UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
10 – Q
 (Mark
One)
 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 Number:  333-149850
 
 EASTERN
RESOURCES, INC.
 (Exact
name of registrant as specified in its charter)
 
 Delaware
                45-0582098(State
      or other jurisdiction of incorporation)
                (I.R.S.
      Employer Identification No.)
 
 4
Park Avenue, Suite 16K, New York, NY  10016
 (Address
of principal executive offices)
 
 (917)
687-6623
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes  xNo   ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  ̈  No
 ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      accelerated filer   ̈
                
                Accelerated
      filer   ̈
                
                Non-accelerated
      filer   ̈
                
                Smaller
      reporting company  x(Do
      not check if a smaller
                  Reporting
      company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes   ̈  No  x
 
 There
were 20,629,000 shares of the issuer’s common stock outstanding as of May 5,
2010.
  
  EASTERN
RESOURCES, INC.
 FORM
10-Q
 FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 2010
 TABLE OF
CONTENTS
 
 PAGEPART
      I - FINANCIAL INFORMATIONItem
      1.
                    Financial
      Statements
                    3Item
      2.
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    14Item
      3.
                    Quantitative
      and Qualitative Disclosures About Market Risk
                    17Item
      4T.
                    Controls
      and Procedures
                    17PART
      II - OTHER INFORMATIONItem
      1.
                    Legal
      Proceedings
                    18Item
      1A.
                    Risk
      Factors
                    18Item
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    18Item
      3.
                    Defaults
      Upon Senior Securities
                    18Item
      4.
                    Other
      Information
                    18Item
      5.
                    Exhibits
                    19SIGNATURES
                    20
  2
  PART
I – FINANCIAL INFORMATION
  ITEM
1.  FINANCIAL STATEMENTS
 PAGEConsolidated
      Balance Sheets as of March 31, 2010 (Unaudited) and December 31, 2009
      (Audited)
                        4Consolidated
      Statements of Operations for the three month periods ended March 31, 2010
      (Unaudited) and March 31, 2009 (Unaudited) and the period from March 15,
      2007(Inception) to March 31, 2010 (Unaudited)
                        5Consolidated
      Statements of Cash Flows for the three month periods ended March 31, 2010
      (Unaudited) and March 31, 2009(Unaudited) and for the period from March
      15, 2007 (Inception) to March 31, 2010 (Unaudited)
                        6Notes
      to Consolidated Financial Statements (Unaudited)
                        7
  3
  EASTERN
RESOURCES INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
BALANCE SHEETS
 
 March 31, 2010
                  
                  
                  December 31, 2009(Unaudited)
                  
                  
                  (Audited)ASSETSCURRENT
      ASSETSCash
                  
                  $
                  3,842
                  
                  
                  $
                  -TOTAL
      CURRENT ASSETS
                  
                  
                  3,842
                  
                  
                  
                  -Capitalized
      film costs
                  
                  
                  1,271,611
                  
                  
                  
                  1,271,611TOTAL
      ASSETS
                  
                  $
                  1,275,453
                  
                  
                  $
                  1,271,611LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
                  
                  $
                  23,057
                  
                  
                  $
                  46,050Loan
      payable-stockholder
                  
                  
                  40,000
                  
                  
                  
                  40,000Convertible
      debenture
                  
                  
                  48,323
                  
                  
                  
                  47,395Compensation
      payable
                  
                  
                  355,462
                  
                  
                  
                  355,462Derivative
      liability
                  
                  
                  2,809
                  
                  
                  
                  -Notes
      payable
                  
                  
                  235,810
                  
                  
                  
                  230,059TOTAL
      CURRENT LIABILITIES
                  
                  
                  705,461
                  
                  
                  
                  718,966LONG-TERM
      LIABILITIES:10%
      Convertible debenture, net of discount of $2,943
                  
                  
                  68,227
                  
                  
                  
                  -TOTAL
      LIABILITIES
                  
                  
                  773,688
                  
                  
                  
                  718,966STOCKHOLDERS'
      EQUITY:Preferred
      stock, $.001 par value, 10,000,000 shares authorized; none
      issued
                  
                  
                  -
                  
                  
                  
