U. S. Securities and Exchange
Commission





Washington,
D.C. 20549




______________






FORM
10-Q




______________






[X]
      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 No.
000-52825




4TH
Grade Films, Inc.


(Exact
name of the issuer as specified in its charter)








Utah
            20-8980078(State
      or Other Jurisdiction of
            (I.R.S.
      Employer I.D. No.)incorporation
      or organization)








1338
South Foothill Drive #163


Salt Lake
City, UT 84108


(Address
of Principal Executive Offices)





(801)
649-3519


(Issuer’s
Telephone Number)





Check
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 (the “Exchange Act”) 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 definition 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   [   ]
            Smaller
      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]


1


APPLICABLE
ONLY TO ISSUER INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS





Indicate
by check mark whether the Registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act subsequent
to the distribution of securities under a plan confirmed by a
court.  Yes [  ] No [  ]





Not
applicable.





Indicate
the number of shares outstanding of each of the Registrant’s classes of common
equity, as of the latest practicable date.





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





Class
            
            Outstanding
      as of May 14, 2010Common
      Capital Voting Stock, $0.01 par value per share
            
            2,345,000
      shares





FORWARD
LOOKING STATEMENTS





This
Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial
Statements contains forward-looking statements that discuss, among other things,
future expectations and projections regarding future developments, operations
and financial conditions. All forward-looking statements are based on
management’s existing beliefs about present and future events outside of
management’s control and on assumptions that may prove to be incorrect. If any
underlying assumptions prove incorrect, our actual results may vary materially
from those anticipated, estimated, projected or intended.





PART
I - FINANCIAL STATEMENTS





Item
1. Financial Statements.





March 31,
2010


C
O N T E N T S








Condensed
      Balance Sheets
            3Condensed
      Statements of Operations
            4Condensed
      Statements of Cash Flows
            5Notes to
      Condensed Financial Statements
            6









2





4th
Grade Films, Inc.


(A
Development Stage Company)


Condensed
Balance Sheets


As
of March 31, 2010 and June 30, 2009





3/31/2010
              
              
              6/30/2009[unaudited]
              
              
              [audited]AssetsCurrent
      AssetsCash
              
              $
              930
              
              
              $
              1,683Prepaid
      Expenses
              
              
              2,500
              
              
              
              -Total
      current assets
              
              
              3,430
              
              
              
              1,683Film
      Costs
              
              
              24,825
              
              
              
              100,149Total
      Assets
              
              $
              28,255
              
              
              $
              101,832LiabilitiesCurrent
      LiabilitiesAccounts
      Payable
              
              $
              13,648
              
              
              $
              11,307Accrued
      Liabilities - related party
              
              
              2,250
              
              
              
              1,575Income
      Taxes Payable
              
              
              -
              
              
              
              100Total
      Current Liabilities
              
              
              15,898
              
              
              
              12,982Long
      Term LiabilitiesNote
      Payable - Shareholder
              
              
              22,159
              
              
              
              6,865Total
      Long Term Liabilities
              
              
              22,159
              
              
              
              6,865Total
      Liabilities
              
              
              38,058
              
              
              
              19,847Stockholders'
      Equity (Deficit)Preferred
      Stock - 5,000,000 shares
              
              
              -
              
              
              
              -authorized
      at $0.01 par; 0 sharesissued
      and outstanding (Series  AConvertible)Common
      Stock - 50,000,000 sharesauthorized
      at $0.01 par; 2,345,000 and2,345,000
      shares issued and outstanding, respectively
              
              
              23,450
              
              
              
              23,450Paid-in
      Capital
              
              
              123,762
              
              
              
              123,762Deficit
      Accumulated during the development stage
              
              
              (157,014
              )
              
              
              (65,227
              )Total
      Stockholders' Equity
              
              
              (9,803
              )
              
              
              81,985Total
      Liabilities and Stockholders' Equity (Deficit)
              
              $
              28,255
              
              
              $
              101,832





See
accompanying notes to financial statements.


