U. S. Securities and Exchange Commission

Washington, D. C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2010
	For the quarterly period ended March 31, 2011
[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____ to _____

Commission File No. 0-31193

EASTERN ENVIRONMENT SOLUTIONS, CORP.

(Name of Registrant in its Charter)

Nevada	16-1583162
(State or Other Jurisdiction of	(I.R.S. Employer I.D. No.)
incorporation or organization)

Harbin Dongdazhi Street 165, Harbin, P.R. China 150001

(Address of Principal Executive Offices)

Issuer's Telephone Number: 86-451-5394-8666

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subjected to such filing requirements for the past 90 days.

Yes X No ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes ___ No ___

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

Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer ___ ~~Small~~Smaller reporting company X

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

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:

~~November~~May 2416, ~~2010~~2011: Common Voting Stock: 1214,~~484~~970,~~353~~186

EASTERN ENVIRONMENT SOLUTIONS, CORP.

QUARTERLY REPORT ON FORM 10Q

TABLE OF CONTENTS

		Page No
Part I	Financial Information
Item 1.	Unaudited Financial Statements ~~(unaudited)~~:
	Condensed Consolidated Balance Sheet – September 30, 2010 and December 31, 2009	2
	Condensed Consolidated Balance Sheet – March 31, 2011 and December 31, 2010	2
	Condensed Consolidated Statements of Income and Comprehensive Income – for the Three and Nine Months Ended September 30, 2010 and 2009	3
	Condensed Consolidated Statements of Income and Comprehensive Income – for the Three Months Ended March 31, 2011 and 2010	3
	Condensed Consolidated Statements of Cash Flows – for the Nine Months Ended September 30, 2010 and 2009	4
	Condensed Consolidated Statements of Cash Flows – for the Three Months Ended March 31, 2011 and 2010	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2018
Item 3	Quantitative and Qualitative Disclosures about Market Risk	2422
Item 4T	Controls and Procedures	2422
Part II	Other Information
Item 1.	Legal Proceedings	2523
Items 1A.	Risk Factors	2523
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2523
Item 3.	Defaults upon Senior Securities	2523
Item 4.	Reserved	2523
Item 5.	Other Information	2523
Item 6.	Exhibits	2523
Signatures

EASTERN ENVIRONMENT SOLUTIONS, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	September 30,		December 31,
	2010		2009
			(Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	4,310,160	$	428,052
Accounts receivable		6,119,391		4,253,203
Inventory		56,662		42,650
Other receivables		1,242		440,208
Loans to related parties				42,828
Total Current Assets		10,487,455		5,206,941
Property and equipment, net of accumulated depreciation of
$57,439 and $44,360, respectively		114,518		124,175
Landfill development costs, net of amortization of
$3,395,156 and $2,423,871, respectively		7,855,552		8,232,899
Deferred tax assets		85,863		-
Total Assets	$	18,543,388	$	13,564,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loan payable - current portion	$	1,027,004	$	966,592
Accounts payable		826		810
Deferred tax liability		-		10,631
Taxes payable		453,129		174,375
Accrued expenses and other payables		73,776		92,192
Total Current Liabilities		1,554,735		1,244,600
Long-term liabilities:
Bank loan payable - net of current portion		302,060		1,087,416
Total Liabilities		1,856,795		2,332,016
Commitments and Contingencies
Stockholders' Equity
Common stock, $0.0001 par value, 100,000,000 shares authorized;
12,459,770 and 11,825,187 shares issued and outstanding
as of September 30, 2010 and December 31, 2009		1,497		1,497
Additional paid-in-capital		4,096,880		3,836,165
Accumulated other comprehensive income		1,906,040		1,717,131
Statutory reserves		186,156		186,156
Retained earnings - Unappropriated		10,496,020		5,491,050
Total Stockholders' Equity		16,686,593		11,231,999
Total Liabilities and Stockholders' Equity	$	18,543,388	$	13,564,015

~~The~~EASTERN ~~accompanying~~ENVIRONMENT ~~notes~~SOLUTIONS ~~are an integral part of these unaudited condensed consolidated financial statements~~CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	MARCH 31,		DECEMBER 31,
	2011		2010
ASSETS
Current assets:
Cash	$	4,331,374	$	1,886,126
Accounts receivable		4,468,003		5,445,418
Inventories		22,795		252,375
Other receivables		1,269		1,259
Loan receivable		4,581,132		4,543,864
Total Current Assets		13,404,573		12,129,042