                  -Common
      stock, $.001 par value, 300,000,000 shares authorized; 20,629,000 issued
      and outstanding at March 31, 2010 and December 31, 2009
                  
                  
                  20,629
                  
                  
                  
                  20,629Additional
      paid in capital
                  
                  
                  903,771
                  
                  
                  
                  903,771Deficit
      accumulated in the development stage
                  
                  
                  (422,635
                  )
                  
                  
                  (371,755
                  )TOTAL
      STOCKHOLDERS' EQUITY
                  
                  
                  501,765
                  
                  
                  
                  552,645TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                  
                  $
                  1,275,453
                  
                  
                  $
                  1,271,611
 
 See notes
to unaudited consolidated financial statements.
  4
  EASTERN
RESOURCES INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (Unaudited)
 
 March 15, 2007(Inception)Three Months Ended
                  
                  
                  toMarch 31, 2010
                  
                  
                  March 31, 2009
                  
                  
                  March 31, 2010Revenues
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Operating
      expenses:General
      and administrative
                  
                  
                  48,919
                  
                  
                  
                  58,481
                  
                  
                  
                  422,305Total
      operating expenses
                  
                  
                  48,919
                  
                  
                  
                  58,481
                  
                  
                  
                  422,305Net
      loss before other income (expense)
                  
                  
                  (48,919
                  )
                  
                  
                  (58,481
                  )
                  
                  
                  (422,305
                  )Other
      income (expense):Unrealized
      gain on fair value of  derivative liability
                  
                  
                  493
                  
                  
                  
                  -
                  
                  
                  
                  493Interest
      expense
                  
                  
                  (2,457
                  )
                  
                  
                  -
                  
                  
                  
                  (4,852
                  )Interest
      income
                  
                  
                  3
                  
                  
                  
                  3
                  
                  
                  
                  4,029Net
      loss
                  
                  $
                  (50,880
                  )
                  
                  $
                  (58,478
                  )
                  
                  $
                  (422,635
                  )Basic
      earnings per share
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )Weighted
      average number of common shares outstanding - basic and
      diluted
                  
                  
                  20,629,000
                  
                  
                  
                  20,629,000
 
 See notes
to unaudited consolidated financial statements.
  5
  EASTERN
RESOURCES INC. AND SUBSIDIARY
 (A
Development Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 InceptionThree Months
                    Ended
                  
                  
                  Three Months
                    Ended
                  
                  
                  (March 15, 2007)
                    toMarch31,2010
                  
                  
                  March 31, 2009
                  
                  
                  March31,2010CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                  
                  $
                  (50,880
                  )
                  
                  $
                  (58,478
                  )
                  
                  $
                  (422,635
                  )Adjustments
      to reconcile net loss to net cash used in operating activities:Gain on
      fair value of derivative liability
                  
                  
                  (493
                  )
                  
                  
                  -
                  
                  
                  
                  (493
                  )Amortization
      of discount on convertible debenture
                  
                  
                  359
                  
                  
                  
                  -
                  
                  
                  
                  359Increase
      in film costs
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,276,220
                  )Increase
      in capitalized interest
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  33,694Increase
      in accounts payable and accrued expenses
                  
                  
                  (22,993
                  )
                  
                  
                  39,044
                  
                  
                  
                  23,057Officer
      stock compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  11,500Increase
      in compensation payable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  355,462NET
      CASH USED IN OPERATING ACTIVITIES
                  
                  
                  (74,007
                  )
                  
                  
                  (19,434
                  )
                  
                  
                  (1,275,276
                  )CASH
      FLOW FROM FINANCING ACTIVITIES:Proceeds
      from loans payable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  160,000Proceeds
      from loan payable-shareholder
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  40,000Increase
      in note payable accrued interest
                  
                  
                  5,751
                  
                  
                  
                  5,211
                  
                  
                  
                  46,725Proceeds
      from convertible debenture
                  
                  
                  70,000
                  
                  
                  
                  -
                  
                  
                  
                  115,000Increase
      in convertible debenture accrued interest
                  
                  
                  2,098
                  
                  
                  
                  -
                  
                  
                  
                  4,493Proceeds
      from issuance of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  912,900NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                  
                  
                  77,849
                  
                  
                  
                  5,211
                  
                  
                  
