----

----

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

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

----

| Freestone Resources, Inc.Consolidated Balance SheetsAs of March 31, 2010 and June 30, 2009  |
|--------------------------------------------------------------------------------------------------|

|                                                                                                                    Assets                                                       |          |        |    |         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|-------------|---------|--------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | (Unaudited)   |        |    | (Audited)    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | March 31,2010 |        |    | June 30,2009 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |
| Current Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |        |    |         |
|   Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | $             | 50,645      |    |         | $ | 4,815 |   |
|   Accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          | -           |    |         |   | 4,559 |   |
|   Deposits and other assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          | 4,846       |    |         |   | 5,068 |   |
|     Total Current Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          | 55,491      |    |         |   | 14,442 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
| Fixed assets, net of accumulated depreciation of $3,774 and $1,915                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |          | 32,343      |    |         |   | 33,052 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
| Other assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          | 31,378      |    |         |   | 1,000 |   |
| Investment in Bleeding Rock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |          | 250,010     |    |         |   | - |   |
| Licenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |          | 150,000     |    |         |   | - |   |
| Intangible asset                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          | 2,714       |    |         |   | - |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |          | 1,254,149   |    |         |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          | 1,688,251   |    |         |   | 1,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
| Total Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | $             | 1,776,085   |    |         | $ | 48,494 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
|                                                                                                                        Liabilities and Stockholders' Equity |          |        |    |         |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
| Current Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
|   Accounts payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $             | 257,650     |    |         | $  | 24,431 |   |
|   Accounts payable-related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          | 150,010     |    |         |   | - |   |
|   Accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          | 6,654       |    |         |   | - |   |
|   Stock to be issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          | 185,000     |    |         |   | - |   |
|   Note payable to bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |          | -           |    |         |   | 25,997 |   |
|   Notes payable-related parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          | 37,557      |    |         |   | 25,000 |   |
|   Line-of-credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          | 14,908      |    |         |   | - |   |
|    Total Current Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |          | 651,779     |    |         |   | 75,428 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
|  Long-term Liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |        |    |         |   |   |   |
|  Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |          | 41,123      |    |         |   | 41,123 |   |
|     Total Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          | 692,902     |    |         |   | 116,551 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |        |    |         |   |   |   |
| Stockholders' Equity (Deficit):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |        |    |         |   |   |   |
| Common stock, $.001 par value, 100,000,000 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |          |        |    |         |   |   |   |
|    authorized, 68,418,994 and 35,115,260 shares issued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |        |    |         |   |   |   |
|    and outstanding, respectively                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          | 68,419      |    |         |   | 35,115 |   |
| Additional paid in capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          | 15,973,089  |    |         |   | 14,572,244 |   |
| Accumulated deficit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |          | (14,958,325 | )  |         |   | (14,675,416 | ) |
|    Stockholders' Equity (Deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |          | 1,083,183   |    |         |   | (68,057 | ) |
| Total Liabilities and Stockholders’  Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $             | 1,776,085   |    |         | $ | 48,494 |   |

----

| Freestone Resources, Inc.Consolidated Statements of OperationsFor the Three and Nine Months Ended March 31, 2010 and 2009(unaudited) |
|--------------------------------------------------------------------------------------------------------------------------------------|

