Eagle Ford Oil & Gas Corp - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Eagle Ford Oil & Gas Corp	Financial_Report.xls
EX-31.2 - CERTIFICAITON OF CHIEF FINANCIAL OFFICER - Eagle Ford Oil & Gas Corp	ex31-2.htm
EX-32.1 - CERTIFICAITON OF CHEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - Eagle Ford Oil & Gas Corp	ex32-1.htm
EX-31.1 - CERTIFICAITON OF CHIEF EXECITVE OFFICER - Eagle Ford Oil & Gas Corp	ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C., 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2013

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.)

2951 Marina Bay Dr., Ste 130-369
League City, TX		77573
(Address of Principal Executive Office)		(Zip Code)

Registrant’s telephone number, including area code: (281) 383-9648

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No þ

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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	þ

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

39,196,377 shares of the registrant’s common stock were outstanding as of May 15, 2013.

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets at March 31, 2013 (unaudited) and December 31, 2012	3

	Condensed Consolidated Statement of Operations for Three months ended March 31, 2013 and 2012 (unaudited)	4

	Condensed Consolidated Statement of Changes in Stockholders’ Deficit for Three months ended March 31, 2013 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Three months ended March 31, 2013 and 2012 (unaudited)	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7-20

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24

Item 4.	Controls and Procedures	25

PART II—OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 6.	Exhibits.	25-31

	Signatures

EAGLE FORD OIL & GAS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2013			December 31, 2012
ASSETS	(Unaudited)

CURRENT ASSETS
Cash and cash equivalents	$	46,784		$	259,138
Accounts receivable - production		25,153			26,568
Prepaid expenses		7,947			14,385
Total current assets		79,884			300,091

PROPERTY AND EQUIPMENT
Oil and gas properties, using full cost accounting
Costs not subject to amortization		8,514,877			8,514,877
Pipeline transmission properties		30,839			30,839
Less: accumulated depreciation and depletion		(8,748	)		(7,500	)
Total property and equipment, net		8,536,968			8,538,216

OTHER ASSETS
Deposits		100,000			100,000

TOTAL ASSETS	$	8,716,852		$	8,938,307

LIABILITIES AND SHAREHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable – trade	$	541,660		$	592,303
Accrued expenses		1,621,671			1,362,369
Accrued expenses to related parties		171,340			153,390
Notes payable, current portion		8,772,709			1,772,709
Notes payable to related parties, current portion		897,500			897,500
Convertible debentures		545,000			545,000
Total current liabilities		12,549,880			5,323,271

LONG-TERM LIABILITIES
Long-term debt		—			7,000,000
Derivative liability - warrants		240,469			188,933
Asset retirement obligations		24,802			24,802
TOTAL LONG-TERM LIABILITIES		265,271			7,213,735

TOTAL LIABILITIES		12,815,151			12,537,006


SHAREHOLDERS’ DEFICIT
Preferred stock, undesignated, 10,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 75,000,000 shares authorized, 38,731,003 and 38,624,620 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		38,731			38,625
Additional paid-in-capital		6,359,837			6,329,943
Accumulated deficit		(10,496,867	)		(9,967,267	)
TOTAL SHAREHOLDERS’ DEFICIT		(4,098,299	)		(3,598,699	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	8,716,852		$	8,938,307

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

EAGLE FORD OIL & GAS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months Ended March 31,
	2013			2012

REVENUE	$	1,357		$	2,191

OPERATING EXPENSES
Lease operating expenses		2,772			1,806
General and administrative expenses		229,796			230,325
Depreciation, depletion and accretion		1,248			1,985
Total operating expenses		233,816			234,116

Net operating loss		(232,459	)		(231,925	)

OTHER INCOME (EXPENSE)
Interest expense		(245,605	)		(73,729	)
(Loss) gain on change in fair value of warrant derivative liability		(51,536	)		29,196
Total other (expense)		(297,141	)		(44,533	)
Net loss attributable to common shareholders of Company	$	(529,600	)	$	(276,458	)

Loss per common share (basic and diluted)	$	(0.01	)	$	( 0.01	)

Weighted average common shares outstanding (basic and diluted)		38,639,906			34,617,288

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

EAGLE FORD OIL & GAS CORP.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT

For the Three months ended March 31, 2013

(Unaudited)

	Common Stock				Additional					Total
	Shares		Par Value		Paid-in Capital		Accumulated Deficit			Shareholders’ Deficit

Balance, December 31, 2012		38,624,620	$	38,625	$	6,329,943	$	(9,967,267	)	$	(3,598,699	)

Common shares issued for cash		106,383		106		29,894		—			30,000

Net loss		—		—		—		(529,600	)		(529,600	)

Balance, March 31, 2013		38,731,003	$	38,731	$	6,359,837	$	(10,496,867	)	$	(4,098,299	)

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

EAGLE FORD OIL & GAS CORP.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Three months Ended March 31,
	2013			2012

