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 June 30,
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.)





166
East 34th Street, Suite 18K, 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 o    
No o





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  o
            
            Accelerated
      filer  o
            
            Non-accelerated
      filer  o
            
            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 August 16,
2010.









EASTERN
RESOURCES, INC.





FORM
10-Q


FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 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
            16Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            19Item
      4T.
            Controls
      and Procedures
            19-20PART
      II - OTHER INFORMATIONItem
      1.
            Legal
      Proceedings
            20Item
      1A.
            Risk
      Factors
            20Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            20Item
      3.
            Defaults
      Upon Senior Securities
            21Item
      4.
            (Removed
      and Reserved)
            21Item
      5.
            Other
      Information
            21Item
      6.
            Exhibits
            21SIGNATURES
            22




2




PART
I – FINANCIAL INFORMATION




ITEM
1.  FINANCIAL STATEMENTS




PAGEConsolidated
      Balance Sheets as of June 30, 2010 (Unaudited) And December 31, 2009
      (Audited)
              4Consolidated
      Statements of Operations for the three and six month periods ended June
      30, 2010 (Unaudited) and June 30, 2009 (Unaudited) and the period from
      March 15, 2007 (Inception) to June 30, 2010 (Unaudited)
              5Consolidated
      Statements of Cash Flows for the six month periods ended June 30, 2010
      (Unaudited) and June 30, 2009(Unaudited)
      and for the period from March 15, 2007 (Inception) to June 30, 2010
      (Unaudited)
              6Notes
      to the Unaudited Consolidated Financial Statements
              7





3




EASTERN RESOURCES INC. AND
SUBSIDIARY


(A Development Stage
Company)


CONSOLIDATED BALANCE
SHEETS





June
      30, 2010
                
                
                December
      31, 2009(Unaudited)
                
                
                (Audited)ASSETSCURRENT
      ASSETSCash
                
                $
                558
                
                
                $
                -TOTAL
      CURRENT ASSETS
                
                
                558
                
                
                
                -Capitalized
      film costs
                
                
                1,271,611
                
                
                
                1,271,611TOTAL
      ASSETS
                
                $
                1,272,169
                
                
                $
                1,271,611LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                
                $
                49,486
                
                
                $
                46,050Loan
      payable-stockholder
                
                
                40,000
                
                
                
                40,000Convertible
      debenture
                
                
                49,251
                
                
                
                47,395Compensation
      payable
                
                
                355,462
                
                
                
                355,462Derivative
      liability
                
                
                1,644
                
                
                
                -Notes
      payable
                
                
                151,066
                
                
                
                230,059TOTAL
      CURRENT LIABILITIES
                
                
                646,909
                
                
                
                718,966LONG-TERM
      LIABILITIESNotes
      payable
                
                
                90,640
                
                
                
                -10%
      Convertible debenture, net of discount of $2,402
                
                
                70,513
                
                
                
                -TOTAL
      LIABILITIES
                
                
                808,062
                
                
                
                718,966STOCKHOLDERS'
      EQUITYPreferred
      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 andoutstanding
      at June 30, 2010 and at December 31, 2009
                
                
                20,629
                
                
                
                20,629Additional
      paid-in capital
                
                
                903,771
                
                
                
                903,771Deficit
      accumulated in the development stage
                
                
                (460,293
                )
                
                
                (371,755
                )TOTAL
      STOCKHOLDERS' EQUITY
                
                
                464,107
                
                
                
                552,645TOTAL
      LIABILITIES ANDSTOCKHOLDERS'
      EQUITY
                
                $
                1,272,169
                
                
                $
                1,271,611




See notes
to the unaudited consolidated financial statements.




