment, pipe and personnel, which has delayed development drilling and has caused significant price increases.  The Company is unable to predict when, or if, such shortages may occur or how they would affect the drilling programs in the Company participates.





OIL AND GAS EXPLORATION REGULATION





The Company’s oil and gas exploration, including future production and related operations are subject to extensive rules and regulations promulgated by federal and state agencies. Failure to comply with such rules and regulations can result in substantial penalties. The regulatory burden on the oil and gas industry adds to our cost of doing business and affects our profitability. Because such rules and regulations are frequently amended or interpreted differently by regulatory agencies, we are unable to accurately predict the future cost or impact of complying with such laws.





The Company’s oil and gas exploration and future production operations are and will be affected by state and federal regulation of gas production, federal regulation of gas sold in interstate and intrastate commerce, state and federal regulations governing environmental quality and pollution control, state limits on allowable rates of production by a well or pro-ration unit and the amount of gas available for sale, state and federal regulations governing the availability of adequate pipeline and other transportation and processing facilities, and state and federal regulation governing the marketing of competitive fuels. For example, a productive gas well may be “shut-in” because of an over-supply of gas or lack of an available gas pipeline in the areas in which we may conduct operations. State and federal regulations generally are intended to prevent waste of oil and gas, protect rights to produce oil and gas between owners in a common reservoir, control the amount of oil and gas produced by assigning allowable rates of production and control contamination of the environment. Pipelines are subject to the jurisdiction of various federal, state and local agencies.





Regulation of Sale and Transportation of Oil





Sales of crude oil, condensate and natural gas liquids are not currently regulated and are made at negotiated prices. Nevertheless, Congress could reenact price controls in the future.


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Our sales of crude oil are affected by the availability, terms and cost of transportation. The transportation of oil in common carrier pipelines is also subject to rate regulation. The Federal Energy Regulatory Commission, or the FERC, regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. In general, interstate oil pipeline rates must be cost-based, although settlement rates agreed to by all shippers are permitted and market-based rates may be permitted in certain circumstances. Effective January 1, 1995, the FERC implemented regulations establishing an indexing system (based on inflation) for transportation rates for oil that allowed for an increase or decrease in the cost of transporting oil to the purchaser. A review of these regulations by the FERC in 2000 was successfully challenged on appeal by an association of oil pipelines. On remand, the FERC in February 2003 increased the index slightly, effective July 2001. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state. Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any way that is of material difference from those of our competitors.





Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers must offer service to all similarly situated shippers requesting service on the same terms and under the same rates. When oil pipelines operate at full capacity, access is governed by prorationing provisions set forth in the pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors.





Regulation of Sale and Transportation of Natural Gas





Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated pursuant to the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 and regulations issued under those Acts by the FERC. In the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at uncontrolled market prices, Congress could reenact price controls in the future. Deregulation of wellhead natural gas sales began with the enactment of the Natural Gas Policy Act. In 1989, Congress enacted the Natural Gas Wellhead Decontrol Act. The Decontrol Act removed all Natural Gas Act and Natural Gas Policy Act price and non-price controls affecting wellhead sales of natural gas effective January 1, 1993.





FERC regulates interstate natural gas transportation rates and service conditions, which affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas. Since 1985, the FERC has endeavored to make natural gas transportation more accessible to natural gas buyers and sellers. The FERC has stated that open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services. Beginning in 1992, the FERC issued Order No. 636 and a series of related orders to implement its open access policies. As a result of the Order No. 636 program, the marketing and pricing of natural gas have been significantly altered. The interstate pipelines’ traditional role as wholesalers of natural gas has been eliminated and replaced by a structure under which pipelines provide transportation and storage service on an open access basis to others who buy and sell natural gas. Although the FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry.





In 2000, the FERC issued Order No. 637 and subsequent orders, which imposed a number of additional reforms designed to enhance competition in natural gas markets. Among other things, Order No. 637 effected changes in FERC regulations relating to scheduling procedures, capacity segmentation, penalties, rights of first refusal and information reporting.





We cannot accurately predict whether the FERC’s actions will achieve the goal of increasing competition in markets in which our natural gas is sold. Additional proposals and proceedings that might affect the natural gas industry are pending before the FERC and the courts. The natural gas industry historically has been very heavily regulated. Therefore, we cannot provide any assurance that the less stringent regulatory approach recently established by the FERC will continue. However, we do not believe that any action taken will affect us in a way that materially differs from the way it affects other natural gas producers.





Gathering service, which occurs upstream of jurisdictional transmission services, is regulated by the states on shore and in state waters. Although its policy is still in flux, FERC has reclassified certain jurisdictional transmission facilities as non-jurisdictional gathering facilities, which has the tendency to increase our costs of getting natural gas to point of sale locations.


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Intrastate natural gas transportation is also subject to regulation by state regulatory agencies. The basis for intrastate regulation of natural gas transportation and the degree of regulatory oversight and scrutiny given to intrastate natural gas pipeline rates and services varies from state to state. Insofar as such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in any states in which we operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors. Like the regulation of interstate transportation rates, the regulation of intrastate transportation rates affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas.





Operating Hazards and Insurance




The oil and natural gas industry involves a variety of operating hazards and risks that could result in substantial losses from, among other things, injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation and penalties and suspension of operations.  The Company may be liable for environmental damages caused by previous owners of property it purchases and leases.  As a result, the Company may incur substantial liabilities to third parties or governmental entities, the payment of which could reduce or eliminate funds available for acquisitions, development or distributions, or result in the loss of properties.  In addition, the Company participates in wells on a nonoperated basis and therefore may be limited in its ability to control the risks associated with the operation of such wells.




In accordance with customary industry practices, the Company maintains insurance against some, but not all, potential losses.  The Company does not obtain separate insurance on non-operated properties in which it holds and interest and such properties may not be insured.  The Company cannot provide assurance that any insurance it obtains will be adequate to cover any losses or liabilities.  In addition, pollution and environmental risks generally are not fully insurable.  The occurrence of an event not fully covered by insurance could have a material adverse effect on the Company’s financial position and results of operations.





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.  Such regulation can increase the cost of such activities. In most instances, the regulatory requirements relate to water and air pollution control measures.  Management believes that we are in substantial compliance with current applicable environmental laws and regulations.





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 liabilities 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.


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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. The Federal Clean Air Act and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and the imposition of other requirements. In addition, EPA has developed and continues to develop stringent regulations governing emissions of toxic air pollutants at specified sources. Federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with air permits or other requirements of the Federal Clean Air Act and associated state laws and regulations. Oil and gas operations may in certain circumstances and locations be subject to permits and restrictions under these statutes for emissions of air pollutants, including volatile organic compounds, nitrous oxides, and hydrogen sulfide. 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.





The Oil Pollution Act of 1990, or OPA, which amends and augments the Clean Water Act, establishes strict liability for owners and operators of facilities that are the site of a release of oil into waters of the United States. In addition, OPA and regulations promulgated pursuant thereto impose a variety of regulations on responsible parties related to the prevention of oil spills and liability for damages resulting from such spills. OPA also requires certain oil and natural gas operators to develop, implement and maintain facility response plans, conduct annual spill training for certain employees and provide varying degrees of financial assurance.





National Environmental Policy Act





Oil and natural gas exploration and production activities on federal lands are subject to the National Environmental Policy Act, or NEPA. NEPA requires federal agencies, including the Department of Interior, to evaluate major agency actions that have the potential to significantly impact the environment. In the course of such evaluations, an agency will prepare an Environmental Assessment that assesses the potential direct, indirect and cumulative impacts of a proposed project and, if necessary, will prepare a more detailed Environmental Impact Statement that may be made available for public review and comment. All of our current exploration and production activities, as well as proposed exploration and development plans, on federal lands require governmental permits that are subject to the requirements of NEPA. This process has the potential to delay the development of oil and natural gas projects.





Endangered Species, Wetlands and Damages to Natural Resources





Various state and federal statutes prohibit certain actions that adversely affect endangered or threatened species and their habitat, migratory birds, wetlands, and natural resources. These statutes include the Endangered Species Act, the Migratory Bird Treaty Act, the CWA and CERCLA. Where takings of or harm to species or damages to wetlands, habitat, or natural resources occur or may occur, government entities or at times private parties may act to prevent oil and gas exploration or production or seek damages to species, habitat, or natural resources resulting from filling or construction or releases of oil, wastes, hazardous substances or other regulated materials.





OSHA and Other Laws and Regulations


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We are subject to the requirements of the federal Occupational Safety and Health Act (OSHA) and comparable state statutes. The OSHA hazard communication standard, the Emergency Planning and Community Right to Know Act and similar state statutes require that we organize and/or disclose information about hazardous materials stored, used or produced in our operations.





Recent studies have indicated that emissions of certain gases may be contributing to warming of the Earth’s atmosphere. In response to these studies, many nations have agreed to limit emissions of “greenhouse gases” pursuant to the United Nations Framework Convention on Climate Change, also known as the “Kyoto Protocol.” Methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of oil and natural gas, and refined petroleum products, are “greenhouse gases” regulated by the Kyoto Protocol. Although the United States is not participating in the Kyoto Protocol, several states have adopted legislation and regulations to reduce emissions of greenhouse gases. Restrictions on emissions of methane or carbon dioxide that may be imposed in various states could adversely affect our operations and demand for our products. Additionally, the U.S. Supreme Court has ruled, in Massachusetts, et al. v. EPA, that the U.S. Environmental Protection Agency abused its discretion under the Clean Air Act by refusing to regulate carbon dioxide emissions from mobile sources. This Supreme Court decision could result in federal regulation of carbon dioxide emissions and other greenhouse gases, and may affect the outcome of other climate change lawsuits pending in U.S. federal courts in a manner unfavorable to our industry. Currently, our operations are not adversely impacted by existing state and local climate change initiatives and, at this time, it is not possible to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact our business.





Texas Railroad Commission





The State of Texas has promulgated certain legislative rules pertaining to exploration, development and production of oil and gas that are administered by the Texas Railroad Commission. The rules govern permitting for new drilling, inspection of wells, fiscal responsibility of operators, bonding wells, the disposal of solid waste, water discharge, spill prevention, liquid injection, waste disposal wells, schedules that determine the procedures for plugging and abandonment of wells, reclamation, annual reports and compliance with state and federal environmental protection laws. We believe that we will function in compliance with these rules.





Private Lawsuits





In addition to claims arising under state and federal statutes, where a release or spill of hazardous substances, oil and gas or oil and gas wastes have occurred private parties or landowners may bring lawsuits against oil and gas companies under state law. The plaintiffs may seek property damages, personal injury damages, remediation costs or injunctions to require remediation or restoration of contaminated property, soil, groundwater or surface water. In some cases, oil and gas operations are located near populated areas and emissions or accidental releases could affect the surrounding properties and population.





EMPLOYEES





On July 23, 2010, Jesse Q. Ozbolt resigned from his position as Chairman of the Board of Directors and President of Eagle Ford Oil & Gas Corp.





On July 23, 2010, Sam Skipper was appointed as Chairman of the Eagle Ford Oil & Gas Corp. Board of Directors. On August 16, 2010, Sam Skipper resigned as chairman and Richard Adams was appointed.  Mr. Skipper remained on the Board as Vice-Chairman until November 15, 2010.





On July 23, 2010, N. Wilson Thomas resigned from his position as Chief Financial Officer of Eagle Ford Oil & Gas Corp. Mr. Thomas remained with the Company as Controller and returned to the position as Chief Financial Officer on February 14, 2011.





On July 26, 2010, Rick Adams was appointed as President and Chief Executive Officer of Eagle Ford Oil & Gas Corp. Mr. Adams has over 15 years experience in the Oil and Gas Finance Markets. He was a Principal at BullFrog Capital where he negotiated oil and gas transactions for up to $350 Million. Prior to forming Bullfrog Capital in 2002, Mr. Adams spent eight years in the oil and gas finance markets with The Williams Companies and Aquila Energy Capital. During that time, Mr. Adams invested over $900 million through 35 transactions. These transactions included volumetric production payments, mezzanine debt, equity investments and securitizations. Mr. Adams holds a BBA in economics and statistics from Baylor University and an MBA in finance from the University ofSaint Thomas.


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On July 26, 2010, Imran Maniar, CPA was appointed as Chief Financial Officer and to the Board of Directors of Eagle Ford Oil & Gas Corp and served until February 14, 2011when he resigned from ECCE.





Richard A. Bobigian joined the Board of Directors on November 24, 2010. Mr. Bobigian is the President and Chief Executive of Marshfield Oil and Gas Corp.  Marshfield is involved in the development of oil and gas exploration in the State of Texas, and was formed in January 2008.  Mr. Bobigian is also the President and Chief Executive of The Black Pool Energy Group, LLC, and the general partner of Black Pool Energy LP.  Black Pool Energy was formed in January 2005.  Prior to forming The Black Pool Energy Group, Mr. Bobigian managed most of the business functions of Osprey Petroleum Company.  Beginning in October 1999, Osprey Petroleum was engaged in oil and gas development along the Texas Shelf area of the Gulf Coast.  Prior to that, Mr. Bobigian was engaged in the oil and gas business using various special purpose entities to invest in both upstream and midstream assets.  Mr. Bobigian earned a Bachelor of Science degree in Geologic Engineering from the Colorado School of Mines, and is currently a resident of Houston, Texas.  Mr. Bobigian is a long time shareholder of Eagle Ford Oil and Gas Corp.





