----

----

|   | 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] |   |

----

|    | PART I FINANCIAL STATEMENTS                                     |   |
|---------|-----------------------------------------------------------------|--------|
|    |                                                            |   |
| Item 1  | Financial Statements                                            | 2      |
|    |                                                            |   |
| Item 2  | Management’s Discussion and Analysis or Plan of Operation | 14     |
|    |                                                            |   |
| Item 3  | Quantitative and Qualitative Disclosure about Market Risk       | 16     |
|    |                                                            |   |
| Item 4T | Controls and Procedures                                         | 19     |
|    |                                                            |   |
|    | PART II FINANCIAL STATEMENTS                                    |   |
| Item 6  | Exhibits and Reports on Form 8-K                                | 18     |

----

| Freestone Resources, Inc.Consolidated Balance SheetsAs of March 31, 2011 and June 30, 2010 |
|--------------------------------------------------------------------------------------------|

|                                                      Assets |          |        |   |         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|-------------|--------|--------------|
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |
|                                                                                                                                                                                                                                                                                                                                 | (Unaudited)   |        |   | (Audited)    |
|                                                                                                                                                                                                                                                                                                                                 | March 31,2011 |        |   | June 30,2010 |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |
| Current Assets:                                                                                                                                                                                                                                                                                                                      |          |        |   |         |
|   Cash                                                                                                                                                                                                                                                                                                                     | $             | 15,378      |   |         | $ | 28,062 |   |
|   Accounts receivable                                                                                                                                                                                                                                                                                                      |          | 0           |   |         |   | 22,029 |   |
|     Total current assets                                                                                                                                                                                                                                                                                         |          | 15,378      |   |         |   | 50,091 |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
| Fixed assets, net of accumulated depreciation of $4,897 and $3,786                                                                                                                                                                                                                                                                   |          | 88,655      |   |         |   | 31,181 |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
| Other assets                                                                                                                                                                                                                                                                                                                         |          | 3,087       |   |         |   | 15,511 |   |
|                                                                                                                                                                                                                                                                                                                                 |          | 3,087       |   |         |   | 15,511 |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
| Total Assets                                                                                                                                                                                                                                                                                                                         | $             | 107,120     |   |         | $ | 96,783 |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
|                                           Liabilities and Stockholders' Equity                                     |          |        |   |         |   |   |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
| Current Liabilities:                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
|   Accounts payable                                                                                                                                                                                                                                                                                                              | $             | 268,051     |   |         | $ | 250,769 |   |
|   Accounts payable-related party                                                                                                                                                                                                                                                                                                |          | 150,010     |   |         |   | 150,010 |   |
|   Accrued expenses                                                                                                                                                                                                                                                                                                         |          | 11,046      |   |         |   | 12,559 |   |
|   Notes payable-related parties                                                                                                                                                                                                                                                                                                 |          | 24,642      |   |         |   | 34,321 |   |
|   Stock to be issued                                                                                                                                                                                                                                                                                                            |          | 0           |   |         |   | 150,000 |   |
|    Total Current Liabilities                                                                                                                                                                                                                                                                                               |          | 453,749     |   |         |   | 597,659 |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
|  Long-term Liabilities:                                                                                                                                                                                                                                                                                                         |          |        |   |         |   |   |   |
|  Asset retirement obligations                                                                                                                                                                                                                                                                                                   |          | 41,123      |   |         |   | 41,123 |   |
|     Total Liabilities                                                                                                                                                                                                                                                                                                 |          | 494,872     |   |         |   | 638,782 |   |
|                                                                                                                                                                                                                                                                                                                                 |          |        |   |         |   |   |   |
| Stockholders' Equity (Deficit):                                                                                                                                                                                                                                                                                                      |          |        |   |         |   |   |   |
| Common stock, $.001 par value, 100,000,000 shares                                                                                                                                                                                                                                                                                    |          |        |   |         |   |   |   |
|    authorized, 74,418,994 and 71,718,994 shares issued                                                                                                                                                                                                                                                                     |          |        |   |         |   |   |   |
|    and outstanding, respectively                                                                                                                                                                                                                                                                                           |          | 74,419      |   |         |   | 71,719 |   |
| Additional paid in capital                                                                                                                                                                                                                                                                                                           |          | 16,675,174  |   |         |   | 16,299,789 |   |
| Accumulated deficit                                                                                                                                                                                                                                                                                                                  |          | (17,137,345 | )      |         |   | (16,913,507 | ) |
|    Stockholders' Equity (Deficit)                                                                                                                                                                                                                                                                                          |          | (387,752    | )      |         |   | (541,999 | ) |
| Total Liabilities and Stockholders’ Equity                                                                                                                                                                                                                                                                                | $             | 107,120     |   |         | $ | 96,783 |   |