3


4th
Grade Films, Inc.


(A
Development Stage Company)


Condensed
Statements of Operations


For
the Three and Nine Months Ended March 31, 2010 and 2009, and


For
the Period from Inception (April 25, 2007) through March 31, 2010


(Unaudited)








For
      the
              
              
              For
      the
              
              
              For
      the
              
              
              For
      theThree
      Months
              
              
              Three
      Months
              
              
              Nine
      Months
              
              
              Nine
      Months
              
              
              Since
      InceptionEnded
              
              
              Ended
              
              
              Ended
              
              
              Ended
              
              
              through3/31/2010
              
              
              3/31/2009
              
              
              3/31/2010
              
              
              3/31/2009
              
              
              3/31/2010Revenues
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Operating
      ExpensesProfessional
      Expenses
              
              
              1,822
              
              
              
              5,561
              
              
              
              10,556
              
              
              
              23,525
              
              
              
              60,000SG&A
              
              
              2,100
              
              
              
              1,108
              
              
              
              4,578
              
              
              
              2,615
              
              
              
              18,196Impairment
      of unamortized film development costs
              
              
              -
              
              
              
              -
              
              
              
              75,323
              
              
              
              -
              
              
              
              75,323Total
      Operating Expenses
              
              
              3,922
              
              
              
              6,669
              
              
              
              90,457
              
              
              
              26,140
              
              
              
              153,519Net
      Income/(Loss) from Operations
              
              
              (3,922
              )
              
              
              (6,669
              )
              
              
              (90,457
              )
              
              
              (26,140
              )
              
              
              (153,519
              )Interest
      Income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Interest
      Expense
              
              
              (533
              )
              
              
              (161
              )
              
              
              (1,331
              )
              
              
              (750
              )
              
              
              (3,196
              )Net
      Loss Before Income Taxes
              
              
              (4,455
              )
              
              
              (6,830
              )
              
              
              (91,788
              )
              
              
              (26,890
              )
              
              
              (156,715
              )Provision
      for Income Taxes
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              300Net
      Loss
              
              $
              (4,455
              )
              
              $
              (6,830
              )
              
              $
              (91,788
              )
              
              $
              (26,890
              )
              
              $
              (157,015
              )Loss
      Per Share
              
              $
              (0.01
              )
              
              $
              (0.01
              )
              
              $
              (0.04
              )
              
              $
              (0.01
              )
              
              $
              (0.09
              )Weighted
      Average Shares Outstanding
              
              
              2,345,000
              
              
              
              2,345,000
              
              
              
              2,345,000
              
              
              
              2,278,212
              
              
              
              1,714,743





See
accompanying notes to financial statements.


4


4th
Grade Films, Inc.


(A
Development Stage Company)


Condensed
Statements of Cash Flows


For
the Three and Nine Months Ended March 31, 2010 and 2009, and


For
the Period from Inception through March 31, 2010


(Unaudited)




For
      the
              
              
              For
      theNine
      Months
              
              
              Nine
      Months
              
              
              Since
      InceptionEnded
              
              
              Ended
              
              
              through3/31/2010
              
              
              3/31/2009
              
              
              3/31/2010Net
      Loss
              
              $
              (91,788
              )
              
              $
              (26,890
              )
              
              $
              (157,015
              )Adjustments
      to reconcile net loss to net cashProvided/(Used)
      by Operating Activities:Impairment
      of capitalized film development costs
              
              $
              75,323
              
              
              $
              -
              
              
              $
              75,323Additions
      to Capitalized Film Costs
              
              
              -
              
              
              
              -
              
              
              
              (100,149
              )(Increase)/Decrease
      in Prepaid Expenses
              
              
              (2,500
              )
              
              
              -
              
              
              
              (2,500
              )Increase/(Decrease)
      in Accounts Payable
              
              
              2,343
              
              
              
              7,817
              
              
              
              13,649Increase/(Decrease)
      in Accrued Liabilities - related party
              
              
              675
              
              
              
              675
              
              
              