                  1,279,118INCREASE
      (DECREASE) IN CASH
                  
                  
                  3,842
                  
                  
                  
                  (14,223
                  )
                  
                  
                  3,842CASH-BEGINNING
      OF PERIOD
                  
                  
                  -
                  
                  
                  
                  15,056
                  
                  
                  
                  -CASH-END
      OF PERIOD
                  
                  $
                  3,842
                  
                  
                  $
                  833
                  
                  
                  $
                  3,842CASH
      PAID FOR:Interest
                  
                  $
                  -
                  
                  
                  $
                  -Income
      Taxes
                  
                  $
                  -
                  
                  
                  $
                  -
  See
notes to unaudited consolidated financial statements.
  6
  EASTERN
RESOURCES INC. AND SUBSIDIARY
 (A
Development Stage Company)
 Notes to
the Unaudited Consolidated Financial Statements
 
 Note
1 – Organization, Nature of Operations and Basis of Presentation
 
 Eastern
Resources, Inc. (the “Company”) was incorporated in the State of Delaware on
March 15, 2007. On that date the Company acquired Buzz Kill, Inc., for
11,500,000 common shares. The Company, through Buzz Kill, Inc., its wholly owned
subsidiary, recently completed production of a feature length major motion
picture, and plans to market it to distributors in the United States and abroad.
The Company plans to produce a wide range of independent films outside the
traditional studio system. The Company intends to distribute films for
theatrical release, and exploit methods of delivery worldwide. The Company
intends to execute its business plan through the acquisition of unique films
from a broad spectrum of independent writers, directors and producers. Each
project will become an independent production company, created as a subsidiary
of Eastern Resources, Inc. The Company plans to fund the projects and maintain
ownership of the films with the intent of building a film library with the
rights to DVD, book and other reproductive media for sale to the
public.
 
 Basis of
Presentation: The accompanying unaudited financial statements of the Company
have been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
necessary to present fairly the information set forth therein have been
included. Operating results for the three months ended March 31, 2010 are not
necessarily indicative of the results that may be experienced for the fiscal
year ending December 31, 2010. The accompanying consolidated financial
statements should be read in conjunction with the Company’s Form 10-K for the
fiscal year ended December 31, 2009 which was filed on March 23,
2010.
 
 Note
2 - Summary of Significant Accounting Policies
 
 Principles of
Consolidation -
The consolidated financial statements of the Company include those of the
Company and its wholly owned subsidiary, Buzz Kill, Inc. All significant
inter-company accounts and transactions have been eliminated in the
consolidation.
 
 Use of Estimates - The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those
estimates.
 
 Cash and Cash Equivalents -
The Company considers all highly liquid short term investments with a remaining
maturity of three months or less when purchased, to be cash
equivalents.
  7
 
 Capitalized Film Costs - Film
costs include all direct negative costs incurred in the physical production of
the film as well as allocated production overhead. Such costs include story
costs and scenario; compensation of cast, directors, producers and extras; set
construction and operations; wardrobe and accessories; sound synchronization;
location expenses and post production costs including music, special effects and
editing. Film costs are amortized based on the ratio of current period gross
revenues to estimated remaining ultimate revenues from all sources on an
individual production basis. Estimated ultimate revenues are revised
periodically and the carrying values of the films are evaluated for impairment.
Losses, if any, are provided in full.
 
 As of
March 31, 2010 and December 31, 2009, the Company is not yet able to reasonably
estimate projected revenues, therefore the Company has not recorded any
amortization expense to date.
 
 Fair Value of Financial
Instruments - The carrying amount reported in the consolidated balance
sheet for cash and cash equivalents, accounts payable and accrued expenses
approximate fair value because of the immediate or short term maturity of these
financial instruments.
 
 Income Taxes Income taxes
are accounted for in accordance with the provisions of FASB ASC Topic No. 740,
“Income Taxes”(formerly
SFAS No. 109,“Accounting for Income
Taxes”). Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amounts
expected to be realized.
 
 Revenue Recognition - The
Company recognizes revenues from the sale or licensing arrangement of a film
upon delivery of a completed film or the commencement of a licensing period. The
Company had substantially completed film production at March 31, 2010 but
realized no revenues as of that date.
 