Cash flows from operating activities:
Net loss	$	(529,600	)	$	(276,458	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation		—			50,000
Depreciation and depletion		1,248			1,985
Unrealized gain on change in derivative value		51,536			(29,196	)
Changes in operating assets and liabilities:
Accounts receivable – production		1,415			(385	)
Prepaid expenses		6,438			15,625
Accounts payable – trade		(50,643	)		50,135
Accrued expenses		277,252			53,247
Net cash used in operating activities		(242,354	)		(135,047	)

Cash flows from investing activities:
Net cash provided by investing activities		—			—

Cash flows from financing activities:
Proceeds from issuance of notes payable to related parties		—			75,000
Payments made on notes payable		—			(18,000	)
Proceeds from sale of common stock		30,000			60,000
Net cash provided by financing activities		30,000			117,000

Net (decrease) in cash and cash equivalents		(212,354	)		(18,047	)
Cash and cash equivalents, at beginning of period		259,138			23,412
Cash and cash equivalents, at end of period	$	46,784		$	5,365

Supplemental cash flow information:
Interest paid	$	—		$	—
Income taxes paid	$	—		$	—

Non-cash investing and financial activities:
Common shares issued to settle notes payable	$	—		$	42,369

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

EAGLE FORD OIL & GAS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013 and 2012

(Unaudited)

1. ORGANIZATION

Eagle Ford Oil & Gas Corp. (“Eagle Ford” or the” Company”) 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 and Louisiana-Gulf Coast Region. Eagle Ford’s strategy is to grow its asset base by purchasing or investing in oil and gas drilling projects in the Texas and Louisiana regions.

On June 20, 2011, pursuant to a Purchase Agreement, Eagle Ford acquired all of the membership interests of Sandstone Energy, L.L.C. (“Sandstone”), an exploration stage entity at the time, in exchange for 17,857,113 shares of common stock of Eagle Ford (the “Reverse Acquisition”). Following the Reverse Acquisition, the shares issued to the former owners of Sandstone constituted 82% of the Company’s common stock.

Sandstone Energy, L.L.C.’s principal assets at the date of the Reverse Acquisition were 50% membership interests in each of Sandstone Energy Partners I, L.L.C. (“SSEP1”), Sandstone Energy Partners II, L.L.C. (“SSEP2”) and Sandstone Energy Partners III, L.L.C. (“SSEP3”). On August 8 and August 11, 2011, Eagle Ford acquired the remaining 50% interests in each of SSEP1, SSEP2 and SSEP3 with an accumulated deficit of $1,443,302 in exchange for 8,970,120 shares of Eagle Ford common stock. Eagle Ford now owns 100% of the interests in these ventures.

Eagle Ford continues to be a “smaller reporting company,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim financial statements have been prepared by the Company in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission. The financial information has not been audited and should not be relied upon to the same extent as audited financial statements. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company’s financial statements and related notes contained in the Form 10-K for the year ended December 31, 2012.

In the opinion of management, the unaudited interim financial statements reflect all adjustments, including normal recurring adjustments, necessary for fair presentation of the interim periods presented. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results of operations to be expected for the full year.

The Company’s unaudited condensed consolidated financial statements include all accounts of Eagle Ford and its subsidiaries: Eagle Ford – East Pearsall, Sandstone, SSEP1, SSEP2, and SSEP3. All significant inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Eagle Ford’s unaudited condensed consolidated financial statements are based on a number of significant estimates, including oil and gas reserve quantities which are the basis for the calculation of depreciation, depletion and impairment of oil and gas properties; timing and costs associated with its asset retirement obligations; estimates for the realization of goodwill; and estimates of the value of derivative financial instruments.

Reclassifications

Certain reclassifications have been made to amounts in prior periods to conform with the current period presentation. All reclassifications have been applied consistently to the periods presented.

Cash and Cash Equivalents

Eagle Ford 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

Eagle Ford 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. Eagle Ford 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 Eagle Ford 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 proved oil and gas properties, including future development costs, if any, are amortized using the units of production method over the estimated proved reserves.

In applying the full cost method, Eagle Ford 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. The Company assessed the realizability of its oil and gas properties and determined that no impairment of its oil and gas properties was necessary as of March 31, 2013.

Depletion

Depletion is provided using the unit-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment (ceiling test) indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value.

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expense.

Asset Retirement Obligations

The Company follows the provisions of the Accounting Standards Codification (“ASC”) 410 - Asset Retirement and Environmental Obligations. The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset and is subject to amortization. The Company’s asset retirement obligations relate to the abandonment of oil and gas producing facilities. The amounts recognized are based upon numerous estimates and assumptions, including future retirement costs, future recoverable quantities of oil and gas, future inflation rates and the credit-adjusted risk-free interest rate.

The following table describes changes in our asset retirement obligation during the three months ended March 31, 2013 and the year ended December 31, 2012.

	Three months Ended March 31, 2013		For the Year Ended December 31, 2012
ARO liability at beginning of period, current and noncurrent	$	24,802	$	24,802
Liabilities incurred from acquisitions		—		—
Accretion		—		—
ARO liability at end of period, current and noncurrent	$	24,802	$	24,802

Revenue and Cost Recognition

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

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.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of Eagle Ford’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At March 31, 2013 and December 31, 2012, an allowance for doubtful accounts was not considered necessary as all accounts receivable were deemed collectible.