              2,250Increase/(Decrease)
      in Income Taxes Payable
              
              
              (100
              )
              
              
              (100
              )
              
              
              -Accrued
      Interest included in Notes Payable Balance
              
              
              1,330
              
              
              
              750
              
              
              
              3,196Issued
      Common Stock in Exchange for Payment of Expenses
              
              
              -
              
              
              
              -
              
              
              
              5,212Net
      Cash Used for Operating Activities
              
              
              (14,717
              )
              
              
              (17,748
              )
              
              
              (160,034
              )Cash From
      Financing ActivitiesProceeds
      from Loan from Shareholder
              
              
              13,964
              
              
              
              -
              
              
              
              38,964Payments
      on Loan from Shareholder
              
              
              -
              
              
              
              (20,000
              )
              
              
              (20,000
              )Issued
      Common Stock for Cash
              
              
              -
              
              
              
              -
              
              
              
              52,000Issued
      Preferred Stock for Cash
              
              
              -
              
              
              
              -
              
              
              
              90,000Net
      Cash From Financing Activities
              
              
              13,964
              
              
              
              (20,000
              )
              
              
              160,964Net
      Increase in cash
              
              
              (753
              )
              
              
              (37,748
              )
              
              
              930Beginning
      Cash Balance
              
              
              1,683
              
              
              
              40,389
              
              
              
              -Ending
      Cash Balance
              
              $
              930
              
              
              $
              2,641
              
              
              $
              930Supplemental
      Schedule of Cash Flow ActivitiesCash
      paid forInterest
              
              $
              -
              
              
              $
              -
              
              
              $
              -Income
      taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              100Common
      Stock Issued in Exchange for Payment of Expenses
              
              $
              -
              
              
              $
              -
              
              
              $
              5,212










See
accompanying notes to financial statements.





5


4th
Grade Films, Inc.


(A
Development Stage Company)


Notes
to Condensed Financial Statements


March 31,
2010


(Unaudited)







NOTE
1 BASIS OF PRESENTATION





The
accompanying financial statements have been prepared without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. The interim
financial statements reflect all adjustments, consisting of normal recurring
adjustments which, in the opinion of management, are necessary to present a fair
statement of the results for the period.
 
 Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company’s Annual Report on Form 10-K for the year ended June 30, 2009.
The results of operations for the period ended March 31, 2010, are not
necessarily indicative of the operating results for the full year.


NOTE
2 LIQUIDITY/GOING CONCERN





The  Company  has  accumulated  losses  since  inception,  has
minimal assets,  and has a net  operating  loss of
$4,455 for the three months ended March 31, 2010.  Because the Company
has accumulated losses since inception, has minimal liquid current assets, and
has limited sales activity there is substantial doubt about the Company's
ability to continue as a going concern. Management plans include continuing to
develop, finance, produce, market and distribute films within the independent
film community.  The financial statements do not include
any   adjustments that might   result from the
outcome of this uncertainty.


NOTE
3 DIRECTOR COMPENSATION EXPENSES / RELATED PARTY TRANSACTIONS





Effective
April 1, 2008, the directors resolved to suspend payment of $1,000 per year to
each member of the board of directors.  The Compensation was paid
semi-annually, with the first $500 payment made on October 1, 2007 and the
subsequent $500 payment paid on March 1, 2008. The payment to the Directors will
be reinstated once the Company generates positive operating cash
flow.
 
 As of the
date of this Report, James Doolin, the Company's President and director, loaned
the Company an aggregate of $15,000 on an unsecured debenture.  The Note
accrues interest at 10% per annum and matures on December 31, 2011.  As of
March 31, 2010, the outstanding note payable balance to the shareholder was
$17,954, including accrued interest.  From inception through March 31,
2010, the Company accrued interest of $2,954 on the note.
 
