Edgar Filing: EASTERN RESOURCES INC

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 333-149850

EASTERN RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Delaware	45-0582098
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

4 Park Avenue, Suite 16K, New York, NY 10016

(Address of principal executive offices)

(917) 687-6623

(Registrant’s telephone number, including area code)

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

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 ¨ No ¨

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.

Large accelerated filer ¨		Accelerated filer ¨		Non-accelerated filer ¨		Smaller reporting company x
				(Do not check if a smaller Reporting company)

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

There were 20,629,000 shares of the issuer’s common stock outstanding as of May 5, 2010.

EASTERN RESOURCES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010

TABLE OF CONTENTS

		PAGE

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4T.	Controls and Procedures	17

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	18

Item 1A.	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Other Information	18

Item 5.	Exhibits	19

	SIGNATURES	20

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

	PAGE

Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and December 31, 2009 (Audited)	4

Consolidated Statements of Operations for the three month periods ended March 31, 2010 (Unaudited) and March 31, 2009 (Unaudited) and the period from March 15, 2007(Inception) to March 31, 2010 (Unaudited)	5

Consolidated Statements of Cash Flows for the three month periods ended March 31, 2010 (Unaudited) and March 31, 2009(Unaudited) and for the period from March 15, 2007 (Inception) to March 31, 2010 (Unaudited)	6

Notes to Consolidated Financial Statements (Unaudited)	7

EASTERN RESOURCES INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

	March 31, 2010			December 31, 2009
	(Unaudited)			(Audited)
ASSETS

CURRENT ASSETS
Cash	$	3,842		$	-
TOTAL CURRENT ASSETS		3,842			-

Capitalized film costs		1,271,611			1,271,611

TOTAL ASSETS	$	1,275,453		$	1,271,611

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	23,057		$	46,050
Loan payable-stockholder		40,000			40,000
Convertible debenture		48,323			47,395
Compensation payable		355,462			355,462
Derivative liability		2,809			-
Notes payable		235,810			230,059
TOTAL CURRENT LIABILITIES		705,461			718,966

LONG-TERM LIABILITIES:
10% Convertible debenture, net of discount of $2,943		68,227			-
TOTAL LIABILITIES		773,688			718,966

STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 10,000,000 shares authorized; none issued		-			-
Common stock, $.001 par value, 300,000,000 shares authorized; 20,629,000 issued and outstanding at March 31, 2010 and December 31, 2009		20,629			20,629
Additional paid in capital		903,771			903,771
Deficit accumulated in the development stage		(422,635	)		(371,755	)
TOTAL STOCKHOLDERS' EQUITY		501,765			552,645

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,275,453		$	1,271,611

See notes to unaudited consolidated financial statements.

EASTERN RESOURCES INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

							March 15, 2007
							(Inception)
	Three Months Ended						to
	March 31, 2010			March 31, 2009			March 31, 2010

Revenues	$	-		$	-		$	-

Operating expenses:
General and administrative		48,919			58,481			422,305
Total operating expenses		48,919			58,481			422,305

Net loss before other income (expense)		(48,919	)		(58,481	)		(422,305	)

Other income (expense):
Unrealized gain on fair value of derivative liability		493			-			493
Interest expense		(2,457	)		-			(4,852	)
Interest income		3			3			4,029

Net loss	$	(50,880	)	$	(58,478	)	$	(422,635	)

Basic earnings per share	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding - basic and diluted		20,629,000			20,629,000

See notes to unaudited consolidated financial statements.