Concentration of Credit Risk

Financial instruments that potentially subject Eagle Ford to concentration of credit risk consist of cash and accounts receivable. At March 31, 2013, cash balances in interest-bearing accounts are zero.

Sales to a single customer comprised 100% of Eagle Ford’s total oil and gas revenues for each of the three months ended March 31, 2013 and 2012. At March 31, 2013 and December 31, 2012, Eagle Ford’s accounts receivable from its primary customer was $25,153 and $26,568, respectively. Eagle Ford believes that, in the event that its primary customer is unable or unwilling to continue to purchase Eagle Ford’s production, there are a substantial number of alternative buyers for its production at comparable prices.

Property and Equipment, other than Oil and Gas Properties

Property and equipment are stated at cost. Additions of new equipment and major renewals and replacements of existing equipment are capitalized. Repairs and minor replacements are charged to operations as incurred. Cost and accumulated depreciation and amortization are removed from the accounts when assets are sold or retired, and the resulting gains or losses are included in operations.

Depreciation of property and equipment is provided using the straight-line method applied to the expected useful lives of the assets:

		Estimated useful lives
Pipeline transmission properties		20 years
Machinery and equipment		3 – 7 years
Office furniture, fixtures and equipment		3 – 5 years

Income Taxes

The Company uses the liability method of accounting for income taxes. Under this method, it records deferred income taxes based on temporary differences between the financial reporting and tax bases of assets and liabilities and uses enacted tax rates and laws that the Company expects will be in effect when it recovers those assets or settles those liabilities, as the case may be, to measure those taxes. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. As of March 31, 2013, the Company did not identify any uncertain tax positions.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the income tax expense (benefit) line item in the statement of operations.

Share-Based Compensation

The Company follows ASC 718 - Compensation - Stock Compensation under which the Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model and common shares based on the last quoted market price of the Company’s common 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, if available. 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.

Financial instruments

The accounting standards regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures.

The three levels are defined as follows:

●	Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●	Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
●	Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has determined that the warrants outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Stock.” See Note 6 for discussion of the impact the derivative financial instruments had on the Company’s unaudited condensed consolidated financial statements and results of operations.

The fair value of these warrants was determined using a lattice model with any change in fair value during the period recorded in earnings as “Other income (expense) – Unrealized gain (loss) on change in warrant derivative value.”

Significant Level 3 inputs used to calculate the fair value of the warrants include the stock price on the valuation date, expected volatility, risk-free interest rate and management’s assumptions regarding the likelihood of a repricing of these warrants pursuant to the anti-dilution provision. See Note 6 for further discussion.

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2013. There were no transfers of financial assets between levels during the three months ended March 31, 2013.


	Carrying Value at March 31,		Fair Value Measurement at March 31, 2013
	2013		Level 1		Level 2		Level 3

Derivative liability	$	240,469	$	—	$	—	$	240,469

The Company did not identify any other assets and liabilities that are required to be presented on the unaudited condensed consolidated balance sheet at fair value.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a loss contingency indicates that it is probable that a loss has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. The Company expenses legal costs associated with contingencies as incurred.

Environmental Expenditures

The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed.

Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component is fixed or reliably determinable. No such liabilities existed or were recorded at March 31, 2013 and December 31, 2012.

Recent Accounting Pronouncements

Eagle Ford does not expect the adoption of any recently issued accounting pronouncements will have a significant impact on its results of operations, financial position or cash flow.

Subsequent Events

The Company has evaluated all transactions from March 31, 2013 through the issuance date of the financial statements for subsequent event disclosure consideration.

3. LIQUIDITY AND GOING CONCERN

As shown in the accompanying unaudited condensed consolidated financial statements, for the three months ended March 31, 2013, Eagle Ford incurred a net loss attributable to common shareholders of $529,600. During the three months ended March 31, 2013, operating expenses included interest expenses and non cash expenses related to the derivative liability. At March 31, 2013 and December 31, 2012, the Company had a working capital deficit of $12,469,996 and $5,023,180, respectively, and held cash and cash equivalents of $46,784 and $259,138, respectively. 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 and investing in the drilling of additional wells to improve future earnings and cash flow. Management is exploring various avenues to obtain such funding to develop our properties and pay existing debt including the issuance of new debt, issuance of securities, sales of properties and joint ventures. Management anticipates that additional financings and loans will be required to sustain operations in the future. 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 Eagle Ford’s business. The unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

4. OIL AND GAS PROPERTIES

The following table sets forth the Company’s costs incurred in oil and gas property acquisition, exploration and development activities for the three months ended March 31, 2013. All of the Company’s oil and gas properties (excluding accumulated depletion) are located in the United States.

