U. S.
Securities and Exchange Commission


Washington,
D. C. 20549





FORM
10-Q





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




For
      the quarterly period ended June 30,
2008





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


For
      the transition period from _____ to
_____





Commission
File No. 0-31193





EASTERN
ENVIRONMENT SOLUTIONS,
CORP.


(Name of
Small Business Issuer in its Charter)




Nevada
            16-1583162(State
      or Other Jurisdiction of incorporation or organization)
            (I.R.S.
      Employer I.D. No.)










Harbin Dongdazhi Street 165,
Harbin, P.R. China 150001


(Address
of Principal Executive Offices)




Issuer's
Telephone Number: 86-451-5394-8666





Indicate  by
check mark  whether the  Registrant  (1) has filed
all reports required to be filed by Sections 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 is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check One)




Large
accelerated filer __ Accelerated
filer __  Non-accelerated filer __ Small
reporting company _X_


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





APPLICABLE
ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of each of the Registrant's classes of common stock, as of the latest
practicable date:




August
11, 2008


Common
Voting Stock: 14,970,186













EASTERN
      ENVIRONMENT SOLUTIONS CORPORATIONCONDENSED
      CONSOLIDATED BALANCE SHEETS (UNAUDITED)June
      30,
              
              
              December
      31,2008
      (Unaudited)
              
              
              2008
      (Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
              $
              2,117,824
              
              
              $
              2,105,255Accounts
      receivable
              
              
              1,604,136
              
              
              
              847,531Inventory
              
              
              5,393
              
              
              
              7,325Other
      receivables
              
              
              5,933
              
              
              
              18,961Loan
      to related party
              
              
              26,405
              
              
              
              32,969Total
      Current Assets
              
              
              3,759,691
              
              
              
              3,012,041Property
      and equipment, net of accumulated depreciation
              
              
              6,095,582
              
              
              
              5,708,388Other
      asset:Advance
      to suppliers
              
              
              3,748,082
              
              
              
              3,510,606Total
      other asset
              
              
              3,748,082
              
              
              
              3,510,606Total
      Assets
              
              $
              13,603,355
              
              
              $
              12,231,035LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Loan
      payable - current portion
              
              $
              1,836,525
              
              
              $
              1,401,559Accounts
      payable
              
              
              22,751
              
              
              
              21,392Taxes
      payable
              
              
              119
              
              
              
              143Accrued
      expenses and other payables
              
              
              62,898
              
              
              
              71,394Total
      Current Liabilities
              
              
              1,922,293
              
              
              
              1,494,488Long-term
      liabilities:Loan
      payable - net of current portion
              
              
              483,296
              
              
              
              966,592Total
      Liabilities
              
              
              2,405,589
              
              
              
              2,461,080Commitments
      and ContingenciesStockholders'
      EquityCommon
      stock, $0.0001 par value, 100,000,000 shares authorized;14,970,186
      and 12,020,186 shares issued and outstandingas
      of June 30, 2008 and December 31, 2007, respectively
              
              
              1,497
              
              
              
              1,202Additional
      paid-in-capital
              
              
              3,262,040
              
              
              
              3,130,793Accumulated
      other comprehensive income
              
              
              1,937,194
              
              
              
              1,157,547Statutory
      reserves
              
              
              186,156
              
              
              
              186,156Retained
      earnings
              
              
              5,810,879
              
              
              
              5,294,257Total
      Stockholders' Equity
              
              
              11,197,766
              
              
              
              9,769,955Total
      Liabilities and Stockholders' Equity
              
              $
              13,603,355
              
              
              $
              12,231,035
  1


EASTERN
      ENVIRONMENT SOLUTIONS CORPORATIONCONDENSED
      CONSOLIDATED STATEMENTS OF INCOMEFor
      the six and three months ended June 30, 2008 and 2007Six-Month
      Ended
              
              
              Three-Month EndedJune
      30,
              
              
              June
      30,
              
              
              June
      30,
              
              
              June
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007(Unaudited)
              
              
              (Unaudited)
              
              
              (Unaudited)
              
              
              (Unaudited)Revenues
              
              $
              866,285
              
              
              $
              1,165,505
              
              
              $
              439,462
              
              
              $
              577,470Cost
      of Goods Sold
              
              
              124,143
              
              
              
              174,938
              
              
              
              65,353
              
              
              
              94,356Gross
      Profit
              
              
              742,142
              
              
              
              990,567
              
              
              
              374,109
              
              
              
              483,114Operating
      ExpensesSelling,
      general and administrative
              
              
              232,574
              
              
              
              154,339
              
              
              
              98,120
              
              
              
              80,805Income
      before other Income and (Expenses)
              
              
              509,568
              
              
              
              836,228
              
              
              
              275,989
              
              
              
              402,309Other
      Income and (Expenses)
              
              
              7,054
              
              
              
              40,821
              
              
              
              3,662
              
              
              
              11,080Income
      Before Income Taxes
              
              
              516,622
              
              
              
              877,049
              
              
              
              279,650
              
              
              
              413,389Provision
      for Income Taxes
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      Income from operations
              
              $
              516,622
              
              
              $
              877,049
              
              
              $
              279,650
              
              
              $
              413,389Net
      income from discontinued operations, net of tax effects of
    $0
              
              
              -
              
              
              
              197,433
              
              
              
              -
              
              
              
              201,272Net
      income
              
              $
              516,622
              
              
              $
              1,074,482
              
              
              $
              279,650
              
              
              $
              614,661Other
      Comprehensive Income:Foreign
      currency transalation adjustment
              
              
              779,647
              
              
              
              234,241
              
              
              
              288,172
              
              
              
              140,153Comprehensive
      income
              
              $
              1,296,269
              
              
              $
              1,308,723
              
              
              $
              567,822
              
              
              $
              754,814Basic
      and diluted income (loss) per shareContinuing
      operations
              