ORGANIZATIONAL HISTORY





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 was 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 sold to Samuel Skipper approximately 28,800,000 shares of common stock of J R Bassett Optical Inc. for nominal consideration and our name was subsequently changed to Samurai Energy Corp. On June 30, 2006, The Company, Samurai Energy Corp. (“Samurai Energy”), and SEI Acquisition Corp., the wholly owned subsidiary of Samurai Energy (“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 the Company were exchanged for one fully paid non-assessable share of the common stock of Samurai Energy, pursuant to which Samurai Energy issued an aggregate of 1,415,999 shares of its common stock to the shareholders of the Company; (ii) the separate corporate existence of SEI ceased; and (iii) the Company was the surviving entity. After completion of the transactions contemplated by the Merger Agreement, the Company became a wholly-owned subsidiary of Samurai Energy and Samurai Energy merged with and into the Company for the purpose of reincorporating under the laws of Nevada. On August 28, 2006, the reincorporation became effective resulting in Samurai Energy continuing its corporate existence in the State of Nevada under the name ECCO Energy Corp.





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





On March 14, 2007, our shares of common stock commenced trading on the Over-the-Counter Bulletin Board under the symbol: “ECCE.OB.”  Our transfer agent is Standard Registrar and Transfer, Draper, UT.





INSURANCE





We currently maintain insurance coverage in amounts that we deem reasonable for our current operations.





RESEARCH & DEVELOPMENT





During each of the last two fiscal years, the Company has not expended any capital on research and development activities.


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ITEM1.A.
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 our Financial Condition





We are an early stage business and, as such, there is a risk of failure.





Any investment in ECCE should be considered a high-risk investment because investors will be placing funds at risk in an early stage business with unforeseen costs, expenses, competition, a history of operating losses and other problems to which start-up ventures are often subject. Investors should not invest in ECCE unless they can afford to lose their entire investment.  Your investment must be considered in light of the risks, expenses, and difficulties encountered in establishing a new business in a highly competitive and mature industry. Our limited business history will make it difficult for you to analyze or to aid you in making an informed judgment concerning the merits of an investment in ECCE.





We currently have revenues, but we are not profitable.





For the year ended December 31, 2010, the Company had revenues of $78,301.  During this period, the Company had a net loss of $1,639,044.  There can be no assurance that the Company will generate positive cash flow from operations or have net income from operations in 2011 or thereafter.





If we are not able to raise additional funds or generate positive cash flows, we may not be able to continue as a going concern.





We have experienced losses and negative cash flows from operations since our inception. These conditions raise substantial doubt about our ability to continue as a going concern and management is attempting to raise additional capital to address our liquidity, or to sell or merge the company. There can be no assurance that we will ever be able to generate positive cash flow from operations.





We will need additional capital in 2011 to implement our business plan and meet our financial obligations.





At December 31, 2010, we had a working capital deficit of $2,652,106.  We will need to raise additional capital during 2011 to fund general corporate working capital needs.  Additionally, as of April 15, 2011, the Company has not paid principal and accrued interest on past due notes payable totaling of $2,049,039.  ECCE owes $545,000 to the convertible bond owners, with a due date of July 26, 2011, and accrued interest of $28,504 which is to paid in common stock at $0.90 per share  As the Company has no debt or equity funding commitments, we will need to rely upon best efforts financings.  There can be no assurance that the Company will be successful in raising the required capital.  The failure to raise sufficient capital through future debt or equity financings or otherwise may cause the Company to curtail operations, sell assets, or result in the failure of our business.





We will need to obtain additional financing to complete further exploration.





A substantial portion of our proved oil and gas reserves are undeveloped.  At December 31, 2010, we estimated that we would require a total of $487,649 of development costs to recover $322,044 of discounted pretax cash flows from our reserves.


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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. Furthermore, if the costs of our planned exploration, development and production programs are greater than anticipated, we may have to seek additional funds through public or private share offerings or arrangements with partners. There can be no assurance that we will be successful in our efforts to raise these required 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 or through debt financing. It is possible that debt financing may not be an alternative to us, due to the general instability of the credit market in the current economic environment. 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. 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 are 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.





Risks Related to our Business





We depend on successful exploration, development and acquisitions to maintain revenue in the future.





In general, the volume of production from natural gas and oil properties declines as reserves are depleted, with the rate of decline depending on reservoir characteristics. Except to the extent that we conduct successful exploration and development activities or acquire properties containing proved reserves, or both, our proved reserves will decline as reserves are produced. Our future natural gas and oil production is, therefore, highly dependent on our level of success in finding or acquiring additional reserves. Additionally, the business of exploring for, developing, or acquiring reserves is capital intensive. Recovery of our reserves, particularly undeveloped reserves, will require significant additional capital expenditures and successful drilling operations. Our ability to make the necessary capital investment to maintain or expand our asset base of natural gas and oil reserves will be impaired unless other external sources of capital become available. In addition, we may be required to find partners for any future exploratory activity. To the extent that others in the industry do not have the financial resources or choose not to participate in our exploration activities, we will be adversely affected.





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.





Our estimated reserves are based on many assumptions that may prove to be inaccurate.  Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.




No one can measure underground accumulations of oil, natural gas and NGL in an exact way.  Reserve engineering requires subjective estimates of underground accumulations of oil, natural gas and NGL and assumptions concerning future oil, natural gas and NGL prices, production levels and operating and development costs.  As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate.  Independent petroleum engineering firms prepare estimates of our proved reserves.  Some of our reserve estimates are made without the benefit of a lengthy production history, which are less reliable than estimates based on a lengthy production history.  Also, we make certain assumptions regarding future oil, natural gas and NGL prices, production levels and operating and development costs that may prove incorrect.  Any significant variance from these assumptions by actual figures could greatly affect our estimates of reserves, the economically recoverable quantities of oil, natural gas and NGL attributable to any particular group of properties, the classifications of reserves based on risk of recovery and estimates of the future net cash flows.  Numerous changes over time to the assumptions on which our reserve estimates are based, as described above, often result in the actual quantities of oil, natural gas and NGL we ultimately recover being different from our reserve estimates.




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The present value of future net cash flows from our proved reserves is not necessarily the same as the current market value of our estimated oil, natural gas and NGL reserves.  We base the estimated discounted future net cash flows from our proved reserves on an unweighted average of the first-day-of-the month price for each month during the 12-month calendar year and year-end costs.  However, actual future net cash flows from our oil and natural gas properties also will be affected by factors such as:




·
actual prices we receive for oil, natural gas and NGL;


·
the amount and timing of actual production;


·
the timing and success of development activities;


·
supply of and demand for oil, natural gas and NGL; and


·
changes in governmental regulations or taxation.




In addition, the 10% discount factor, required to be used under the provisions of applicable accounting standards when calculating discounted future net cash flows, may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general.





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 actively seek to acquire oil and natural gas properties.  Acquisitions involve potential risks that could adversely impact our future growth and our ability to remain a viable entity.




Any acquisition involves potential risks, including, among other things:




·
the risk that reserves expected to support the acquired assets may not be of the anticipated magnitude or may not be developed as anticipated;


·
the risk of title defects discovered after closing;


·
inaccurate assumptions about revenues and costs, including synergies;


·
significant increases in our indebtedness and working capital requirements;


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·
an inability to transition and integrate successfully or timely the businesses we acquire;


·
the cost of transition and integration of data systems and processes;


·
the potential environmental problems and costs;


·
the assumption of unknown liabilities;


·
limitations on rights to indemnity from the seller;


·
the diversion of management’s attention from other business concerns;


·
increased demands on existing personnel and on our corporate structure;


·
customer or key employee losses of the acquired businesses; and


·
the failure to realize expected growth or profitability





We are a new entrant into the oil and gas exploration and development industry without a 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.


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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 of 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.


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The oil and gas industry in which we operate involves 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 success largely depends on the success of our exploitation, exploration, development and production activities. Our oil and natural gas exploration and production activities are subject to numerous risks beyond our control; including the risk that drilling will not result in commercially viable oil or natural gas production. 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 fractures; (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. 1(xi) weather related events such as hurricanes can cause disruption of deliveries or destruction of producing facilities, either on or off shore.  Such damage may be to our facilities or to facilities operated by other companies needed for the delivery of our production.





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.





Our producing properties are located in regions which make us vulnerable to risks associated with operating in a limited number of geographic areas, including the risk of damage or business interruptions from hurricanes.





Our properties are geographically located in the Texas Gulf Coast region. As a result, we may be affected by any delays or interruptions in production or transportation in these areas caused by governmental regulation, transportation capacity constraints, natural disasters, regional price fluctuations or other factors.





Such disturbances could in the future have any or all of the following adverse effects on our business:





·
interruptions to our operations as we suspend any production in advance of an approaching storm;




·
damage to our facilities and equipment, including damage that disrupts or delays any production; and




·
disruption to any transportation systems we may rely upon for delivery.





Terrorist attacks aimed at our energy operations could adversely affect our business.





The continued threat of terrorism and the impact of military and other government action has led and may lead to further increased volatility in prices for oil and natural gas and could affect these commodity markets or the financial markets used by us. In addition, the U.S. government has issued warnings that energy assets may be a future target of terrorist organizations. These developments have subjected our oil and natural gas operations to increased risks.





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.


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We may not be able to keep pace with technological developments in our industry.





The natural gas and oil industry is characterized by rapid and significant technological advancements and introduction of new products and services which utilize new technologies. As others use or develop new technologies, we may be placed at a competitive disadvantage or competitive pressures may force us to implement those new technologies at substantial costs. In addition, other natural gas and oil companies may have greater financial, technical, and personnel resources that allow them to enjoy technological advantages and may in the future allow them to implement new technologies before we are able to. We may not be able to respond to these competitive pressures and implement new technologies on a timely basis or at an acceptable cost. If one or more of the technologies we use now or in the future were to become obsolete or if we are unable to use the most advanced commercially available technology, our business, financial condition, and results of operations could be materially adversely affected.





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.





We may not have enough insurance to cover all of the risks that we face and operations of prospects in which we participate may not maintain or may fail to obtain adequate insurance.





We cannot insure fully against pollution and environmental risks. The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial condition and results of operations. The impact of recent hurricanes has resulted in escalating insurance costs and less favorable coverage terms.





Oil and natural gas operations are subject to particular hazards incident to the drilling and production of oil and natural gas, such as blowouts, cratering, explosions, uncontrollable flows of oil, natural gas or well fluids, fires and pollution and other environmental risks. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension of operation. The occurrence of a significant adverse event that is not fully covered by insurance could result in the loss of our total investment in a particular prospect which could have a material adverse effect on our financial condition and results of operations


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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 Rick Adams, our President, and N. Wilson Thomas, 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.





We may experience difficulty in achieving and managing future growth.





We may not be successful in upgrading our technical, operations, and administrative resources or in increasing our ability to internally provide certain of the services currently provided by outside sources, and we may not be able to maintain or enter into new relationships with project partners and independent contractors. Our inability to achieve or manage growth may adversely affect our financial condition and results of 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 Our Common and Preferred 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 3,006,418 shares of common stock issued and outstanding, and 303,936 of our Series D convertible preferred stock (“Series D Preferred Stock”).  Each share of our preferred stock is convertible into one share of our common stock. As of the date of this Annual Report, there are 3,006,418 outstanding shares of our common stock and 303,936 outstanding shares of our preferred 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.  In the event that any of the convertible preferred shares of stock are converted into shares of common stock, such shares may be available for immediate resale which could have an adverse effect on the price of our common stock.


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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.





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. We have also issued preferred stock classes A, B, C and D, although only the Class D is still outstanding. 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.





There is not now, and there may not ever be, an active market for the Company’s common stock.




There currently is a limited public market for the Company’s common stock.  Further, although the common stock is currently quoted on the Over-the-County Bulletin Board, trading of its common stock may be extremely sporadic.  For example, several days may pass before any shares may be traded.  As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations of the price of, the common stock.  Accordingly, investors must assume they may have to bear the economic risk of an investment in the common stock for an indefinite period of time.  This severely limits the liquidity of the common stock, and would likely have a material adverse effect on the market price of the common stock and on the Company’s ability to raise additional capital.





The Company cannot assure you that our common stock will become liquid or that the common stock will be listed on a securities exchange.