Property and equipment, net of accumulated depreciation of $66,713 and $60,867, respectively		108,987		113,404

Landfill development costs, net of amortization of $4,178,651 and $3,814,935, respectively		7,417,382		7,627,184

Deferred tax assets		155,137		120,719

Total Assets	$	21,086,079	$	19,990,349

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Bank loan payable - current portion	$	845,768	$	1,087,416
Accounts payable		844		838
Taxes payable		377,312		315,917
Accrued expenses and other payables		101,084		95,291
Total Current Liabilities		1,325,009		1,499,462

Total Liabilities		1,325,009		1,499,462

Commitments and Contingencies

Stockholders' Equity

Common stock, $0.0001 par value, 100,000,000 shares authorized; 14,970,186 shares issued and outstanding		1,497		1,497
Additional paid-in capital		4,180,255		4,138,567
Accumulated other comprehensive income		2,199,213		2,097,014
Statutory reserves		1,338,011		1,225,381
Retained earnings - unappropriated		12,042,095		11,028,428
Total Stockholders' Equity		19,761,071		18,490,888

Total Liabilities and Stockholders' Equity	$	21,086,080	$	19,990,349

The accompanying notes are an integral part of these condensed consolidated financial statements

EASTERN ENVIRONMENT SOLUTIONS, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
				NINE MONTHS ENDED SEPTEMBER 30,						THREE MONTHS ENDED SEPTEMBER 30,
				2010			2009			2010		2009
							(Restated)					(Restated)
Revenues
		-	Landfill disposal fees	$	3,530,736		$	-		$	1,221,208	$	-
		-	PET bottle sales		7,959,964			-			3,437,986		-
		-	Landfill minimum fees		-			1,342,554			-		452,533
					11,490,700			1,342,554			4,659,194		452,533
Cost of Revenues
			Landfill disposal fee's		1,133,679			-			393,719		-
			PET bottle sales		4,173,824			-			1,908,896		-
			Landfill minimum fee's		-			-			-		-
					5,307,503			-			2,302,615		-
Gross Profit					6,183,197			1,342,554			2,356,579		452,533
Selling, general and administrative expenses					449,505			498,226			154,580		144,999
			Income from operations		5,733,692			844,328			2,201,999		307,534
Other Income (expense)
	Interest income				24,829			8,622			1,282		471
	Interest expense				-			(162,731	)		-		(51,570	)
	Other expense				(41	)					71
			Total other income, net		24,788			(154,109	)		1,353		(51,099	)
Income from Operations before Income Taxes				$	5,758,480		$	690,219		$	2,203,352	$	256,435
Provision for Income Taxes					753,510			145,130			284,325		51,551
Net Income					5,004,970			545,089			1,919,027		204,884
Other Comprehensive Income (loss) -
	Foreign currency translation Income (loss)				188,908			(21,671	)		184,793		3,333
Comprehensive Income				$	5,193,878		$	523,418		$	2,103,820	$	208,217
Basic & Diluted Income Per Share
	Basic			$	0.41		$	0.04		$	0.17	$	0.02
	Diluted			$	0.33		$	0.04		$	0.13	$	0.01
Weighted Average Number of Common Shares Outstanding
	Basic				12,198,106			12,431,549			11,319,984		11,534,954
	Diluted				14,970,186			14,970,186			14,970,185		14,970,186

EASTERN ENVIRONMENT SOLUTIONS CORPORATION

~~The~~CONDENSED ~~accompanying~~CONSOLIDATED ~~notes~~STATEMENTS ~~are~~OF ~~an integral part of these unaudited condensed consolidated financial statements~~INCOME

(Unaudited)

	THREE MONTHS ENDED
	MARCH 31,
	2011			2010

Revenues
Landfill disposal fees	$	1,233,016		$	1,122,699
PET bottle sales		3,304,608			465,055
		4,537,624			1,587,754
Cost of Goods Sold
Landfill disposal fees		407,300			356,730
PET bottle sales		2,691,355			95,614
		3,098,655			452,344

Gross Profit		1,438,969			1,135,410

Selling, General and Administrative Expense		218,095			145,918

Income from operations		1,220,874			989,492

Other Income (Expense)
Interest income		97,626			23,226
Interest expense		(24,202	)		-
Other income		-			(120	)
Total other income, net		73,424			23,106