|                                                                     |   | Three Months Ended March 31, 2010 |       |   | Three Months Ended March 31, 2010 |   |       | Six Months Ended March 31, 2010 |   |    | Six Months Ended March 31, 2010 |   |
|--------------------------------------------------------------------------|--------|----------------------------------------|------------|--------|-----------------------------------|--------|------------|---------------------------------|--------|---------|---------------------------------|--------|
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |
| Revenue:                                                                 |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |
|   Oil and gas revenues resulting from research activities      |   | $                                      | 25,539     |   |                              | $      | 13,960     |                            |   | $       | 52,734                          |   |   | $ | 83,222 |   |
|     Total revenue resulting from research activities |   |                                   | 25,539     |   |                              |   | 13,960     |                            |   |    | 52,734                          |   |   |   | 83,222 |   |
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
| Operating expenses:                                                      |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
|   Cost of revenue                                              |   |                                   | -          |   |                              |   | 5,538      |                            |   |    | -                               |   |   |   | 11,036 |   |
|   Lease operating costs                                        |   |                                   | 15,146     |   |                              |   | 13,020     |                            |   |    | 20,367                          |   |   |   | 60,184 |   |
|   Depreciation and depletion                                   |   |                                   | 620        |   |                              |   | 6,943      |                            |   |    | 1,859                           |   |   |   | 20,828 |   |
|   Impairment expense                                           |   |                                   | -          |   |                              |   | -          |                            |   |    | 7,649                           |   |   |   | - |   |
|   General and administrative                                   |   |                                   | 163,766    |   |                              |   | 22,111     |                            |   |    | 310,152                         |   |   |   | 303,037 |   |
|     Total operating expenses                         |   |                                   | 179,532    |   |                              |   | 47,612     |                            |   |    | 340,027                         |   |   |   | 395,085 |   |
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
| Operating loss                                                           |   |                                   | (153,993   | )      |                              |   | (33,652    | )                               |   |    | (287,293                        | )      |   |   | (311,863 | ) |
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
| Other income (expense):                                                  |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
|   Gain on settlement of debt                                   |   |                                   | -          |   |                              |   | -          |                            |   |    | 6,200                           |   |   |   |   |   |
|   Interest income (expense)                                    |   |                                   | 1,312      |   |                              |   | (2,159     | )                               |   |    | (1,816                          | )      |   |   | (6,344 | ) |
|   Other income (expense)                                       |   |                                   | -          |   |                              |   | -          |                            |   |    | -                               |   |   |   | - |   |
|    Total other income (expense)                           |   |                                   | 1,312      |   |                              |   | (2,159     | )                               |   |    | 4,384                           |   |   |   | (6,344 | ) |
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
| Net loss                                                                 |   | $                                      | (152,681   | )      |                              | $      | (35,811    | )                               |   | $  | (282,909                        | )      |   | $ | (318,207 | ) |
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
| Basic and diluted loss per share                                         |   | $                                      | 0.00       |   |                              | $      | 0.00       |                            |   | $  | 0.00                            |   |   | $ | (0.01 | )  |
|                                                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
| Weighted average shares outstanding:                                     |   |                                   |       |   |                              |   |       |                            |   |    |                            |   |   |   |   |   |
| Basic and diluted                                                        |   |                                   | 68,298,994 |   |                              |   | 52,180,260 |                            |   |    | 57,433,894                      |   |   |   | 52,172,395 |   |

----

| Freestone Resources, Inc.Consolidated Statement of Stockholders’ EquityFor the Year Ended June 30, 2009 andthe Nine Months Ended March 31, 2010(Unaudited) |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |
|--------------------------------------------|--------|--------------|-------------|--------|------------|--------|-------------|-----------------|--------|--------|------------|--------|--------|--------|-------------|
|                                       |   | Common Stock |        |   | Additional |   |        | Accumulated     |   |   |       |   |
|                                       |   | Shares       |        |   | Amount     |   |        | Paid in Capital |   |   | Deficit    |   |   | Total  |        |
|  Balance, June 30, 2008               |   |         | 50,025,260  |   |       | $      | 50,025      |            |   | $      | 13,964,084 |   |   | $      | (13,734,880 | ) |   | $ | 295,854 |   |
|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |   |   |   |   |   |
| Common stock issued for services           |   |         | 10,955,000  |   |       |   | 10,955      |            |   |   | 512,295    |   |   |   | -           |   |   |   | 523,250 |   |
| Common stock issued for note payable       |   |         | 2,000,000   |   |       |   | 2,000       |            |   |   | 68,000     |   |   |   | -           |   |   |   | 70,000 |   |
|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |   |   |   |   |   |
| Common stock – cancelled             |   |         | (27,865,000 | )      |       |   | (27,865     | )               |   |   | 27,865     |   |   |   | -           |   |   |   | - |   |
|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |   |   |   |   |   |
| Net loss                                   |   |         |        |   |       |   |        |            |   |   |       |   |   |   | (957,161    | ) |   |   | (957,161 | ) |
|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |   |   |   |   |   |
| Balance, June 30, 2009                     |   |         | 35,115,260  |   |       | $      | 35,115      |            |   | $      | 14,572,244 |   |   | $      | (14,675,416 | ) |   | $ | (68,057 | ) |
|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |   |   |   |   |   |
| Common stock issued for acquisition of EOS |   |         | 31,603,734  |   |       |   | 31,604      |            |   |   | 1,232,545  |   |   |   | -           |   |   |   | 1,264,149 |   |
| Common stock issued for cash     |   |         | 1,700,000   |   |       |   |  1,700 |            |   |   | 168,300    |   |   |   | -           |   |   |   | 170,000 |   |
|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |   |   |   |   |   |
| Net loss                                   |   |         |        |   |       |   |        |            |   |   |       |   |   |   | (282,909    | ) |   |   | (282,909 | ) |
| Balance, March 31, 2010               |   |         | 68,418,994  |   |       | $      | 68,419      |            |   | $      | 15,973,089 |   |   | $      | (14,958,325 | ) |   | $ | 1,083,183 |   |
|                                       |   |         |        |   |       |   |        |            |   |   |       |   |   |   |        |   |   |   |   |   |