Until the common stock is listed on an exchange, the Company expects its common stock to remain eligible for quotation on the Over-the-County Bulletin Board, or on another over-the-counter quotation system, or in the “pink sheets.”  In those venues, however, an investor may find it difficult to obtain accurate quotations as to the market value of the common stock.  In addition, if the Company fails to meet the criteria set forth in the SEC regulations, various requirements would be imposed by law on broker-dealers who sell the Company’s securities to persons other than established customers and accredited investors.  Consequently, such regulations may deter broker-dealers from recommending or selling the common stock, which may further affect the liquidity of the common stock.  This would also make it more difficult for the Company to raise additional capital.





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


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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.





We presently do not intend to pay cash dividends on our common stock.





We currently anticipate that no cash dividends will be paid on the common stock in the foreseeable future.  Therefore, prospective investors who anticipate the need for immediate income by way of cash dividends from their investment should not purchase our common stock.





ITEM 1.B.
UNRESOLVED STAFF COMMENTS





None.





ITEM 2.
DESCRIPTION OF PROPERTY





ECCE moved to 3315 Marquart Street., Suite 206, Houston, Texas  77027 during 2007, and expanded its office space from about 2,000 sq. ft. to 9,750 sq. ft. during 2008.  ECCE entered into a new lease agreement through December 31, 2014.  The rent for 2010 was negotiated for $18.00 per square foot, or $14,625 per month.  However, due to market conditions, the monthly rent was reduced to $4,800 per month for 2010 and 2011.  Our landlord is Marquart St. LLC, a company owned by Rick Bobigian, who is a Director of the Company.





Our principal assets are oil and gas properties, principally a 1% working interest in oil and gas producing properties located in Live Oak County, Texas.





ITEM 3.
LEGAL PROCEEDINGS





We have not paid our property taxes for 2007, 2008 or 2009 on the Wilson Field in Nueces County, Texas.  The County has taken legal proceedings to collect those taxes and has placed tax liens on the property.  In the sale of the Wilson Field property to Samurai Corp., ECCE agreed to pay the property taxes for 2007, 2008 and 2009, while Samurai Corp assumed the liability for 2010 property taxes.  ECCE has reduced the outstanding balance from $68,679 to $34,468 as of December 31, 2010.





ECCE settled an ongoing lawsuit relating to the sale of ECCO Biofuels in 2007.  The settlement called for a $10,000 payment during the third quarter of 2009 and 40,000 shares of restricted common shares of ECCE stock, valued at $5,600, to the plaintiffs as part of the settlement. The settlement also called for full payment to be made during 2010. Total settlement expense of $65,600 was recorded as of December 31, 2009.  The final payment on this settlement was made in January 2011 by Sam Skipper, and the Company was released from the lien.  The $30,000 remaining from the December 31, 2009 reserve for settlement account was recorded as other income for the year ended December 31, 2010.





On February 28, 2010 M-J Oil Company Inc, of Paris Ohio, obtained a judgment against ECCO Energy for non-compliance with covenants in the original mortgage relating to the purchase of the M-J Oil Company pipeline (“Pipeline”).   We are in negotiations with the M-J Oil Company to remove the judgment and to adjust the mortgage terms, which required full payment on September 30, 2009.  As of this date, we have not reached a satisfactory agreement with the lender, although discussions continue.





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





None.


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PART II





ITEM 5.
MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES





Since March 14, 2007, our shares of common stock have traded 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.





Quarter Ended
High Bid
Low BidDecember 31, 2010
$2.45
$0.10September 30, 2010
$1.50
$0.07June 30, 2010
$1.50
$0.06March 31, 2010
$0.19
$0.05December 31, 2009
$0.45
$0.06September 30, 2009
$0.55
$0.10June 30, 2009
$0.66
$0.11March 31, 2009
$1.25
$0.08





As of April 15, 2011, we had 200 shareholders of record.





DIVIDEND POLICY





No dividends have ever been declared by the board of directors on our common stock. We do not intend to pay cash dividends on our common stock in the foreseeable future.





SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS





As of the date of this Annual Report, we have one equity compensation plan 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.  As of the date of this Annual Report, we have not granted any options under the Plan or any plan.





RECENT SALES OF UNREGISTERED SECURITIES





As of the date of this Annual Report and during fiscal years ended December 31, 2010 and 2009, 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.  The issuances of these equity securities were consummated pursuant to Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder on the basis that such transactions did not involve a public offering and the offerees were sophisticated, accredited investors with access to the kind of information that registration would provide. The recipients of these securities represented its intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions.  Unless otherwise noted, no sales commissions were paid.





Common Stock





The Board of Directors has adopted, and the majority stockholder of the Company has approved, pursuant to the written consent dated as of September 21, 2010, a reverse stock split of the Company’s common stock at a 1-for-10 reverse split ratio.  The board of directors of the Company approved the adoption of the reverse stock split by unanimous written consent as it believes the corporate actions are in the best interests of the Company and its stockholders. All share and per share disclosures have been restated retroactively to reflect the reverse stock split.


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During February 2010, ECCE issued 35,639 common shares to five of the Preferred B shareholders upon conversion of 192,724 shares of the Series B Preferred stock and accrued dividends to common stock.





During February 2010, ECCE cancelled 50,000 shares of stock which were awarded to two vendors for services contracted for in 2008. However, their failure to satisfactorily complete their services to the Company’s satisfaction resulted in the cancellation of the stock. There was no gain or loss realized on the cancellation of these shares.





During February 2010, ECCE awarded 50,000 shares of common stock to be distributed to various consultants and employees. This consisted of 15,000 shares being issued to employees for retention and 35,000 to consultants for various services. The shares were valued at $40,000, using the grant date fair value of ECCE’s trading price of $0.80 per share.





During May 2010, ECCE awarded 50,000 shares of common stock to E. E. Hudson for consulting services. The shares were valued at $35,000, using the grant date fair value of ECCE’s trading price of $0.70 per share.





During May 2010, ECCE cancelled 25,000 shares of stock which had previously been awarded for services contracted for in the first quarter of 2010 that were not performed. There was no gain or loss on the cancellation of these shares.





On August 13, 2010, ECCE agreed with Samurai Corp. to convert $414,722 of its debt and accrued interest into 432,222 shares of common stock.  Based on the stock’s closing price of $1.50 per share, a loss on settlement of debt of $233,611 was recorded on the transaction.





On August 13, 2010, Sam Skipper, a major shareholder in ECCE, converted 100,000 shares Series A Preferred stock into 100,000 shares of common stock.  Sam Skipper owned all of the outstanding Series A Preferred stock.  The Preferred A stock had provisions providing super voting rights to certain corporate actions.  All Series A Preferred stock has been retired and no other series of stock contains super voting rights.





On August 24, 2010, ECCE issued 120,000 common shares as payment due on 2009 employment retention bonuses.  The valuation of the award was $12,000 based on ECCE’s stock trading price of $0.10 per share and was recorded as expense in 2010 on the date of the grant.





On September 3, 2010, Rick Bobigian agreed to convert $322,925 of debt and accrued interest into 325,055 shares of common stock.  Based on the stock’s closing price of $0.26 per share, a gain on settlement of debt of $238,411 was recorded on the transaction.





On September 23, 2010, ECCE agreed with Shelby Engineering to convert $35,712 of debt and accrued interest into 39,680 shares of common stock.  Based on the stock’s closing price of $0.26 per share, a gain on settlement of debt of $25,395 was recorded on the transaction.





On October 7, 2010 the remaining 434,078 shares of Preferred Series B stock along with accrued dividends were converted into 53,826 shares of common stock.





On October 21, 2010 the remaining 30,000 shares of Preferred Series C stock along with accrued dividends were converted into 3,605 shares of common stock.





On December 14, 2010, ECCE issued 44,444 to Apollo Global Advisors, LLC as a one-time non-refundable fee for entering into an consulting agreement to seek financing.  The shares were valued at $4,444, using the grant date fair value of ECCE’s trading price of $0.10 per share.





On January 13, 2011, Richard Bobigian, a Director of ECCE, purchased 277,000 shares of restricted common stock for $100,000 to provide working capital.





The shares were exempt from registration under Section 4(2) of the Securities Act of 1933 because they were issued in a privately negotiated transaction with persons with whom we had prior material business relations and were restricted from resale.





Preferred Stock


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There was no preferred stock issued during the years ended December 31, 2010 and 2009.





Description of Our Preferred Stock





In addition to our common stock, we are authorized to issue up to 10,000,000 shares of preferred stock, par value $0.001.  As of the date of this Annual Report, we have 303,936 shares issued and outstanding of our Series D Preferred Stock.  All outstanding Series A, B and C shares were converted to common shares during the year ended December 31, 2010.





Series D Preferred Stock





The terms of the Series D Preferred Stock, with an initial value of $5.00 per share, which was adjusted to $50.00 with the reverse stock split in 2010, prohibit the issuance of any series of stock having rights senior to or ranking on parity with the Series D Preferred Stock without the approval of the holders of 2/3’s of the outstanding Series D Preferred Stock. The holders of the outstanding shares of Series D Preferred Stock shall be entitled to receive in preference to the holders of any other shares of capital stock of the Company, cumulative dividends whether or not declared, and accruing from issuance at a per share amount equal to 8% per annum of the initial value. Additionally, upon occurrence of our liquidation, dissolution or winding up, the holder of shares of Series D Preferred Stock will be entitled to receive, before any distribution of assets is made to holders of any other shares of capital stock , but only after all distributions to holders of Series D Preferred Stock have been made in an amount per share of Series D Preferred Stock equal to 100% of the initial value plus the amount of any accrued but unpaid dividends due for each share of Series D Preferred Stock. Each share of Series D Preferred Stock is convertible into fully paid and nonassessable shares of our common stock determined by dividing the initial value of the Series D Preferred Stock plus the amount of accrued and unpaid dividends due thereon by the conversion price.  The initial conversion price was $5.00, and is subject to adjustment.  The reverse split of our common stock in 2010 resulted in the conversion price being adjusted to $50.00 per share.





The following table provides a summary of the potential dilution of common stock should our Series D Preferred Stock be converted to common stock.  These valuations are as of December 31, 2010, and assume a conversion of one share of preferred for one share of common at the designated valuation price of $50.00 per share, resulting from the revaluation of our 10 to 1 reverse split during 2010.





Preferred


Preferred


Accrued


Conversion


Conversion


Number of Common SharesShares


Shares @$5.00


Dividends


Valuation


Price


Issued upon ConversionSeries D


303,936


$
1,519,680


$
364,723


$
1,884,403


$
50.00



37,688Total Shares


303,936


$
1,519,680


$
364,723


$
1,884,403







37,688





Warrants





In  March 2008, and in September 2008, we issued a warrant to a third party to acquire up to 30,000 and 5,000 shares of common stock at an exercise price of $1.00 per share, with 30,000 shares expiring on March 19, 2010, and 5,000 shares expiring on September 30, 2010, as additional consideration in connection with a debt financing.  The warrant for 30,000 shares expired during March, 2010, and the remaining 5,000 shares expired in September, 2010.  At December 31, 2010 and 2009 warrants outstanding were 0 and 35,000, respectively.





ITEM 6.               SELECTED FINANCIAL DATA





Not required.





ITEM 7.                   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, 2010 and 2009, 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 consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.


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 Table of Contents


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has negative working capital and has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.





RESULTS OF OPERATIONS





We have incurred recurring losses to date. We are exploring the possible sale or merger of the Company. If we do not sell or merge the Company, then over the next twelve months, our strategy is to grow our asset base by acquiring producing properties and investing in working interests 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.





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 will require additional capital to meet both our long and short term operating requirements.





Fiscal Year Ended December 31, 2010 Compared to Fiscal Year Ended December 31, 2009





Our net loss applicable to common stockholders for 2010 was $1,909,478 or $0.96 per share compared to a net loss of $13,071,593 or $11.18 per share for the year ended 2009 (a decrease of $11,162,115). The net loss was $1,639,044, compared to $12,339,179 in 2009.  The decrease in net loss is primarily attributable to the $9,969,383 impairment of oil and gas properties in 2009.





During 2010, we generated revenue of $78,301 compared to revenue of $113,006 during 2009 (a decrease of $34,705). The decrease in revenues during 2010 compared to 2009 was attributable to a decline in total production sales from 5,757 barrels oil equivalent (“BOE”) in 2009 to 3,742 BOE in 2010, resulting from depletion and the sale of the Wilson Properties.





During 2010, we incurred operating expenses of $1,407,373 compared to $12,341,623 incurred during 2009 (a decrease of $10,854,195). These operating expenses incurred during fiscal year ended December 31, 2010 consisted of: (i) General and administrative expenses of $495,749 (2009: $1,840,292); (ii) Depreciation and depletion of $27,652 (2009: $153,990); (iii) Impairment expense of $769,743 (2009: $9,969,383); (iv) Lease operating expenses of $106,449 (2009: $145,432); and (v) Loss on disposal of property of $7,780.