----

| Freestone Resources, Inc.Consolidated Statements of OperationsFor the Three and Nine Months Ended March 31, 2011 and 2010(unaudited) |
|--------------------------------------------------------------------------------------------------------------------------------------|

|                                                                     |   | Three MonthsEndedMarch 31, 2011 |       |   | Three MonthsEndedMarch 31, 2010 |   |       | Nine MonthsEndedMarch 31, 2011 |   |    | Nine MonthsEndedMarch 31, 2010 |   |
|--------------------------------------------------------------------------|--------|---------------------------------|------------|--------|---------------------------------|--------|------------|--------------------------------|--------|---------|--------------------------------|--------|
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |
| Revenue:                                                                 |   |                            |       |   |                            |   |       |                           |   |    |                           |   |
|   Oil and gas revenues resulting from research activities      |   | $                               | 2,327      |   |                            | $      | 25,539     |                           |   | $       | 20,735                         |   |   | $ | 52,734 |   |
|     Total revenue resulting from research activities |   |                            | 2,327      |   |                            |   | 25,539     |                           |   |    | 20,735                         |   |   |   | 52,734 |   |
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
| Operating expenses:                                                      |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
|   Lease operating costs                                        |   |                            | 10,182     |   |                            |   | 15,146     |                           |   |    | 28,333                         |   |   |   | 20,367 |   |
|   Depreciation                                                 |   |                            | 370        |   |                            |   | 620        |                           |   |    | 1,111                          |   |   |   | 1,859 |   |
|   Impairment expense                                           |   |                            | 0          |   |                            |   | 0          |                           |   |    | 0                              |   |   |   | 7,649 |   |
|   General and administrative                                   |   |                            | 66,077     |   |                            |   | 163,766    |                           |   |    | 231,978                        |   |   |   | 310,152 |   |
|     Total operating expenses                         |   |                            | 76,629     |   |                            |   | 179,532    |                           |   |    | 261,422                        |   |   |   | 340,027 |   |
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
| Operating loss                                                           |   |                            | (74,302    | )      |                            |   | (153,993   | )                              |   |    | (240,687                       | )      |   |   | (287,293 | ) |
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
| Other income (expense):                                                  |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
|   Interest income (expense)                                    |   |                            | (84        | )      |                            |   | 1,312      |                           |   |    | (427                           | )      |   |   | (1,816 | ) |
|   Gain on sale of investment asset                             |   |                            | 0          |   |                            |   | 0          |                           |   |    | 17,276                         |   |   |   | 0 |   |
|   Gain on settlement of debt                                   |   |                            | 0          |   |                            |   | 0          |                           |   |    | 0                              |   |   |   | 6,200 |   |
|   Other income (expense)                                       |   |                            | 0          |   |                            |   | 0          |                           |   |    | 0                              |   |   |   | 0 |   |
|    Total other income (expense)                           |   |                            |  (84  | )      |                            |   | 1,312      |                           |   |    |  16,849                   |   |   |   | 4,384 |   |
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
| Net loss                                                                 |   | $                               | (74,386    | )      |                            | $      | (152,681   | )                              |   | $  | (223,838                       | )      |   | $  | (282,909 | ) |
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
| Basic and diluted loss per share                                         |   | $                               | 0.00       |   |                            | $      | 0.00       |                           |   | $  | 0.00                           |   |   | $  | 0.00 |   |
|                                                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
| Weighted average shares outstanding:                                     |   |                            |       |   |                            |   |       |                           |   |    |                           |   |   |   |   |   |
| Basic and diluted                                                        |   |                            | 73,153,438 |   |                            |   | 68,298,994 |                           |   |    | 72,380,673                     |   |   |   | 57,433,894 |   |