 Advertising Costs -
Advertising costs are expensed as incurred. Expenditures for the nine months
period ended March 31, 2010 and 2009 were insignificant.
 
 Loss Per Common Share - Loss
per common share is computed using the weighted average number of shares
outstanding. Potential common shares includable in the computation of fully
diluted per share results are not presented in the financial statements as their
effect would be anti-dilutive.
  8
  New Accounting
Pronouncements – Effective January 29, 2010, the Company
adopted FASB ASC Topic No. 815 – 40,Derivatives and Hedging -Contracts
in Entity’s Own
Stock  (formerly Emerging Issues Task Force Issue No.
07-5,Determining
Whether an Instrument or Embedded Feature is Indexed to an Entity’s Own Stock ). The adoption
of FASB ASC Topic No. 815 –40’s requirements can affect the accounting for
warrants and many convertible instruments with provisions that protect holders
from a decline in the stock price (or “down-round” provisions). As a result of
the Company issuing a convertible note on January 29, 2010, the Company
adopted ASC Topic No. 815 – 40,Derivatives and Hedging
- Contracts in Entity’s Own
Stock  (formerly Emerging Issues Task Force Issue No.
07-5,Determining
Whether an Instrument or Embedded Feature is Indexed to an Entity’s Own Stock ). As such, the
embedded feature convertible option on the January 29, 2010 convertible note are
classified as liabilities as of January 29, 2010 as these exercise price reset
features and are not deemed to be indexed to the Company’s own stock. See Note 6
for further discussion.
 
 In
October 2009, the FASB issued guidance for amendments to FASB Emerging Issues
Task Force on EITF Issue No. 09-1 “ Accounting for Own-Share Lending
Arrangements in Contemplation of a Convertible Debt Issuance or Other Financing”
( Subtopic 470-20 ) “Subtopic”. This accounting standards update establishes the
accounting and reporting guidance for arrangements under which own-share lending
arrangements issued in contemplation of convertible debt
issuance.  This Statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2009.
Earlier adoption is not permitted.  Management believes this Statement
will have no impact on the consolidated financial statements of the Company once
adopted.
  In
December 2009, the FASB issued guidance for Consolidations – Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities (
Topic 810 ).  The amendments in this update are a result of
incorporating the provisions of SFAS No. 167, Amendments to FASB Interpretation
No. 46(R). The provisions of such Statement are effective for fiscal years, and
interim periods within those fiscal years, beginning on or after November 15,
2009. Earlier adoption is not permitted. The presentation and disclosure
requirements shall be applied prospectively for all periods after the effective
date. Management believes this Statement will have no impact on the consolidated
financial statements of the Company once adopted.
 
 In
January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and
Disclosures (Topic 820) Improving Disclosures about Fair Value
Measurements, which enhances the usefulness of fair value measurements.
The amended guidance requires both the disaggregation of information in certain
existing disclosures, as well as the inclusion of more robust disclosures about
valuation techniques and inputs to recurring and nonrecurring fair value
measurements.  The amended guidance is effective for interim and
annual reporting periods beginning after December 15, 2009, except for the
disaggregation requirement for the reconciliation disclosure of Level 3
measurements, which is effective for fiscal years beginning after December 15,
2010 and for interim periods within those years. The Company does not anticipate
that this pronouncement will have a material impact on its results of operations
or financial position.
 
 Management
does not believe that any other recently issued, but not yet effective,
accounting standards could have a material effect on the accompanying
consolidated financial statements. As new accounting pronouncements are issued,
the Company will adopt those that are applicable under the
circumstances.
  9
 
 Note
3 - Going Concern
 
 The
Company at present has insufficient funds to sustain the cash flows required to
meet the anticipated operating costs to be incurred in the next twelve months.
Management intends to sell additional equity and / or debt securities in the
future to supplement potential revenues. However, there can be no assurance that
the Company will be successful in raising significant additional funds. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 Note
4 – Notes Payable
 
 In 2007
the Company issued 10% Subordinated Debenture Notes aggregating $160,000 payable
to four persons. The notes included accrued interest compounded monthly and
become due and payable on varying dates in the year 2010. The notes are
subordinated to monies payable to trade payables and to the loan payable to Mr.
Hanna, an officer and major stockholder.  Upon repayment of the notes
and accrued interest the Company agreed to pay the note holders an additional
premium of 20% of the original principal $32,000, which was recorded at present
value of $24,324.  The note holder’s rights to receive the premium
survive any redemption of the notes. Such amount was calculated using 10% per
annum compounded monthly. In addition to the repayments of principal, accrued
interest and premium the note holders will be entitled to a 12% participation in
the film’s net proceeds as defined in the agreements.
 