Salaries and compensation expenses, professional and consulting fees, and general and administrative expenses incurred during 2010 decreased, primarily due to the reduction of consulting fees of $174,760 of cash-based payments and $759,174 paid with common stock related to development of oil and gas properties.  The Company continued to use common stock in payment of certain expense items in order to conserve cash.  The value of the common stock as represented on the financial statement greatly exceeded the actual market value of the services.  This was because of the lack of liquidity in ECCE common stock, vendors demanded additional stock than that represented by the quoted stock price.  General and administrative expenses generally include corporate overhead, financial and administrative contract services, marketing, and consulting costs.





Depreciation and depletion of oil and gas properties decreased during 2010 primarily due to the decline in gas production (8,646 mcf) and a small increase in oil (4 bbl) production from our Wilson properties, and as a result of the sale of that field.  Production in the Live Oak County property began during the quarter ending December 31, 2010.


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Our lease operating expenses decreased during fiscal year ended December 31, 2010.  During 2009, we incurred significant costs related to environmental projects in the Wilson field.  We did not have as significant an amount to pay during fiscal 2010, with most of the cleanup ending during the first quarter and none after the subsequent sale in August 2010.




Interest expense of $368,758 (2009: $166,352) increased by $202,406 during 2010 due to the increased debt resulting from the short-term obligations incurred in 2010 and 2009 for the purchase of our oil and gas properties, as well as debt incurred to finance working capital activities.





LIQUIDITY AND CAPITAL RESOURCES





Balance Sheet Data





At December 31, 2010, our current assets were $58,022 and our current liabilities were $2,710,128, which resulted in a working capital deficiency of $2,652,106.  At December 31, 2010, current liabilities were comprised of: (i) $132,592 in accounts payable-trade (ii) $19,037 in accounts payable to related parties (iii) $456,171 in accrued expenses (iv) $29,347 in accrued liabilities to related parties (v) $1,549,578 in short-term debt (vi) $142,000 of current maturities of long term debt (vii) $35,077 in short-term debt to related parties and (viii) $346,326 of convertible debt, net of discount of $198,674.





At December 31, 2010, our total assets were $342,625 comprised of: (i) $14 in cash, (ii)  a receivable for oil and gas sales of $7,829 from a related party and (iii) $25,958 in deferred financing cost (iv) $24,221 in prepaid insurance (v) $260,601 in oil and gas properties and equipment and a $100,000 in pipeline assets, less accumulated depletion and depreciation of $75,998. The decrease of $526,667 in total assets during the year ended December 31, 2010 from the year ended December 31, 2009 of $864,501 was primarily due to the disposition of the Wilson Field property.





At December 31, 2010, our total liabilities were $2,937,570, comprised of: (i) $2,710,128 in current liabilities and (ii) $227,442 in long term debt and asset retirement obligations. The decrease in total liabilities of $55,564 during fiscal year ended December 31, 2010 from fiscal year ended December 31, 2009 was primarily due to the reduction in ARO and other liabilities related to the sale of the Wilson field, and the conversion of debt to common stock which were partially offset by additional debt.





Stockholders’ deficit increased from $2,123,842 for the year ended December 31, 2009 to $2,594,945 for year ended December 31, 2010 due to the current year loss, resulting primarily from the impairment of oil and gas properties.





Cash Flows from Operating Activities





The increase in net cash flows used in operating activities for the year ended December 31, 2010 to $447,177, (2009: $443,908) was primarily the result of the decrease in cash flows from field operations and uses of working capital for workovers on the Wilson properties.  The continued decline of production from the Wilson Field reduced our operating revenue to only $70,422 for the year.





Cash Flows from Investing Activities





The change in cash flows from investing activities represents the capitalized portion of the work on Wilson Field Well 502 that was ultimately impaired in 2010.  Also, ECCE purchased for $250,000, a farm-in of a 1% working interest in 2,400 acres and the drilling of two wells in the Eagle Ford Shale formation located in Live Oak County in South Texas.  In an attempt to repair the Wilson Properties, ECCE spent $52,165 on a rework of one of the non-producing wells and subsequently impaired the property.  A payment to settle asset retirement obligations was made for $42,334, and ECCE purchased office equipment for $4,600.





During the year ending December 31, 2009, ECCE sold the Bateman Lake Property and received $775,000. ECCE also spent $35,586 in oil and gas property development during that year.





Cash Flows from Financing Activities





We have financed some of our operations from the issuance of equity and debt instruments. We received (i) net proceeds of $500,500 from four lenders from the issuance of our convertible debt after paying financing costs of $44,500, (ii) $267,000 from the issuance of notes payable to third parties and  (iii) $59,077 from the issuance of notes payable to related parties during the year ending December 31, 2010. During the year ending December 31, 2009, we obtained (i) $117,176 from the issuance of short term debt, (ii) $55,420 from the issuance of short term debt to related parties and (iii) $20,000 from the issuance of common stock.


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During the year ending December 31, 2010 ECCE made payments of $30,500 on short term debt, compared to payments of $494,563 during 2009.





We expect that working capital requirements will continue to be funded through a combination of our future revenues we expect to generate on the Live Oak properties, loans and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. Since inception, our working capital needs have been met through operating activities and from financings and loans from related entities.  ECCE does not anticipate future funds being available from related entities.  We anticipate that additional financings and loans will be required to sustain operations and acquire development properties in the future.





There can be no assurance that the Company will be successful in raising the required capital or that related parties will continue to advance funds to the Company.  The failure to raise sufficient capital through future debt or equity financings or otherwise will cause the Company to curtail operations and result in the failure of our business.


.


WORKING CAPITAL NEEDS





At December 31, 2010, we had a working capital deficit of $2,652,106.  We will need to raise additional capital during 2011 to develop the oil and gas properties and fund general corporate working capital needs.  ECCE has notes payable of $2,049,039, including accrued interest, that were past due as of December 31, 2010, notes payable of (i) $217,000 that came due prior to April 1, 2011 and (ii) convertible debentures of $545,000 that are payable in July 2011, and a $227,131 note that is due January 2012.  As the Company has no debt or equity funding commitments, we will need to rely upon best efforts financings.  There can be no assurance that the Company will be successful in raising the required capital.  The failure to raise sufficient capital through future debt or equity financings or otherwise will cause the Company to curtail operations, sell assets, or result in the failure of our business.




MATERIAL COMMITMENTS





Payments due by periodContractual Obligations

Total


Less than 1 year


1-3 years


3-5 years


More than 5

yearsLong Term Debt


1






227,131



-



-Convertible Bonds


5



545,000



-



-



-MJ Pipeline judgment


1



1,000,000



-



-



-Short Term Notes


15



714,655



-



-



-Asset Retirement Obligations


1



-



-



-



311Total






2,259,655



227,131



-



311





PURCHASE OF SIGNIFICANT EQUIPMENT





We 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





We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.


27
 Table of Contents


ITEM8.
FINANCIAL STATEMENTS





The Company’s consolidated financial statements and footnotes are set forth on pages F-1 through F-19.




28
 Table of Contents





Index to Consolidated Financial StatementsPageReport of Independent Registered Public Accounting Firm
F-2Consolidated Balance Sheets at December 31, 2010 and 2009
F-3Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009
F-4Consolidated Statements of Changes in Shareholders’Equity (Deficit) for the Years Ended December 31, 2010 and 2009
F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009
F-6 to 7Notes to Consolidated Financial Statements
F-8 to 21


F-1
 Table of Contents


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors


Eagle Ford Oil and Gas Corp.


Houston, Texas





We have audited the accompanying consolidated balance sheets of Eagle Ford Oil and Gas Corp. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in shareholders' equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of Eagle Ford Oil and Gas 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial position of Eagle Ford Oil and Gas Corp. and subsidiaries, as of December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.





The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has negative working capital and has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.








/s/ GBH CPAs, PC





www.gbhcpas.com


Houston, Texas





April 15, 2011


F-2
 Table of Contents





EAGLE FORD OIL AND GAS CORP.


CONSOLIDATED BALANCE SHEETS





December 31,2010


2009ASSETSCURRENT ASSETSCash and cash equivalents

$
14


$
213Accounts receivable oil and gas sales - related party


7,829



-Deferred financing cost


25,958



-Prepaid expenses


24,221



-Total current assets


58,022



213PROPERTY AND EQUIPMENTOil and gas properties, using full cost accounting


250,303



1,110,488Pipeline transmission properties


100,000



100,000Equipment


10,298



18,764Less accumulated depreciation and depletion


(75,998
)


(360,173
)Total property and equipment


284,603



869,079TOTAL ASSETS

$
342,625


$
869,292LIABILITIES AND SHAREHOLDERS’ DEFICITCURRENT LIABILITIESAccounts payable - trade

$
132,592


$
137,173Accounts payable - related parties


19,037



-Accrued expenses


456,171



305,692Accrued expenses - related parties


29,347Short-term debt


1,549,578



1,445,754Short-term debt - related parties


35,077



-Current maturities of long-term debt


142,000



-Convertible debentures, net of debt discount of $198,674 and $0, respectively


346,326



-Total current liabilities


2,710,128



1,888,619LONG-TERM LIABILITIESLong term debt, less current maturities


227,131



227,131Long term debt - related parties


-



775,836Asset retirement obligations


311



101,548TOTAL LIABILITIES


2,937,570



2,993,134COMMITMENTS AND CONTINGENCIES


-



-SHAREHOLDERS’ DEFICITPreferred stock, 10,000,000 shares authorized:Series A, $0.001 par value; 0 and100,000 issued and outstanding, respectively


-



100Series B, $0.001 par value; 0 and 627,000 issued and outstanding, respectively


-



627Series C, $0.001 par value; 0 and 30,000 issued and outstanding, respectively


-



30Series D, $0.001 par value; 303,936 issued and  outstanding


304



304Common stock, $0.001 par value; 75,000,000 shares authorized;2,729,418 and 1,549,947 shares issued and outstanding, respectively


2,729



1,550Additional paid-in-capital


14,698,443



12,729,630Accumulated deficit


(17,296,421
)


(14,856,083
)Total shareholders’ deficit


(2,594,945
)


(2,123,842
)TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

$
342,625


$
869,292





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


F-3
 Table of Contents





EAGLE FORD OIL AND GAS CORP.


CONSOLIDATED STATEMENTS OF OPERATIONS





For the Year Ended

December 31,2010


2009REVENUE

$
78,301


$
113,006OPERATING EXPENSESLease operating expenses


106,449



145,432General and administrative expenses


495,749



1,840,292Depreciation, depletion and accretion


27,652



153,990Impairment of oil and gas property


769,743



9,969,383Loss on disposal of property


7,780



232,526Total operating expenses


1,407,373



12,341,623Net operating loss


(1,329,072
)


(12,228,617
)OTHER INCOME (EXPENSE)Interest expense


(368,758
)


(166,352
)Gain on settlement of liens


-



121,390Gain on settlement of debt converted to common stock


28,786



-Gain (loss) on ECCO Biofuels settlement


30,000



(65,600
)Total other expense


(309,972
)


(110,562
)Net loss


(1,639,044
)


(12,339,179
)Dividends applicable to preferred stock


(270,434
)


(732,414
)Net loss attributable to common shareholders

$
(1,909,478
)

$
(13,071,593
)Basic and diluted net loss per share

$
(0.96
)

$
(11.18
)Weighted average shares outstanding – basic and diluted


1,984,913



1,103,272





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


F-4
 Table of Contents


EAGLE FORD OIL AND GAS CORP.


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)


Years Ended December 31, 2010 and 2009





Preferred Stock


Common Stock


Additional


AccumulatedShares


Amount


Shares


Amount


Paid in Capital


Deficit


TotalBalances, December 31, 2008


2,063,936


$
2,064



942,496


$
943


$
10,882,203


$
(1,884,778
)

$
9,000,432Common shares issued for cash


-



-



20,000



20



19,980



-



20,000Common shares issued for services


-



-



399,500



400



1,046,910



-



1,047,310Common shares issued for accounts payable


-



-



15,000



15



47,580



-



47,595Preferred C conversion to common shares


(630,000
)


(630
)


63,000



63



567



-



-Preferred B conversion to common shares


(373,207
)


(373
)


37,321



37



336



-



-Common stock issued for preferred dividends conversion


-



-



72,630



72



732,054



-



732,126Distributed dividends


-



-



-



-



-



(632,126
)


(632,126
)Net loss


-



-



-



-



-



(12,339,179
)


(12,339,179
)Balances, December 31, 2009


1,060,729



1,061



1,549,947



1,550



12,729,630



(14,856,083
)


(2,123,842
)Cancellation of shares


-



-



(75,000
)


(75
)


75



-



-Common shares issued for services


-



-



264,444



264



91,181



-



91,445Preferred A conversion to common shares


(100,000
)


(100
)


100,000



100



-



-



-Preferred B conversion to common shares


(626,793
)


(627
)


72,057



72



555



-



-Preferred C conversion to common shares


(30,000
)


(30
)


3,545



4



26



-



-Common stock issued for preferred dividends conversion










17,468



17



801,277



(801,294
)


-Common stock issued to settle debt and accrued interest


-



-



796,957



797



742,367



-



743,164Discount on convertible debt


-



-



-



-



333,332



-



333,332Net loss


-



-



-



-



-



(1,639,044
)


(1,639,044
)Balances, December 31, 2010


303,936


$
304



2,729,418


$
2,729


$
14,698,443


$
(17,296,421
)

$
(2,594,945
)





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


F-5
 Table of Contents


EAGLE FORD OIL & GASCORP.