              $
              0.04
              
              
              $
              0.09
              
              
              $
              0.02
              
              
              $
              0.04Discontinued
      operations
              
              $
              -
              
              
              $
              0.02
              
              
              $
              -
              
              
              $
              0.02Weighted
      average number of common shares outstanding
              
              
              13,025,131
              
              
              
              10,012,483
              
              
              
              14,030,076
              
              
              
              10,076,229
  2


EASTERN
      ENVIRONMENT SOLUTIONS CORPORATIONCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR
      THE SIX MONTHS ENDED JUNE 30,2008
              
              
              2007Cash
      Flows From Operating Activities:Continuing
      Operations:Net
      income from continuing operations
              
              $
              516,622
              
              
              $
              877,049Adjustments
      to reconcile net income to net cashprovided
      by(used in) operating activities:Depreciation
      and amortization
              
              
              118,642
              
              
              
              122,125Amoritzation
      of stock compensation
              
              
              131,542
              
              
              
              25,111Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              (756,605
              )
              
              
              (533,929
              )Inventory
              
              
              1,933
              
              
              
              (21,718
              )Other
      receivable
              
              
              13,028
              
              
              
              (48,828
              )Advances
      to suppliers
              
              
              (237,476
              )
              
              
              (28,854
              )Accounts
      payable
              
              
              1,358
              
              
              
              (64,275
              )Taxes
      payable
              
              
              (24
              )
              
              
              (43,530
              )Accrued
      expenses and other payables
              
              
              (6,781
              )
              
              
              11,240Net
      Cash provided by (used in) continuing activities
              
              
              (217,761
              )
              
              
              294,391Discontinued
      operations:Net
      loss from discontinued operations
              
              
              -
              
              
              
              197,433Adjustments
      to reconcile net cash (used in) discontinued operations
              
              
              -
              
              
              
              (218,229
              )Net
      cash (used in) discontinued operations
              
              
              -
              
              
              
              (20,796
              )Net
      cash provided by (used in) operating activities
              
              
              (217,761
              )
              
              
              273,595Cash
      Flows From Investing Activities:Purchase
      of property and equipment
              
              
              -
              
              
              
              (144,992
              )(Additions)
      reduction to construction in process
              
              
              (356,863
              )
              
              
              (378,241
              )Collections
      on loan to related parties
              
              
              6,565
              
              
              
              686,032Cash
      provided by (used in) investing activities
              
              
              (350,298
              )
              
              
              162,798Cash
      provided by discontinued activities
              
              
              -
              
              
              
              26,842Net
      cash provided by (used in) investing activities
              
              
              (350,298
              )
              
              
              189,640Cash
      Flows From Financing Activities:Reduction
      in bank loan payable
              
              
              (56,664
              )
              
              
              (483,296
              )Cash
      (used in) financing activities
              
              
              (56,664
              )
              
              
              (483,296
              )Cash
      (used in) discontinuing activities
              
              
              -
              
              
              
              (6,046
              )Net
      cash (used in) financing activities
              
              
              (56,664
              )
              
              
              (489,342
              )Effect
      of exchange rate changes on cash and cash equivalents
              
              
              637,293
              
              
              
              174,694Increase
      in cash and cash equivalents
              
              
              12,569
              
              
              
              148,588Cash
      and Cash Equivalents - Beginning of period
              
              
              2,105,255
              
              
              
              1,230,064Cash
      and Cash Equivalents - End of period
              
              $
              2,117,824
              
              
              $
              1,378,652SUPPLEMENTAL
      CASH FLOW INFORMATION:During
      the period, cash was paid for the following:Interest
      expense
              
              $
              144,932
              
              
              $
              65,687Income
      taxes
              
              $
              -
              
              
              $
              44,628Non-Cash
      Investing and Financing Activities:Common
      stock issued for incentive employee compensation
              
              $
              1,327,500
              
              
              $
              101,100Common
      stock issued for consulting services
              
              $
              -
              
              
              $
              19,500


3





EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007







NOTE
1. BASIS OF PRESENTATION AND ORGANIZATION





Eastern
Environment Solutions, Corp. (“the Company” or “EESC”) was incorporated under
the laws of the State of Nevada and formerly known as USIP.COM, Inc.
(“USIP”).





The
Company operates its business primarily through its wholly-owned subsidiary
Harbin Yifeng Eco-Environment Co., Ltd. (“Harbin Yifeng”), a corporation
organized and existing under the laws of the People’s Republic of China (“PRC”).
Harbin Yifeng is an environmental engineering company in the PRC that
specializes in providing non-hazardous municipal solid waste processing and
disposal services in the northeast regions of China.





The
Company’s condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America (“US GAAP”). In the opinion of management, the accompanying balance
sheets and related interim statements of income and cash flows include all
adjustments, consisting only of normal recurring items, necessary for their fair
presentation in conformity with accounting principles generally accepted in the
United States of America (“U.S. GAAP”).




Interim
results are not necessarily indicative of results for a full year. The
information included in this Form 10-Q should be read in conjunction with
Management’s Discussion and Analysis and the financial statements and notes
thereto included in the Company’s 2007 Form 10-KSB.




NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Management
estimates




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




Principles
of consolidation




The
accompanying condensed consolidated Financial Statements include the accounts of
the Company and its wholly owned subsidiaries, Harbin Yifeng and Harbin Yifeng’s
wholly owned subsidiary, Harbin Yifeng Zhiye Management Co., Ltd. (“Yifeng
Zhiye”). All significant inter-company transactions and balances have been
eliminated in consolidation.




Cash
and cash equivalents





For
purposes of the statement of cash flow, the Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.