EASTERN RESOURCES INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

							Inception
	Three Months Ended			Three Months Ended			(March 15, 2007) to
	March 31, 2010			March 31, 2009			March 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(50,880	)	$	(58,478	)	$	(422,635	)
Adjustments to reconcile net loss to net cash used in operating activities:Gain on fair value of derivative liability		(493	)		-			(493	)
Amortization of discount on convertible debenture		359			-			359
Increase in film costs		-			-			(1,276,220	)
Increase in capitalized interest		-			-			33,694
Increase in accounts payable and accrued expenses		(22,993	)		39,044			23,057
Officer stock compensation		-			-			11,500
Increase in compensation payable		-			-			355,462
NET CASH USED IN OPERATING ACTIVITIES		(74,007	)		(19,434	)		(1,275,276	)

CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from loans payable		-			-			160,000
Proceeds from loan payable-shareholder		-			-			40,000
Increase in note payable accrued interest		5,751			5,211			46,725
Proceeds from convertible debenture		70,000			-			115,000
Increase in convertible debenture accrued interest		2,098			-			4,493
Proceeds from issuance of common stock		-			-			912,900
NET CASH PROVIDED BY FINANCING ACTIVITIES		77,849			5,211			1,279,118

INCREASE (DECREASE) IN CASH		3,842			(14,223	)		3,842
CASH-BEGINNING OF PERIOD		-			15,056			-
CASH-END OF PERIOD	$	3,842		$	833		$	3,842

CASH PAID FOR:
Interest	$	-		$	-
Income Taxes	$	-		$	-

See notes to unaudited consolidated financial statements.

EASTERN RESOURCES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to the Unaudited Consolidated Financial Statements

Note 1 – Organization, Nature of Operations and Basis of Presentation

Eastern Resources, Inc. (the “Company”) was incorporated in the State of Delaware on March 15, 2007. On that date the Company acquired Buzz Kill, Inc., for 11,500,000 common shares. The Company, through Buzz Kill, Inc., its wholly owned subsidiary, recently completed production of a feature length major motion picture, and plans to market it to distributors in the United States and abroad. The Company plans to produce a wide range of independent films outside the traditional studio system. The Company intends to distribute films for theatrical release, and exploit methods of delivery worldwide. The Company intends to execute its business plan through the acquisition of unique films from a broad spectrum of independent writers, directors and producers. Each project will become an independent production company, created as a subsidiary of Eastern Resources, Inc. The Company plans to fund the projects and maintain ownership of the films with the intent of building a film library with the rights to DVD, book and other reproductive media for sale to the public.

Basis of Presentation: The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the information set forth therein have been included. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be experienced for the fiscal year ending December 31, 2010. The accompanying consolidated financial statements should be read in conjunction with the Company’s Form 10-K for the fiscal year ended December 31, 2009 which was filed on March 23, 2010.

Note 2 - Summary of Significant Accounting Policies

Principles of Consolidation - The consolidated financial statements of the Company include those of the Company and its wholly owned subsidiary, Buzz Kill, Inc. All significant inter-company accounts and transactions have been eliminated in the consolidation.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Cash and Cash Equivalents - The Company considers all highly liquid short term investments with a remaining maturity of three months or less when purchased, to be cash equivalents.

Capitalized Film Costs - Film costs include all direct negative costs incurred in the physical production of the film as well as allocated production overhead. Such costs include story costs and scenario; compensation of cast, directors, producers and extras; set construction and operations; wardrobe and accessories; sound synchronization; location expenses and post production costs including music, special effects and editing. Film costs are amortized based on the ratio of current period gross revenues to estimated remaining ultimate revenues from all sources on an individual production basis. Estimated ultimate revenues are revised periodically and the carrying values of the films are evaluated for impairment. Losses, if any, are provided in full.

As of March 31, 2010 and December 31, 2009, the Company is not yet able to reasonably estimate projected revenues, therefore the Company has not recorded any amortization expense to date.

Fair Value of Financial Instruments - The carrying amount reported in the consolidated balance sheet for cash and cash equivalents, accounts payable and accrued expenses approximate fair value because of the immediate or short term maturity of these financial instruments.