CONSOLIDATED STATEMENTS OF CASH FLOWS





For the Year Ended December 31,2010


2009Cash flows from operating activities:Net loss

$
(1,639,044
)

$
(12,339,179
)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation, depletion and accretion


27,652



153,990Amortization of debt discount


134,658



-Amortization of deferred financing cost


18,542



-Stock issued for services


91,445



1,047,310Impairment of oil and gas properties


769,743



9,969,383Loss on sale of property


7,780



232,256Gain on settlement of liabilities


(34,286
)


(121,390
)Bad debt expense


-



15,000Changes in operating assets and liabilities:Accounts receivable


(7,829
)


(15,000
)Accounts receivable – related party


(69,727
)


-Prepaid expenses


10,860



34,499Accounts payable – trade


(4,581
)


47,475Accounts payable – related parties


19,037



341,843Accrued liabilities


193,726



189,635Accrued liabilities– related parties


29,347



-Net cash used in operating activities


(447,177
)


(443,908
)Cash flows from investing activities:Purchase of oil and gas properties


(250,000
)


-Capital expenditures for oil and gas properties


(52,165
)


(35,586
)Proceeds from sale of assets


-



775,000Payment to settle asset retirement obligations


(42,334
)


-Purchase of office equipment


(4,600
)


-Net cash provided by (used in) investing activities


(349,099
)


739,414Cash flows from financing activities:Proceeds from sale of common stock


-



20,000Proceeds from refund of cancelled insurance premiums financing


-



5,841Proceeds from issuance of convertible debt, net of financing costs


500,500



-Proceeds from issuance of short term debt


267,000



117,176Proceeds from short term debt – related party


59,077



55,420Payments made on short term debt – related party


(30,500
)


(486,563
)Payments made on short term debt


-



(8,000
)Net cash provided by (used in) financing activities


796,077



(296,126
)Net change in cash and cash equivalents


(199
)


(620
)Cash and cash equivalents, at beginning of period


213



833Cash and cash equivalents, at end of period

$
14


$
213Supplemental cash flow information:Interest paid

$
-


$
202Income taxes paid

$
-


$
-





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


F-6
 Table of Contents


EAGLE FORD OIL & GAS CORP.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(continued)




For the Year EndedDecember 31,2010


2009Non-cash investing and financial activities:Reclassification of assets held for sale

$
-


$
5,636,739Reclassification of liabilities associated with assets held for sale

$
-


$
898,864Accounts payable accrued for plugging and abandonment costs

$
-


$
22,587Note payable issued for related party accounts payable

$
-


$
809,252Prepaid insurance premium financed

$
35,081


$
44,866Assumption (disposition) of Bateman Lake liens

$
-


$
(232,256
)Change in asset retirement obligation

$
303


$
-Liabilities assumed on sale of oil and gas property

$
88,177


$
190,470Note payable issued for prepaid insurance premiums

$
-


$
6,925Shares issued for accounts payable

$
-


$
136,327Cancellation of common shares

$
75


$
-Preferred shares converted to common shares

$
757


$
1,003Common shares issued for preferred stock dividends

$
801,294


$
732,126Common shares issued for accounts payable

$
-


$
47,595Common shares issued to settle debt and accrued interest

$
743,164


$
-Discount on convertible debt

$
333,332


$
-





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


F-7
 Table of Contents


EAGLE FORD OIL AND GAS CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





1.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization





Eagle Ford Oil and Gas 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 undeveloped and developed non-producing reserves to proved developed producing reserves. ECCE also intends to develop its existing Live Oak County property.





Consolidation





The accompanying consolidated financial statements include all accounts of ECCE. and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.





Use of Estimates





The preparation of consolidated 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 consolidated financial statements and that affect the reported amounts of revenues and expenses during the reporting period. Significant estimates include those with respect to the amount of recoverable oil and gas reserves, the fair value of financial instruments, oil and gas depletion, asset retirement obligations and stock-based compensation.





Reclassifications





Certain reclassifications have been made in the prior period consolidated financial statements to conform to the current period presentation.





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, Full Cost Method





ECCE uses the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related asset retirement costs are capitalized.





Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and gas property costs. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. ECCE assesses the realizability of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management's intention with regard to future exploration and development of individually significant properties and the ability of ECCE to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.





Costs of oil and gas properties are amortized using the units of production method. Amortization expense calculated per equivalent physical unit of production amounted to $5.71 and $5.91 per barrel oil equivalent for the years ended December 31, 2010 and 2009, respectively.


F-8
 Table of Contents


In applying the full cost method, ECCE performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the “estimated present value,” of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense. Impairment costs of $769,743 and $9,969,383 were recorded during the years ended December 31, 2010 and 2009, respectively.





Revenue and Cost Recognition





ECCE recognizes sales revenues, net of royalties and net profits interests, based on the amount of gas, oil and condensate sold to purchasers when delivery to the purchaser has occurred and title has transferred. This occurs when production has been delivered to a pipeline. The Company follows the sales method to account for natural gas imbalances. Sales may result in more or less than the Company’s share of pro-rata production from certain wells. When natural gas sales volumes exceed the Company’s entitled share and the accumulated overproduced balance exceeds the Company’s share of the remaining estimated proved natural gas reserves for a given property, the Company will record a liability. Historically, sales volumes have not materially differed from the Company’s entitled share of natural gas production and the Company did not have a material imbalance position in terms of volumes or values at December 31, 2010 or 2009. 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 2010, 100% of oil and gas revenues were attributable to two customers and in 2009, 100% 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.





Income Taxes





ECCE is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest and penalties associated with income taxes are included in selling, general and administrative expense.





ECCE has adopted ASC Topic 740 “Accounting for Uncertainty in Income Taxes” which prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its consolidated financial statements uncertain tax positions that the company has taken or expects to take on a tax return.  ASC 740 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. As of December 31, 2010, the Company had not recorded any tax benefits from uncertain tax positions.





Loss per Share





Pursuant to FASB ASC Topic 260, Earnings Per Share, basic net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common and common equivalent shares outstanding during the period. Common share equivalents included in the diluted computation represent shares issuable upon assumed exercise of stock options and warrants using the treasury stock and “if converted” method and conversion of preferred shares. For periods in which net losses are incurred, weighted average shares outstanding is the same for basic and diluted loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect.


F-9
 Table of Contents


For the year ended December 31, 2010, ECCE had preferred series D shares convertible into 37,688 shares of common stock that were excluded from the calculation of diluted net loss per share because they were anti-dilutive.  For the year ended December 31, 2009, ECCE had 35,000 warrants to purchase common stock and preferred series A, B, and C shares convertible into 1,139,840 common shares that were excluded from the calculation of diluted net loss per share because they were anti-dilutive.





Stock-based Compensation





ECCE measures the cost of employee services received in exchange for stock based on the grant date fair value of the awards under FASB ASC Topic 718, Compensation – Stock Compensation (“ASC 718”).  ECCE determines the fair value of shares of nonvested stock (also commonly referred to as restricted stock) based on the last quoted price of our stock on the date of the share grant.  The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award.  As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates. Previously recognized compensation costs may be adjusted to reflect the actual forfeiture rate for the entire award at the end of the vesting period.  Excess tax benefits, as defined in ASC 718, if any, are recognized as an addition to paid-in capital





Subsequent Events





ECCE evaluated events occurring between the end of our fiscal year, December 31, 2010, and April 15, 2011 when the consolidated financial statements were issued.





New Accounting Pronouncements





In January 2010, the FASB issued revised authoritative guidance that requires more robust disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and the transfers between Levels 1, 2 and 3. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009 (which is January 1, 2010 for the Company) except for the disclosures about purchases, sales, issuances, and settlements in the roll forward activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years (which is January 1, 2011 for the Company). Early application is encouraged. The revised guidance was adopted as of January 1, 2010. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows..





Other than the pronouncements noted above, ECCE does not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.





2.           GOING CONCERN





As shown in the accompanying consolidated financial statements, we incurred net losses attributable to common shareholders of $1,909,478 and $13,071,593 for 2010 and 2009, respectively. In addition, we had an accumulated deficit of $17,296,421 and a working capital deficit of $2,652,106 as of December 31, 2010. These conditions raise substantial doubt as to our ability to continue as a going concern. Management is working to improve its liquidity and its results from operations by raising additional capital through purchasing producing wells, and the drilling of additional wells to improve future earnings and cash flow. We are also actively attempting to raise funds through debt and equity transactions, or through a merger. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.  If we do not obtain funding, ECCE will cease operations.





3.           OIL AND GAS PROPERTIES





All of ECCE’s 2010 oil and gas properties are located in the United States.


F-10
 Table of Contents


Costs being amortized at December 31, 2010 are as follows:





Year Incurred

Acquisition Costs


Development Costs


Sale of Properties


Impairment of Properties


Asset Retirement Costs


Total2007 and prior

$
10,982,352


$
134,481


$
-


$
-


$
60,522


$
11,177,3552008


237,182



179,287



(261,000
)






687,187



842,6562009


-



-



(255,348
)


(9,969,383
)


(684,792
)


(10,909,523
)2010


250,000



52,165



(392,607
)


(707,129
)


(62,614
)


(860,185
)Total


11,469,534


$
365,933


$
(908,955
)

$
(10,676,512
)

$
303


$
250,303





LIVE OAK COUNTY, TEXAS





In August 2010, ECCE purchased a farm-in of a 1% working interest in 2,400 acres and the drilling of two wells in the Eagle Ford Shale formation located in Live Oak County in South Texas for $250,000.  The Dena Forehand #2H and the Kellam#2H were drilled and completed, and production began during November and December 2010.  Subject to the availability of funds, ECCE will continue to participate in the drilling of additional wells in this lease and anticipates a total of 14 wells will be drilled over the next 48 months.  There is no assurance that the Company will be able to raise those funds.  ECCE has no estimated costs or timeframe for the drilling of these additional wells.If the first two wells do not show the anticipated economic results, the Company is under no obligation to continue its investment in the property.





WILSON PROPERTIES





During 2010, ECCE attempted to rework Well 502 at the Wilson Field property.  The attempt was not successful.  ECCE spent $119,165 on the attempt and capitalized $52,165 of that amount.  In January 2010, ECCE also incurred expenses of $42,334 in the plugging of an abandoned well on the property.  Subsequent to the failure to rework Well 502, ECCE made the determination to sell the Wilson Field properties to focus our efforts on properties in the Eagle Ford Shale region. After an examination of results from surrounding wells, ECCE determined that the Wilson Field property was impaired and had a net realizable value of $88,177 based on the liabilities assumed by the buyer on the sale of the Wilson Properties in August 2010.  This resulted in an impairment charge of $769,743 during the year ended December 31, 2010.





On August 13, 2010, ECCE sold its properties in the Wilson Field, Nueces County, Texas to Samurai Corp for the assumption of liabilities of $88,177.  Samurai Corp. is an affiliated company, owned by Sam Skipper, who was the Vice-Chairman of the Board of Eagle Ford Oil & Gas Corp at the time of the sale.





ACQUISITION OF GAS PIPELINE





In October 2008, ECCE acquired a gas pipeline (“Pipeline”) approximately 13 miles in length located in Jefferson and Harrison Counties, Ohio.  The Pipeline was purchased from M- J Oil Company of Paris, Ohio, an unaffiliated third party, by issuing a mortgage note for $1,000,000.  The mortgage note bears an 8% annual interest rate.  The mortgage is secured by the Pipeline assets.  The mortgage was due on September 30, 2009, at which time, the entire unpaid balance of principal and accrued interest was to have been paid.  The pipeline services oil and gas properties owned by Samurai Corp, an affiliated company





On February 27, 2009, ECCE entered into an agreement to buy oil and gas producing properties in Ohio, from Samurai Corp, an affiliated company owned by Sam Skipper.  Upon further review, due to market conditions pertaining to the price of oil and gas, both Samurai and ECCE decided that the transaction was not in the best interest of shareholders of either company.  Therefore, on April 13, 2009 the Board of Directors of both companies decided to terminate the transaction.





A review of the pipeline valuation was performed by management.  This was necessary as the asset was not an income producing asset during 2009.  A comparison of replacement cost, comparable market value and comparable earnings potential to other pipelines, shows that the expected realizable value of the asset at December 31, 2010 was $100,000. An impairment charge of $900,000 was recorded during the year ended December 31, 2009.