 As of the
date of this Report, Michael Doolin, a shareholder of the Company, loaned the
Company an aggregate of $3,964 on an unsecured debenture.  The Note
accrues interest at 10% per annum and matures on December 31,
2011.  As of March 31, 2010, the outstanding note payable balance to
the shareholder was $4,205, including accrued interest.  As of March
31, 2010 the Company has accrued interest of $241 on the note.
 
 As of
March 31, 2010, approximately 77.9% of the Company's issued and outstanding
common stock is controlled by one family giving them effective power to control
the vote on substantially all significant matters without the approval of other
stockholders.
 
 The
Company rents office space from the Company’s President at a cost of $75 per
month. The Company has accrued $2,250 in unpaid rental fees from this
arrangement.





6


NOTE
4 FILM COSTS


Film
costs consisted of the following as of March 31, 2010:





Films:Released
            
            $
            24,825Completed,
      not released
            
            
            -In
      Production
            
            
            -In
      Development, or Preproduction
            
            
            -Total
            
            $
            24,825


During
the quarter ended March 31, 2010, the Company signed a distribution agreement
with Vanguard Cinema. Vanguard has the exclusive right to distribute the film in
all DVD, digital and television markets in the United States, Puerto Rico and
Canada. Prior to the quarter ended March 31, 2010, management determined that
the unamortized costs of the film exceeded the net realizable value for the
film. Accordingly, the Company recognized an impairment charge of $75,323 on the
film.


NOTE
5 PREPAID EXPENSES





On July
30, 2009 the Company engaged the services of Circus Road Films, Inc. (“CRF”).
CRF will act as a sales representative for the film “Four Stories of St.
Julian”, and will seek distribution agreements. The fee for this agreement was
$7,500 and 10% of gross proceeds, after the Company has received $75,000. The
fee is based on gross proceeds from any distribution agreements that the Company
enters into within the following twelve months.
 
 The
Company capitalized the $7,500 upfront costs as a prepaid expense and is
expensing it over a 12 month period. The amount expensed for the quarter ended
March 31, 2010 was $1,875.


NOTE
6 RECENT ACCOUNTING PRONOUNCEMENTS





Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted
Accounting Principles – Overall (“ASC 105-10”), which was formerly known as SFAS
168.  ASC 105-10 establishes the FASB Accounting Standards
Codification (the “Codification”) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with U.S.
GAAP.  Rules and interpretive releases of the Securities and Exchange
Commission (the “SEC”) under authority of federal securities laws are also
sources of authoritative U.S. GAAP for SEC registrants.  All guidance
contained in the Codification carries an equal level of
authority.  The Codification superseded all existing non-SEC
accounting and reporting standards and all other non-grandfathered, non-SEC
accounting literature not included in the Positions or Emerging Issues Task
Force Abstracts.  Instead, it will issue Accounting Standards Updates
(“ASUs”).  The FASB will not consider ASUs as authoritative in their
own right.  ASUs will serve only to update the Codification, provide
background information about the guidance and provide the bases of conclusions
on the change(s) in the Codification. References made to FASB guidance
throughout this document have been updated for the Codification.





In
October 2009, the FASB issued Accounting Standards Update No. 2009-13 for
Revenue Recognition – Multiple Deliverable Revenue Arrangements (Subtopic
605-25) “Subtopic”. This accounting standard update establishes the accounting
and reporting guidance for arrangements under which the vendor will perform
multiple revenue – generating activities. Vendors often provide multiple
products or services to their customers. Those deliverables often are provided
at different points in time or over different time periods. Specifically, this
Subtopic addresses how to separate deliverables and how to measure and allocate
arrangement consideration to one or more units of accounting.  The
amendments in this guidance will affect the accounting and reporting for all
vendors that enter into multiple-deliverable arrangements with their customers
when those arrangements are within the scope of this
Subtopic.





7


This
Statement is effective for fiscal years beginning on or after June 15, 2010.
Earlier adoption is permitted. If a vendor elects early adoption and the period
of adoption is not the beginning of the entity’s fiscal year, the entity will
apply the amendments under this Subtopic retrospectively from the beginning of
the entity’s fiscal year.  The presentation and disclosure
requirements shall be applied retrospectively for all periods presented.
Currently, Management believes this Statement will have no impact on the
financial statements of the Company once adopted.