4




EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007







NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Accounts
Receivables





Accounts
receivables are stated at net realizable value. Any allowance for doubtful
accounts is established based on the management’s assessment of the
recoverability of accounts and other receivables. A considerate amount of
judgment is required in assessing the realization of these receivables,
including the current credit worthiness of each customer and the related aging
analysis. The Company’s receivables are primarily due from municipal government
of Harbin City and are considered fully collectible. Therefore, no allowance for
doubtful accounts was deemed necessary for the six months ended June 30, 2008
and 2007.




Inventory





Inventories
mainly consist of the raw materials and supplies to be used in the regular
day-to-day operations. Inventories are valued at the lower of cost or market
with cost determined on a first-in first-out basis.




Property
and equipment





Property
and equipment are stated at cost, net of accumulated
depreciation.  Maintenance and repairs are charged to expense as
incurred. Depreciation is computed using the straight-line method over the
estimated useful lives of 5-10 years.




Advance
to suppliers




Advance
to suppliers represent the payments made and recorded in advance for goods and
services.  Advances were also made for the purchase of the materials
and equipments of the Company’s construction in progress. The final phase of the
construction is not completed.  As such, no amortization was made for
the six months ended June 30, 2008 and 2007.




Revenue
recognition




The
Company utilizes the accrual method of accounting.  Revenue is
recognized when service is provided and payments of the customers and collection
are reasonably assured.  Payments made in advance of the services
performed are charged to deferred revenue until performance has been
completed.




5





EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007







NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Concentrations
of credit risk




The
primary operations of the Company are now located in the PRC. Accordingly, the
Company’s business, financial condition, and results of operations may be
influenced by the political, economic, and legal environments in the PRC, in
addition to the general state of the PRC economy. The Company's operations in
the PRC are subject to special considerations and significant risks not
typically associated with companies in North America and Western Europe. These
include risks associated with, among others, the political, economic and legal
environments legal environments and foreign currency exchange.





The
Company’s results may be adversely affected by changes in the political and
social conditions in the PRC, and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency conversion
and remittance abroad, and rates and methods of taxation, among other
things.




Foreign
currency translation




The
functional currency for the Company’s operations in China is the Renminbi
(“RMB”). Foreign currency transactions are translated at the applicable rates of
exchange in effect at the transaction dates. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the applicable rates of exchange in effect at that date. Revenues and expenses
are translated at the average exchange rates in effect during the reporting
period.





Translation
adjustments arising from the use of different exchange rates from period to
period are included as a component of stockholders' equity as "Accumulated Other
Comprehensive Income".  Gains and losses resulting from foreign
currency translations are included in Accumulated Other Comprehensive
Income.





Stock-based
compensation





The
Company records stock based compensation expense pursuant to Financial
Accounting Standards Board Statement of Financial Accounting Standards (“SFAS”)
No 123R, “Share-based Payments”, which establishes the accounting for employee
stock-based awards. Under the provisions of SFAS No. 123(R), stock-based
compensation is measured at the grant date, based on the calculated fair value
of the award, and is recognized as an expense over the requisite employee
service period (generally the vesting period of the grant). Deferred stock
compensation represents shares issued to employees that will be vested over a
certain service period. Deferred stock compensation is included in additional
paid-in capital as an offset to equity.




6




EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007







NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Stock-based
compensation
(continued)




The
Company measures compensation expense for its non-employee stock-based
compensation under the Financial Accounting Standards Board (FASB) Emerging
Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity Instruments
that are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”. The fair value of the option issued is used to
measure the transaction, as this is more reliable than the fair value of the
services received. Fair value is measured as the value of the Company’s common
stock on the date that the commitment for performance by the counterparty has
been reached or the counterparty’s performance is complete.




Earnings
per share




Basic
earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
There are no common stock equivalents available for dilution purposes as of June
30, 2008.




New accounting
pronouncements




In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities- including an Amendment of FASB
Statement No. 115 (“SFAS 159”), which allows an entity to choose to measure
certain financial instruments and liabilities at fair value. Subsequent
measurements for the financial instruments and liabilities an entity elects to
fair value will be recognized in earnings. SFAS 159 also establishes additional
disclosure requirements. SFAS 159 is effective for us beginning
January 1, 2008. We are currently valuating the potential impact of
the adoption of SFAS 159 on our consolidated financial position, results of
operations or cash flows.




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (“SFAS 141R”). SFAS 141R establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired.
SFAS 141R also establishes disclosure requirements to enable the evaluation
of the nature and financial effects of the business combination. This statement
is effective for us beginning January 1, 2009. We are currently evaluating
the potential impact of the adoption of SFAS 141R on our consolidated
financial position, results of operations or cash flows.




7





EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007








NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of Accounting Research Bulletin
No. 51 (“SFAS 160”). SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parent’s ownership
interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated. SFAS 160 also establishes disclosure
requirements that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. This statement is
effective for us beginning January 1, 2009. We are currently evaluating the
potential impact of the adoption of SFAS 160 on our consolidated financial
position, results of operations or cash flows.







In March
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about
Derivative Instruments and Hedging Activities - An Amendment of SFAS
No. 133” (“SFAS 161”). SFAS 161 seeks to improve financial reporting for
derivative instruments and hedging activities by requiring enhanced disclosures
regarding the impact on financial position, financial performance, and cash
flows. To achieve this increased transparency, SFAS 161 requires (1) the
disclosure of the fair value of derivative instruments and gains and losses in a
tabular format; (2) the disclosure of derivative features that are credit
risk-related; and (3) cross-referencing within the footnotes. SFAS 161 is
effective on January 1, 2009. The Company is in the process of evaluating
the new disclosure requirements under SFAS 161.