F-11
 Table of Contents


Due to the failure to complete the transfer of assets from Samurai to ECCE, the covenants of the Pipeline purchase were violated.  On February 28, 2010 M-J Oil Company Inc, of Paris Ohio, obtained a judgment against ECCO Energy for non-compliance with covenants in the original mortgage relating to the purchase of the M-J Oil Company pipeline (“Pipeline”).   ECCE is in negotiations with the M-J Oil Company to remove the judgment and to adjust the mortgage terms, which required full payment on September 30, 2009.  As of this date, ECCE has not reached a satisfactory agreement with the lender and the note remains in default.





4.           DEBT





Debt – Related Parties





ECCE’s notes payable to related parties consisted of the following at December 31, 2010 and 2009:





December 31, 2010


December 31, 2009Promissory note to Rick Bobigian - interest at 8% due January 1, 2012; unsecured

$
-


$
263,173Promissory note to Rick Bobigian - interest at 8% due July 1, 2010; unsecured. (5)


25,000



-Promissory notes to Rick Adams - interest at 6% due February 10, 2011; unsecured. (5)


3,017



-Promissory notes to Rick Adams - interest at 6% due March 15, 2011; unsecured. (5)


7,060



-Promissory note to Samurai Corp - interest at 5% due January 1, 2012; unsecured


-



512,663Less current portion of related party debt


35,077



-Total related party debt – long term

$
-


$
775,836





Debt – Non-Related Parties




December 31, 2010


December 31, 2009Promissory note - interest of 7% due July 17, 2009; not secured (1)

$
-


$
12,000Promissory note - interest of 7% due August 17, 2009; not secured (1)


12,000



12,000Promissory note - interest of 7% due August 17, 2009; not secured (1)


12,000



12,000Promissory note - interest of 7% due August 17, 2009; not secured. (1)


12,000



12,000Promissory note - interest of 7% due August 17, 2009; not secured (1)


12,000



12,000Promissory note - interest of 7% due September 10, 2009; not secured (1)


6,000



6,000Promissory note - interest of 7% due September 14, 2009; not secured (1)


12,000



12,000Promissory note - interest of 7% due September 10, 2009; not secured (1)


6,000



6,000Promissory note - interest of 12% due June 30, 2009; (3)


328,578



328,578Pipeline mortgage - interest of 8% due September 30, 2009; secured by pipeline (4)


1,000,000



1,000,000




F-12
 Table of Contents





Promissory note - interest of 7% due October 19, 2009; not secured. (1)


12,000



12,000Promissory note - interest of 7% due September 10, 2009; not secured (1)


12,000



-Promissory note - interest of 7% due December 1, 2009; not secured.


-



10,000Promissory note - interest of 7% due August 12, 2009; not secured


-



9,365Promissory note - interest of 7% due December 1, 2009; not secured


-



1,811Promissory notes - interest of 6% due April 1, 2011 (2)


142,000



-Promissory notes - interest of 5% due October 15, 2010; not secured (2)


50,000



-Promissory note -  interest of 20% due January 1, 2011; not secured (2)


75,000



-Promissory note - interest of 5% due January 1, 2012; not secured.


227,131



227,131Less current portion


1,691,578



1,445,754Total long term debt to non-related parties


227,131



227,131Total debt

$
1,918,709


$
1,672,885





(1)
In 2009, ECCE borrowed $96,000 from three different parties for general corporate purposes.  None of these notes have been repaid and are in default. No demand has been made for payment.  ECCE is continuing to accrue interest on these notes at the stated rate.





(2)
In 2010, ECCE borrowed $267,000 from 4 different parties for drilling on the Wilson Field lease and for general corporate purposes.  None of these notes have been repaid and are in default. No demand has been made for payment.  ECCE is continuing to accrue interest on these notes at the stated rate.





(3)
ECCE issued 35,000 warrants with the issuance of the note payable.  On March 2010, 30,000 of the warrants expired, and the remaining 5,000 expired in September 2010.  All principal and interest became due June 30, 2009.  This note has not been repaid and is in default. No demand has been made for payment.  ECCE is continuing to accrue interest on this note at the stated rate.  This note was originally secured by the Wilson Field properties.





(4)
The entire unpaid balance of principal and accrued interest was due on September 30, 2009. No payments have been made and this mortgage note is in default.   There has been a judgment rendered against ECCE in the amount of the mortgage.  See Note 3. ECCE is in discussions with the lender to restructure the mortgage. ECCE is continuing to accrue interest on these notes at the stated rate.





(5)
ECCE borrowed $35,077 from two related parties for general corporate purposes.  As of the date of this report, all three notes are in default.  No demand has been made for payment.  ECCE is continuing to accrue interest on these notes at the stated rate.





5.           CONVERTIBLE DEBENTURES





During August 2010, ECCE began offering convertible debentures for $90,000 per unit of Secured Convertible Debt.  ECCE received gross proceeds of $545,000 from five investors and paid financing fees totaling $44,500.  The financing costs have been recorded as deferred financing cost on the balance sheet and will be amortized over the term of the convertible note.  For the year ended December 31, 2010, $18,542 of the deferred financing cost were amortized to interest expense.  The Secured Convertible Debentures are payable on July 26, 2011, and bear interest at a rate of 12%, payable quarterly in 3,000 shares of common stock for each unit.  There have been no shares issued as of the date of the report.  The interest for these debentures are accrued at the 12% rate and included in the accrued expenses.  The Debentures are secured by an investment in three oil and gas producing wells that are to be completed in a 2,300 acre lease in Live Oak County, Texas.  The Debentures are convertible into ECCE restricted common stock at a fixed conversion rate of $0.90 per common share.




F-13
 Table of Contents





At the commitment dates of the Convertible Debentures the embedded conversion features had an intrinsic value of $333,332.  ECCE recorded a debt discount of $333,332.  Amortization of debt discount of $134,658 was recorded as interest expense during the year ended December 31, 2010.  The remaining debt discount balance of $198,674 will be amortized over the remaining life of the debentures.





The following are maturities on all debt and convertible notes for the next five years:





Principal Amount2011


2,271,6552012


227,1312013


-2014


-Thereafter


-Total debt

$
2,498,786





6.           RELATED PARTY TRANSACTIONS





During the year ended December 31, 2010, ECCE made net payments of $85,472 to Samurai Corp, an affiliated company, for repayment of a prior note and for lease operating expenses related to Samurai Operating Company performing as the operator at the Wilson Field.  These transactions were in addition to an existing note with Samurai Corp. for $512,663.  On August 13, 2010, ECCE agreed with Samurai Corp. to convert $414,722 of its debt and accrued interest into 432,222 shares of common stock using the stock’s closing price of $1.50 per share.  A loss on settlement of debt of $229,520 was recorded on the transaction.





On August 13, 2010, ECCE sold its properties in Wilson County, Texas to Samurai Corp for the assumption of liabilities of $88,177.  Samurai Corp. is an affiliated company, owned by Sam Skipper, the former Vice Chairman of ECCE.





On August 13, 2010, Sam Skipper, a major shareholder in ECCE, converted 100,000 shares of Series A Preferred stock into 100,000 shares of common stock.  Sam Skipper owned all of the outstanding Series A Preferred stock.





On September 3, 2010, ECCE agreed with Rick Bobigian to convert $322,925 of debt and accrued interest into 325,055 shares of common stock using the stock’s closing price of $0.90 per share.  A gain on settlement of debt of $238,411 was recorded on the transaction.





On November 11, 2010, Rick Adams, the President of ECCE, loaned the company $3,017 for working capital.





On December 14, 2010 Rick Adams, the President of ECCE, loaned the company $7,060 for working capital.





7.           ASSET RETIREMENT OBLIGATIONS





In accordance with ASC 410, “Accounting for Asset Retirement Obligations” ECCE records 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 credit-adjusted risk-free interest rate. No market risk premium has been included in ECCE's calculation of the ARO balance.


F-14
 Table of Contents





The following is a description of the changes to the Company's asset retirement obligations for the years ended December 31,





2010


2009Asset retirement obligations at beginning of year

$
101,548


$
747,709Sale of properties


(61,614
)


(713,370
)Purchase of properties


303



-Abandonment costs incurred


(42,334
)


-Accretion expense


2,400



67,209Asset retirement obligations at end of year

$
303


$
101,548








8.            INCOME TAXES





As of December 31, 2010, ECCE had accumulated net operating losses, and therefore, had no tax liability.  The net deferred tax asset generated by the loss carryforwards has been fully reserved.  The cumulative net operating loss carryforward was $15,410,315 at December 31, 2010, and will expire in the years 2024 through 2030.





At December 31, 2010 and 2009, the deferred tax assets consisted of the following:





2010


2009Deferred tax assetsNet operating losses

$
5,239,507


$
4,409,326Less: valuation allowance


(5,239,507
)


(4,409,326
)Net deferred tax asset

$
–


$
–





The change in the valuation allowance for the years ended December 31, 2010 and 2009 totaled $830,181 and $3,839,235, respectively.





The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows as of December 31, 2010 and 2009:
 
 2010


2009Statutory federal income tax rate


(34.0
%)


(34.0
%)State income taxes and other


-



-Valuation allowance


34.0
%


34.0
%Effective tax rate


-



-




9.           SHAREHOLDERS’ EQUITY





The Board of Directors has adopted, and the majority stockholder of the Company has approved, pursuant to the written consent dated as of September 21, 2010, a reverse stock split of the Company’s common stock at a 1-for-10 reverse split ratio.  The Board of Directors of the Company approved the adoption of the reverse stock split by unanimous written consent as it believes the corporate actions are in the best interests of the Company and its stockholders. All share and per share disclosures have been restated retroactively to reflect the reverse stock split.




Preferred Stock
 
 In addition to our common stock, the Company is authorized to issue up to 10,000,000 shares of preferred stock, par value $0.001.  The preferred stock offered additional rights over the common shares which include:





As of December 31, 2010, the Company has 303,936 shares issued and outstanding of Series D Preferred Stock.  All outstanding Series A, B and C shares were converted to common shares during the year ended December 31, 2010.





1.
The shares are entitled to dividends, if and when declared by the Board of Directors.


2.
Special liquidation rights based upon the success of underlying assets (a triggering event), and other conversion features should the Company be acquired.





In the year ending December 31, 2009, ECCE sold or disposed of the assets which were acquired by the issuance of these preferred stocks.  Since the Company no longer owned the assets, it was not possible for the preferred shareholders to obtain the necessary “triggering event” which would have provided funds to pay the accrued dividends and to retire the preferred shares through redemption.  Accordingly, the Board of Directors determined the preferred shares would never be redeemed for cash and there would never be a payment of the accrued dividends.





ECCE determined that it was in the best interest of the preferred shareholders and existing common shareholders to convert the preferred stock to common.  ECCE then attempted to notify all preferred shareholders, however, ECCE was unable to locate five shareholders of the B preferred and one shareholder of the C preferred comprising 434,078Series B Preferred shares and 30,000 Series C Preferred shares.  ECCE believes it has the right to convert these shares to common stock. These shareholders had their shares converted at the designated formula and the shares were sent to the appropriate representative of the shareholders.  If the preferred shareholders should object to the conversion, then the Company could be required to reissue the preferred shares.  The Board of Directors does not anticipate any such event.





As of December 31, 2010, the Company has 303,936 shares issued and outstanding of Series D Preferred Stock.  All outstanding Series A, B and C shares were converted to common shares during the year ended December 31, 2010.  For the year ending December 31, 2010, 626,893 shares of the original Series B shares and accumulated dividends of $771,064 were converted to 193,010 shares of common stock.  For the Series C preferred, 30,000 shares of the original preferred shares and $30,230 of accumulated dividends were converted into 3,605 shares of ECCE common stock.





F-15
 Table of Contents




Convertible Series D Preferred Stock


On March 27, 2008, ECCE filed with the Nevada Secretary of State a First Amended Certificate of Designation of Series D Convertible Preferred Stock designating 303,396 shares of the 10,000,000 shares of authorized preferred stock as Series D Preferred Stock, with an initial value of $5.00 (the “Initial Value”). The Series C Preferred Stock had been authorized by ECCE’s Board of Directors as a new series of preferred stock, which ranks senior and is not subordinated in any respects to the Series A or B or C Preferred Stocks. As long as any Series D Preferred Stock is outstanding, ECCE is prohibited from issuing any series of stock having rights senior to or ranking on parity with the Series C Preferred Stock without the approval of the holders of two-thirds of the outstanding Series D Preferred Stock. The holders of the outstanding shares of Series D Preferred Stock shall be entitled to receive in preference to the holders of any other shares of capital stock of the Corporation, cumulative dividends when and as if they may be declared by the Board of Directors at a per share equal to 8% per annum of the Initial Value. Additionally, upon occurrence of ECCE’s liquidation, the holder of shares of Series B or C Preferred Stock will be entitled to receive, before any distribution of assets is made to holders of ECCE common stock or any other stock ranking junior to the Series D Preferred Stock Preferred Stock as to dividends or liquidations rights, but only after all distributions to holders of Series B or C Preferred Stock have been made in an amount per share of Series B or C Preferred Stock equal to 100% of the Initial Value plus the amount of any accrued but unpaid dividends due for each share of Series D Preferred Stock (the “Liquidation Amount).