The
Company has reviewed all other recently issued, but not yet adopted, accounting
standards in order to determine their effects, if any, on its consolidated
results of operation, financial position or cash flows.  Based on that
review, the Company believes that none of these pronouncements will have a
significant effect on its consolidated financial statements.







8


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





Forward-looking
Statements
 
 Statements
made in this Quarterly Report which are not purely historical are
forward-looking statements with respect to the goals, plan objectives,
intentions, expectations, financial condition, results of operations, future
performance and our business, including, without limitation, (i) our ability to
raise capital, and (ii) statements preceded by, followed by or that include the
words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,”
“believes,” “estimates,” “plans,” “intends,” “targets” or similar
expressions.
  Forward-looking
statements involve inherent risks and uncertainties, and important factors (many
of which are beyond our control) that could cause actual results to differ
materially from those set forth in the forward-looking statements, including the
following, general economic or industry conditions, nationally and/or in the
communities in which we may conduct business, changes in the interest rate
environment, legislation or regulatory requirements, conditions of the
securities markets, our ability to raise capital, changes in accounting
principles, policies or guidelines, financial or political instability, acts of
war or terrorism, other economic, competitive, governmental, regulatory and
technical factors affecting our current or potential business and related
matters.
  Accordingly,
results actually achieved may differ materially from expected results in these
statements.  Forward-looking statements speak only as of the date they
are made.  We do not undertake, and specifically disclaim, any
obligation to update any forward-looking statements to reflect events or
circumstances occurring after the date of such statements.
 
 Plan
of Operations
 
 For
the next 12 months, the Company will:
  (1)
On July 15, 2009, the Company engaged Circus Road Films, Inc. (“CRF”), a sales
representative for the film “Four Stories of St. Julian” or “the Film”. CRF has
and will continue to represent the Film and solicit distribution, television
licensing and international sales agency agreements form established licensors
of rights to feature films. During the quarter ended March 31, 2010, CRF
negotiated a distribution agreement for the Film with Vanguard Cinema. Vanguard
has the exclusive right to distribute the film in all DVD, digital and
television markets in the United States, Puerto Rico and Canada. CRF will
continue to market the Film’s international rights.
  (2)
Continue seeking opportunities developing, financing, producing, marketing and
distributing additional media content. The Company does not currently have any
projects in production, but plans to begin pre-production of another film
project within the next twelve months. The Company’s management may advance the
Company monies, not to exceed $50,000, to finance future projects or fund
working capital requirements. The monies advanced from the Company’s management
will be non-secured loans to the Company. The loan will be on terms no less
favorable to the Company than would be available from a commercial lender in an
arm’s length transaction.  The Company is also seeking financing from
outside sources to fund future projects. These funds may be raised as either
debt or equity, but management does not have any plans or relationships
currently in place and can provide no assurance that is will be able to obtain
such funds.
  (3)
As part of an ongoing management process, the Company’s fund raising efforts and
support for the above initiatives will be continuously reviewed and prioritized
to ensure that returns are commensurate with levels of investment.
  The
Company has accumulated losses since inception and has not been able to generate
profits from operations. The Company recently signed a distribution agreement to
distribute the film through various media channels throughout the United States,
Puerto Rico and Canada. The Company anticipates receiving revenue from this
distribution agreement, but can provide no assurance that revenue generated will
be sufficient to fund future operating activities. Operating capital, including
the proceeds to finance the Film has been raised through the Company’s
shareholders and management.


9





The
Company’s plan of operation for the next twelve months will continue to be
managed and operated solely by the Company’s officers and directors. Other than
the Company officers and directors the Company does not have any employees nor
does it anticipate hiring any employees over the next twelve
months.





The
Company has not been able to generate positive cash flow from operations since
inception. This along with the above mentioned factors raise substantial doubt
of the Company’s ability to continue as a going concern.