NOTE
3. PROPERTY AND EQUIPMENT, NET





Property
and equipment at June 30, 2008 and December 31, 2007 consist of the
following:




June
      30, 2008
              
              
              December
      31, 2007Machinery
      & Equipment
              $
              872,359
              
              
              $
              820,278Vehicles
              
              381,077
              
              
              
              358,326Landfills
              
              2,116,838
              
              
              
              1,990,459Subtotal
              
              3,370,274
              
              
              
              3,169,063Less:
      Accumulated Depreciation
              
              (939,150
              )
              
              
              (768,270
              )Construction
      in progress
              
              3,664,458
              
              
              
              3,307,595Total
      Property and equipment, net
              $
              6,095,582
              
              
              $
              5,708,388




Depreciation
expense for the six months ended June 30, 2008 and 2007 was $118,642 and
$122,125, respectively.




8





EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007








NOTE
3. PROPERTY AND EQUIPMENT, NET (Continued)





Construction
in progress represents direct costs of construction or acquisition and design
fees incurred for the Company’s new operating site and equipments.
Capitalization of these costs ceases and the construction in progress is
transferred to plant and equipment when substantially all the activities
necessary to prepare the assets for their intended use are completed. No
depreciation is provided until it is completed and ready for its intended
use.




NOTE
4.   INVENTORY





Inventory
as of June 30, 2008 and December 31, 2007consists of the following:




June
      30, 2008
              
              
              December
      31, 2007Materials
              
              $
              735
              
              
              $
              7,009Supplies
              
              
              4,658
              
              
              
              316Total
              
              $
              5,393
              
              
              $
              7,325




No
allowance for inventory was made for the six months ended June 30, 2008 and
2007.




NOTE
5. RELATED PARTY TRANSACTIONS




As of
June 30, 2008, the Company has loans receivable in the amount of $26,405 from
Mr. Shibin Jiang and Mr. Yun Wang, who are both shareholders of the Company. The
loans are unsecured and interest free. The management of the Company expects the
entire amount of this outstanding loan will be repaid within one
year.




NOTE
6. MAJOR CUSTOMER





The
Company has an exclusive 17-year agreement with Harbin Municipal Urban
Administrative Bureau (“HMUAB”) to handle approximately one-third of the city’s
solid waste disposal. The revenue from HMUAB alone accounted for 100% of the
gross revenues for the six months ended June 30, 2008. At June 30, 2008, the
entire balance of accounts receivable was due from HMUAB.




9


EASTERN
ENVIRONMENT SOLUTIONS,
CORP
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007








NOTE
7. BANK LOAN PAYABLE





On
November 18, 2004, the Company received a long-term loan from Industrial and
Commercial Bank of China, Harbin Branch in the amount of $4,832,960, secured by
the Company’s building. The loan is for a 5-year term, maturing November 15,
2009. Pursuant to the loan agreement, the interest rate for the first year was
set at 7.605%. Starting from the second year and thereafter, the rates become
adjustable based on the change of the official rates at the time. In addition to
paying the quarterly interest, the Company is also required to make $241,648
pre-determined principal repayments every quarter.




Upon the
suspension of the Company’s landfill operation as discussed in the following
Note 11, the Company renegotiated with the Bank for a temporarily reduced
quarterly principle repayments in the amount of RMB 200,000 each quarter,
starting in the third quarter of 2007. Once the Company resumes the landfill
operation, it will be required to make the regular quarterly repayments as
agreed.For the six months
ended June 30, 2008, principal payments in the amount of $56,664 were
made.




As of
June 30, 2008 and December 31, 2007, the loan payable consists of the
following:




June
      30, 2008
              
              
              December
      31, 2007Loan
      payable
              
              $
              2,319,821
              
              
              $
              2,368,151Less:
      current portion
              
              
              1,836,525
              
              
              
              1,401,559Loan
      payable - non-current portion
              
              $
              483,296
              
              
              $
              966,592




The
non-current portion of the loan payable will be due in 2009.




NOTE
8.  INCOME TAXES




United States Tax




EESC is
subject to United States of America tax law. No provision for income taxes in
the United States or elsewhere has been made as EESC had no taxable income
subject to U.S. taxes for the six month ended June 30, 2008.




PRC
Tax




Two of
the Company’s operating subsidiaries, Harbin Yifeng and Yifeng Zhiye are both
registered and operate in Harbin, China. They are governed by the Income Tax Law
of the People’s Republic of China concerning the private-run enterprises, which
are normally subject to tax at a statutory rate of 25% and were, until January
2008, subject to tax at a statutory rate of 33% (30% state income tax plus 3%
local income tax) on its taxable income.




10





EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007






NOTE
8.  INCOME TAXES (Continued)




PRC
Tax (continued)




Upon the
acquisition of Harbin Yifeng by AEEC, Harbin Yifeng has applied to be treated as
a Wholly Foreign Owned Enterprise (“WFOE”). In accordance with the relevant
income tax laws, the profits of WFOEs are fully exempted from income tax for two
years, from the first profit making calendar year of operations after offset of
accumulated taxable losses, followed by a 50% income tax reduction for the
immediate next three calendar years (“tax holiday”).




On March
16, 2007, National People's Congress passed a new corporate income tax law,
which became effective on January 1, 2008. This new corporate income tax unifies
the corporate income tax rate, cost deductions and tax incentive policies for
both domestic and foreign-invested enterprises in China.  According to the
new corporate income tax law, the applicable corporate income tax rate of our
Chinese subsidiaries will incrementally decrease to 25% over a five-year
period.




Harbin
Yifeng was granted the status of WFOE in the fourth quarter of 2006 upon the
reserve merger with USIP with a choice of starting the tax holiday immediately
or the next calendar year. Harbin Yifeng elected for this tax holiday to
commence in January 2007. Its two-year tax exemption period will be from January
1, 2007 to December 31, 2008 and the three-year income tax reduction period will
be from January 1, 2009 to December 31, 2011.