ECCE evaluated the convertible preferred financial instruments under SFAS No. 133 (ASC 815), EITF 00-19 and EITF 88-5 and concluded that the instruments contained no derivative instruments or beneficial conversion features.





Common Stock





During February 2010, ECCE issued 35,639 common shares to five of the Preferred B shareholders upon conversion of 192,724 shares of the Series B Preferred stock and accrued dividends to common stock.





During February 2010, ECCE cancelled 50,000 shares of stock which were awarded to two vendors for services contracted for in 2008. However, their failure to satisfactorily complete their services to the Company’s satisfaction resulted in the cancellation of the stock. There was no gain or loss realized on the cancellation of these shares.





During February 2010, ECCE awarded 50,000 shares of common stock to be distributed to various consultants and employees. This consisted of 15,000 shares being issued to employees for retention and 35,000 to consultants for various services. The shares were valued at $40,000, using the grant date fair value of ECCE’s trading price of $0.80 per share.





During May 2010, ECCE awarded 50,000 shares of common stock to E. E. Hudson consulting services. The shares were valued at $35,000, using the grant date fair value of ECCE’s trading price of $0.70 per share.





During May 2010, ECCE cancelled 25,000 shares of stock which had previously been awarded for services contracted for in the first quarter of 2010 that were not performed. There was no gain or loss on the cancellation of these shares.





On August 13, 2010, ECCE agreed with Samurai Corp. to convert $414,722 of its debt and accrued interest into 432,222 shares of common stock.  Based on the stock’s closing price of $1.50 per share, a loss on settlement of debt of $233,611 was recorded on the transaction.





On August 13, 2010, Sam Skipper, a major shareholder in ECCE, converted 100,000 shares Series A Preferred stock into 100,000 shares of common stock.  Sam Skipper owned all of the outstanding Series A Preferred stock.  The Preferred A stock had provisions providing super voting rights to certain corporate actions.  All Series A Preferred stock has been retired and no other series of stock contains super voting rights.





On August 24, 2010, ECCE issued 120,000 common shares as payment due on 2009 employment retention bonuses.  The valuation of the award was $12,000 based on ECCE’s stock trading price of $0.10 per share and was recorded as expense in 2010 on the date of the grant.





On September 3, 2010, Rick Bobigian agreed to convert $322,925 of debt and accrued interest into 325,055 shares of common stock.  Based on the stock’s closing price of $0.26 per share, a gain on settlement of debt of $238,411 was recorded on the transaction.


F-16
 Table of Contents


On September 23, 2010, ECCE agreed with Shelby Engineering to convert $35,712 of debt and accrued interest into 39,680 shares of common stock.  Based on the stock’s closing price of $0.26 per share, a gain on settlement of debt of $25,395 was recorded on the transaction.





On October 7, 2010 the remaining 434,078 shares of Preferred Series B stock along with accrued dividends were converted into 53,826 shares of common stock.





On October 21, 2010 the remaining 30,000 shares of Preferred Series C stock along with accrued dividends were converted into 3,605 shares of common stock.





On December 14, 2010, ECCE issued 44,444 to Apollo Global Advisors, LLC as a one-time non-refundable fee for entering into an consulting agreement to seek financing.  The shares were valued at $4,444, using the grant date fair value of ECCE’s trading price of $0.10 per share.





The following table provides a summary of the potential dilution of common stock should ECCE’s Preferred D be converted to common stock.  These valuations are as of December 31, 2010, and assume a conversion of one share of preferred stock for one share of common stock at the designated valuation price of $50.00 per share, as adjusted by the reverse 10 to 1 split in 2010.





Preferred


Preferred


Accrued


Conversion


Conversion


Number of CommonShares


Shares @$5.00


Dividends


Valuation


Price


Shares after ConversionSeries D


303,936


$
1,519,680


$
364,723


$
1,884,403


$
50.00



37,688Totals


303,936


$
1,519,680


$
364,723


$
1,884,403







37,688





Warrants





Warrant activity during the years ended December 31, 2010 and 2009 is as follows:




Warrants


Weighted Average Exercise Price


Weighted Average Remaining Contractual Term

(in Years)Outstanding at December 31, 2008


-


$
-



-Granted


35,000



1.00



-Exercised


-



-



-Forfeited or cancelled


-



-



-Outstanding at December 31, 2009


35,000



1.00



-Granted


-



-



-Exercised


-



-



-Forfeited or cancelled


(35,000
)


1.00



-Outstanding and exercisable at December 31, 2010


-


$
-



-




ECCE issued 35,000 warrants with the issuance of a note payable during 2008.  On March 2010, 30,000 of the warrants expired, and the remaining 5,000 warrants expired in September 2010.





No options or warrants were outstanding as of December 31, 2010


F-17
 Table of Contents


10.        COMMITMENTS AND CONTINGENCIES





Legal Proceedings





During the third quarter of 2009, ECCE settled an ongoing lawsuit relating to the sale of ECCO Biofuels in 2007.  The settlement called for a $10,000 payment during the third quarter of 2009.  ECCE also issued 40,000 shares of restricted common shares of ECCE stock, valued at $5,600, to the plaintiffs as part of the settlement. The settlement also called for an additional $50,000 to be made during 2010.  Settlement expenses of $65,600 were accrued as of December 31, 2009.  On December 31, 2010, there was a remaining balance of $30,000 due on this settlement. The final payment on this agreement was made in January 2010, thus finalizing the settlement.  As Sam Skipper made the final payment, the remaining accrual of $30,000 was recorded as income.





ECCE has not paid property taxes for 2007, 2008 or 2009 on the Wilson Field in Nueces County, Texas.  Samurai Corp. agreed to assume the liabilities for property taxes for 2010 when it acquired the property.  The County has initiated legal proceedings to collect those taxes by placing tax liens on the property.  As of December 31, 2010, ECCE owed $34,468 for these property taxes.





On February 28, 2010 M-J Oil Company Inc, of Paris Ohio, obtained a judgment against ECCO Energy for non-compliance with covenants in the original mortgage relating to the purchase of the M-J Oil Company pipeline (“Pipeline”).   We are in negotiations with the M-J Oil Company to remove the judgment and to adjust the mortgage terms, which required full payment on September 30, 2009.  As of this date, we have not reached a satisfactory agreement with the lender.





Operating Leases





ECCE moved to 3315 Marquart Street., Suite 206, Houston, Texas  77027 during 2007, and expanded its office space from about 2,000 sq. ft. to 9,750 sq. ft. during 2008.  ECCE entered into a new lease agreement through December 31, 2014.  The rent for 2009 was negotiated to be $18 per square foot, or approximately $14,625 per month.  However, due to market conditions, the monthly rent was verbally reduced to $4,800 per month for 2009, 2010 and 2011 by our landlord Marquart St. LLC, which is owned by Rick Bobigian, a director of Eagle Ford Oil and Gas.  Subsequent rent payments will be $4,800 per month and the lease terms will be month to month effectively cancelling the earlier contract.





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.




Other Commitments
  On November 15, 2010, ECCE entered into a Consulting Agreement with the Apollo Group in which the Apollo Group will provide capital raising and advisory services for the company.   Apollo Group received 44,444 shares of common stock and an $8,000 fee for the initial work relating to this agreement.  ECCE has a continuing obligation to compensate the Apollo Group based upon any funds which they may raise.   These fees include an amount equal to 8% of the first one million of gross proceeds raised, and 5.5% of any amount of gross proceeds over one million.  There may be additional compensation paid, depending on the nature of the funding.  As of December 31, 2010 and through the date of this report, there were no amounts due the Apollo Group relating to the successful raising of funds.
 
 11.         SUBSEQUENT EVENTS





On January 13, 2011, Richard Bobigian, a Director of ECCE, purchased 277,000 shares of restricted common stock for $100,000 for working capital.





ECCE evaluated events occurring between the end of our fiscal year, December 31, 2010, and April 15, 2011 when the consolidated financial statements were issued.





12.         SUPPLEMENTAL OIL AND GAS INFORMATION (Unaudited)





Proved oil and gas reserve quantities are based on estimates prepared externally by an independent engineer in accordance with guidelines established by the Securities Exchange Commission (SEC).


F-18
 Table of Contents


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.





Modernization of Oil and Natural Gas Reporting Requirements




Effective for fiscal years ending on or after December 31, 2009, the Securities and Exchange Commission (“SEC”) approved revisions designed to modernize reserve reporting requirements for oil and natural gas companies.  In addition, effective for the same period, the Financial Accounting Standards Board issued Accounting Standards Codification Update 2011-03, “Extractive Activities – Oil and Gas (Topic 932) – Oil and Gas Reserve Estimation and Disclosures,” to provide consistency with the new SEC rules.  The Company adopted the new requirements effective December 31, 2009.





Representative NYMEX prices:(1)Natural gas (MMBtu)

$
4.33Oil (Bbl)

$
79.99(1) This measure is not intended to represent the market value of estimated reserves.





Reserves and pricing were calculated by a qualified independent engineer, Rex Morris.Reserve engineering is inherently a subjective process of estimating underground accumulations of oil, natural gas and NGL that cannot be measured exactly.  The accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and judgment.  Accordingly, reserve estimates may vary from the quantities of oil, natural gas and NGL that are ultimately recovered.  Future prices received for production may vary, perhaps significantly, from the prices assumed for the purposes of estimating the standardized measure of discounted future net cash flows.  The standardized measure of discounted future net cash flows should not be construed as the market value of the reserves at the dates shown.  The 10% discount factor required to be used under the provisions of applicable accounting standards may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Company or the oil and natural gas industry.  The standardized measure of discounted future net cash flows is materially affected by assumptions about the timing of future production, which may prove to be inaccurate.





In accordance with SEC regulations, reserves were estimated using the average price during the 12-month period, determined as an unweighted average of the first-day-of-the-month price for each month, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.


F-19
 Table of Contents





Gas

(MMcf)


Oil

(MBbls)Total Proved Reserves:Balance, December 31, 2008


18,163



264Extensions, discoveries and improved recovery


1,019



37Production


(33
)


-Sale of Minerals in Place


(413
)


(7
)Revisions of previous estimates


(17,416
)


(257
)Balance, December 31, 2009


1,320



37Sale of oil and gas properties


(1,302
)


(37
)Purchase of oil and gas properties


355



-Production


(18
)


-Balance, December 31, 2010


355



-Proved developed as of December 31, 2010


87



-Proved developed as of December 31, 2009


10



-





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, 2010:





2010


2009Proved properties


250,000



1,110,489Less accumulated depletion


(6,271
)


(292,425
)Net capitalized costs

$
243,729


$
818,604





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, 2010 and 2009:





2010


2009Acquisition costs

$
250,000


$
-Development costs


52,165



-Total Costs Incurred

$
302,165


$
-





The following disclosures concerning the standardized measure of future cash flows from proved oil and gas reserves are presented in accordance with ASC 932. As prescribed by ASC 932, 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.





Reserves and pricing were calculated by a qualified independent engineer.


F-20
 Table of Contents


Standardized Measure of Discounted Future Net Cash Flow





2010


2009Future cash inflows at December 31,

$
1,466,331


$
8,002,729Future costs-Operating


(246,942
)


(1,608,897
)Development and abandonment


(487,649
)


(1,813,833
)Future net cash flows before income taxes


731,740



4,579,999Future income taxes


-



(651,488
)Future net cash flows before income taxes


731,740



3,928,511Discount at 10% annual rate


(409,736
)


(2,121,397
)Standardized measure of discounted future net cash flows

$
322,004


$
1,807,114





The following reconciles the change in the standardized measure of discounted net cash flow for the year ended December 31, 2010 and 2009





2010


2009Beginning of the year

$
1,807,114


$
26,511,608Purchase of minerals in place


322,044



-Extensions, discoveries and improved recovery


-



1,466,967Revision of quantity estimates


-



(37,664,500
)Sales of minerals in place


(2,074,974
)


(866,000
)Net change in prices and production costs


(85,207
)


(185,782
)Accretion of discount


32,204



210,600Sales, net of production costs


(31,026
)


(113,006
)Previously estimated development costs incurred during the period


52,165



-Change in future development costs


-



-Net change in future income taxes


299,684



12,447,227Ending of year

$
322,004


$
1,807,114




F-21
 Table of Contents


ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.





None





ITEM 9A(T).
CONTROLS AND PROCEDURES.





Disclosure Controls and Procedures





We maintain "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the "Evaluation"), under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures ("Disclosure Controls") as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. The evaluation of our disclosure controls and procedures included a review of the disclosure controls’ and procedures’ objectives, design, implementation and the effect of the controls and procedures on the information generated for use in this report. In the course of our evaluation, we sought to identify data errors, control problems or acts of fraud and to confirm the appropriate corrective actions, if any, including process improvements, were being undertaken. Our Chief Executive Officer and our Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective at the level of operations we experienced in 2010 and were operating at the reasonable assurance level. However, as we grow, we will need to enhance our controls.  We intend to take measures in 2011 that will enhance controls over various functions of our operations so as to insure the level of such controls is effective in the future.