Income Taxes Income taxes are accounted for in accordance with the provisions of FASB ASC Topic No. 740, “Income Taxes”(formerly SFAS No. 109, “Accounting for Income Taxes”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

Revenue Recognition - The Company recognizes revenues from the sale or licensing arrangement of a film upon delivery of a completed film or the commencement of a licensing period. The Company had substantially completed film production at March 31, 2010 but realized no revenues as of that date.

Advertising Costs - Advertising costs are expensed as incurred. Expenditures for the nine months period ended March 31, 2010 and 2009 were insignificant.

Loss Per Common Share - Loss per common share is computed using the weighted average number of shares outstanding. Potential common shares includable in the computation of fully diluted per share results are not presented in the financial statements as their effect would be anti-dilutive.

New Accounting Pronouncements – Effective January 29, 2010, the Company adopted FASB ASC Topic No. 815 – 40, Derivatives and Hedging -Contracts in Entity’s Own Stock (formerly Emerging Issues Task Force Issue No. 07-5, Determining Whether an Instrument or Embedded Feature is Indexed to an Entity’s Own Stock ). The adoption of FASB ASC Topic No. 815 –40’s requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from a decline in the stock price (or “down-round” provisions). As a result of the Company issuing a convertible note on January 29, 2010, the Company adopted ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock (formerly Emerging Issues Task Force Issue No. 07-5, Determining Whether an Instrument or Embedded Feature is Indexed to an Entity’s Own Stock ). As such, the embedded feature convertible option on the January 29, 2010 convertible note are classified as liabilities as of January 29, 2010 as these exercise price reset features and are not deemed to be indexed to the Company’s own stock. See Note 6 for further discussion.

In October 2009, the FASB issued guidance for amendments to FASB Emerging Issues Task Force on EITF Issue No. 09-1 “ Accounting for Own-Share Lending Arrangements in Contemplation of a Convertible Debt Issuance or Other Financing” ( Subtopic 470-20 ) “Subtopic”. This accounting standards update establishes the accounting and reporting guidance for arrangements under which own-share lending arrangements issued in contemplation of convertible debt issuance. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2009. Earlier adoption is not permitted. Management believes this Statement will have no impact on the consolidated financial statements of the Company once adopted.

In December 2009, the FASB issued guidance for Consolidations – Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities ( Topic 810 ). The amendments in this update are a result of incorporating the provisions of SFAS No. 167, Amendments to FASB Interpretation No. 46(R). The provisions of such Statement are effective for fiscal years, and interim periods within those fiscal years, beginning on or after November 15, 2009. Earlier adoption is not permitted. The presentation and disclosure requirements shall be applied prospectively for all periods after the effective date. Management believes this Statement will have no impact on the consolidated financial statements of the Company once adopted.

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements, which enhances the usefulness of fair value measurements. The amended guidance requires both the disaggregation of information in certain existing disclosures, as well as the inclusion of more robust disclosures about valuation techniques and inputs to recurring and nonrecurring fair value measurements. The amended guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disaggregation requirement for the reconciliation disclosure of Level 3 measurements, which is effective for fiscal years beginning after December 15, 2010 and for interim periods within those years. The Company does not anticipate that this pronouncement will have a material impact on its results of operations or financial position.

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

Note 3 - Going Concern

The Company at present has insufficient funds to sustain the cash flows required to meet the anticipated operating costs to be incurred in the next twelve months. Management intends to sell additional equity and / or debt securities in the future to supplement potential revenues. However, there can be no assurance that the Company will be successful in raising significant additional funds. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 4 – Notes Payable

In 2007 the Company issued 10% Subordinated Debenture Notes aggregating $160,000 payable to four persons. The notes included accrued interest compounded monthly and become due and payable on varying dates in the year 2010. The notes are subordinated to monies payable to trade payables and to the loan payable to Mr. Hanna, an officer and major stockholder. Upon repayment of the notes and accrued interest the Company agreed to pay the note holders an additional premium of 20% of the original principal $32,000, which was recorded at present value of $24,324. The note holder’s rights to receive the premium survive any redemption of the notes. Such amount was calculated using 10% per annum compounded monthly. In addition to the repayments of principal, accrued interest and premium the note holders will be entitled to a 12% participation in the film’s net proceeds as defined in the agreements.