The
Company’s common stock currently trades on the Over-the-Counter Bulletin Board
(OTCBB) under the symbol FHGR.





Results
of Operations





Three
Months Ended March 31, 2010 Compared to Three Months Ended March 31,
2009





Operating Results –
Overview





The three
month period ended March 31, 2010, resulted in a net loss of
$4,455.  The Basic Loss per Share for the three month period ended
March 31, 2010 was ($0.01).  Details of changes in revenues and
expenses can be found below.





Operating Results –
Revenue





The
Company has not generated a profit since inception.  The Company
generated a net loss of $4,455 and no revenue for the quarter ended March 31,
2010. For the quarter ended March 31, 2009 the Company generated no revenue and
a net loss of $6,830.  The Company will not provide any forecasts of
future earnings or profitability.  The future success of the COmpany cannot
be ascertained with any certainty, and if an until the Company obtains its film
projects, no such forecast or guidance will be formulated or
provided.


Operating
Results – Cost of Goods Sold / Cost of Sales





Cost of
sales was $0 for the three month period ended March 31, 2010 and
2009.  The Company did not generate any revenue for the periods ended
March 31, 2010 and 2009, and therefore did not incur any expenses related to
revenue.





Operating
Results – Operating Expenses





Operating
expense for the three month period ended March 31, 2010, was $3,922 compared
with $6,669 for the three month period ended March 31, 2009. Operating expenses
included   professional fees and general administrative
expenses.


The
Company's professional fees include accounting, legal fees, and distribution
sales agent fee.
 
 Accounting
expenses incurred in the three month period ended March 31, 2010 totaled $1,821
and $1,180 for the period ended March 31, 2009.
 
 The
Company incurred $4,381 in legal fees in the quarter ended March 31, 2009
compared to $0 in the quarter ended in March 31, 2010. The Company’s increased
legal fees in the quarter ended March 31, 2009 due to various legal opinions
rendered by the Company’s legal counsel.
 
 The
Company also incurred expenses associated with Circus Road Films, Inc., a
distribution sales agent, engaged to market the Film. The Company incurred
$7,500 in expenses attributed to the engagement of Circus Road Films, of which
$2,500 has been reported as a prepaid asset.  Other than a commission
expense, the Company does not anticipate incurring any other fees associated
with Circus Road Films within the next twelve month
period.


10


The
Company incurred $225 in general and administrative expenses for the three month
period ended March 31, 2010 and $883 in general and administrative expenses for
the three month period ended March 31, 2009.
 
 The
Company estimates annual accounting expenses to be approximately $8,000.
Management estimates legal expenses for the fiscal year to be approximately
$5,000.


Operating
Results – Interest Expenses





The
Company  incurred  $533
in  interest  expense  for
the  quarter  ended March 31, 2010 and $161 in
interest  expense for the quarter  ended  March
31, 2009.  The increase in interest expense for the quarter ended
March  31, 2010, was attributed to an increase in the outstanding loan
balance from James Doolin, the Company's President and director, and Michael
Doolin, a shareholder of the Company.
 Nine
Months Ended March 31, 2010 Compared to Nine Months Ended March 31,
2009
 
 Operating Results –
Overview
 
 The nine
month period ended March 31, 2010, resulted in a net loss of
$91,788.  The Basic Loss per Share for the nine month period ended
March 31, 2010 was ($0.04).  Details of changes in revenues and
expenses can be found below.
 
 Operating Results –
Revenue
 
 The
Company has not generated a profit since inception.  The Company
generated a net loss of $91,788 and no revenue for the nine months ended March
31, 2010. For the nine months ended March 31, 2009 the Company generated no
revenue and a net loss of $26,890.
 
 Operating
Results – Cost of Goods Sold / Cost of Sales
 
 Cost of
sales was $0 for the nine month period ended March 31, 2010 and
2009.  The Company did not generate any revenue for the nine month
periods ended March 31, 2010 and 2009, and therefore did not incur any expenses
related to revenue.
 