Well Description	December 31, 2012		Additions		Impairment/ Dispositions		March 31, 2013

East Pearsall, Frio Co. TX	$	6,464,436	$	—	$	—	$	6,464,436
Vick 2, Lee County, TX		1,308,461		—		—		1,308,461
Alexander 1, Lee County, TX		741,980		—		—		741,980
	$	8,514,877	$	—	$	—	$	8,514,877

EAST PEARSALL

On June 4, 2012, ECCE entered into an agreement though a special purpose entity named EFOGC – East Pearsall, L.L.C. (“EFEP”), a Texas limited liability company. ECCE owns 100% of the Class B Membership Interests in EFEP. EFEP completed the acquisition of 85% Working Interest in 3,683 acres in Frio County, Texas from Amac Energy, L.L.C. to develop the Austin Chalk, Buda, Eagle Ford and Pearsall Shale reservoirs. ECCE is attempting to raise funds in order to develop this field. The total investment to date in this field totals $6,464,436 (out of which $12,500 is unpaid). As of the date of this filing, ECCE has not been able to raise the needed funds for drilling.

LEE COUNTY, TX

The Vick No: 2 well is currently a drilled and unevaluated well and was drilled in 2010 as a vertical well and then extended as a horizontal well. Although the well generated initial production, monthly production has declined to approximately 15 bbls, which is enough to hold its lease position. Options to improve production are being considered. The Company has a 38.75% net working interest as of March 31, 2013.

The Alexander No: 1 well is currently a drilled and unevaluated well. Although the well generated initial production from late 2010 to May 2011 when the operator suspended operations for technical and operations evaluation, the production to date has not been consistently sustained to establish proved reserves. The Company has a 38.75% net working interest as of March 31, 2013.

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, the Kellam #2H and the Hammon 1H were drilled and completed and production began during late 2010 and early 2011 and classified as proved reserves. Production has proven to be well below expectations, and ECCE does not intend to pursue additional investments in this field. As of the date of this report, the wells in Live Oak County continue to have minimal gas production.

The reserve report dated January 1, 2011 showed future reserves substantially below the prior year’s report. Therefore an impairment charge of $116,029 was taken on December 31, 2011. The reserve report dated January 1, 2012 showed reserves for future development being negative, primarily due to low natural gas prices during 2012. An impairment charge of $100,752 (net of accumulated amortization and accretion) was taken on December 31, 2012, reducing the value of the field to $0.00. The three wells are still producing, but revenue is insignificant after expenses are deducted. ECCE may owe future amounts on these wells pertaining to any attempts to improve production; however there has been no decision to make such repairs, or improvements.

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

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.

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.

BAYOU CHOCTAW

On August 5, 2011, ECCE, entered into an agreement to purchase 1.5% Working Interest in the Bayou Choctaw Project located in Iberville Parish, Louisiana from GFX Energy, Inc. (GFX). Prior to December 31, 2011, ECCE decided to not further participate in the Bayou Choctaw development. ECCE and GFX decided to use the $100,000 deposited for Bayou Choctaw as a deposit on a future, undetermined endeavor relating to the exploration of oil and gas. ECCE remains in discussion about this investment with GFX Energy, Inc.

5. DEBT

Debt – Related Parties

Notes Payable – Related Parties

	March 31, 2013		December 31, 2012
Promissory note to TDLOG – 8% interest; due September 30, 2013; unsecured (1)	$	817,500	$	817,500

Promissory note to TDLOG – 8% interest; due September 30, 2013; unsecured (1)		80,000		80,000

Total: Notes Payable – Related Parties	$	897,500	$	897,500

(1)

TDLOG, LLC is controlled by Thomas E. Lipar, Chairman of the Board of Eagle Ford. Note due date was changed to September 30, 2013 from September 30, 2012.

Accrued interest expenses on above notes to related party as of March 31, 2013 and December 31, 2012 is $171,340 and $153,390, respectively

Interest expenses to related party for the three months ended March 31, 2013 and 2012 is $17,950 and $16,482, respectively.

Notes Payable – Non-Related Parties

	March 31, 2013			December 31, 2012
Promissory note - 12% interest; due September 30, 2009; not secured (2)	$	328,578		$	328,578

Promissory note - 5% interest; due January 1, 2012; not secured (2).		227,131			227,131

Pipeline mortgage - 8% interest; due September 30, 2009; secured by pipeline (3)		1,000,000			1,000,000

Promissory notes - 6% interest; due April 1, 2011; not secured (4)		142,000			142,000

Promissory notes - 5% interest; due October 15, 2010; not secured (4)		50,000			50,000

Promissory note to Rick Bobigian – 8% interest; due July 1, 2010; unsecured. (5)		25,000			25,000

Promissory note – Medallion Investment- 10% interest (6)		7,000,000			7,000,000

Total notes payable		8,772,709			8,772,709

Less: current portion of notes payable		(8,772,709	)		(1,772,709	)

Total notes payable – long term	$	—		$	7,000,000

Accrued and unpaid interest for notes payable to non-related parties at March 31, 2013 and December 31, 2012 was $1,442,024 and $1,214,503, respectively, and is included in accrued expenses on the accompanying unaudited condensed consolidated balance sheets.