At March 31, 2010 and December 31, 2009, the Company recorded related accrued interest of $51,486 and $45,735, respectively.

Note 5 - Loan Payable - Stockholder

In July 2007, the Company received a bridge loan of $100,000 from Mr. Hanna. Subsequent repayments of $60,000 reduced the loan to $40,000 as of March 31, 2010. The loan is unsecured, interest free and repayable on demand.

Note 6 – Convertible Debentures and Derivatives

8.25% Convertible Debenture

On May 8, 2009, the Company entered into a securities purchase agreement with Milestone Enhances Fund Ltd. (“Milestone” or “Holder”). Under the purchase agreement, the Company issued to Milestone a convertible promissory note (“Promissory Note”), convertible into the Company’s common stock, in the amount of $45,000.

At any time, subject to a written notice of conversion, the Holder may convert any portion of the outstanding and unpaid principal and interest balance due on the Promissory Note into the Company’s common shares at a conversion price to be mutually determined by the Company and the Holder. Any conversion of any portion of the Promissory Note shall be deemed to be a prepayment of principal, without any penalty, and shall be credited against future payments of principal in the order such payments become due or payable.

The Promissory Note bears interest at the rate of 8.25% per annum and is payable at maturity, November 8, 2010, together with any accrued and unpaid interest. The Promissory Note may be prepaid by the Company at any time without penalty. Both parties may, however, mutually agree to extend the term of the Promissory Note beyond the maturity date.

In the event of default due to non-payment of principal and interest at maturity date, the Holder would have the right to all legal remedies available for it to pursue collection, and the Company shall bear all reasonable costs of collection, including but not limited to attorney’s fees.

At March 31, 2010 and December 31, 2009, the Company recorded accrued interest of $928 and $2,395 related to the convertible debenture.

10% Convertible Debenture

On January 29, 2010, the Company issued to Paramount Strategy Corp. (“Paramount”) a convertible promissory note (“Paramount Promissory Note”) amounting to $70,000.

At any time, subject to a written notice of conversion, Paramount may convert any portion of the outstanding and unpaid principal and interest balance due on the Paramount Promissory Note into the Company’s common shares at a conversion price (the “Fixed Conversion Price”) of $0.10 per share. So long as the Paramount Promissory Note is outstanding, if the Company issues shares of its common stock at a price below the Fixed Conversion Price, the Fixed Conversion Price shall be reduced to such other lower price. The Fixed Conversion Price and number of shares to be issued upon conversion shall also be subject to adjustment from time to time upon the happening of certain other events, in particular in the event a merger or sale of the Company’s assets, reclassification or change in the Company’s common stock, and in the event of stock splits, combinations or dividends. The Paramount Promissory Note bears interest at the rate of 10% per annum and is payable at its maturity on July 28, 2011, unless its term is mutually extended by both parties.

The Paramount Promissory Note contains ratchet provisions which adjusts the exercise price of the embedded feature conversion option if the Company issues common stock at a price lower than the fixed conversion prices in the 10% Paramount Promissory Note. As a result, the Company assessed the terms of the 10% Paramount Promissory Note in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock (formerly Emerging Issues Task Force Issue No. 07-5, Determining Whether an Instrument or Embedded Feature is Indexed to an Entity’s Own Stock ) and determined that the underlying embedded feature conversion option are not indexed to the Company’s common stock and are therefore a derivative which should be valued at fair value at the date of issuance and at each subsequent interim period.