Income from Operations before Income Taxes		1,294,298			1,012,598

Provision for Income Taxes		168,002			139,273

Net Income		1,126,296			873,325

Other Comprehensive Income -
Foreign currency translation gain		102,199			(48,918	)

Comprehensive Income	$	1,228,496		$	824,407


Basic and Diluted Income Per Share
Basic	$	0.09		$	0.07
Diluted	$	0.08		$	0.06

Weighted Average Number of Common Shares Outstanding
Basic		12,599,353			11,969,910
Diluted		14,970,186			14,970,186

The accompanying notes are an integral part of these condensed consolidated financial statements

EASTERN ENVIRONMENT SOLUTIONS, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	NINE MONTHS ENDED SEPTEMBER 30,
	2010			2009
				(Restated)
Cash Flows From Operating Activities:
Net income	$	5,004,970		$	545,089
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		13,079			12,686
Amortization of development landfill costs		943,778			-
Amortization of stock-based compensation		260,715			287,063
Changes in operating assets and liabilities:
Accounts receivable		(1,866,188	)		(1,342,325	)
Inventory		(14,012	)		25,267
Accounts payable		16			(77	)
Deferred tax liability		(10,631	)		21,527
Advances to suppliers		-			32,541
Taxes payable		278,754			123,589
Deferred tax assets		(85,863	)		-
Accrued expenses and other payables		(18,416	)		(13,475	)
Net cash provided by (used in) operating activities		4,506,202			(308,115	)
Cash Flows From Investing Activities:
Purchase of property and equipment		(4,290	)		(24,669	)
Payment of interests for construction loan		(110,383	)		(162,736	)
Payments on loans to unrelated party		-			(256,257	)
Proceeds from loans to unrelated party		438,966			196,349
Proceeds from loans to related party		42,828			-
Net cash provided by (used in) investing activities		367,121			(247,313	)
Cash Flows From Financing Activities:
Repayment of bank loan payable		(724,944	)		(72,494	)
Net cash used in financing activities		(724,944	)		(72,494	)
Effect of exchange rate changes on cash and cash equivalents		(266,271	)		87,540
Increase (decrease) in Cash and Cash Equivalents		3,882,108			(540,382	)
Cash and Cash Equivalents - Beginning of period		428,052			1,112,487
Cash and Cash Equivalents - End of period	$	4,310,160		$	572,105
Supplemental Cash Flow Information:
Cash paid during the periods:
Interest expense	$	110,383		$	162,736
Income taxes	$	753,510		$	-

EASTERN ENVIRONMENT SOLUTIONS, CORP. AND SUBSIDIARIES

~~The~~CONDENSED ~~accompanying~~CONSOLIDATED ~~notes~~STATEMENTS ~~are~~OF anCASH ~~integral part of these unaudited condensed consolidated financial statements~~FLOWS

(UNAUDITED)

	THREE MONTHS ENDED MARCH 31,
	2011			2010
Cash Flows From Operating Activities:
Net income	$	1,126,296		$	873,325
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		336,224			304,915
Amortization of stock-based compensation		41,688			95,688
Deferred tax benefit		(34,418	)		(30,315	)

Changes in operating assets and liabilities:
Accounts receivable		977,415			(446,803	)
Inventories		229,580			(10,314	)
Accounts payable		6			-
Taxes payable		61,395			9,208
Accrued expenses and other payables		5,793			(9,143	)

Net cash provided by operating activities		2,743,980			786,561

Cash Flows From Investing Activities:
Additions to construction in process		(94,414	)		-
Payment of capitalized interest for construction loan		-			(40,769	)
Payments on loan to related parties		-			(22,692	)
Collections (payments) on loans receivable		(37,278	)		439,430

Net cash provided by (used in) investing activities		(131,692	)		375,969

Cash Flows From Financing Activities
Loan repayments to bank		(241,648	)		(241,648	)

Net cash used in financing activities		(241,648	)		(241,648	)

Effect of Exchange Rate Changes on Cash		74,609			(50,257	)

Increase in Cash		2,445,248			870,625

Cash - Beginning of Period		1,886,126			428,052

Cash - End of Period	$	4,331,374		$	1,298,677

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash was paid for the following:
Interest expense	$	24,202		$	40,769
Income taxes	$	276,870		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION AND ORGANIZATION

Eastern Environment Solutions, Corp. (“the Company” or “EESC”) was incorporated under the laws of the State of Nevada and formerly known as USIP.COM, Inc. (“USIP”).