Managements’ Annual Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act, as amended, as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:





* pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;





* provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;





* and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.





Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.


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In order to evaluate the effectiveness of our internal control over financial reporting as of December 31, 2010 as required by Sections 404 of the Sarbanes-Oxley Act of 2002, our management commenced an assessment, based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework “). A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. In assessing the effectiveness of our internal control over financial reporting, our management, including the chief executive officer and chief financial officer, identified the following deficiencies: (1) Deficiencies in Segregation of Duties. The Chief Executive Officer and the Chief Financial Officer are actively involved in the preparation of the consolidated financial statements, and therefore cannot provide an independent review and quality assurance function within the accounting and financial reporting group. The limited number of qualified accounting personnel discussed above results in an inability to have independent review and approval of financial accounting entries. Furthermore, management and financial accounting personnel have wide-spread access to create and post entries in the Company’s financial accounting system. There is a risk that a material misstatement of the consolidated financial statements could be caused, or at least not be detected in a timely manner, due to insufficient segregation of duties, and (2) Our financial statement closing process did not identify all the journal entries that needed to be recorded as part of the closing process for certain complex and non-routine transactions. As part of the audit, our independent registered public accounting firm proposed certain entries that should have been recorded as part of the normal closing process. Our internal control over financial reporting did not detect such matters and, therefore, was not effective in detecting misstatements in the consolidated financial statements.





To address the material weakness, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the consolidated financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented. As a result, we are developing an implementation plan in be put in place whereby in 2011 sufficient testing to satisfy COSO requirements will be performed. The absence of the ability to conclude as to the sufficiency of internal controls is a material weakness.





This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the SEC that permits the company to provide only management’s report in this annual report.





ITEM 9B.
OTHER INFORMATION





Not applicable.


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PART III





ITEM 10.
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 CompanyRick Adams

42

President, Chief Executive Officer and a DirectorImran Maniar

41

Chief Financial Officer and a DirectorN. Wilson Thomas

57

Chief Financial OfficerRichard A Bobigian

61

Director





On July 23, 2010, Jesse Q. Ozbolt resigned from his position as Chairman of the Board of Directors and President of Eagle Ford Oil & Gas Corp., effective on that date. Mr. Ozbolt’s resignation was not due to any disagreement with us on any matter relating to our operations, policies or practices.





On July 23, 2010, Sam Skipper was appointed as Chairman of the Eagle Ford Oil & Gas Corp. Board of Directors. On August 16, 2010, Sam Skipper resigned as chairman and Richard Adams was appointed.  Mr. Skipper remained on the Board as Vice-Chairman until November 15, 2010.





On July 23, 2010, N. Wilson Thomas resigned from his position as Chief Financial Officer of Eagle Ford Oil & Gas Corp., and remained with the company as Controller.  Mr. Thomas returned to the position of Chief Financial Officer on February 14, 2011.  Mr. Thomas is a CPA and a graduate of the University of Texas, Austin.





On July 26, 2010, Rick Adams was appointed as President and Chief Executive Officer of Eagle Ford Oil & Gas Corp. Mr. Adams has over 15 years experience in the Oil and Gas Finance Markets. He was a Principal at BullFrog Capital where he negotiated Oil and Gas transactions for $350 Million. Prior to forming Bullfrog Capital in 2002, Mr. Adams spent eight years in the oil and gas finance market with The Williams Companies and then Aquila Energy Capital. During that time, Mr. Adams invested $911 million through 35 transactions. These transactions included volumetric production payments, mezzanine debt, equity investments and securitizations. Mr. Adams holds a BBA in economics and statistics from Baylor University and an MBA in finance from the University ofSaint Thomas.





On July 26, 2010, Imran Maniar, CPA was appointed as Chief Financial of Eagle Ford Oil & Gas Corp and served in that position until February 14, 2011.Mr. Maniar has more than 20 years’ experience in the energy sector, including power plants, natural gas distribution and petrochemicals.  Mr. Maniar served on the Board of Directors from July 26, 2010 until February 14, 2011, when he left the firm.





Richard A. Bobigian joined the Board of Directors on November 24, 2010. Mr. Bobigian is the President and Chief Executive of the Marshfield Oil and Gas Corp.  Marshfield is involved in the development of oil and gas exploration in the State of Texas, and was formed in January 2008.  Mr. Bobigian is also the President and Chief Executive of The Black Pool Energy Group, LLC, and the general partner of Black Pool Energy LP.  Black Pool Energy was formed in January 2005.  Prior to forming the Black Pool Energy group, Mr. Bobigian managed most of the business functions of Osprey Petroleum Company.  Beginning in October 1999, Osprey Petroleum was engaged in oil and gas development along the Texas Shelf area of the Gulf Coast.  Prior to that, Mr. Bobigian was engaged in the oil and gas business using various special purpose entities to invest in both upstream and midstream assets.  Mr. Bobigian earned a Bachelor of Science degree in Geologic Engineering from the Colorado School of Mines, and is currently a resident of Houston, Texas.  Mr. Bobigian is a long time shareholder of Eagle Ford Oil and Gas Corp.


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Raymond Ward served as Chief Operating Officer from March 2009 until January 2010.  From 2005 to 2010, Mr. Ward served as Secretary and Managing Partner for Republic Petroleum, LLC.  From 2003 to 2005, Mr. Ward served as Vice-President of Operations and Production for Millennium Offshore Group.  Mr. Ward received his B.S. in Petroleum Engineering from Mississippi State University and is currently a licensed Professional Engineer in the state of Texas.





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 Company has no audit committee financial expert as defined under 17 CFR Section 228.41.





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 SEC. 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, 2010.





CODE OF ETHICS





The Company adopted a code of ethics (“Code”) that applies to all of its directors and officers.  The Code is filed as an exhibit to this Annual Report.  Copies of the Company’s Code of Ethics are available, free of charge, by submitting a written request to the Company at 3315 Marquart St., Suite 206, Houston, Texas 77027.





ITEM 11.
EXECUTIVE COMPENSATION





The following table sets forth the compensation paid to our chief executive officer and chief financial officer for fiscal year ended December 31, 2010, and during 2009 (collectively, the “Named Executive Officers”):


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SUMMARY COMPENSATION TABLE




Name and Principal Position

Year

Salary


Bonus


Stock Awards


Option Awards


Non-Equity Incentive Plan Compensation


Non-Qualified Deferred Compensation Earnings


All Other Compensation


Total($)


($)


($)


($)


($)


($)


($)


($)Samuel Skipper,

2010


-



-



-



-



-



-



54,500



54,500Director/ Pres/CEO

2009


50,000



-



-



-



-



-



-



50,000Jesse Ozbolt

2010


37,000







6,000



-



-



-



-



43,375Pres/CEO

2009


72,000







43,375



-



-



-



-



115,375Rick Adams, CEO

2010


10,000











-



-



-



-



10,000N. Wilson Thomas

2010


21,000







6,000



-



-



-



-



27,000CFO

2009


60,000







43,375



-



-



-



-



103,375Imran Maniar, CFO

2010


15,000







-







-



-



-



15,000Totals 2010



$
83,000






$
12,000



-



-



-


$
54,500


$
149,500Totals 2009



$
182,000



-


$
86,750



-



-



-



-


$
268,750




Note:
Mr. Thomas postponed salary payment of $50,000 from prior years and $42,000 from 2010 until 2011.  The expense is recorded on the balance sheet under accrued liabilities.





GRANTS OF PLAN-BASED AWARDS





The Company has reserved 100,000 shares of our common stock for issuance under the Plan.  No securities or options have been issued pursuant to the Plan.  No options have been issued to the named executive officers under the Plan or any other plan.





EMPLOYMENT AGREEMENTS





The Company has not entered into any employment agreements with any of its executive officers.





DIRECTOR COMPENSATION





During fiscal year ended December 31, 2010, we did not pay any compensation to our directors for their respective position on the board of directors.





ITEM 12.
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 and our Series A Preferred Stock (our only class of preferred stock that has voting rights) by each stockholder known by us to be the beneficial owner of more than 5% of our common stock by each of our directors, our Named Executive Officers, and our executive officers and directors as a group. Each person has sole voting and investment power with respect to the shares, except as otherwise indicated. 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 of the date of this Annual Report, there are 2,829,591 shares issued and outstanding.


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Name and Address of Beneficial Owner (1)

Shares of Common Stock and Percentage of Voting PowerNo.


%Directors & OfficersRichard Adams


250,901



8.79Richard A. Bobigian


539,406
(3)


19.06N. Wilson Thomas


97,500



3.44-



-All executive officers & directors as a group (3 persons)


887,807



31.37Beneficial Owners of more than 5%Samuel Skipper


1,024,273
(2)


36.20




(1)
Unless otherwise indicated, the business address of the individuals listed is 3315 Marquart St., Suite 206, Houston, Texas 77027.


(2)
Includes: (i) 663,123 shares of common stock held of record by Mr. Skipper; and (ii) 361,150 shares of common stock held of record by Samurai, an entity of which Mr. Skipper controls.


(3)
Includes: (i) 539,406 shares of common stock held of record by Mr. Bobigian.





ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE





Samurai Operating Company L.L.C., an entity owned by our former president, was the operator of the Wilson Field properties and provided production, engineering and maintenance services and charged an operating fee for its services of $12,000 in 2010 and $24,000 in 2009.





Sam Skipper acquired 2,406,000 shares of our common stock in 2006 for nominal consideration.  Samurai, and entity controlled by Mr. Skipper, acquired 2,611,500 of our shares of common stock in 2006 for nominal consideration.  Samurai Energy LLC, an entity controlled by Mr. Skipper, acquired 102,999 shares of our common stock in 2006 for nominal consideration.   Mr. Skipper acquired 100,000 shares of our Series A Preferred Stock for nominal consideration of $27,000, which provided him common stock voting power of at least 50.1%.  This stock was exchanged for 100,000 shares of ECCE common stock in August 2010 and the Preferred A shares were cancelled.





The Company subleased its office space from a building that is 100% owned by Mr. Bobigian at a monthly rate of $4,800 during 2010 and 2011.




ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES





During fiscal year ended December 31, 2010, we incurred approximately $42,470 in fees to our principal independent accountants for professional services rendered in connection with the audit of our consolidated financial statements for the fiscal year ended December 31, 2009 and for the review of our consolidated financial statements for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010.





During 2010, 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.





During fiscal year ended December 31, 2009, we incurred approximately $75,340 in fees to our principal independent accountants for professional services rendered in connection with the audit of our consolidated financial statements for the fiscal year ended December 31, 2008 and for the review of our consolidated financial statements for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009.





During 2009, 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.


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ITEM 15.
EXHIBITS





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





Exhibit Number

Description of Exhibit3.1

Articles of Incorporation, as amended (1)3.2

Certificate of Amendment to Articles of Incorporation (2)3.1.2

First Amended Certificate of Designation of Convertible Series B Preferred Stock (4)3.1.3

First Amended Certificate of Designation of Convertible Series C Preferred Stock (5)3.1.4

First Amended Certificate of Designation of Convertible Series D Preferred Stock (5)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, 2006 (2)4.3

Assignment, Conveyance, and Bill of Sale with respect to 37% working interest in Wilson Wells (3)10.1

2005 Directors, Officer and Consultants Stock Option, Stock Warrants and Stock Awards Plan (4)14.1

Code of Ethics (7)14.2

Whistleblower Policy (7)31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (7)31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (7)32.1

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (7)32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (7)





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





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





(3)
Incorporated by reference to our Annual Report on Form 10-K filed with the SEC 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.







(5)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on October 5, 2007.





(6)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on April 11, 2008.





(7)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on April 25, 2008.





(8)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on September 9, 2008.





(9)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on September 10, 2008.





(10)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on March 5, 2009.





(11)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on March 20, 2009





(12)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on June 26, 2009.


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(13)
Incorporated by reference to our Current Report on S-8 filed with the SEC on June 26, 2009.





(14)
Incorporated by reference to our Current Report on Form 8-K filed with the SEC on October 2, 2009.





(15)
Incorporated by reference to our Current Report on Form Def-14C with the SEC on July 6, 2010.





(16)
Incorporated by reference to our Current Report on Form8-K filed with the SEC on July 27, 2010.





(17)
Incorporated by reference to our Current Report on Form8-K filed with the SEC on August 20, 2010.





(18)
Incorporated by reference to our Current Report on Form8-K filed with the SEC on November 30, 2010.





(19)
Filed herewith


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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.




EAGLE FORD OIL AND GAS CORPDated: April 15, 2011

By: /s/ Richard Adams_______________________Richard Adams, President/ChiefExecutive Officer and DirectorDated: April 15, 2011

By: /s/ N. Wilson Thomas_______________________N. Wilson Thomas/ChiefFinancial Officer and Principal Accounting Officer




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