Interest expenses to non-related party for the three months ended March 31, 2013 and 2012 is $227,521 and $55,514, respectively.

(2)	All principal and interest became due September 30, 2009. This note has not been repaid and is in default. No demand has been made for payment. Eagle Ford is continuing to accrue interest on this note at the stated rate.

(3)	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 Eagle Ford in the amount of the mortgage (see Note 8). Eagle Ford is in discussions with the lender to restructure the mortgage. Eagle Ford is continuing to accrue interest on this note at the stated rate.

(4)	Pursuant to the Reverse Acquisition, the Company assumed these notes payable totaling $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. Eagle Ford is continuing to accrue interest on these notes at the stated rate.

(5)	Prior to the Reverse Acquisition, Eagle Ford borrowed $25,000 from a related party for general corporate purposes. The note is in default and due on demand. Eagle Ford continued to accrue interest on these notes at the stated rate. From July 20, 2011 this note holder is no longer a related party.

(6)

East Pearsall

ECCE borrowed $7,000,000 from Medallion Oil Company LTD (MOC) to purchase the East Pearsall tract from AMAC Energy, which created a Special Purpose Entity (SPE). Upon receipt of the funds, ECCE granted to MOC a lien and security interest on all the assets of the SPE, including the leases up to the investment and any accrued interest. The amount will be paid in full within 12 months, and bears an interest rate of 10.00% APR. There will be an additional distribution of $7,000,000 to MOC in preferred production payments, which may be deferred until after receipt of the initial $7,000,000 and interest payments and then paid per agreed upon sliding scale within 18 months from the closing date or a mutually agreed date.

MOC will retain 6.55% of the 63.75% Net Revenue Interest as an overriding royalty interest (ORRO) after all payments described previously are received by MOC. There may also be a sliding scale on these payments to be negotiated on a reasonable basis to enable ECCE to retain reasonable cash proceeds to enable it to conduct its business with respect to drilling and development of the project.

The overriding royalty interest shall be free and clear of all costs except production taxes. The ORRO will apply to any renewals, extensions, etc. of existing leases and to any new leases acquired within the Area of Mutual Interest. ECCE must satisfy all drilling obligations or otherwise default to the terms included in the final transaction documents. MOC shall have all rights under the SPE documents, including but not limited to the right to foreclose on its lien and security interest and obtain all rights to the Leases. ECCE will reimburse MOC for any legal hours it occurs, up to $10,000.

Included in the AMAC financing agreement, ECCE agrees to cause the drilling of at least one oil and gas well on or prior to 12 months from the date hereof and obtain drilling funds of at least $21,500,000 with a satisfactory drilling partner within nine months of the date hereof, or December 4, 2012.

On October 22, 2012, MOC agreed to modify the agreement with ECCE relating to the issue relating to the date for raising drilling funds. ECCE must raise $10,500,000 for drilling funds by December 4, 2012, instead of the $21,500,000 in the original agreement. As of the date of this report, ECCE has failed to raise the necessary drilling funds, this caused the company to be in default and as a result, this note reclased from long term to short term liability. As of the date of this report, MOC has taken no action relating to the failure to raise these funds. ECCE is in discussion with MOC about the terms and payment conditions of the note.

Convertible Debentures

On June 20, 2011, the Company assumed the liability for $545,000 of Secured Convertible Debentures as a result of the Reverse Acquisition. The Secured Convertible Debentures matured on July 26, 2011, and earned interest at a rate of 12%, payable quarterly in 3,000 shares of common stock for each debenture. The Company is in default. There have been no shares issued for the interest payable as of the date of this report, nor have the Debentures been repaid. The interest for these debentures is accrued at the 12% rate and is included in accrued expenses. Accrued and unpaid interest was $175,654 and $159,305 at March 31, 2013 and December 31, 2012, respectively related to the convertible debentures. The Debentures are secured by a 1.5% interest in three oil and gas producing wells that are in a 2,400 acre lease in Live Oak County, Texas. The Debentures are convertible at the holders’ option into Eagle Ford restricted common stock at a fixed conversion rate of $0.90 per common share. The Debentures may also be satisfied by transferring the lease to the investors. Eagle Ford is in negotiation with the debenture holders and no agreement has been made as of the date of this report.

Following are maturities on convertible debentures for the next five years:

	Principal Amount

2014	$	545,000

Thereafter		—

Total convertible debt	$	545,000

6. DERIVATIVE LIABILITY

In connection with the Reverse Acquisition, the Company assumed 1,000,000 warrants which were issued by Eagle Ford prior to the Reverse Acquisition in connection with the conversion of Eagle Ford’s convertible preferred shares, which also occurred prior to the Reverse Acquisition. The Company determined that the warrants contained provisions that protect the holders from declines in the Company’s stock price that could result in modification of the exercise price under the warrant based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815 – 40. As a result, these warrants were not indexed to the Company’s own stock. The fair value of these warrants was recognized as derivative warrant instruments and will be measured at fair value at each reporting period. As of June 20, 2011, the Company determined that, using a lattice model, the fair value of the warrants was $438,680, which had been reduced to $188,933 by December 31, 2012.. The Company re-measured the warrants as of March 31, 2013 and determined the fair value to be $240,469. The increase in fair value has been recognized as an unrealized loss on the change in derivative value of $51,536 for the three months ended March 31, 2013.