----

| Freestone Resources, Inc.Consolidated Statements of Cash FlowsFor the Nine Months Ended March 31, 2010 and 2009(Unaudited) |
|----------------------------------------------------------------------------------------------------------------------------|

|                                                                                           |   | Nine months ended March 31, |      |
|------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                                           |   | 2010                        |      |   | 2009 |   |
|                                                                                           |   |                        |      |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                          |   |                        |      |   |   |   |
| Net loss                                                                                       |   | $                           | (282,909  | ) |   | $ | (318,207 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      |   |                        |      |   |   |   |   |   |
|     Depreciation and amortization                                          |   |                        | 1,859     |   |   |   | 20,828 |   |
|     Shares issued for services                                             |   |                        | -         |   |   |   | 215,500 |   |
| Changes in operating assets and liabilities:                                                   |   |                        |      |   |   |   |   |   |
|     Write-off in note receivable                                           |   |                        | -         |   |   |   | 16,468 |   |
|     Change in account receivable                                           |   |                        | 4,559     |   |   |   | 42,260 |   |
|     Change in inventory of Petrozene                                       |   |                        | -         |   |   |   | (90,771 | ) |
|     Change in other assets                                                 |   |                        | (51,453   | ) |   |   | (15,068 | ) |
|    Change in accounts payable                                                   |   |                        | (14,004   | ) |   |   |   |   |
|     Change in accrued expenses                                   |   |                        | 6,654     |   |   |   | 6,005 |   |
|     Change in accounts payable - related party                             |   |                        | (11,664   | ) |   |   | 101,786 |   |
|     Change in line-of-credit                                               |   |                        | (3,092    | ) |   |   | - |   |
|   Net cash provided used in operating activities                                     |   |                        | (350,050  | ) |   |   | (21,199 | ) |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                          |   |                        |      |   |   |   |   |   |
|     Intangible assets acquired with subsidiary                             |   |                        | 17,296    |   |   |   | - |   |
|     Purchases of fixed assets                                              |   |                        | (1,150    | ) |   |   | (43,869 | ) |
|   Net cash used in investing activities                                              |   |                        | 16,146    |   |   |   | (43,869 | ) |
| CASH FLOWS FROM FINANCING ACTIVITES:                                                           |   |                        |      |   |   |   |   |   |
|     Payments on note payable                                               |   |                        | 24,734    |   |   |   | (2,570 | ) |
|     Proceeds from note payable                                             |   |                        | -         |   |   |   | 33,279 |   |
|     Proceeds from sale of stock                                            |   |                        | 170,000   |   |   |   | - |   |
|     Proceeds from long-term debt                                           |   |                        | -         |   |   |   | 20,811 |   |
|     Proceeds from sale of common stock to be issued                        |   |                        | 185,000   |   |   |   | - |   |
|  Net cash provided by financing activities                                                |   |                        | 379,734   |   |   |   | 51,520 |   |
| NET CHANGE IN CASH                                                                             |   |                        | 45,830    |   |   |   | (13,548 | ) |
| CASH AT BEGINNING OF PERIOD                                                                    |   |                        | 4,815     |   |   |   | (13,548 | ) |
| CASH AT END OF PERIOD                                                                          |   | $                           | 50,645    |   |   | $ | - |   |
| Supplemental cash flow information:                                                            |   |                        |      |   |   |   |   |   |
|    Cash paid for interest                                                       |   | $                           | 3,128     |   |   | $ | 6,344 |   |
| Non-cash investing activities:                                                                 |   |                        |      |   |   |   |   |   |
|    Stock issued for purchase of subsidiary                                      |   | $                           | 1,264,149 |   |   | $ | - |   |
|    Licenses assumed in acquisition of subsidiary                                |   | $                           | 150,000   |   |   | $ | - |   |
|    Intangible asset                                                             |   | $                           | 10,000    |   |   | $ | - |   |
|    Assumption of accounts payable and note payable in acquisition of subsidiary |   | $                           | 400,000   |   |   | $ | - |   |