4




EASTERN RESOURCES INC. AND
SUBSIDIARY


(A Development Stage
Company)


CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)





March
      15, 2007Three
      Months Ended
            
            
            Six
      Months Ended
            
            
            (Inception)
      toJune
      30, 2010
            
            
            June
      30, 2009
            
            
            June
      30, 2010
            
            
            June
      30, 2009
            
            
            June
      30, 2010Revenues
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Operating
      expenses:General
      and administrative
            
            
            35,609
            
            
            
            22,495
            
            
            
            84,528
            
            
            
            80,976
            
            
            
            457,914Total
      operating expenses
            
            
            35,609
            
            
            
            22,495
            
            
            
            84,528
            
            
            
            80,976
            
            
            
            457,914Net
      loss before other income (expense)
            
            
            (35,609
            )
            
            
            (22,495
            )
            
            
            (84,528
            )
            
            
            (80,976
            )
            
            
            (457,914
            )Other
      income (expense):Gain
      on fair value of derivative liability
            
            
            1,165
            
            
            
            -
            
            
            
            1,658
            
            
            
            -
            
            
            
            1,658Interest
      expense
            
            
            (3,214
            )
            
            
            (539
            )
            
            
            (5,671
            )
            
            
            (539
            )
            
            
            (8,066
            )Interest
      income
            
            
            -
            
            
            
            -
            
            
            
            3
            
            
            
            3
            
            
            
            4,029Net
      loss
            
            $
            (37,658
            )
            
            $
            (23,034
            )
            
            $
            (88,538
            )
            
            $
            (81,512
            )
            
            $
            (460,293
            )Basic
      earnings per share
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )Weighted
      average number ofcommon
      shares outstanding -basic
      and diluted
            
            
            20,629,000
            
            
            
            20,629,000
            
            
            
            20,629,000
            
            
            
            20,629,000




See notes
to the unaudited consolidated financial statements.




5




EASTERN RESOURCES INC. AND
SUBSIDIARY


(A Development Stage
Company)


CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Unaudited)





Six
      MonthsEnded
              
              
              Six
      MonthsEnded
              
              
              Inception(March 15, 2007)
      toJune 30,
    2010
              
              
              June 30, 2009
              
              
              June 30,
    2010CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (88,538
              )
              
              $
              (81,512
              )
              
              $
              (460,293
              )Adjustments
      to reconcile net loss tonet
      cash used in operating activities:Gain
      on fair value of derivative liability
              
              
              (1,658
              )
              
              
              -
              
              
              
              (1,658
              )Amortization
      of discount on convertible debenture
              
              
              901
              
              
              
              -
              
              
              
              901Increase
      in film costs
              
              
              -
              
              
              
              -
              
              
              
              (1,276,220
              )Increase
      in capitalized interest
              
              
              -
              
              
              
              -
              
              
              
              33,694Increase
      (decrease) in accounts payable and accrued expenses
              
              
              3,436
              
              
              
              10,366
              
              
              
              49,486Officer
      stock compensation
              
              
              -
              
              
              
              -
              
              
              
              11,500Increase
      in compensation payable
              
              
              -
              
              
              
              -
              
              
              
              355,462NET
      CASH USED IN OPERATING ACTIVITIES
              
              
              (85,859
              )
              
              
              (71,146
              )
              
              
              (1,287,128
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from loans payable
              
              
              -
              
              
              
              -
              
              
              
              160,000Proceeds
      from loan payable-shareholder
              
              
              -
              
              
              
              -
              
              
              
              40,000Increase
      in note payable accrued interest
              
              
              11,647
              
              
              
              10,551
              
              
              
              52,621Proceeds
      from convertible debenture
              
              
              70,000
              
              
              
              45,000
              
              
              
              115,000Increase
      in convertible debenture accrued interest
              
              
              4,770
              
              
              
              539
              
              
              
              7,165Proceeds
      from issuance of common stock
              
              
              -
              
              
              
              -
              
              
              
              912,900NET
      CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              86,417
              
              
              
              56,090
              
              
              
              1,287,686INCREASE
      (DECREASE) IN CASH
              
              
              558
              
              
              
              (15,056
              )
              
              
              558CASH-BEGINNING
      OF PERIOD
              
              
              -
              
              
              
              15,056
              
              
              
              -CASH-END
      OF PERIOD
              
              $
              558
              
              
              $
              -
              
              
              $
              558CASH
      PAID FOR:Interest
              
              $
              -
              
              
              $
              -Income
      taxes
              
              $
              -
              
              
              $
              -




See notes
to the 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. Eachproject 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.