Activity for the derivative warrant instruments during the three months ended March 31, 2013 was:

	December 31, 2012		Activity During the Period		Decrease in Fair Value		March 31, 2013

Derivative warrant instruments	$	188,933	$	—	$	51,536	$	240,469
Total	$	188,933	$	—	$	51,536	$	240,469

The assumptions used in the lattice model to determine the fair value of the warrants as of December, 2012 and March 31, 2013 were as follows:

	December 31, 2012			March 31, 2013
Exercise price		$0.45-$0.48			$0.39-$0.49
Risk free discount rate (1)		0.21	%		0.17	%
Volatility (2)		181	%		172	%
Projected future offering price (3)		$0.17-$0.47			$0.17-$0.47
Stock price on measurement date		$0.29			$0.39
Expected dividend yields (4)	None			None

(1)	The risk-free interest rate was determined by management using the U.S. Treasury zero-coupon yield over the contractual term of the warrant on date of grant.
(2)	The volatility factor was determined by management using the historical volatilities of the Company’s stock.

(3)	Projected future offering price is based on 12 month historical trading range.
(4)	Management determined the dividend yield to be 0% based upon its expectation that there will not be earnings available to pay dividends in the near term.

7. SHAREHOLDERS’ EQUITY

As of March 31, 2013 and December 31, 2012, there were 38,731,003 and 38,624,620 shares of common stock issued and outstanding.

Common stock sales

On March 5, 2013, ECCE sold 106,383 shares of common stock to an individual for $0.282 per share.

Warrants

Warrant activity during the three months ended March 31, 2013 is as follows:

	Warrants		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2013		1,000,000	$	0.50	$	—
Granted		—		—		—
Exercised		—		—		—
Expired		—		—		—
Outstanding and exercisable at March 31, 2013		1,000,000	$	0.50	$	—

The fair value of these warrants was recognized as derivative warrant instruments and will be measured at fair value at each reporting period. See Note 6. As of March 31, 2013, all warrants outstanding and exercisable had an intrinsic value of $0, based on the trading price of Eagle Ford’s common stock of $0.39 per share.

8. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

On February 28, 2009 M-J Oil Company Inc, of Paris Ohio, obtained a judgment of $1,000,000 against Eagle Ford (f/k/a ECCO Energy) for non-compliance with covenants in the original mortgage relating to the purchase of the M-J Oil Company pipeline (“Pipeline”). Eagle Ford 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 the date of this filing, the Company has not reached a satisfactory agreement with the lender, although a settlement is being actively pursued.

Eagle Ford has not paid property taxes for 2007 or 2008 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 March 31, 2013, Eagle Ford owed $43,452 for these property taxes. ECCE is currently in negotiations to settle this liability.

Operating Leases

Subsequent to the merger with Sandstone LLC, ECCE moved to 1110 NASA Parkway, Ste 311, Houston, TX 77058 and vacated the offices on 3315 Marquart Street, Ste. 206, Houston, Texas 77027. The landlord at Marquart St. was Marquart St. LLC, a company owned by Rick Bobigian, who was a Director of the Company until July, 2011. Upon the merger, the previous rental contract was terminated, and the outstanding rent payments were cancelled.

The rental contract at 1110 NASA Parkway for 1,379 sq. ft. commenced July 1, 2010 and terminates on August 31, 2013. The monthly rent increased from $1,781 on September 1, 2011 to $1,839 on September 1, 2012, and will remain at that amount until the lease expires on August 31, 2013.

Year 2013: $9,651.

9. SUBSEQUENT EVENTS

On April 19, 2013, ECCE sold 34,843 shares of common stock to an individual for $0.287 per share.

On April 29, 2013, ECCE sold 37,313 shares of common stock to an individual for $0.268 per share.

On May 1, 2013 ECCE sold 93,284 shares of common stock to an individual for $0.286 per share.

All proceeds from stock sales were used for general corporate purposes.

On April 19, 2013, ECCE issued 300,000 shares of common stock valued at $0.36 per share to Emerging Markets Consultants for services related to fundraising.

Short Term Financing with JMJ Financial Corp.