----

----

|   | ● | The Company owns 100% of EOS and has applied ASC 810 in consolidating the subsidiary. |
|--------|---------|---------------------------------------------------------------------------------------|

|   | ● | EOS owns 50% of BRC, as does an unrelated third party, Hidden Peak Group.  Although each party owns 50%, Hidden Peak Group maintains control of the three person management board with three representatives, and therefore, applying the requirements for consolidations under ASC 810, EOS has not consolidated BRC but shows its impact through the Noncontrolling Interest method. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                |   | March 31,2010 |                                             |    | June 30, 2009 |   |
|-----------------------------------------------------|--------|---------------|--------------------------------------------------|---------|---------------|--------|
| Computers & office furniture                    |   | $             | 8,967                                            |    |          | $      | 8,967 |   |
| Oil and gas research and development equipment      |   |          | 27,150                                           |    |          |   | 26,000 |   |
| Total fixed assets                                  |   |          | 36,117                                           |    |          |   | 34,967 |   |
| Less: Accumulated depreciation                 |   |          |        (3,774 | )  |          |   |        (1,915 | )  |
| Total fixed assets, net of accumulated depreciation |   | $             | 32,343                                           |    |          | $      | 33,052 |   |

----

|                                                 |   | March 31, |     |   | June 30, |    |
|------------------------------------------------------|--------|-----------|----------|--------|----------|---------|
|                                                 |   | 2010      |     |   | 2009     |    |
| Prior Year                                           |   | $    | 522,009  |   |     | $  | 196,574 |   |
| Tax Benefit for Current Period                       |   |      | 145,312  |   |     |    | 325,435 |   |
| Net Operating Loss Carryforward                      |   | $         | 667,321  |   |     | $       | 522,009 |   |
| Less: Valuation Allowance                            |   |      | (667,321 | )      |     |    | (522,009 | ) |
|      Net Deferred Tax Asset |   | $         | 0        |   |     | $       | 0 |   |

----

|  EOS Summary of Net Assets as of September 24, 2009 |
|----------------------------------------------------------|

|  Assets                                 |   |   |          |
|----------------------------------------------|--------|--------|---------------|
|  Investment in Bleeding Rock, LLC       |   | $      | 250,010       |   |
|  Intangible assets                 |   |   | 10,000   |   |
|  Licenses                               |   |   | 150,000       |   |
|  Total Assets                           |   |   | 410,010       |   |
|                                         |   |   |          |   |
|  Liabilities                            |   |   |          |   |
|  Accounts payable                       |   |   | 250,000       |   |
|  Accounts payable – Related Party |   |   | 150,010  |   |
|  Total Liabilities                      |   |   | 400,010       |   |
|                                         |   |   |          |   |
|  Net Assets                             |   | $      | 10,000        |   |