 At March
31, 2010 and December 31, 2009, the Company recorded related accrued interest of
$51,486 and $45,735, respectively.
 
 Note
5 - Loan Payable - Stockholder
 
 In July
2007, the Company received a bridge loan of $100,000 from Mr. Hanna. Subsequent
repayments of $60,000 reduced the loan to $40,000 as of March 31, 2010. The loan
is unsecured, interest free and repayable on demand.
 
 Note
6 – Convertible Debentures and Derivatives
 
 8.25%
Convertible Debenture
 
 On May 8,
2009, the Company entered into a securities purchase agreement with Milestone
Enhances Fund Ltd. (“Milestone” or “Holder”).  Under the purchase
agreement, the Company issued to Milestone a convertible promissory note
(“Promissory Note”), convertible into the Company’s common stock, in the amount
of $45,000.
 
 At any
time, subject to a written notice of conversion, the Holder may convert any
portion of the outstanding and unpaid principal and interest balance due on the
Promissory Note into the Company’s common shares at a conversion price to be
mutually determined by the Company and the Holder.  Any conversion of
any portion of the Promissory Note shall be deemed to be a prepayment of
principal, without any penalty, and shall be credited against future payments of
principal in the order such payments become due or payable.
  10
 
 The
Promissory Note bears interest at the rate of 8.25% per annum and is payable at
maturity, November 8, 2010, together with any accrued and unpaid
interest.  The Promissory Note may be prepaid by the Company at any
time without penalty.  Both parties may, however, mutually agree to
extend the term of the Promissory Note beyond the maturity date.
 
 In the
event of default due to non-payment of principal and interest at maturity date,
the Holder would have the right to all legal remedies available for it
to  pursue collection, and the Company shall bear all reasonable costs
of collection, including but not limited to attorney’s fees.
 
 At March
31, 2010 and December 31, 2009, the Company recorded accrued interest of $928
and $2,395 related to the convertible debenture.
 
 10%
Convertible Debenture
 
 On
January 29, 2010, the Company issued to Paramount Strategy Corp. (“Paramount”) a
convertible promissory note (“Paramount Promissory Note”) amounting to
$70,000.
 
 At any
time, subject to a written notice of conversion, Paramount may convert any
portion of the outstanding and unpaid principal and interest balance due on the
Paramount Promissory Note into the Company’s common shares at a conversion price
(the “Fixed Conversion Price”) of $0.10 per share. So long as the Paramount
Promissory Note is outstanding, if the Company issues shares of its common stock
at a price below the Fixed Conversion Price, the Fixed Conversion Price shall be
reduced to such other lower price. The Fixed Conversion Price and number of
shares to be issued upon conversion shall also be subject to adjustment from
time to time upon the happening of certain other events, in particular in the
event a merger or sale of the Company’s assets, reclassification or change in
the Company’s common stock, and in the event of stock splits, combinations or
dividends.  The Paramount Promissory Note bears interest at the rate
of 10% per annum and is payable at its maturity on July 28, 2011, unless its
term is mutually extended by both parties.
 
 The
Paramount Promissory Note contains ratchet provisions which adjusts the exercise
price of the embedded feature conversion option if the Company issues common
stock at a price lower than the fixed conversion prices in the 10% Paramount
Promissory Note.  As a result, the Company assessed the terms of the 10%
Paramount Promissory Note in accordance with ASC Topic No. 815 – 40,Derivatives and Hedging
- Contracts in Entity’s Own
Stock  (formerly Emerging Issues Task Force Issue No.
07-5,Determining
Whether an Instrument or Embedded Feature is Indexed to an Entity’s Own Stock ) and determined that
the underlying embedded feature conversion option are not indexed to the
Company’s common stock and are therefore a derivative which should be valued at
fair value at the date of issuance and at each subsequent interim
period.
 