----

| Freestone Resources, Inc.Consolidated Statement of Stockholders’ EquityFor the Year Ended June 30, 2010And the Nine Months Ended March 31, 2011 (Unaudited) |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |
|-------------------------------------------------|--------|--------------|------------|--------|------------|--------|--------|-----------------|--------|--------|------------------|--------|--------|--------|-------------|
|                                            |   | Common Stock |       |   | Additional |   |   | Accumulated     |   |   |             |   |
|                                            |   | Shares       |       |   | Amount     |   |   | Paid in Capital |   |   | Deficit          |   |   | Total  |        |
|  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        |   |   |   | 0           |   |   |   | 1,264,149 |   |
|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |   |   |   |   |   |
| Common stock issued for cash          |   |         | 5,000,000  |   |       |   | 5,000  |            |   |   | 495,000          |   |   |   | 0           |   |   |   | 500,000 |   |
|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |   |   |   |   |   |
| Net loss                                        |   |         |       |   |       |   |   |            |   |   |             |   |   |   | (2,238,091  | ) |   |   | (2,238,091 | ) |
|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |   |   |   |   |   |
| Balance, June 30, 2010                          |   |         | 71,718,994 |   |       | $      | 71,719 |            |   | $      | 16,299,789       |   |   | $      | (16,913,507 | ) |   | $ | (541,999 | ) |
|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |   |   |   |   |   |
| Common stock issued for cash          |   |         | 2,600,000  |   |       |   | 2,600  |            |   |   | 316,900          |   |   |   | 0           |   |   |   | 319,500 |   |
|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |   |   |   |   |   |
| Common stock issued for demonstration equipment |   |         | 100,000    |   |       |   | 100    |            |   |   | 58,485           |   |   |   | 0           |   |   |   | 58,585 |   |
|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |   |   |   |   |   |
| Net loss                                        |   |         |       |   |       |   |   |            |   |   |             |   |   |   | (223,838    | ) |   |   | (223,838 | ) |
| Balance, March 31, 2011                    |   |         | 74,418,994 |   |       | $      | 74,419 |            |   | $      |  16,675,174 |   |   | $      | (17,137,345 | )  |   | $ | (387,752 | ) |
|                                            |   |         |       |   |       |   |   |            |   |   |             |   |   |   |        |   |   |   |   |   |

----

| Freestone Resources, Inc.Consolidated Statements of Cash FlowsFor the Nine Months Ended March 31, 2011 and 2010 (Unaudited) |
|----------------------------------------------------------------------------------------------------------------------------------|

