U.S.
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, 2009





OR





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





Commission
File Number 000-28753










FREESTONE RESOURCES,
INC.


(Exact
name of small business issuer as specified in its charter)






Nevada
            
            33-0880427(State
      or other jurisdiction of incorporation or organization)
            
            (IRS
      Employer Identification No.)





Republic Center, Suite 1350,
325 N. St. Paul Street Dallas, TX 75201


(Address
of principal executive offices)





(214)
880-4870


(Issuer's
telephone number)





2000 E. Lamar Blvd. Ste. 600
Arlington, TX 76006


(Former
name, former address and former fiscal year, if changed since last
report)





Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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
|   | No |X|





Indicate
by check mark whether the Registrant is a large accredited filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accredited filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act:






Large
      Accredited Filer [  ]
            Accelerated
      Filer [  ]Non-Accredited
      Filer   [  ]
            Smaller
      Reporting Company [X]




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





As of May
18, 2009 there were 35,115,260 shares of Common Stock of the issuer
outstanding.


























Freestone
      Resources, Inc.Consolidated
      Balance Sheets(Unaudited)March
      31, 2009
                
                
                June
      30, 2008AssetsCurrent
      Assets:Cash
                
                $
                -
                
                
                $
                13,548Accounts
      receivable
                
                
                -
                
                
                
                42,260Note
      receivable
                
                
                -
                
                
                
                16,468Inventory
      of Petrozene
                
                
                90,771
                
                
                
                -Total
      Current Assets
                
                
                90,771
                
                
                
                72,276Fixed
      assets, net
                
                
                367,243
                
                
                
                344,202Other
      assets
                
                
                15,068
                
                
                
                -Petrozene
      contract, net
                
                
                1,000
                
                
                
                1,00016,068
                
                
                
                1,000Total
      Assets
                
                $
                474,082
                
                
                $
                417,478Liabilities
      and Stockholders’ EquityCurrent
      Liabilities:Accounts
      payable
                
                $
                29,630
                
                
                $
                23,625Accounts
      payable – related party
                
                
                107,658
                
                
                
                5,872Note
      payable
                
                
                35,000
                
                
                
                1,721Current
      portion – long term debt
                
                
                33,078
                
                
                
                12,267Total
      Current Liabilities
                
                
                205,366
                
                
                
                43,485Long-term
      Liabilities:Long-term
      debt
                
                
                40,681
                
                
                
                43,251Asset  retirement
      obligations
                
                
                34,888
                
                
                
                34,888Total
      Liabilities
                
                
                280,935
                
                
                
                121,624Stockholders’
      Equity:Preferred
      stock, $.001 par value, 5,000,000 sharesauthorized,
      -0- shares issued and outstanding
                
                
                -
                
                
                
                -Common
      stock, $.001 par value, 100,000,000 sharesauthorized,
      52,180,260 and 50,025,260 shares issuedand
      outstanding, respectively
                
                
                52,180
                
                
                
                50,025Additional
      paid in capital
                
                
                14,177,429
                
                
                
                13,964,084Accumulated
      deficit
                
                
                (14,036,462
                )
                
                
                (13,718,255
                )Total
      stockholders’ equity
                
                
                193,147
                
                
                
                295,854Total
      Liabilities and Stockholders’ Equity
                
                $
                474,082
                
                
                $
                417,478










The
accompanying notes are an integral part of these financial
statements.






















Freestone
      Resources, Inc.Consolidated
      Statements of Operations(Unaudited)Three Months
      Ended
                    
                    
                    Nine
      Months EndedMarch
                    
                    
                    March
                    
                    
                    March
                    
                    
                    March31, 2009
                    
                    
                    
                    31, 2008
                    
                    
                    
                    31, 2009
                    
                    
                    
                    31,
      2008Revenue:Oil
      and gas
                    
                    $
                    13,960
                    
                    
                    $
                    44,417
                    
                    
                    $
                    83,222
                    
                    
                    $
                    83,686Petrozene
                    
                    
                    -
                    
                    
                    
                    4,400
                    
                    
                    
                    -
                    
                    
                    
                    406,726Total
      revenue
                    
                    
                    13,960
                    
                    
                    
                    48,817
                    
                    
                    
                    83,222
                    
                    
                    
                    490,412Operating
      expenses:Cost
      of revenue
                    
                    
                    5,538
                    
                    
                    
                    -
                    
                    
                    
                    11,036
                    
                    
                    
                    151,800Lease
      operating costs
                    
                    
                    13,020
                    
                    
                    