The Companysecured the services
of a sales representative who will assist in guiding the film through the
festival and distribution process and, on May 13, 2010, Buzz Kill executed a
trademark license agreement with Second City, Inc. Pursuant to the
Agreement, the Company acquired a non-exclusive right to use the “Second City”
trademark in connection with the distribution of the film, in exchange for
payment of a royalty to Second City equal to 10% of the producer gross receipts,
as defined in the agreement. On May 19, 2010, Buzz Kill executed a contest
agreement with Reed Business Information and uPlaya Music Intelligence
Solutions, Inc., whereby uPlaya will provide hosting services for a contest to
select a song for BuzzKill,and the contest will be co-branded and co-marketed from the media outlets
of Variety, the weekly entertainment-trade magazine published by Reed Business
Information.





The
Company intends to raise additional capital through the issuance of debt and/or
equity securities to provide financing for our marketing and distribution
activities. Currently, we are in negotiations with an independent media
production and distribution company to secure distribution for the
film.





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
requiredby 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 thesixmonths endedJune30, 2010are 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.




7




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
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 andexpensesduring the period. Actual results could
differ from those estimates.





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





Capitalized Film
Costs- Film costs include
all direct negative costs incurred in the physical production of the film as
well as allocated production overhead. Such costs include story costs and
scenario; compensation of cast, directors, producers andextras; 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.





Asof June 30, 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 intheconsolidatedbalance sheetsfor 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.





8





Note
2 - Summary of Significant Accounting Policies-continued





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 atJune 30, 2010,but realized no revenues as of that
date.





Advertising
Costs- Advertising costs are expensed as
incurred. Expenditures for thesix month periods ended June 30, 2010and June 30, 2009were 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 dilutedper share results are not
presented in the financial statements as their effect would be
anti-dilutive.





New Accounting
Pronouncements-





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
whichown-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)
ImprovingDisclosures 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 recurringand 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.




9




Note
2 - Summary of Significant Accounting Policies-continued





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
IssuesTask 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.





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





Note 3 - Going
Concern





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





Note 4 -Notes Payable





In 2007,the Company issued 10% Subordinated
Debenture Notes aggregating $160,000 payable to four persons. The notes included
accrued interest compounded monthly,and become due and payable on varying
dates in the year 2010. The notes are subordinated to monies payable to trade payables and to the loan
payable to Mr. Hanna, an officer and major stockholder. Upon repayment of the
notes and accrued interest,the Company agreed to pay the note
holders an additional premium of 20% of the original principal $32,000,
which wasrecorded at present value of
$24,324. The
noteholder’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 June 30, 2010 and December 31, 2009,
the Company recorded related accrued interest of $52,621 and $40,973,
respectively.





10





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 $40,000as ofJune 30, 2010. The loan is unsecured, interest
free,and repayable on demand.





Note 6 -ConvertibleNote Payable 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 outstandingand 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 bea prepayment of principal, without any
penalty, and shall be credited against future payments of principal in the order
such payments become due or payable.





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





In the event of default due to non-payment
of principal and interest at maturity date, the Holder would have the right to
all legal remedies available for it to pursue collection, and the Company shall
bear all reasonable costs of collection, including but notlimited to attorney’s fees.





At June 30, 2010 and December 31, 2009, the
Company recorded accrued
interest of $4,251and
$2,395 related to the convertible debenture.