As of January 29, 2010 (date of note issuance), the fair value of the derivatives was $3,302. As a result, a discount of $3,302 on the Paramount Promissory Note, and a derivative liability of $3,302 was recorded on January 29, 2010. The revaluation of the derivatives as of March 31, 2010 resulted in a value of derivative liability of $2,809. The change in fair value during the period of January 29, 2010 to March 31, 2010 resulted in a recorded gain on fair value of derivative liability of $493 in the accompanying consolidated statement of operations. For the three months ended March 31, 2010, the Company also amortized the discount on the note for $359.

The fair value of the derivative was determined using the Black-Scholes option pricing model with the following assumptions:

	January 29, 2010			March 31, 2010
Common stock issuable upon conversion		700,000			700,000
Estimated market value of common stock on measurement date	$	0.02		$	0.02
Exercise price	$	0.10		$	0.10
Risk free interest rate (1)		0.82	%		0.82	%
Term in years	1.49 years			1.33 years
Expected volatility		129	%		129	%
Expected dividends		0	%		0	%

(1)	The risk-free interest rate was estimated by management using the U.S. Treasury zero-coupon yield over the contractual term of the note.

(2)	Management estimated the dividend yield at 0% based upon its expectation that there will not be earnings available to pay dividends in the near term.

Note 7 - Fair Value Measurements

As defined in FASB ASC Topic No. 820 – 10 (formerly SFAS 157), fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC Topic No. 820 – 10 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories:

Level 1:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:

Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.

Level 3:

Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). The Company’s valuation models are primarily industry standard models. Level 3 instruments include derivative warrant instruments. The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.

As required by FASB ASC Topic No. 820 – 10 (formerly SFAS 157), financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model (see Note 6).

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, 2010:

	Fair Value Measurements at March 31, 2010
							Total
							Carrying
Description	(Level 1)		(Level 2)		(Level 3)		Value
Derivative liability -	$	-	$	-	$	2,809	$	2,809
Total	$	-	$	-	$	2,809	$	2,809

Note 8 - Issuance of Common and Preferred Stock

Authorized capital stock consists of 300,000,000 shares of common stock with a par value of $0.001 per share and 10,000,000 shares of preferred stock, with a par value of $0.001 per share.

In December 2007, the Company completed a private placement offering of 8,529,000 shares of common stock at a price of $0.10 per share for aggregate proceeds of $852,900. In June 2008, the Company sold additional 600,000 shares of our common stock to an institutional investor at a price of $0.10 per share for gross proceeds of $60,000.

As of March 31, 2010, there were 20,629,000 shares of common stock issued and outstanding. No preferred stock shares have been issued.

Note 9 – Subsequent Events

In accordance with ASC 855, “Subsequent Events”, the Company evaluated subsequent event from the balance sheet date of March 31, 2010 through May 5, 2010, which is the date the consolidated financial statements were issued.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statement Regarding Forward-Looking Information

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial position, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe”, “expects”, “anticipates”, “intends”, “estimates”, “projects”, “target”, “goal”, “plans”, “objective”, “should”, or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, the availability and pricing of additional capital to finance operations, the acceptance of our feature film at various film festivals, the successful negotiation and execution of marketing and distribution agreements, our ability to acquire and develop future film projects, and future economic conditions and the independent film market.

Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Results of Operations

For the quarter ended March 31, 2010 and since our date of inception (March 15, 2007), we have not generated any operating revenues. We do not anticipate generating operating revenues in the near future. We are presently in the development stage of our business and we can provide no assurance that we will make any money on the films we produce.

We incurred total operating expenses of $48,919 for the three month period ended March 31, 2010, as compared to total operating expenses of $58,481 for the three month period ended March 31, 2009. The decrease in total operating expenses was due to decrease in legal and other professional fees incurred in connection with ongoing SEC filing requirements.

Other expense for the three months ended March 31, 2010, was ($1,961) compared to other income of $3 for the three months ended March 31, 2009. We generated interest income in the amount $3 for the three month period ended March 31, 2010, as compared to interest income of $3 for the three month period ended March 31, 2009. Also, during the three month ended March 31, 2010, we recognized an unrealized gain from the decrease in the fair value of the derivative liability of $493 and interest expense of $2,457.