----

|   |   | Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.  |                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Level 2 - Inputs to the valuation methodology include:                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                               | ·  quoted prices for similar assets or liabilities in active markets;                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                               | ·  quoted prices for identical or similar assets or liabilities in inactive markets;·       inputs other than quoted prices that are observable for the asset or liability;·       inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|   |   |                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                 |

|   | If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                          |   |
|   | Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.                                                 |   |

|  Liabilities at Fair Value as of March 31, 2010 |
|------------------------------------------------------|

|                         |   | Level 1 |                                                          |   | Level 2 |   |                                                          | Level 3 |   |   | Total              |   |
|------------------------------|--------|---------|---------------------------------------------------------------|--------|---------|--------|---------------------------------------------------------------|---------|--------|--------|--------------------|--------|
| Asset retirement obligations |   | $       |           - |   |    | $      |           - |    |   | $      |   41,123 |   |   | $ |   41,123 |   |

----

| Freestone Resources, Inc.Consolidated Statements of OperationsPROFORMA(Unaudited) |
|-----------------------------------------------------------------------------------|

|                                                                     |   | Nine Months EndedMarch 31, 2010 |       |
|--------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                     |   |                            |       |
|                                                                     |   |                            |       |   |
|                                                                     |   |                            |       |   |
| Revenue:                                                                 |   |                            |       |   |
|   Oil and gas resulting from research activities               |   | $                               | 52,734     |   |
|     Total revenue resulting from research activities |   |                            | 52,734     |   |
|                                                                     |   |                            |       |   |
| Operating expenses:                                                      |   |                            |       |   |
|   Cost of revenue                                              |   |                            | -          |   |
|   Lease operating costs                                        |   |                            | 20,367     |   |
|   Depreciation and depletion                                   |   |                            | 1,859      |   |
|   Impairment expense                                           |   |                            | 7,649      |   |
|   Engineering expense                                          |   |                            | 250,000    |   |
|   General and administrative                                   |   |                            | 310,152    |   |
|     Total operating expenses                         |   |                            | 590,027    |   |
|                                                                     |   |                            |       |   |
| Operating  income (loss)                                       |   |                            | (537,293   | ) |
|                                                                     |   |                            |       |   |
| Other income (expense):                                                  |   |                            |       |   |
|   Interest (expense)                                           |   |                            | (1,816     | ) |
|   Gain on settlement of debt                                   |   |                            | 6,200      |   |
|    Total other income (expense)                           |   |                            | 4,384      |   |
|                                                                     |   |                            |       |   |
| Net income (loss)                                                        |   | $                               | (532,909   | ) |
|                                                                     |   |                            |       |   |
|                                                                     |   |                            |       |   |
| Earnings per Share, Basic and diluted income                             |   | $                               | (0.01      | ) |
|                                                                     |   |                            |       |   |
| Weighted average shares outstanding:                                     |   |                            |       |   |
| Basic and diluted                                                        |   |                            | 52,119,443 |   |

----

|   | ● | The Company owns 100% of EOS and has applied ASC 810 in consolidating the subsidiary. |
|--------|---------|---------------------------------------------------------------------------------------|

|   | ● | EOS owns 50% of BRC, as does an unrelated third party, Hidden Peak Group.  Although each party owns 50%, Hidden Peak Group maintains control of the three person management board with three representatives, and therefore, applying the requirements for consolidations under ASC 810, EOS has not consolidated BRC but shows its impact through the Minority Interest method. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | ● | Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control and financial statement presentation. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  Michael Doran  |  Chief Executive Officer and Director |
|---------------------------|--------------------------------------------|

|  Clayton Carter   |  Chief Executive Officer |
|----------------------------------|-------------------------------|
|  Don Edwards           |  Director                |

|   |   | February 17, 2010: Un-registered sales of securities |
|--------|--------|------------------------------------------------------|

|   | February 22, 2010: Amendments to Articles of Incorporation |
|--------|------------------------------------------------------------|

|   | March 9, 2010: Change in Registrant’s Certifying Accountant |
|--------|-------------------------------------------------------------------|

|  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. |
|       |                                                                                                                                                                                     |

----