10% Convertible
Debenture





On January 29, 2010, the Company issued
to Paramount StrategyCorp.
(“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
unpaidprincipal and interest balance
due on the Paramount
Promissory Note into the Company’s common shares at a
conversionprice (the “Fixed Conversion Price”) of $0.10 per share. So long as the
Paramount Promissory Note is outstanding, if theCompany issues shares of its common
stock at a price below the
Fixed Conversion Price, the Fixed Conversion Price shall bereduced to such other lower price. The
Fixed Conversion Price




11




Note 6 -ConvertibleNote Payable and
Derivatives-continued





and number of shares to be issued upon
conversion shall alsobe 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
itsmaturity 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 featureconversion 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 inaccordance with ASC Topic No. 815–40, Derivatives and Hedging - Contracts
in Entity’s Own Stock (formerly
EmergingIssues Task Force Issue No. 07-5,
Determining Whether an Instrument or Embedded Feature is Indexed to an
Entity’s OwnStock ) and determined that the
underlying embedded feature conversion option are not indexed to the
Company’s commonstock and are therefore a derivative
which should be valued at fair value at the date of issuance and at each
subsequent interimperiod.





As of January 29, 2010 (date of note
issuance), the fair value of the derivatives was $3,302. As a result, a discount
of $3,302on the Paramount Promissory Note, and a
derivative liability of $3,302 was recorded on January 29, 2010. The
revaluationofthe derivatives as ofJune 30,2010 resulted in a value of derivative liability of
$1,644. The change in fair
value during the


period of January 29, 2010 toJune 30,2010 resulted in a recorded gain on fair
valueof derivative
liability of $1,658in
theaccompanying consolidated
statement of operations.
For the sixmonths endedJune 30,2010, the Company alsoamortized thediscount on the note for
$901.





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





January 29,
      2010
            
            
            June 30,
    2010Common stock issuable upon
      conversion
            
            
            700,000
            
            
            
            700,000Estimated market value of common
      stock on measurement date
            
            $
            0.02
            
            
            $
            0.02Exercise
    price
            
            $
            0.10
            
            
            $
            0.10Riskfree interest rate
      (1)
            
            
            0.82
            %
            
            
            0.82
            %Term in
    years
            
            1.49 years
            
            
            1.08 yearsExpected
      volatility
            
            
            129
            %
            
            
            121
            %Expected dividends
      (2)
            
            
            0
            %
            
            
            0
            %





12




Note 6 -ConvertibleNote Payable and
Derivatives-continued





(1) The risk-free interestrate was estimated by management using
the U.S. Treasury zero-coupon yield over the contractualterm of the note.





(2) Management estimated the dividend
yield at 0% based upon its expectation that there will not be earnings available
to paydividends 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 thesale 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 expandsdisclosure about fair value
measurements.The statement requires fair value
measurements be classifiedand disclosed in one ofthe 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
      forthe assets or liabilities occur in
      sufficient frequency and volume to provide pricing information on
      anongoing
    basis.





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





Level 3:
            Measured based on prices or
      valuation models that require inputs that are both significant
      to the fair
      valuemeasurement and less observable
      from objective sources (i.e. supported by little or no market activity).
      TheCompany’s valuation models are primarily
      industry standard models. Level 3 instruments include
      derivativewarrant instruments.
      TheCompany does not
      have sufficient corroborating evidence to support classifyingthese 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 thelowest level of input that is
significant to the fair value measurement. The Company’s assessment of the significance of
aparticular input to the fair value
measurement requires judgment, and may affect the valuation of the fair value of
assets andliabilities and their placement within the
fair value hierarchy levels. The estimated fair value of the derivative
liability wascalculated using the Black-Scholes
option pricing model (see Note 6).