The Company operates its business primarily through its wholly-owned subsidiary Harbin Yifeng Eco-Environment Co., Ltd. (“Harbin Yifeng”), a corporation organized and existing under the laws of the People’s Republic of China (“PRC”). Harbin Yifeng is an environmental engineering company in the PRC that specializes in providing non-hazardous municipal solid waste processing and disposal services in the northeast regions of China.

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). In the opinion of management, the accompanying condensed balance sheets and related interim statements of income and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America.

~~NOTE~~Interim 2results are not necessarily indicative of the results that maybe expected for a full year. The ~~RESTATEMENT~~information included in this Form 10-Q should be read in conjunction with information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on March 30, 2011.

~~The~~NOTE ~~Company~~2. ~~has~~SUMMARY ~~restated~~OF ~~the~~SIGNIFICANT ~~consolidated~~ACCOUNTING ~~financial statements for the three and nine months period ended September 30, 2009 for the following reasons:~~POLICIES

The Company has determined that revenue should be recognized using three different revenue models.

For revenue associated with waste disposed at the landfill, the Company has determined the appropriate revenue recognition policy to be the greater of the minimum rate or the actual tonnage disposed of during the period, whichever is greater. The Company will also disclose separately the actual tonnage disposed each period in order to match the cost of revenues with the actual disposal activities.

As part of the Franchise Agreement, the Company has the right to charge minimum fees per day. During the periods of suspension by the Harbin County Government, the Company only collected the minimum fees. The Company has determined the minimum fee revenue should be disclosed separately as these fees will result in a different cost of revenue model. The minimum fees were negotiated to reimburse the administrative costs of the business or to approximate a break-even.

Lastly, the Company will record revenue associated with separating the waste and reselling bottles based on the actual rate, plus the costs of labor, the Company will receive per the amount delivered to the bottling customer. The amount of waste separated will reduce the actual tons utilized in the landfill each period.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. RESTATEMENT (Continued)

The Company has evaluated the cost of revenue separately from the revenue model. The landfill will be constructed over a period of years as one (1) whole unit. However, the construction will be completed in different stages in order for compliance with certain structural requirements. In order to start the next phase of construction, the prior phase must be completed. Each earlier phase acts to support the later phases. The Company has estimated the total costs to fully construct the landfill, however, the revenue generation is for the entire landfill period and the Company believes the cost structure should mirror the same period.

The Company has evaluated the total cost of completing the full construction of the landfill and viewed the landfill as one (1) unit for accounting purposes, even though it will be constructed in four (4) separate phases. , The Company anticipates the total landfill capacity of approximately 7.8 million tons. The build outs will be as follows:

Phase 1 totals approximately 1.60 mil tons (below ground and 20.51% of total tonnage)

Phase 2 totals approximately 0.67 mil tons (below ground and 8.59% of total tonnage)

Phase 3 totals approximately 1.00 mil tons (below ground and 12.82% of total tonnage)

Phase 4 totals approximately 4.53 mil tons (above ground and 58.08% of total tonnage)

As stated previously, the total construction will cost approximately $17.235 mil. These costs are for the completion of the three underground phases with minimal costs expected for the 4th phase above ground. Therefore, the Company has concluded that each underground phase is used to support the above ground landfill. Each phase will build upon the prior phase, meaning the next phase cannot commence until the prior phase is constructed and filled with waste.

The landfill costs will be amortized over the period the revenues are earned or more specifically over the total tonnage dumped in the landfill (i.e. over the full four (4) phases). However, this amount will not equal the tonnage received from the Municipality, which is used to determine the revenue billed each period to the Municipality. Instead, this amount of tonnage each period will be reduced as a result of separating the bottles for resale.

All costs, including the added labor costs, for separating the waste in order to resell the bottles will be reported as such for each period.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2. RESTATEMENT (Continued)

Balance sheet reclassification:

Currently, the Company has disclosed separately amounts pertaining to landfill costs, construction in progress and advances to suppliers. As a result of further analysis, the Company has determined all of these assets relate to the landfill and therefore should not be stated separately. The Company will be reclassifying these amounts into one caption for all filings.

Additionally, the Company reclassified certain cost of revenue expenses as administrative during the Landfill suspension period and expensed $571,674, of previously capitalized interest during the same period.