We have generated no operating revenues since our inception and our net loss from inception through March 31, 2010 was $422,635.

Liquidity and Capital Resources

The report of our independent registered accounting firm on our audited consolidated financial statements for the fiscal year ended December 31, 2009 contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have achieved no revenues since our inception. We have depended on loans and sales of equity securities to conduct operations. As of March 31, 2010 and December 31, 2009, we had cash of $3,842 and $0, current assets of $3,842 and $0 and current liabilities of $705,461 and $718,966, respectively. Unless and until we achieve material revenues, we will remain dependent on financings to continue our operations.

Plan of Operation

We were formed as a Delaware corporation on March 15, 2007 for the purpose of producing full length independent feature films. Since inception, we have been engaged in the production and attempted distribution of our first independent, full-length feature film entitled BuzzKill. We have recently finished weighing four different distribution offers and are now focusing our efforts on finalizing a distribution deal. It will likely be a DVD/TV deal that should allow for Buzzkill to be publicly available in the fourth quarter of 2010 or first quarter of 2011. In conjunction with the foregoing, we are negotiating a license agreement for the film with a popular entertainment entity which we hope will open up a number of marketing opportunities. Additionally, we are currently working with Uplava and Variety to participate in a songwriting competition where the winning song will be used in the film. This opportunity will allow the film to piggyback on the marketing efforts of Variety and Uplava and should prove to be a great public relations opportunity.

On April 1, 2007, Buzz Kill, Inc. (“Buzz Kill”), our wholly owned subsidiary, acquired all rights, title and interest in and to the screenplay entitled “Buzz Kill,” written by Steven Kampmann and Matt Smollon. Pursuant to the Literary Purchase Agreement, dated April 1, 2007, each of Messrs. Kampmann and Smollon received the following compensation: (i) $6,250, (ii) $12,731 in deferred compensation, and (iii) contingent compensation equal to 3.5% of the “net proceeds” of the film. Messrs. Kampmann and Smollon will receive an additional $25,000 if the film’s North American (i.e., the United States and Canada) theatrical box office receipts reach $15,000,000 and an additional $25,000 thereafter for each $15,000,000 in theatrical box office receipts reached thereafter.

On April 13, 2007, Buzz Kill hired Mr. Kampmann to direct the film. Pursuant to Director Agreement, dated April 13, 2007, for his director services, Mr. Kampmann received the following compensation: (i) $20,000, (ii) $50,000 in deferred compensation, (iii) an additional $10,000 for every $100,000 that the final, actualized budget exceeds $650,000, and (iv) contingent compensation equal to 5% of the “net proceeds” of the film. Mr. Kampmann will receive an additional $25,000 if the film’s North American (i.e., the United States and Canada) theatrical box office receipts reach $15,000,000 and an additional $25,000 thereafter for each $15,000,000 in theatrical box office receipts reached thereafter.

Pursuant to the Investment Agreement, dated May 1, 2007, between our Company and Buzz Kill, we provided financing to Buzz Kill in the amount of $800,000 for the production (principal photography only) and exploitation of BuzzKill. Under the agreement, we received a “first priority” right of recoupment of the financing amount and a 20% premium. In addition, our Company is entitled to a percentage of the “net proceeds” of the picture, calculated as a percentage equal to 50% of the fraction with a numerator equal to the amount of our financing and a denominator equal to the amount of the final, actualized budget of the film. Buzz Kill agreed that the negative cost of the film (that is, the cost of actually producing and shooting the film and not including such costs as distribution and promotion) shall not exceed $1,100,000 without the written consent of our Company and to limit its financing debt to $300,000 plus 20%.