                    18,598
                    
                    
                    
                    60,184
                    
                    
                    
                    21,055Depreciation
      and depletion
                    
                    
                    6,943
                    
                    
                    
                    8,630
                    
                    
                    
                    20,828
                    
                    
                    
                    14,383General
      and administrative
                    
                    
                    22,111
                    
                    
                    
                    82,999
                    
                    
                    
                    303,037
                    
                    
                    
                    251,488Total
      operating expenses
                    
                    
                    47,612
                    
                    
                    
                    110,227
                    
                    
                    
                    395,085
                    
                    
                    
                    438,726Operating  income
      (loss)
                    
                    
                    (33,652
                    )
                    
                    
                    (61,410
                    )
                    
                    
                    (311,863
                    )
                    
                    
                    51,686Other
      income (expense):Interest
      expense
                    
                    
                    (2,195
                    )
                    
                    
                    (519
                    )
                    
                    
                    (6,344
                    )
                    
                    
                    (613
                    )Total
      other income (expense)
                    
                    
                    (2,195
                    )
                    
                    
                    (519
                    )
                    
                    
                    (6,344
                    )
                    
                    
                    (613
                    )Net
      income (loss)
                    
                    $
                    (35,847
                    )
                    
                    $
                    (61,929
                    )
                    
                    $
                    (318,207
                    )
                    
                    $
                    51,073Basic
      and diluted income (loss) per share
                    
                    $
                    0.00
                    
                    
                    $
                    0.01
                    
                    
                    $
                    (0.01
                    )
                    
                    $
                    0.00Weighted
      average shares outstanding:Basic
      and diluted
                    
                    
                    52,180,260
                    
                    
                    
                    39,740,012
                    
                    
                    
                    52,172,395
                    
                    
                    
                    36,389,824










The
accompanying notes are an integral part of these financial
statements















Freestones
      Resources, Inc.Consolidated
      Statement of Stockholders' Equity(Unaudited)Common
      Stock
                              
                              
                              Additional
                              
                              
                              AccumulatedShares
                              
                              
                              Amount
                              
                              
                              paid
      in capital
                              
                              
                              Deficit
                              
                              
                              TotalBalance,
      June 30, 2008
                              
                              50,025,260
                              
                              
                              $ 50,025
                              
                              
                              $ 13,964,084
                              
                              
                              $ (13,718,255)
                              
                              
                              $ 295,854Common
      stock issued for services
                              
                              
                              2,155,000
                              
                              
                              
                              2,155
                              
                              
                              
                              213,345
                              
                              
                              
                              -
                              
                              
                              
                              215,500Net
      Loss
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (318,207
                              )
                              
                              
                              (318,207)Balance,
      March 31, 2009
                              
                              
                              52,180,260
                              
                              
                              $
                              52,180
                              
                              
                              $
                              14,177,429
                              
                              
                              $
                              (14,036,462
                              )
                              
                              $
                              193,147










The
accompanying notes are an integral part of these financial
statements.























Freestone
      Resources, Inc.
              Consolidated
      Statements of Cash Flows
              (Unaudited)




Nine
      Months Ended March 31,2009
                    
                    
                    2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                    
                    $
                    (318,207
                    )
                    
                    $
                    51,073Adjustments
      to reconcile net income (loss) to net cash provided by (used in)
      operating activities:Depreciation
      and amortization
                    
                    
                    20,828
                    
                    
                    
                    14,383Shares
      issued for services
                    
                    
                    215,500
                    
                    
                    
                    -Write-off
      in note receivable
                    
                    
                    16,468
                    
                    
                    
                    -Change
      in account receivable
                    
                    
                    42,260
                    
                    
                    
                    (17,856
                    )Change
      in inventory of Petrozene
                    
                    
                    (90,771
                    )
                    
                    
                    -Change
      in other assets
                    
                    
                    (15,068
                    )
                    
                    
                    (1,000
                    )Change
      in accounts payable
                    
                    
                    6,005
                    
                    
                    
                    (140,062
                    )Change
      in accounts payable - related party
                    
                    
                    101,786
                    
                    
                    
                    -Net
      cash provided by (used in) operating activities
                    
                    
                    (21,199
                    )
                    
                    
                    47,788CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of fixed assets
                    
                    
                    (43,869
                    )
                    
                    
                    -Net
      cash used in investing activities
                    
                    
                    (43,869
                    )
                    
                    
                    -CASH
      FLOWS FROM FINANCING ACTIVITES:Proceeds
      from note payable
                    
                    
                    33,279
                    
                    
                    