As part of this reclassification, the Company will also comply with its impairment testing in accordance with impairment of long-lived assets as required by professional standards.

The impact of this restatement on the financial statements as previously reported is summarized below:

	December 31, 2009
	As Previously Reported		As Restated
Total Assets	$	15,309,927	$	13,564,015
Fixed Assets	$	10,102,986	$	8,357,074
Retained earnings	$	7,019,463	$	,5,491,050

	For the three months ended September 30, 2009				For the nine months ended September 30, 2009
	As Previously Reported		As Restated		As Previously Reported			As Restated
Revenues	$	452,533	$	452,533	$	1,342,554		$	1,342,554
Cost of sales		65,611		--		251,428			--
Gross profit		369,922		452,533		1,091,306		$	1,342,554
S G & A		137,015		14,999		419,091			498,226
Interest expense		--		51,099		--			154,109
Operating profit		250,378		256,435		651,233			690 ,21 9
Net income	$	206,030	$	204,884	$	557,265		$	545,089
Comprehensive income/(loss)	$	4,406		3,333	$	(22,593	)		21,671
Income per share - basic	$	.01	$	.02	$	.04		$	.04
Income per share - Diluted	$	.01	$	.01	$	.04		$	.04

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Harbin Yifeng and Harbin Yifeng’s wholly owned subsidiary, Harbin Yifeng Zhiye Management Co., Ltd. (“Yifeng Zhiye”). All significant inter-company transactions and balances have been eliminated in consolidation.

Management estimates

The preparation of financial statements in conformity with generally accepted accounting ~~principal~~principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The unaudited interim condensed consolidated financial statements furnished herein included all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. Interim results are not necessarily indicative of the results that maybe expected for a full tear. The information included in this Form 10_Q should be red in conjunction with information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 18, 2010.

Cash and cash equivalents

For purposes of the statement of cash flow, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounts receivables

Accounts receivables are stated at net realizable value. Any allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables. A considerable amount of judgment is required in assessing the realization of these receivables, including the current credit worthiness of each customer and the related aging analysis. The Company’s receivables are primarily due from the municipal government of Harbin City and are considered by management to be fully collectible. The Company’s receivables from its recycling of bottles and plastic beginning in 2010 are considered fully collectible, under contracts with the recycling companies engaged for the disposal of the material. Therefore, no allowance for doubtful accounts was deemed necessary at ~~September~~March 3031, ~~2010~~2011or or December 31, ~~2009~~2010.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 32. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

~~Inventory~~ Inventories

~~Inventory~~Inventories ~~mainly~~consist ~~consists~~ of (a) materials and supplies to be used in the regular day-to-day operations of the landfill and (b) PET plastics held by the Company or its consignees pending processing and delivery to customers of the consignees. Inventory is valued at the lower of cost or market with cost determined on a first-in first-out basis.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of 5-10 years.

All of the Company's assets are located in The People's Republic of China. During the nine months ended September 30, 2010, the Company operated in two business segments - landfill segment and plastic bottles sorting and recycling segment. The Company operated in one business segment for the three and nine months ended September 30, 2009.

Landfill development costs

~~Advance~~Landfill todevelopment ~~suppliers~~costs, iswhich ~~included~~also ininclude ~~Landfill~~advances ~~Development~~to ~~Costs~~suppliers, ~~and~~represent ~~represents~~ payments made ~~and~~for ~~recorded~~labor, inmachinery, ~~advance~~supplies ~~for~~and equipment related to the ~~purchase~~construction of ~~machinery,~~the ~~equipment,~~landfill. ~~materials~~Landfill development costs are stated at cost, ~~supplies~~net ~~and~~of ~~vehicles~~accumulated ~~related~~amortization. toAmortization is computed on a units of measure basis: the Company’s ~~construction~~estimate inof ~~progress.~~the ~~The~~total ~~Company~~cost ~~expects~~of tothe ~~utilize~~landfill when complete is multiplied by a fraction, the ~~advances~~numerator being the total tonnage disposed during the ~~next~~period ~~two~~and ~~years. Advances~~the todenominator ~~suppliers~~being ~~have~~the ~~been~~total ~~classified~~anticipated ~~under~~capacity ~~investing~~of ~~activities~~the ~~are~~landfill. ~~disclosed~~The asanticipated ~~non-cash~~total ~~investing~~cost ~~activity~~of ~~when~~the ~~transferred~~landfill is reviewed quarterly, based on costs incurred to ~~property~~date and ~~equipment~~updated projections, and is adjusted, as necessary. Conversion of expenses already incurred is based on the reported historical conversion rate; the estimate of future costs is converted based on the conversion rate on the measurement date.