13




Note 7 - Fair Value
Measurements-continued





The following table sets forth, by level within the fair
value hierarchy, the Company’s financial assets and liabilities that
wereaccounted for at fair value on a
recurring basis as ofJune
30,
2010:




Fair Value Measurements at June
      30, 2010TotalCarryingDescription
            
            (Level 1)
            
            
            (Level 2)
            
            
            (Level 3)
            
            
            ValueDerivative liability
      -
            
            $
            -
            
            
            $
            -
            
            
            $
            1,644
            
            
            $
            1,644Total
            
            $
            -
            
            
            $
            -
            
            
            $
            1,644
            
            
            $
            1,644





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 sharefor gross proceeds of
$60,000.





As of June 30, 2010, there were
20,629,000shares of common
stock issued and outstanding. No preferred stock shares have been
issued.





Note9- Commitments and
Contingencies





OnMay 13, 2010, the Company
entered into a trademark license agreement with Second City, Inc., in which the
Company acquired a non-exclusive right to use the “Second City” trademark in
connection with the distribution of the film, in exchange for payment of a
royalty to Second City equal to 10% of the producer gross receipts, as defined
in the agreement.





On May
19, 2010, the Company executed a contest agreement with Reed Business
Information and uPlaya Music Intelligence Solutions, Inc., whereby uPlaya will
provide hosting services for a contest to select a song for BuzzKill,and the contest
will be co-branded and co-marketed from the media outlets of Variety, the weekly
entertainment-trade magazine published by Reed Business Information. As per the
agreement, the Company has accrued $3,500 to compensate uPlaya for incremental
design, technical, and administrative set-up costs. Buzzkill agrees to
compensate the Grand Prize Winner $1,000 within 15 days of the contest end-date
and winner verification.





14




Note
10 - Subsequent Events





On July
26, 2010, a promissory note with a principal amount of $50,000, bearing 10%
interest, matured. The Company was able to obtain an extension of the maturity
date, amending the maturity date from July 26, 2010 to July 26,
2012.





On August
1, 2010, a promissory note with a principal amount of $5,000, bearing 10%
interest, matured. The Company was able to obtain an extension of the maturity
date, amending the maturity date from August 1, 2010 to August 1,
2012.





On August
1, 2010, a promissory note with a principal amount of $5,000, bearing 10%
interest, matured. The Company was able to obtain an extension of the maturity
date, amending the maturity date from August 1, 2010 to August 1,
2012.




15




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 June 30, 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 $35,609 and $84,528 for the three and six
month periods ended June 30, 2010, as compared to total operating expenses of
$22,495 and $80,976 for the three and six month periods ended June 30, 2009. The
increase in total operating expenses was due to increase in legal and other
professional fees incurred in connection with ongoing SEC filing
requirements.





We have
generated no operating revenues since our inception and our net loss from
inception through June 30, 2010 was $(460,293).




16




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 June 30, 2010 and December 31, 2009, we had cash of
$558 and $0, respectively, current assets of $558 and $0, respectively, and
current liabilities of $646,909 and $718,966, respectively.  Unless
and until we achieve material revenues, we will remain dependent on financings
to continue our operations.





As of
June 30, 2010 our wholly-owned subsidiary, Buzz Kill, Inc., our wholly owned
subsidiary (“Buzz Kill”), has issued an aggregate principal amount of $160,000
of its 10% notes series.  The notes have an interest rate of 10%,
compounded monthly, and a maturity date of three years from the date of
issuance.  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.
Proceeds from the notes were used to finance the production of the
film.  On July 26, 2010 one 10% note in the principal amount of
$50,000 matured, and the holder agreed to extend the maturity date to July 26,
2012.  On August 1, 2010 two 10% notes, each in the principal amount
of $5,000 matured and the holders agreed to extend the maturity dates to August
1, 2012.





As of
June 30, 2010, our Company also has (i) a demand loan payable to Thomas Hanna in
the amount of $40,000, (ii) a $70,000 loan payable to an unaffiliated third
party due July 28, 2011 and represented by an 10% convertible promissory note
dated January 29, 2010, and (iii) 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.