 As of
January 29, 2010 (date of note issuance), the fair value of the derivatives was
$3,302.  As a result, a discount of $3,302 on the Paramount Promissory
Note, and a derivative liability of $3,302 was recorded on January 29, 2010. The
revaluation of the derivatives as of March 31, 2010 resulted in a value of
derivative liability of $2,809.  The change in fair value during the period
of January 29, 2010 to March 31, 2010 resulted in a recorded gain on fair value
of derivative liability of $493 in the accompanying consolidated statement of
operations.  For the three months ended March 31, 2010, the Company
also amortized the discount on the note for $359.
  11


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





January29,
                            2010
                          
                          
                          March31,
                            2010Common
      stock issuable upon conversion
                          
                          
                          700,000
                          
                          
                          
                          700,000Estimated
      market value of common stock on measurement date
                          
                          $
                          0.02
                          
                          
                          $
                          0.02Exercise
      price
                          
                          $
                          0.10
                          
                          
                          $
                          0.10Risk
      free interest rate (1)
                          
                          
                          0.82
                          %
                          
                          
                          0.82
                          %Term
      in years
                          
                          1.49
      years
                          
                          
                          1.33
      yearsExpected
      volatility
                          
                          
                          129
                          %
                          
                          
                          129
                          %Expected
      dividends
                          
                          
                          0
                          %
                          
                          
                          0
                          %





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





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





Note
7 - Fair Value Measurements





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





Level
      1:
            Unadjusted
      quoted prices in active markets that are accessible at the measurement
      date for identical, unrestricted assets or liabilities. The Company
      considers active markets as those in which transactions for the assets or
      liabilities occur in sufficient frequency and volume to provide pricing
      information on an ongoing basis.





Level
      2:
            Quoted
      prices in markets that are not active, or inputs which are observable,
      either directly or indirectly, for substantially the full term of the
      asset or liability. This category includes those derivative instruments
      that the Company values using observable market data. Substantially all of
      these inputs are observable in the marketplace throughout the term of the
      derivative instruments, can be derived from observable data, or supported
      by observable levels at which transactions are executed in the
      marketplace.


12





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





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





The
following table sets forth, by level within the fair value hierarchy, the
Company’s financial assets and liabilities that were accounted for at fair value
on a recurring basis as of March 31, 2010:




FairValueMeasurementsatMarch31,2010TotalCarryingDescription
                      
                      (Level1)
                      
                      
                      (Level2)
                      
                      
                      (Level3)
                      
                      
                      ValueDerivative
      liability -
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      2,809
                      
                      
                      $
                      2,809Total
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      2,809
                      
                      
                      $
                      2,809





Note
8 - Issuance of Common and Preferred Stock





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





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





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





Note
9 – Subsequent Events





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


13


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





Statement
Regarding Forward-Looking Information





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





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





Results
of Operations





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





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


14


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





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





Liquidity
and Capital Resources





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





Plan
of Operation





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





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


15


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





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





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





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





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


16


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





Off-Balance Sheet
Arrangements





We have
no off-balance sheet arrangements.





ITEM
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





ITEM
      4T.
            CONTROLS
      AND PROCEDURES





Evaluation
of Our Disclosure Controls





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





Limitations
on Effectiveness of Controls and Procedures





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


17


Changes
in Internal Control Over Financial Reporting





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





PART
II – OTHER INFORMATION





ITEM
      1.
            LEGAL
      PROCEEDINGS





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





ITEM
      1A.
            RISK
      FACTORS





Not
applicable.





ITEM
      2.
            UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





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





ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES





None.





ITEM
      4.
            OTHER
      INFORMATION





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


18


ITEM
      5.
            EXHIBITS.





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





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





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





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





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





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





The
following exhibits are included as part of this report:





Exhibit No.
                  
                  Description31.1
      / 31.2
                  
                  Certification
      of Principal Executive and Financial Officer pursuant to Section 302 the
      Sarbanes-Oxley Act of 200232.1
      / 32.2
                  
                  Certification
      of Principal Executive and Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002


19


SIGNATURES





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





Date:  May
5, 2010


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




20