Revenue recognition

The Company, ~~recognizes revenue~~ in accordance with ASC 360, ~~which states that revenue, should not be recognized until it is realized or realizable and earned. In general, the Company~~ records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

For revenue associated with waste ~~disposed~~disposal at the landfill, the Company ~~has~~recognizes ~~determined the appropriate~~ revenue ~~recognition~~based ~~policy~~on totonnage beon the ~~greater~~date ofit ~~the~~is ~~minimum rate or the actual tonnage~~ disposed ofinto ~~during~~ the ~~period, whichever is greater~~landfill. The Company ~~will~~discloses ~~also disclose~~ separately the actual tonnage disposed during each period in order to match the cost of ~~revenues~~revenue with the actual disposal activities. See: Note 4.

9The Company records revenue associated with the resale of bottles and caps based on the contract price that the Company’s consignee is required to pay to the Company upon its resale of the processed plastic. Revenue is recorded on the date when the consignee ships the processed plastic to its customer, at which time it is contractually obliged to pay the related fee to the Company.

Income taxes

The Company accounts for income tax under the provisions of ASC No.740 "Income Taxes", which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Harbin Yifeng was granted the status of wholly foreign-owned entities (“WFOE”) in the fourth quarter of 2006 upon the reverse merger with USIP with a choice of starting the tax holiday immediately or the next calendar year. Harbin Yifeng elected for this tax holiday to commence in January 2007. Its two-year tax exemption period was from January 1, 2007 to December 31, 2008 and the three-year 50% income tax reduction period will be from January 1, 2009 to December 31, 2011.

The Company has deferred tax assets that relate to its landfill development amortization and its net operating loss in the U. S., which is not covered by the tax holiday.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 32. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

As part of the Franchise Agreement with the Harbin landfill, the Company has the right to charge minimum fees per day and during the periods of suspension by the Harbin County Government. The Company only collected the minimum fees. The minimum fee revenue is disclosed separately as these fees result in a different cost of revenue model. The minimum fees were negotiated to reimburse the administrative costs of the business or to approximate a break-even.

The Company records revenue associated with separating the waste and reselling bottles based on the actual rate, plus the costs of labor, the Company will receive per the amount delivered to the bottling customer. The amount of waste separated will reduce the actual tons utilized in the landfill each period.

The Company’s revenue is derived primarily from its solid waste disposal operations and bottle recycling operations. For the solid waste disposal operations, the Company recognizes revenue upon the arrival of the solid waste at the landfill. For the bottle recycling operations, the Company engaged two external agents to process and resell to industry the polyethylene terephthalate (“PET”) bottles and the granules from the plastic bottles and bottle caps that the Company removes from the landfill. The Company recognizes sales upon shipment of the PET bottles and granules to industry.

Income taxes

The Company accounts for income tax under the provisions of Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) No.740 "Income Taxes", which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Harbin Yifeng was granted the status of wholly foreign-owned entities (“WFOE”) in the fourth quarter of 2006 upon the reverse merger with USIP with a choice of starting the tax holiday immediately or the next calendar year. Harbin Yifeng elected for this tax holiday to commence in January 2007. Its two-year tax exemption period was from January 1, 2007 to December 31, 2008 and the three-year income tax reduction period will be from January 1, 2009 to December 31, 2011.

The Company, as a result of restating its prior year financial statements, has recorded deferred tax assets, relating to the timing of expensing landfill development costs using a units of measure method verses a straight line method. However, the Company has deferred tax assets that relate to its net operating loss in the U. S., which is not covered by the tax holiday.

Concentrations of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of accounts receivable and other receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its clients' financial condition and customer payment practices to minimize collection risk on accounts receivable.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair value of financial instruments

The Company adopted the provisions of ~~Accounting Standards Codification (“~~ASC”) 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

· Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

· Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.

· Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, other receivables, accounts payable, accrued expenses, taxes payable and notes payable approximate fair value due to the short-term nature of these items. ~~the~~The Company uses ~~tht~~the Level 3 method to measure fair value of its bank loan. The carrying amount of the bank loan approximates the fair value based on the Company's expected borrowing rate for debt with similar remaining maturities and comparable risk in market. The Company did not identify any other assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with ASC 820.