On April 8, 2013, EEOC signed an agreement providing up to $335,000 in short term financing with JMJ Financial Corp. On April 10, 2013, EEOC obtained a $55,000 withdrawal from this credit line. The net proceeds were $50,000 and include an original issue discount of $5,000. The maturity date is one year from the effective date of each amount borrowed under the terms of the agreement. ECCE is only required to pay interest and principal on the amount actually borrowed. ECCE has ninety days to repay the note with no interest charged or accrued. JMJ Financial has the option to convert the note to ECCE common stock at a rate $0.39 per share or 60% of the lowest trade price in the 25 trading days pervious to the conversion, whichever is lower. Unless otherwise agreed in writing by both parties, at no time will the Lender convert any amount of the Note into common stock that would result in the Lender owning more than 4.99% of the common stock outstanding.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

- the cyclical nature of the natural gas and oil industries to meet our obligations, finance operating deficits and fund acquisitions, exploration and development and continue as a going concern

- 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 weather, leaks, explosions and lack of rig availability)

- the cyclical nature of the natural gas and oil industries

BUSINESS OPERATIONS

We (“Eagle Ford” or the “Company”) are an independent oil and gas company actively engaged in oil and gas development, exploration and production with properties and operational focus in the Texas-Louisiana Gulf Coast Region. Our strategy is to grow our asset base by investing in oil and gas drilling and production in various locations in that region. Our shares of common stock are traded on the Over-the-Counter Bulletin Board, with the symbol ECCE.

RECENT DEVELOPMENTS

Business Acquisitions

On June 20, 2011, pursuant to a Purchase Agreement, Eagle Ford acquired all of the membership interests of Sandstone Energy, L.L.C. (“Sandstone”) in exchange for 17,857,113 shares of common stock of Eagle Ford (the “Reverse Acquisition”). Following the Reverse Acquisition, the shares issued to the former owners of Sandstone constituted 82% of the Company’s common stock. Sandstone Energy, L.L.C.’s principal assets at the date of the Acquisition were 50% membership interests in each of Sandstone Energy Partners I, L.L.C. (“SSEP1”), Sandstone Energy Partners II, L.L.C. (“SSEP2”) and Sandstone Energy Partners III, L.L.C. (“SSEP3”). On August 8 and August 11, 2011, Eagle Ford acquired the remaining 50% interests in each of SSEP1, SSEP2 and SSEP3 with an accumulated deficit of $1,443,302 in exchange for 8,970,120 shares of Eagle Ford common stock. Eagle Ford now owns 100% of the interests in these ventures.

The Reverse Acquisition is being accounted for as a “reverse acquisition” in which Sandstone is deemed to be the accounting acquirer (“Acquirer”) and Eagle Ford is deemed to be the accounting acquiree (“Acquiree”). Consequently, the assets and liabilities and the historical operations reflected in the accompanying consolidated financial statements prior to the Reverse Acquisition are those of Sandstone and are recorded at the historical cost basis of Sandstone. The consolidated financial statements after completion of the Reverse Acquisition include the assets and liabilities of Sandstone and the Acquiree and the historical operations of Sandstone and the Acquiree and its subsidiaries from the closing date of the Reverse Acquisition. In accordance with ASC 805, the assets and liabilities of the Acquiree at the date of the acquisition have been recorded at fair value.

As a result of the Reverse Acquisition and the August acquisition of the remaining 50% interests in SSEP1, SSEP2, and SSEP3, the Company’s most significant oil and gas assets at March 31, 2013 were the Company’s interests in Vick No.1, Vick No. 2 and Alexander 1, all located in Lee County, Texas. All of the Company’s wells in Lee County (the Lee County Wells”) are operated by a third party.

Oil & Gas Properties

Prior to the Reverse Acquisition, in August 2010, Eagle Ford purchased a farm-in of a 1% working interest in 2,400 acres and the drilling of three wells in the Eagle Ford Shale formation located in Live Oak County in South Texas for $250,000 plus potential additional expenses related to the drilling. The wells were drilled and completed and production began during November and December 2010 and classified as proved reserves. As of the date of this report, the wells in Live Oak County continue to have minimal oil and gas production. We do not anticipate any further drilling in this field.

The Company also plans to acquire additional leases and other oil and gas properties or interests in the Texas-Louisiana Gulf Coast region.

RESULTS OF OPERATIONS

We have incurred recurring losses to date. Over the next twelve months, our strategy is to grow our asset base by investing in oil and gas drilling and production in the Texas-Louisiana Gulf Coast region. Although we do not currently operate any of our wells, we desire to 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 substantial additional capital to meet our current obligations and long term operating requirements and acquisition objectives.

Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012

For the three months ended March 31, 2013, Eagle Ford recognized revenue of $1,357, a decrease of $834 compared to revenue of $2,191 during the three months ended March 31, 2012. The decrease in revenues for the three months ended March 31, 2013 is primarily due to decreased production from the Live Oak County Wells. During the three months ended March 31, 2013, we sold no barrels of oil and 478 Mcf of natural gas at an average price of $2.98 per Mcf. During the three months ended March 31, 2012, we sold approximately 925 mcf of natural gas at an average price of $2.41 and no oil.

For the three months ended March 31, 2013, we incurred operating expenses of $233,816, a decrease of $300 compared to $234,116 for the three months ended March 31, 2012.

Other expenses increased by $252,608 in total, to $297,141 from $44,533 for the three months ended March 31, 2013 and 2012, respectively. The $252,608 increase in other expenses is due to a $51,536 loss on change in derivative value and Interest expenses increased by $171,876 due to interest expense on the payable on the East Pearsall properties.