As of March 31, 2010, Buzz Kill has issued an aggregate principal amount of $160,000 of its 2007 10% Notes Series. The notes have an interest rate of 10%, compounded monthly. $60,000 of the notes are due on August 1, 2010. $100,000 of the notes are due on October 17, 2010. Upon repayment of the notes, in addition to the outstanding principal balance and all accrued and unpaid interest, the noteholders will be entitled to receive (i) a premium equal to 20% of the original principal amount and (ii) contingent compensation equal to 12% of the “net proceeds” of the film. All amounts under the notes remain unpaid and outstanding, and proceeds from the notes were used to finance the production of the film. As of March 31, 2010, BuzzKill also has a $40,000 demand loan payable to Thomas H. Hanna, Jr., a $45,000 loan payable to an unaffiliated third party due November 8, 2010 and represented by an 8.25% convertible promissory note dated May 9, 2009, and a $70,000 loan payable to an unaffiliated third party due July 28, 2011 and represented by a 10% convertible promissory note dated January 29, 2010.

Unless otherwise provided, the relative priority of the debt servicing and other payments under our material agreements is as provided in the definition of “net proceeds.” “Net proceeds” is defined as the sums remaining from all gross monies received from the licensing, distribution and other exploitation of all rights to the film after the deductions, in the following order, of (i) distribution expenses, (ii) production deferments to any party providing rights, materials, services or facilities in connection with the production of the film, (iii) recoupment by the financier’s of the film of its financial contribution plus a 20% premium, (iv) repayment of costs of production provided by third parties, and (v) other deferments.

Over the next twelve months we expect to enter into a distribution deal, a licensing deal with a well known entertainment entity and have distribution of the film in the fourth quarter of 2010. After that, our next objective in during the next twelve months is to complete the conception phase and enter into the pre-production phase of a second feature film. As of the date of this report, we have not identified our second project. We intend to raise additional capital through the issuance of debt or equity securities to provide financing for our marketing and distribution activities. No assurance can be given that we will be able to do so. Our failure to do so would have a material adverse effect on our operations.

We do not currently engage in any product research and development and have no plans to do so in the foreseeable future. We have no present plans to purchase or sell any plant or significant equipment. We also have no present plans to add employees although we may do so in the future if we engage in any merger or acquisition transactions.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T.

CONTROLS AND PROCEDURES

Evaluation of Our Disclosure Controls

Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, Thomas H. Hanna, Jr., we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) 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.

Limitations on Effectiveness of Controls and Procedures

Our management, including Thomas H. Hanna, Jr., our Chief Executive and Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2010 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.

ITEM 1A.

RISK FACTORS

Not applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We issued no equity securities during the quarter ended March 31, 2010.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

OTHER INFORMATION

On January 29, 2010 we received a $70,000 loan from an unrelated entity and issued a 10%, $70,000 convertible promissory note dated January 29, 2010. If not converted, interest and principal are due at maturity on July 28, 2011. The note is convertible at any time prior to maturity at a conversion price of $0.10 per share. The conversion price and the number of shares issuable upon conversion are subject to adjustment under certain circumstances including mergers, consolidations, reclassifications, stock splits, combinations, dividends and similar transactions. Further, the conversion price is subject to downward adjustment if we issue common stock or securities convertible into common stock at a price of less than $0.10 per share at any time while the note remains outstanding. In such event, the conversion price under the note shall be reduced to such lower price.

ITEM 5.

EXHIBITS.

In reviewing the agreements included as exhibits to this Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

•

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

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may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

•

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

The following exhibits are included as part of this report:

Exhibit No.		Description
31.1 / 31.2		Certification of Principal Executive and Financial Officer pursuant to Section 302 the Sarbanes-Oxley Act of 2002

32.1 / 32.2		Certification of Principal Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

Date: May 5, 2010

	EASTERN RESOURCES, INC.

	By:	/s/ Thomas H. Hanna, Jr.
	Thomas H. Hanna, Jr., Principal Executive and Financial Officer