On the
other hand, Yifeng Zhiye, Harbin Yifeng’s wholly-owned subsidiary, is exempted
from both income tax and value-added tax for three years starting August
2004 because Zhiye hires retired veterans and the government grants tax
incentives for such employers.




On March
16, 2007, National People's Congress passed a new corporate income tax law (the
“New CIT Law”), which became effective on January 1, 2008. This new corporate
income tax unifies the corporate income tax rate, cost deductions and tax
incentive policies for both domestic and foreign-invested enterprises in China.
 Under the new CIT law, the corporate income tax rate applicable to all
Companies will be 25%, replacing the current applicable tax rate of 33%.
However, companies previously being approved for any income holiday will not be
subject to the new enacted tax rate until the holiday runs out. Accordingly, the
applicable corporate income tax rate of our Chinese subsidiaries will
incrementally decrease to 12.5% (50% of new applicable rate of 25%) for the
three-year income tax reduction period.




NOTE
9.   STOCKHOLDERS' EQUITY





On
January 10, 2007, the Company issued 650,000 shares of its common stock for
consulting services provided to the Company for $19,500, representing the fair
value of the shares at the date of grant.




11




EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007








NOTE
9.   STOCKHOLDERS' EQUITY (Continued)





In the
second and third quarter of 2007, the Company issued a total of 2,000,000 shares
of its common stock as full compensation to 22 employees. An amount of $988,000
represents the aggregate fair value of the shares.




In the
second quarter of 2008, the Company issued a total of 2,950,000 shares of
its common stock as full compensation to consultants and 8 employees. An
amount of $1,327,500 represents the aggregate fair value of the
shares.




The
Company has 14,970,186 shares of common stock issued and outstanding as of June
30, 2008.





NOTE
10.   STOCK-BASED COMPENSATION




In May
2007, the Board of Directors of the Company adopted and approved the 2007
Employee Incentive Stock Option Plan (the “Plan”), which authorized the issuance
of up to 2,000,000 shares of common stock under the Plan. Subject to the terms
and provisions of the Plan, the Board of Directors, at any time and from time to
time, may grant shares of stock to eligible persons in such amounts and upon
such terms and conditions as the Board of Directors shall
determine.




The
Company granted a total of 2,000,000 shares of its common stock to twenty two
employees in 2007 under the Plan with a weighted average grant price of $0.49
and average vesting period of 3 years.




The
Company granted a total of 2,950,000 shares of its common stock to consultants
and seven employees in 2008 under the Plan with a weighted average grant price
of $0.45 and average vesting period of 10 years.




A summary
of the status of the Company’s deferred stock compensation under the Plan as of
June 30, 2008, and changes for the six month ended June 30, 2008, is presented
below:




Deferred
      stock compensation as of January 1, 2008
              
              $
              876,486Deferred
      stock compensation granted
              
              
              1,327,500Compensation
      expenses debited to statement of operations
              
              
              -with
      a credit to additional paid-in capital
              
              
              (131,542
              )Deferred
      stock compensation as of March 31, 2008
              
              $
              2,072,444




12





EASTERN
ENVIRONMENT SOLUTIONS, CORP


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
SIX MONTHS ENDED JUNE 30, 2008 AND 2007








NOTE
11. COMMITMENTS AND CONTINGENCIES




On June
13, 2007, the company filed a Form 8-K with SEC, announced that in accordance
with the PRC National Environment Protection Bureau’s request in relation to
landfills and adjustments to their peripheral inhabitants’ well-being, the
Harbin municipal government city administrative bureau is carrying out certain
adjustments to the original landfill plans of our subsidiary, Harbin Yifeng
Eco-environment Co. Ltd. (“Harbin Yifeng”).  Such adjustments will result
in the relocation of some peripheral inhabitants of the landfill and its waste
water disposal plant. The costs of such adjustments will be borne by the Harbin
municipal government city administrative bureau.  These measures will
disrupt Harbin Yifeng’s normal operations.  After careful consideration,
our Board of Directors has decided to temporarily suspend Harbin Yifeng’s
operations effective June 13, 2007, for an estimated period of 9 months (the
“Suspension Period”) while these measures are being carried out. However, Harbin
Yifeng will still be collecting the minimum fixed fees for the Suspension Period
as per the “Special Permission Operation Rights Contract”, which Harbin Yifeng
had signed with the Harbin municipal government city administrative bureau on
September 1, 2003. The bureau will compensate and pay Harbin Yifeng a sum
equivalent to the fee for disposing 800 tons of waste per day during the
Suspension Period. As of June 30, 2008, Harbin Yifeng has not yet resumed the
landfill operations.




ITEM
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
      OPERATIONS





Forward-Looking
Statements: No Assurances Intended




In
addition to historical information, this Quarterly Report contains
forward-looking statements, which are generally identifiable by use of the words
“believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,”
“projects,” or similar expressions. These forward-looking statements represent
Management’s belief as to the future of Eastern Environment Solutions,
Corp.  Whether those beliefs become reality will depend on many
factors that are not under Management’s control.  Many risks and
uncertainties exist that could cause actual results to differ materially from
those reflected in these forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in the
section entitled “Management’s Discussion and Analysis—Risk Factors That May
Affect Future Results.” Readers are cautioned not to place undue reliance on
these forward-looking statements. We undertake no obligation to revise or
publicly release the results of any revision to these forward-looking
statements.







Results
of Operations




The
growth of our business was delayed in June 2007, when the Harbin Municipal Urban
Administrative Bureau (“HMUAB”), which is our only customer, was mandated by the
PRC National Environment Protection Bureau to carry out certain modifications to
the development of its landfill for the protection of local
residents.  The modifications involve the relocation of some of the
neighboring residents, as well as the relocation of our wastewater disposal
plant.  The cost of the modifications is being born entirely by the
HMUAB.  Nevertheless, while the modifications are ongoing, we have
suspended our operations at the Landfill, which are currently our only source of
revenue.  We expect to recommence operations at the Landfill in the
near future, although the date will depend on the efficiency with which HMUAB
completes the modifications.