 Operating
Results – Operating Expenses
 
 Operating
expense for the nine month period ended March 31, 2010, was $90,457 compared
with $26,140 for the nine month period ended March 31, 2009.
 
 Operating
expenses for the nine month period ended March 31, 2010 included $10,556 in
professional fees, $4,578 in general administrative expenses and $75,323
associated to the impairment of unamortized film costs.
 
 Operating
expenses for the nine month period ended March 31, 2009 included $23,525 in
professional fees and $2,615 in general and administrative fees.
 
 Operating
Results – Interest Expenses
 
 The
Company  incurred  $1,331
in  interest  expense  for the  nine
month period ended March 31, 2010 and $750 in interest  expense for
the nine month period  ended  March 31, 2009.  The
increase in interest expense for the most recent nine month period was
attributed to an increase in the outstanding loan balance payable to James
Doolin, the Company's President and director, and Michael Doolin, a shareholder
of the Company.


Liquidity
and Capital Requirements





As of
March 31, 2010, the Company had no accounts receivable, $15,899 in accounts
payable and accrued liabilities.  The Company had no inventory as of
March 31, 2010, but has capitalized film development costs of
$24,825.
 
 11
 The
Company has a cash balance of $930 and prepaid expenses totaled $2,500 as of
March 31, 2010.  Management does not anticipate that the Company's
existing cash balance will cover the Company's general expenses of operation for
the next twelve months. However, the Company’s management will continue to
advance the Company monies not to exceed $50,000, as loans to the Company. The
loan will be on terms no less favorable to the Company than would be available
from a commercial lender in an arm's length transaction.  Currently a
member of the Company’s management has loaned the Company approximately $15,000
in principal, and a shareholder has loaned the Company
$3,964 in principal. If the Company needs funds in excess of $50,000, it will be
up to the Company's management to raise such monies. These funds may be raised
as either debt or equity, but management does not have any plans or
relationships currently in place to raise such funds. The Company can provide no
assurances that if additional funds are needed the Company will be able to
obtain financing.





Off-balance
Sheet Arrangements





None; not
applicable





Item
3.  Quantitative and Qualitative Disclosures About Market
Risk.





Not
required.





Item
4(T).  Controls and Procedures.





Evaluation of Disclosure
Controls and Procedures





Disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act)
are designed to ensure that information required to be disclosed in reports
filed or submitted under the Exchange Act is recorded, processed, summarized,
and reported within the time periods specified in rules and forms adopted by the
Securities and Exchange Commission, and that such information is accumulated and
communicated to management, including the President and Vice President, to allow
timely decisions regarding required disclosures.
 
 Under the
supervision and with the participation of our management, including our
President and Vice President, we evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rule
13a-15(e) under the Exchange Act).  Based upon that evaluation, our
President and Vice President concluded that, as of the end of the period covered
by this report, our disclosure controls and procedures were
effective.




Changes
in Internal Control Over Financial Reporting





During the most recent fiscal quarter
covered by this Quarterly Report, there has been no change in our internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.





PART II - OTHER
INFORMATION





Item 1. Legal
Proceedings





None; not
applicable.





Item
1A. Risk Factors





Not
required.





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





None; not
applicable.





12


Item 3. Defaults Upon Senior
Securities





None; not
applicable.





Item
4. Submission of Matters to a Vote of Security Holders





None; not
applicable.





Item 5. Other
Information





None; not
applicable.





Item
6. Exhibits





(a)
Exhibits





All Sarbanes-Oxley Certifications
follow the signature line at the end of this Quarterly Report.





(b)
Reports on Form 8-K





None.










SIGNATURES




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








4TH
GRADE FILMS, INC.


(Issuer)





Date:
            05/14/10
            
            By:
            /s/James
      DoolinJames
      Doolin, President and Director





Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
Quarterly Report has also been signed below by the following person on behalf of
the Registrant and in the capacities and on the dates indicated.








Date:
            05/14/10
            
            By:
            /s/Shane
      ThuesonShane
      Thueson, Vice President