                    -Proceeds
      from long-term debt
                    
                    
                    20,811Payments
      on long-term debt
                    
                    
                    (2,570
                    )
                    
                    
                    (1,508
                    )Net
      cash provided by (used in) financing activities
                    
                    
                    51,520
                    
                    
                    
                    (1,508
                    )NET
      CHANGE IN CASH
                    
                    
                    (13,548
                    )
                    
                    
                    46,280CASH
      AT BEGINNING OF PERIOD
                    
                    
                    13,548
                    
                    
                    
                    -CASH
      AT END OF PERIOD
                    
                    $
                    -0-
                    
                    
                    $
                    46,280Supplemental
      cash flow information:Cash
      paid for interest
                    
                    $
                    6,344
                    
                    
                    $
                    612Non-cash
      investing activities:Acquisition
      of oil and gas interests and fixed assets for stock
                    
                    $
                    -
                    
                    
                    $
                    330,989Assumption
      of accounts payable and note payable
                    
                    $
                    -
                    
                    
                    $
                    181,412













The
accompanying notes are an integral part of these financial
statements.
















Freestone
Resources, Inc.


Notes
to Consolidated Financial Statements


(Unaudited)





Note
1 – Basis of Presentation





The
accompanying unaudited interim consolidated financial statements of Freestone
Resources, Inc. (“Freestone” or  “Company”) have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission. The results of
operations for the three months ended March 31, 2009 and nine months ended
March 31, 2009 are not necessarily indicative of the results of operations for
the full year or any other interim period.  The information included
in this Form 10-Q should be read in conjunction with Management's Discussion and
Analysis and Financial Statements and notes thereto included in the Company’s
June 30, 2008 Form 10-K.  Notes to the consolidated financial
statements which substantially duplicate the disclosure contained in the audited
financial statements for fiscal 2008 as reported in the Form 10-K have been
omitted.





Critical
Accounting Policies





Oil and Gas Properties-
Freestone uses the full cost method of accounting for oil and gas
properties.  Management believes adoption of the full cost method more
accurately reflects management's exploration objectives and results by including
all costs incurred as integral for the acquisition, discovery and development of
whatever reserves ultimately result from our efforts as a
whole.  Under the full cost method of accounting, all costs associated
with acquisition, exploration and development of oil and gas reserves, including
directly related overhead costs, are capitalized.  Such costs include
lease acquisitions, seismic surveys, drilling and completion equipment,
estimated future development costs and, where significant, dismantlement,
restoration and abandonment costs, net of estimated salvage values. All
capitalized costs of oil and gas properties are amortized on the
unit-of-production method using estimates of proved reserves.





Investments
in unproved properties and major development projects are not amortized until
proved reserves associated with the projects can be determined or until
impairment occurs.  Unproved or unevaluated properties are evaluated
at least annually for impairment on a property-by-property basis.  If
the results of an assessment indicate that the properties are impaired, the
amount of impairment is added to the proved oil and natural gas property costs
to be amortized. The unproven properties were purchased in order to test
the Company’s keystone product Petrozene, and allow the Company to continue
research and development of this product.





The
capitalized costs are subject to a "full cost ceiling test," which generally
limits such costs to the aggregate of the "estimated present value," discounted
at a 10 percent (10%) interest rate, of future net revenues from proved
reserves, based on current economic and operating conditions, plus the lower of
cost or fair market value of unproved properties.  If net capitalized
costs exceed this limit, the excess is charged to operations through
depreciation, depletion and amortization.  Sales of proved and
unproved properties are accounted for as adjustments of capitalized costs with
no gain or loss recognized, unless such adjustments would significantly alter
the relationship between capitalized costs and proved reserves of oil and gas,
in which case the gain or loss is recognized in income.





Freestone
      proportionally consolidates its interests in oil and natural gas
      properties.





Earnings per share- Basic
earnings (loss) per share are computed by dividing net income (loss) by the
weighted average number of common shares outstanding for the
period.  Diluted earnings (loss) per share include the effects of any
outstanding options, warrants and other potentially dilutive
securities.  For the periods presented, there were no potentially
dilutive securities outstanding.

























Note
2 – Going Concern





As
reflected in the accompanying consolidated financial statements, Freestone
incurred operating losses, and has a negative working capital position as of
March 31, 2009.  The above factors raise substantial doubt about
Freestone's ability to continue as a going concern.  Freestone's
continued existence is dependent on its ability to obtain additional equity
and/or debt financing to fund its operations.  Freestone plans to
raise additional financing and to increase sales volume.  There is no
assurance that Freestone will obtain additional financing or achieve profitable
operations or cash inflows.  The financial statements do not include
any adjustments relating to the recoverability or classification of recorded
asset amounts or the amount and classification of liabilities that might be
necessary as a result of this uncertainty.