In
accordance with the terms of our contract, the HMUAB is required to paying us,
during the period of suspended operations, a sum equivalent to the fee for
processing 800 tons of waste per day, which is approximately 66% of the
Landfill’s capacity.  As a result, our revenue from waste processing
during the first six months of 2008 fell by 26% from $1,165,505 in the six
months ended June 30, 2008 to $866,285, while our revenue for the quarter ended
June 30, 2008 fell 24% from $577,470 in the three months ended June 30, 2007 to
$439,462. We expect that as soon as we recommence operations at the Landfill, we
will return to our earlier revenue level for waste processing
operations.  From that baseline, we will endeavor to expand our waste
processing operations by (a) pursuing strategic acquisitions, (b) developing
additional landfills, and (c) implementing recycling technologies that will
provide additional revenue sources, such as the sale of methane to the electric
power industry.  Given the overwhelming growth of China’s cities, we
expect there to be plentiful market opportunities.





Although
our revenues in the six months ended June 30, 2008 were achieved without any
production on our part, we still realized $124,143 in cost of goods
sold.  These costs are attributable to the fact that we have retained
our core employees on salary, even as we had no revenue producing work for them
to perform.  Management determined that eliminating the Company’s
employee base during the landfill suspension would make it very difficult to
revive that operation when the suspension ends.




13




Our
selling, general and administrative expenses increased by 51% from the first six
months of 2007 ($154,339) to the first six months of 2008
($232,574).  In the three months ended June 30, 2008 the increase was
21% over the three months ended June 30, 2007.  The increases are
entirely attributable to the expensing of stock compensation that we gave to
employees and consultants as incentives for future services.  At June
30, 2008 there remained $2,072,444 in deferred stock compensation expense on our
books, which will be amortized as expenses over the expected terms of service of
the employees and consultants who received the shares.





The Company’s revenue less expenses
produced a pre-tax income from continuing operations of $516,622 in the six
months ended June 30, 2008, compared to a pre-tax income from continuing
operations of $877,049 in the six months ended June 30, 2007.  Our net
pre-tax income from continuing operations during the three months ended June 30,
2008 was $279,650, compared to $413,389 in the same period of
2007.  As a result of Chinese tax laws that reward foreign investment
in China, Yifeng is entitled to exemption from income taxes during 2007 and
2008, followed by a 50% abatement of taxes from 2009 to 2011.  Our net
income for the first half and second quarter of 2008, therefore, was identical
to our pre-tax income, representing $0.04 per share for the six month period and
$0.02 per share for the three month period ended June 30, 2008.  In
the corresponding periods of 2007 we realized net income from continuing
operations that equaled $.09 per share for the six months and $.04 per share for
the three months ended June 30, 2007.





Our business operates entirely in
Chinese Renminbi, but we report our results in our SEC filings in U.S.
Dollars.  The conversion of our accounts from RMB to Dollars results
in translation adjustments.  While our net income is added to the
retained earnings on our balance sheet; the translation adjustments are added to
a line item on our balance sheet labeled “accumulated other comprehensive
income,” since it is more reflective of changes in the relative values of U.S.
and Chinese currencies than of the success of our business.  During
the six months ended June 30, 2008, the effect of converting our financial
results to Dollars was to add $779,647 to our accumulated other comprehensive
income.





Liquidity
and Capital Resources




To date,
we have financed our operation and met capital expenditure requirements
primarily through bank loans and operating income. On November 18, 2004, the
Company received a long-term loan from Industrial and Commercial Bank of China,
Harbin Branch in the amount of $4,832,960, secured by the Company’s building.
The loan is for a 5-year term, maturing November 15, 2009. Pursuant to the loan
agreement, the interest rate for the first year was set at 7.605%. Starting from
the second year and thereafter, the rates become adjustable based on the change
of the official rates at the time. In addition to paying the quarterly interest,
the Company is also required to make $241,648 pre-determined principal
repayments every quarter. When our operations at the Landfill were suspended,
the Bank agreed to reduce our debt service requirements, with the result that in
the six months ended June 30, 2008, we made principal payments of only
$56,664.  That abatement will end when we recommence operations at the
Landfill.  The entire amount of the loan is due to be paid by the end
of 2009.




14





Our working capital at June 30, 2008
totaled $1,837,398, an increase of $319,845 from our working capital at December
31, 2007.  The increase in working capital lagged our net income for
the six month period, as we applied $356,863 of net income to our ongoing
construction efforts at the Harbin landfill.  The largest component of
the increase in our working capital consisted of $756,605 in additional accounts
receivable.  The increase results from the fact that we are dependent
on one source of revenue – compensation payments made by the HMUAB to offset our
loss of revenue during the suspension of Landfill operations.  While
the landfill is closed, HMUAB has made few payments, and none during the
six  months ended June 30, 2008.    Nevertheless
we do not consider the receivable to be at risk, and have made no provision for
doubtful accounts.





After
property and equipment – primarily our investment in the Landfill – our largest
asset category at June 30, 2008 was “advances to suppliers,” totaling
$3,748,082, an increase of $237,476 since December 31, 2007.  These
amounts primarily represent payments to contractors for work on Phase I and
Phase II of the Landfill.  The asset will be reclassified as “property
and equipment” when the related construction projects are
completed.