We intend
to raise additional capital through the issuance of debt and/or equity
securities to provide financing for our marketing and distribution
activities.





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.





On April
1, 2007 Buzz Kill 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.




17




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
by which the final, actualized budget exceeds $650,000, and (iv) contingent
compensation equal to 5% of the “net proceeds” of the film.  Mr.
Kampmann will also receive, as the film’s director, 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 (i) that the net 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 (ii) to limit its financing debt
to $300,000 plus 20%.





In
December 2007, we completed a private placement offering of 8,529,000 shares of
our common stock to a total of 33 purchasers at a price of $0.10 per share for
aggregate proceeds of $852,900. In June 2008, we 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.





In
February 2008, through our wholly owned subsidiary, Buzz Kill, Inc., we
completed post-production of the film, and now seek to market the film and
secure distribution.  We secured the services of a sales
representative who will assist us in guiding the film through the festival and
distribution process and, on May 13, 2010, Buzz Kill executed a trademark
license agreement with Second City, Inc.  Pursuant to the Agreement,
we acquired a non-exclusive right to use the “Second City” trademark in
connection with the distribution of the film, in exchange for payment of a
royalty to Second City equal to 10% of the producer gross receipts, as defined
in the agreement.  On May 19, 2010 Buzz Kill executed a contest
agreement with Reed Business Information and uPlaya Music Intelligence
Solutions, Inc., whereby uPlaya will provide hosting services for a contest to
select a song for BuzzKill,and the contest will be co-branded and co-marketed from the media outlets
of Variety, the weekly entertainment-trade magazine published by Reed Business
Information.





Milestone
to Achieve in the Next Twelve Months





Our major
objective in the next twelve months is to secure distribution and market our
first independent feature film, BuzzKill. Principal photography on the film was
completed in September 2007, and post-production was completed in February
2008.




18




We are
currently engaged in the initial marketing of the film.  The finished
film will be entered into various film festivals in the U.S. and
abroad.  The fee for entering a film into a festival competition is
typically $200-300 per entry.  We believe this is the most
time-efficient and inexpensive means of (i) measuring audience response, (ii)
meeting film distributors both domestic and foreign, and (iii) formulating a
public relations campaign with print, TV and other media outlets. To date, we
have submitted our film to a number of film festivals.  The film won
the People’s Choice Award for Best Feature Film at the 2008 NJ State Film
Festival at Cape May.





Total
marketing and distribution costs are estimated at $200,000.  We hope
to reduce out-of-pocket expenses by entering into a distribution
agreement.  This distributor will market and distribute the film in
exchange for a percentage of royalties.  This means that additional
out-of-pocket expense for marketing and sales would be minimal.  If we
are unable to contract with a distributor, we intend to finance these
expenditures through additional private equity or debt financing.





Our next
objective in 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.





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 Disclosure Controls and Procedures





We
maintain disclosure controls and procedures that are designed to ensure that
material information required to be disclosed in our periodic reports filed
under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded,
processed, summarized, and reported within the time periods specified in the
SEC’s rules and forms and to ensure that such information 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. During the quarter ended June 30, 2010 we carried out an evaluation,
under the supervision and with the participation of our management, including
Thomas H. Hanna, Jr., our principal executive and financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this
evaluation, management concluded that, as of June 30, 2010, our disclosure
controls and procedures were effective.




19




Limitations
on Effectiveness of Controls and Procedures





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





Changes
in Internal Control Over Financial Reporting





There
have been no changes in our internal control over financial reporting that
occurred during the last fiscal quarter 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 June 30, 2010.





ITEM
      3.
              DEFAULTS
      UPON SENIOR SECURITIES


None.





20




ITEM
      4.
              (REMOVED
      AND RESERVED)


ITEM
      5.
              OTHER
      INFORMATION


None.






ITEM
      6.
              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





21





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.






August
18, 2010


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




22