Note
3 – Common Stock





On July
2, 2008 Freestone issued 2,155,000 shares of common stock valued at $215,500 to
consultants for services.





Note
4 – Change in Control





On July
1, 2008, the Company agreed to accept the resignation of the following officers
and directors:




Lloyd
      Lane
            President and
      DirectorTom
      Bonner
            Secretary and
      Director




On July
1, 2008, the Company appointed the following officers and
directors:




Mike
      Doran
            Chief
      Executive Officer and DirectorClayton
      Carter
            President and
      Director





Note
5 – Freestone Technologies, LLC





On
October 24, 2008 Freestone established and incorporated Freestone Technologies,
LLC (the “Subsidiary”) in the state of Texas.  The Subsidiary is
wholly owned by Freestone and has certain assets and liabilities relating to the
purchase of oil wells.  These wells were purchased as additional test
wells for Petrozene.  The assets and liabilities of the Subsidiary are
included in the consolidated financial statements of Freestone.






Note
6 – Subsequent Events





On April
17, 2009 the Company entered into an agreement with Lloyd Lane, Tom Bonner, Mike
Doran, Jimmy Carter, Clayton Carter and Capital Financial Consultants to
liquidate their investments in Freestone.  Each  surrendered
his Freestone common stock issued to him (an aggregate of 27,865,000 shares)
upon forming Freestone in exchange for a building, certain oil and gas assets,
the assumption of certain liabilities related to those assets and assignment of
a Petrozene supply contract.





On April
21, 2009 the Company issued 2,000,000 restricted shares of common stock to Dona
Doran in payment of a $50,000 loan.




On April
22, 2009 the Company issued 3,000,000 restricted shares of common stock to Mike
Doran, 3,000,000 restricted shares of common stock to Clayton Carter, 1,500,000
restricted shares of common stock to Don Edwards, and 1,250,000 restricted
shares of common stock to consultants as compensation for past services rendered
in lieu of salary.






















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





This
report contains forward looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company’s actual results could differ
materially from those set forth on the forward looking statements as a result of
the risks set forth in the Company’s filings with the Securities and Exchange
Commission, general economic conditions, and changes in the assumptions used in
making such forward looking statements.





General





Freestone
Resources, Inc. was involved in the operation of an internet computer supply
business until its operations were discontinued in 2001. It had no business
until November of 2007 when it entered the oil and gas business when it
purchased certain oil and gas properties, related fixed assets and a Petrozene
contract which gives the Company the right to purchase Petrozene. The Company
was incorporated as Para-Link, Inc. in the State of Texas on January 22, 1997
and on March 10, 1999, Para-Link acquired 100% of the outstanding capital stock
of iChargeit Inc. ("iChargeit"). iChargeit was incorporated on January 6, 1999
in the State of Nevada. On March 17, 1999, the Company changed its name to
iChargeit. On November 5, 1999 the Company was reincorporated in Delaware. On
August 22, 2007, the Company was reincorporated in Nevada and changed its name
to Freestone Resources, Inc. in anticipation of going into the oil and gas
business.





Results
of Operations





Three
months Ended March 31, 2009 and March 31, 2008.  Compared to
nine months ended March 31, 2009 and March 31, 2008





Revenue- Our revenue for the
three months March 31, 2009 was $13,960, compared to $48,817 revenue for the
same period in 2008. Revenue decreased in the third quarter due to decreased in
oil and gas sales from wells acquired on November 1, 2007.  Our
revenue for the nine months March 31, 2009 was $83,222, compared to $490,412
revenue for the same period in 2008.





Operating Expense- Cost of
Petrozene sales was negligible for the three months ended March 31,
2009.  Cost of Petrozene sales for the three months ended March 31,
2009 was $-0-, compared to $-0- for the same period of 2008.  There
were no Petrozene sales in the three months ended March 31, 2009 and nine months
ended March 31, 2009. Petrozene sales in the three months ended March 31, 2008
were $4,400 and nine months ended March 31, 2008 were $406,726.  Cost
of Petrozene sales for the three months ended March 31, 2008 were $-0- and nine
months ended March 31, 2008 were $151,800.