Our operating subsidiary, Yifeng, has
sufficient liquidity to fund its near-term operations and to fund the working
capital demands of a modest expansion of its operations.  In order to
complete Phase II and Phase III of the Landfill project within the next six
years, it will be necessary that we obtain additional debt or equity
financing.  In addition, if we are to achieve critical mass in our
industry by developing new landfills, we will require substantial infusions of
capital.  We do not know at this time whether we will be able to
secure such financing, or on what terms it might be available.





Based upon the financial resources
available to Yifeng, management believes that it has sufficient capital and
liquidity to sustain operations for the foreseeable future.





Off-Balance
Sheet Arrangements





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 or results of
operations.





Risk Factors That May Affect Future
Results




Investing in our common stock involves
a high degree of risk. You should carefully consider the risks described below
together with all of the other information contained in this Report, including
the financial statements and the related notes, before deciding whether to
purchase any shares of our common stock. If any of the following risks occurs,
our business, financial condition or operating results could materially suffer.
In that event, the trading price of our common stock could decline and you may
lose all or part of your investment.




15





We rely on one relationship for all of
our current revenues.




All of our revenues in 2007 and 2008
have arisen from our relationship with the Government of Harbin, specifically
from one landfill operation.  We intend that in the future we will
expand our operations to develop other revenue-producing relationships, but we
have no immediate prospects for such plan.  If our relationship with
the City of Harbin becomes disrupted for any reason before we develop other
sources of revenue, we will have no source of revenue, and our business would
fail.





Our business and growth will suffer if
we are unable to hire and retain key personnel that are in high
demand.




Our future success depends on our
ability to attract and retain highly skilled engineers, technical and marketing
personnel. Qualified individuals are in high demand in China, and there are
insufficient experienced personnel to fill the demand.  Therefore we
may not be able to successfully attract or retain the personnel we need to
succeed.





We may have difficulty establishing
adequate management and financial controls in China and in complying with U.S.
corporate governance and accounting requirements.




The People’s Republic of China has only
recently begun to adopt the management and financial reporting concepts and
practices that investors in the United States are familiar with.  We
may have difficulty in hiring and retaining employees in China who have the
experience necessary to implement the kind of management and financial controls
that are expected of a United States public company.  If we cannot
establish such controls, we may experience difficulty in collecting financial
data and preparing financial statements, books of account and corporate records
and instituting business practices that meet U.S. standards.





Capital outflow policies in China
may hamper our ability to pay dividends to shareholders in the United
States.




The People’s Republic of China has
adopted currency and capital transfer regulations. These regulations require
that we comply with complex regulations for the movement of capital. Although
Chinese governmental policies were introduced in 1996 to allow the
convertibility of RMB into foreign currency for current account items,
conversion of RMB into foreign exchange for capital items, such as foreign
direct investment, loans or securities, requires the approval of the State
Administration of Foreign Exchange. We may be unable to obtain all of the
required conversion approvals for our operations, and Chinese regulatory
authorities may impose greater restrictions on the convertibility of the RMB in
the future. Because all of our current revenues and most of our future revenues
will be in RMB, any inability to obtain the requisite approvals or any future
restrictions on currency exchanges will limit our ability to fund our business
activities outside China or to pay dividends to our shareholders.




16





We have limited business insurance
coverage.




The insurance industry in China is
still at an early stage of development. Insurance companies in China offer
limited business insurance products, and do not, to our knowledge, offer
business liability insurance. As a result, we do not have any business liability
insurance coverage for our operations. Moreover, while business disruption
insurance is available, we have determined that the risks of disruption and cost
of the insurance are such that we do not require it at this time. Any business
disruption, litigation or natural disaster might result in substantial costs and
diversion of our resources.





Environmental compliance and
remediation could result in substantially increased capital requirements and
operating costs.




Our
operating subsidiary, Yifeng, is subject to numerous Chinese provincial and
local laws and regulations relating to the protection of the environment. These
laws continue to evolve and are becoming increasingly stringent. The ultimate
impact of complying with such laws and regulations is not always clearly known
or determinable because regulations under some of these laws have not yet been
promulgated or are undergoing revision. Our consolidated business and operating
results could be materially and adversely affected if Yifeng were required to
increase expenditures to comply with any new environmental
regulations affecting its operations.




We may be required to raise
additional financing by issuing new securities with terms or rights superior to
those of our shares of common stock, which could adversely affect the market
price of our shares of common stock.




We will
require additional financing to fund future operations and to expand into new
markets. We may not be able to obtain financing on favorable terms, if at all.
If we raise additional funds by issuing equity securities, the percentage
ownership of our current shareholders will be reduced, and the holders of the
new equity securities may have rights superior to those of the holders of shares
of common stock, which could adversely affect the market price and the voting
power of shares of our common stock. If we raise additional funds by issuing
debt securities, the holders of these debt securities would similarly have some
rights senior to those of the holders of shares of common stock, and the terms
of these debt securities could impose restrictions on operations and create a
significant interest expense for us.




We do not intend to pay any cash
dividends on our common stock in the foreseeable future and, therefore, any
return on your investment in our common stock must come from increases in the
fair market value and trading price of our common stock.






We have
never paid a cash dividend on our common stock.  We do not intend to
pay cash dividends on our common stock in the foreseeable future and, therefore,
any return on your investment in our common stock must come from increases in
the fair market value and trading price of our common stock.






All
of our assets are located in China and changes in the political and economic
policies of the PRC government could have a significant impact upon what
business we may be able to conduct in the PRC and accordingly on the results of
our operations and financial condition.




17




Our
business operations may be adversely affected by the current and future
political environment in the PRC. The Chinese government exerts substantial
influence and control over the manner in which we must conduct our business
activities. Our ability to operate in China may be adversely affected by changes
in Chinese laws and regulations, including those relating to taxation,
environmental regulations, land use rights, property and other matters. Under
the current government leadership, the government of the PRC has been pursuing
economic reform policies that encourage private economic activity and greater
economic decentralization. There is no assurance, however, that the government
of the PRC will continue to pursue these policies, or that it will not
significantly alter these policies from time to time without
notice.