|                                                                                           |   | Nine months endedMarch 31, |     |
|------------------------------------------------------------------------------------------------|--------|----------------------------|----------|
|                                                                                           |   | 2011                       |     |   | 2010 |   |
|                                                                                           |   |                       |     |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                          |   |                       |     |   |   |   |
| Net loss                                                                                       |   | $                          | (223,838 | ) |   | $ | (282,909 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      |   |                       |     |   |   |   |   |   |
|     Depreciation                                                           |   |                       | 1,111    |   |   |   | 1,859 |   |
|     Shares issued for demonstration equipment                              |   |                       | 58,585   |   |   |   | 0 |   |
|     Gain on sale of investment asset                                       |   |                       | (17,276) |   |   |   | 0 |   |
| Changes in operating assets and liabilities:                                                   |   |                       |     |   |   |   |   |   |
|     Change in accounts  receivable                               |   |                       | 22,029   |   |   |   | 4,559 |   |
|     Change in other assets                                                 |   |                       | (300 )   |   |   |   | (51,453 | ) |
|     Change in accounts payable                                                  |   |                       | 17,282   |   |   |   | (14,004 | ) |
|     Change in accrued liabilities                                          |   |                       | (1,513)  |   |   |   | 6,654 |   |
|     Change in accounts payable – related party             |   |                       | 0        |   |   |   | (11,664 | ) |
|     Change in line-of-credit                                               |   |                       | 0        |   |   |   | (3,092 | ) |
|   Net cash provided used in operating activities                                     |   |                       | (143,920 | ) |   |   | (350,050 | ) |
|                                                                                           |   |                       |     |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                          |   |                       |     |   |   |   |   |   |
|     Proceeds from sale of investment asset                                 |   |                       | 30,000   |   |   |   | 0 |   |
|     Intangible assets acquired with subsidiary                             |   |                       | 0        |   |   |   | 17,296 |   |
|     Purchase of fixed assets                                               |   |                       | (58,585  | ) |   |   | (1,150 | ) |
|   Net cash from (used) in investing activities                                       |   |                       | (28,585  | ) |   |   | 16,146 |   |
|                                                                                           |   |                       |     |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITES:                                                           |   |                       |     |   |   |   |   |   |
|     Payments on note payable                                               |   |                       | 0        |   |   |   | 24,734 |   |
|     Proceeds from note payable                                             |   |                       | 0        |   |   |   | 0 |   |
|     Payments on note payable – related party                         |   |                       | (9,679   | ) |   |   | 0 |   |
|     Proceeds from sale of stock                                            |   |                       | 319,500  |   |   |   | 170,000 |   |
|     Stock to be issued                                                     |   |                       | (150,000 | ) |   |   | 185,000 |   |
|  Net cash provided by financing activities                                                |   |                       | 159,821  |   |   |   | 379,734 |   |
|                                                                                           |   |                       |     |   |   |   |   |   |
| NET CHANGE IN CASH                                                                             |   |                       | (12,684  | ) |   |   | 45,830 |   |
| CASH AT BEGINNING OF PERIOD                                                                    |   |                       | 28,062   |   |   |   | 4,815 |   |
| CASH AT END OF PERIOD                                                                          |   | $                          | 15,378   |   |   | $ | 50,645 |   |
| Supplemental cash flow information:                                                            |   |                       |     |   |   |   |   |   |
|    Cash paid for interest                                                       |   | $                          | 242      |   |   | $ | 3,128 |   |
| Non-cash investing activities:                                                                 |   |                       |     |   |   |   |   |   |
|    Stock issued for purchase of subsidiary                                      |   | $                          | 0        |   |   | $ | 1,264,149 |   |
|    Licenses assumed in acquisition of subsidiary                                |   | $                          | 0        |   |   | $ | 150,000 |   |
|    Intangible asset                                                             |   | $                          | 0        |   |   | $ | 10,000 |   |
|    Assumption of accounts payable and note payable in acquisition of subsidiary |   | $                          | 0        |   |   | $ | 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 31,2011 |                                             |   | June 30, 2010 |   |
|-----------------------------------------------------|--------|---------------|--------------------------------------------------|--------|---------------|--------|
| Computers & office furniture                    |   | $             | 8,967                                            |   |          | $      | 8,967 |   |
| Oil and gas research and development equipment      |   |          | 26,000                                           |   |          |   | 26,000 |   |
| Demonstration equipment                             |   |          | 58,585                                           |   |          |   | 0 |   |
| Total fixed assets                                  |   |          | 93,552                                           |   |          |   | 34,967 |   |
| Less: Accumulated depreciation                 |   |          |        (4,897 | )      |          |   |        (3,786 | ) |
| Total fixed assets, net of accumulated depreciation |   | $             | 88,655                                           |   |          | $      | 31,181 |   |

----

|                                                 |   | March 31, |       |   | June 30, |    |
|------------------------------------------------------|--------|-----------|------------|--------|----------|---------|
|                                                 |   | 2011      |       |   | 2010     |    |
| Prior Year                                           |   | $    | 1,282,960  |   |     | $  | 522,009 |   |
| Tax Benefit for Current Period                       |   |      | 76,105     |   |     |    | 760,951 |   |
| Net Operating Loss Carryforward                      |   | $         | 1,359,065  |   |     | $       | 1,282,960 |   |
| Less: Valuation Allowance                            |   |      | (1,359,065 | )      |     |    | (1,282,960 | ) |
|      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, 2011 |
|------------------------------------------------------|

|                         |   | Level 1 |                                                          |   | Level 2 |   |   | Level 3 |   |   | Total              |   |
|------------------------------|--------|---------|---------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|--------------------|--------|
| Asset retirement obligations |   | $       |           0 |   |    | $      | 0      |    |   | $      |   41,123 |   |   | $ |   41,123 |   |

----

|   | ● | 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. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | ● | 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. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  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. |
|       |                                                                                                                                                                                     |

----