Lease
operating expense for the three months ended March 31, 2009 was $13,020 compared
to $18,598 for the same period in 2008. Lease operating expense decreased for
three months ended due to cost associated with wells acquired on November 1,
2007.  Lease operating expense for the nine months ended March 31,
2009 was $60,184 compared to $21,055 for the same period in 2008.





Operating Expense- Total
operating expenses for the three months ended March 31, 2009 were $6,943 of
depreciation and depletion expense and $22,075 of general and administrative
expenses respectively, compared to $8,630 depreciation and depletion expense and
$82,999 of general and administrative expenses for the same period in
2008.  Total operating expenses for the nine months ended March 31,
2009 were $20,828 of depreciation and depletion expense and $303,037 of general
and administrative expenses respectively, compared to $14,383 depreciation and
depletion expense and $251,488 of general and administrative expenses for the
same period in 2008.  General and administrative expenses for the nine
months ended March 31, 2009 include a non-cash expense of $215,500, see Note 3,
Common Stock.





Net Income (Loss)- Net loss
for the three months ended March 31, 2009 was $35,811 compared to net loss of
$61,929 for the same period in 2008.  - Net loss for the nine months
ended March 31, 2009 was $318,207 compared to a net income of $51,073 for the
same period in 2008.








Liquidity
and Capital Resources





We have
little cash reserves and liquidity to the extent we receive it from
operations.














During
the nine months ended March 31, 2009, our cash and cash equivalent decreased to
$0 from $13,548 at June 30, 2008.





Net cash
used in operating activities was $21,199 for the nine months ended March 31,
2009 compared to $47,788 provided by operating activities for the same period in
2008.





Employees





As of
March 31, 2009, Freestone only employees are officers of the
Company.





Need
for Additional Financing








No
commitments to provide additional funds have been made by management or other
stockholders.  Our independent auditors included a going concern
qualification in their report included in our annual report on Form
10-K for the year ended June 30, 2008, which raises substantial doubt about
our ability to continue as a going concern.





Further,
there exist no agreements or understandings with regard to loan agreements by or
with the Officers, Directors, principals, affiliates or shareholders of the
Company.





















ITEM
3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Not
applicable.








ITEM
4: CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Securities Exchange Act of 1934, as
amended (the "Act") is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure. It should be noted that the design of any system of
controls 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, regardless of
how remote.  As of the end of the period covered by this Quarterly Report,
we carried out an evaluation, under the supervision and with the participation
of our President, also serving as our Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures.  Based on this evaluation, our President has concluded that the
Company’s disclosure controls and procedures are not effective because of the
identification of a material weakness in our internal control over financial
reporting which is identified below, which we view as an integral part of our
disclosure controls and procedures.





The
material weakness relates to the lack of segregation of duties in financial
reporting, as our financial reporting and all accounting functions are performed
by an external consultant with no oversight by a professional with accounting
expertise.  Our President does not possess accounting expertise and our
Company does not have an audit committee.  This weakness is due to the
Company’s lack of working capital to hire additional staff.  To remedy this
material weakness, we intend to engage another accountant to assist with
financial reporting as soon as our finances will allow.







Changes
in Internal Controls over Financial Reporting





We have
not yet made any changes in our internal controls over financial reporting that
occurred during the period covered by this report on Form 10-Q that has
materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
































PART
II – Other Information





Item
      No.2    Unregistered Sales of Equity Securities and
      use of Proceeds.





During
the nine months ended March 31, 2009, Freestone issued 2,155,000 restricted
shares of common stock valued at $215,500 to consultants for services. The
consultants agreed to acquire the shares for investment purposes only and not
for resale. The certificates representing the shares carry a legend that the
shares may not be sold or transferred without compliance with the registration
requirements of the Securities Act of 1933, as amended (the “Act”) or in
reliance upon an applicable exemption there from. In connection with the issue
of these shares, the Company relied upon the private offering exemption found in
section 4(2) of the Act.








Item No.
6 – Exhibits





Exhibit
Number











31.1
            Certification
      of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange
      Act, as enacted by Section 302 of the Sarbanes-Oxley Act of
      2002.





31.2
              Certification
      of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange
      Act, as enacted by Section 302 of the Sarbanes-Oxley Act of
      2002.





32.1
              Certification
      of Chief Executive Officer and Chief Financial Officer, pursuant to 18
      United States Code Section 1350, as enacted by Section 906 of the
      Sarbanes-Oxley Act of 2002.














SIGNATURES





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





FREESTONE
RESOURCES, INC.





By /s/ Mike
Doran





Mike
Doran, CEO





Date: May
21, 2009