Our bank deposits are not
insured.




There is no insurance program in the
PRC that protects bank deposits, in the way that bank deposits in the U.S. are
given limited protection by the FDIC.  If the bank in which we
maintain our cash assets were to fail, it is likely that we would lose most or
all of our deposits.




Our
operations are subject to PRC laws and regulations that are sometimes vague and
uncertain. Any changes in such PRC laws and regulations, or the interpretations
thereof, may have a material and adverse effect on our business.




Our
principal operating subsidiary, Yifeng, is considered a foreign invested
enterprise under PRC laws, and as a result is required to comply with PRC laws
and regulations. Unlike the common law system prevalent in the United States,
decided legal cases have little value as precedent in China. There are
substantial uncertainties regarding the interpretation and application of PRC
laws and regulations, including but not limited to the laws and regulations
governing our business and the enforcement and performance of our arrangements
with customers in the event of the imposition of statutory liens, death,
bankruptcy or criminal proceedings. The Chinese government has been developing a
comprehensive system of commercial laws. However, because these laws and
regulations are relatively new, and because of the limited volume of published
cases and judicial interpretation and their lack of force as precedents,
interpretation and enforcement of these laws and regulations involve significant
uncertainties. New laws and regulations that affect existing and proposed future
businesses may also be applied retroactively. We cannot predict what effect the
interpretation of existing or new PRC laws or regulations may have on our
businesses. If the relevant authorities find us in violation of PRC laws or
regulations, they would have broad discretion in dealing with such a
violation.




The
scope of our business license in China is limited, and we may not expand or
continue our business without government approval and renewal,
respectively.




Our
principal operating subsidiary, Yifeng, is a wholly foreign-owned enterprise
organized under PRC law, commonly known as a WFOE. A WFOE can only conduct
business within its approved business scope, which ultimately appears on its
business license. In order for us to expand our business beyond the scope of our
license, we will be required to enter into a negotiation with the authorities
for the approval to expand the scope of our business. We cannot assure you that
Yifeng will be able to obtain the necessary government approval for any change
or expansion of our business scope.




18




We
rely principally on dividends and other distributions on equity paid by our
operating subsidiary to fund our cash and financing requirements, but such
dividends and other distributions are subject to restrictions under
PRC law. Limitations on the ability of our operating subsidiary to pay
dividends or other distributions to us could have a material adverse effect on
our ability to grow, make investments or acquisitions, pay dividends to you, and
otherwise fund and conduct our business.


We are a
holding company and conduct substantially all of our business through our
operating subsidiary, Yifeng, which is a limited liability company established
in China. We rely on dividends paid by Yifeng for our cash needs, including the
funds necessary to pay dividends and other cash distributions to our
shareholders, to service any debt we may incur and to pay our operating
expenses. The payment of dividends by entities organized in China is subject to
Yifeng to us only out of accumulated profits as determined in accordance with
PRC accounting standards and regulations. Yifeng is also required to set aside
at least 10% of its after-tax profit based on PRC accounting standards each year
to its general reserves until the cumulative amount of such reserves reaches 50%
of its registered capital. These reserves are not distributable as cash
dividends. In addition, Yifeng is required to allocate a portion of its
after-tax profit to its enterprise expansion fund and the staff welfare and
bonus fund at the discretion of its board of directors. Moreover, if Yifeng
incurs debt on its own behalf in the future, the instruments governing the debt
may restrict its ability to pay dividends or make other distributions to us. Any
limitations on the ability of Yifeng to pay dividends or other distributions to
us could have a material adverse effect on our ability to grow, make investments
or acquisitions, pay dividends to you, and otherwise fund or conduct our
business.




Our
business development, future performance, strategic plans, and other objectives
would be hindered if we lost the services of our Chairman.




Yun Wang
is the Chief Executive Officer of Eastern Environment and of our operating
subsidiary, Yifeng.  Mr. Wang is responsible for strategizing not only
our business plan but also the means of financing it.  If Mr. Wang
were to leave Eastern Environment or become unable to fulfill his
responsibilities, our business would be imperiled.  At the very least,
there would be a delay in the development of Eastern Environment until a
suitable replacement for Mr. Wang could be retained.




ITEM
      3.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
  Not
applicable.




19




ITEM
      4.
              CONTROLS
      AND PROCEDURES





(a)           Evaluation of disclosure controls and
procedures.




The term “disclosure controls and
procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files under the Securities
Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and
reported within required time periods. The Company’s management, with the
participation of the Chief Executive Officer and the Chief Financial Officer,
has evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by this report (the “Evaluation
Date”). Based on that evaluation, the Company’s Chief Executive Officer and
Chief Financial Officer have concluded that, as of the Evaluation Date, such
controls and procedures were effective.





(b)           Changes in internal
controls.




The term “internal control over
financial reporting” (defined in SEC Rule 13a-15(f)) refers to the process of a
company that is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. The Company’s management, with the participation of the Chief
Executive Officer and Chief Financial Officer, has evaluated any changes in the
Company’s internal control over financial reporting that occurred during the
fiscal quarter covered by this annual report, and they have concluded that there
was no change to the Company’s internal control over financial reporting that
has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.




PART
II   -   OTHER INFORMATION




Item
      6.
            Exhibits31.1
            Rule
      13a-14(a) Certification – CEO31.2
            Rule
      13a-14(a) Certification - CFO32
            Rule
      13a-14(b) Certifications





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.





EASTERN
      ENVIRONMENT SOLUTIONS, CORP.Date:
      August 11, 2008
            
            By:/s/Yun
      WangYun
      Wang, Chief Executive Officer







20