Our net loss for the three months ended March 31, 2013 was $529,600, an increase of $253,142 (92%) compared to a net loss of $276,458 for the three months ended March 31, 2012, due to the reasons noted above, primarily due to interest expense and derivative value.

LIQUIDITY AND CAPITAL RESOURCES

Three Month Period Ended March 31, 2013

At March 31, 2013, our current assets were $79,884 and our current liabilities were $12,549,880, which resulted in a working capital deficiency of $12,469,996. At March 31, 2013, our total liabilities were $12,815,151 consisting of: (i) $541,660 in accounts payable - trade; (ii) $1,621,671 in accrued expenses; (iii) $171,340 in accrued expenses – related party; (iv) $1,772,709 in notes payable to third parties, current-short term and $7,000,000, long term; (v) $897,500 in short-term debt – related parties; (vi) $545,000 in convertible debt; (vii) $240,469 in derivative liabilities; and (viii) $24,802 in asset retirement obligations.

Stockholders’ deficit increased from $3,598,699 at December 31, 2012 to a deficit of $4,098,299 as of March 31, 2013. This deficit was increased by the loss from operations for the first three months of 2013.

Cash Flows

Cash Flows from Operating Activities

Cash used in operations were $242,354 during the three months ended March 31, 2013, compared to net cash used in operations of $135,047 during the prior year period, which was an increase in cash used in operations of $107,307, primarily due to a $253,142 increase in net loss and offset by net increase in accounts payable and accrued expenses.

Cash Flows from Investing Activities

The Company used net cash for investing activities of $0 during the three months ended March 31, 2013, compared to net cash provided by investing activities of $0 during the prior year period, which represented funds from the sale of an oil and gas property.

Cash Flows from Financing Activities

The Company received cash from financing activities of $30,000 during the three months ended March 31, 2013, compared to net cash from financing activities of $117,000 during the prior year period, which was a decrease from financing activities of $87,000.

Our Existence and Success Depend upon Future Financings/Going Concern Issues

The independent auditor’s report on our December 31, 2012 financial statements states that our recurring losses raise substantial doubts about our ability to continue as a going concern.

At March 31, 2013, we had a working capital deficit of $12,469,996. We will need to raise additional capital during 2013 to fund general corporate working capital needs, which includes principal and accrued interest on past due notes payable and convertible bonds totaling $11,828,573. We will also need to raise funds to meet commitments with respect to its existing wells in the Lee County Prospect or future wells on that and other prospects.

We anticipate that additional financings and loans will be required to sustain operations in the future. There can be no assurance that the Company will be successful in raising the required capital. Management is exploring various avenues to obtain such funding to develop our properties and pay existing debt including the issuance of new debt, issuance of securities, sales of properties and joint ventures. The Company also intends to continue to negotiate with holders of its current debt to convert such debt into equity or otherwise restructure such debt.

As we have no debt or equity funding commitments, we will need to rely upon best efforts financings. The Company is conducting ongoing discussions with potential lenders, investors and merger partners and acquisition candidates. There can be no assurance that the Company will be successful in raising the required capital in the private placement or from any other source.

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 anticipate that our working capital requirements will continue to be funded through a combination of our future revenues, existing funds, loans and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. We anticipate that additional financings and loans will be required to sustain operations in the future. In addition, we anticipate that for the foreseeable future such financings are likely to rely heavily on the issuance of equity. There can be no assurances that such equity issuances will be at dilution levels that will be highly dilutive to existing holders or our common stock or other stakeholders.

There can be no assurance that we 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.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months, outside of any items related to the drilling or completion of the Lee County, Live Oak County and East Pearsall fields.

OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2013, 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

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

Item 4. 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, as amended (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 our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. An evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as March 31, 2013. 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 improvement, were being undertaken. Based on that evaluation, our Chief Executive Officer, and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2013. We continue to require additional safeguards to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We are in the process of evaluating and enhancing such controls and procedures, and expect additional controls and procedures to be implemented during the second and third quarters of this year.

There was no change in our internal control over financial reporting during the quarter ended March 31, 2013 and as of the date of this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On March 5, 2013, ECCE sold 106,383 shares of common stock to an individual for $0.282 per share.

On April 11, 2013, ECCE sold 34,843 shares of common stock to an individual for $0.287 per share.

On April 17, 2013, ECCE sold 37,313 shares of common stock to an individual for $0.268 per share.

On May 1, 2013 ECCE sold 93,284 shares of common stock to an individual for $0.286 per share.

All proceeds from stock sales were used for general corporate purposes.

On April 19, 2013, ECCE issued 300,000 shares of common stock valued at $0.36 per share to Emerging Markets Consultants for services related to fundraising.

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 or other applicable exemptions from registration.

Item 6. Exhibits.

Exhibit Number	Description

31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	EAGLE FORD OIL & GAS CORP.

Date: May 13, 2013	By:	/s/ Paul L. Williams Jr.
		Paul L. Williams Jr.
		Title: Chief Executive Officer



Date: May 13, 2013	By:	/s/ N. Wilson Thomas
		N. Wilson Thomas
		Title: Chief Financial Officer

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