Foreign currency translation

The Company’s reporting currency is the U.S. dollar (“US$”) and its principal country of operations is the PRC. The financial position and results of operations of the Company are determined using the local currency (“RMB”) as the functional currency. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated Other Comprehensive Income”.

11The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions, Any significant revaluation of RMB may materially affect the Company's financial condition in terms of US$ reporting.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 32. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions, Any significant revaluation of RMB may materially affect the Company's financial condition in terms of US$ reporting.

Stock-based compensation

~~Stock-~~The Company records stock based compensation isexpense inpursuant ~~accordance~~to ~~with~~the United States ASC 718, ~~and~~which establishes the accounting for employee stock-based awards. Under the above provisions, stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). For the three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010, $7441,~~951~~688 and $95,688 stock based compensation ~~expense was recorded in selling, general and administrative~~ expenses. ~~For~~were ~~the nine months ended September 30, 2010 and 2009, $260,715 and $287,063 stock-based compensation expense was~~ recorded in selling, general and administrative expenses.

Earnings and diluted earnings per share

Earnings per share are calculated in accordance with the ASC 260, “Earnings ~~per~~Per ~~share~~Share.” Basic net earnings per share are based upon the weighted average number of common shares outstanding, but excluding shares issued as compensation that have not yet vested. Diluted net earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised, and that all unvested shares have vested. Dilution is computed by applying the treasury stock method. Under this method, stock-based compensation is assumed to be vested at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

The following table sets forth the computation of basic and diluted earnings per share for the periods presented:

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2010		2009		2010		2009
	2011		2010
Net income	$	1,~~919~~126,~~027~~296	$	~~204~~873,~~884~~325	$	~~5,004,970~~	$	~~545,089~~
Shares (denominator):
Weighted average common shares outstanding - basic		1112,~~319~~599,~~984~~353		11,~~534~~969,~~954~~910		~~12198,106~~		~~12,431,549~~
Earnings per share - basic	$	0.1709	$	0.0207	$	~~0.41~~	$	~~0.04~~
Plus: effect of diluted securities - unvested compensation
Shares		32,~~650~~370,~~202~~833		3,~~435~~000,~~232~~276		~~2,772,080~~		~~2,568,637~~
Weighted average common shares outstanding - diluted		14,970,186		14,970,186		~~14,970,186~~		~~14,970,186~~
Earnings per share - diluted	$	0.1308	$	0.0106	$	~~0.33~~	$	~~0.04~~

128

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 43. ~~LANDFILL DEVELOPMENT COSTS AND~~ PROPERTY AND EQUIPMENT

	September 30, 2010			December 31, 2009
Property and Equipment	$	171,957		$	168,535
Less: accumulated depreciation		57,439			44,360
Total property and equipment, net	$	114,518		$	124,175
Landfill development costs
Machinery and equipment	$	1,178,218		$	1,097,761
Landfill		2,067,974			2,129,168
Wastewater treatment station		175,852			-
Construction in progress		3,668,950			3,645,860
Advances to suppliers		4,159,714			3,783,981
Subtotal		11,250,708			10,656,770
Less: accumulated depreciation		(3,395,156	)		(2,423,871	)
Total Landfill development costs, net	$	7,855,552		$	8,232,899

Property and equipment consisted of the following:

Depreciation expense for property and equipment for the three months ended September 30, 2010 and 2009 was $ 4,642 and $4,104, respectively. Depreciation expense for property and equipment for the nine months ended September 30, 2010 and 2009 was $ 13,079 and $12,686, respectively.

	March 31, 2011				December 31, 2010
		$	175,700			$	174,271
Less: accumulated depreciation			(66,713	)			(60,867	)
Total property and equipment, net		$	108,987			$	113,404

~~Amortization~~Property ~~expense~~and ~~for~~equipment ~~the~~are ~~landfill~~stated ~~development~~at ~~costs~~cost, ~~for~~net ~~the~~of ~~three~~accumulated ~~months~~depreciation ~~ended~~and ~~September~~amortization. Maintenance ~~30,~~and ~~2010~~repairs ~~and~~are ~~2009~~charged ~~was~~to ~~$351,047~~expense as incurred. Depreciation and ~~$0,~~amortization ~~respectively~~are computed using the straight-line method over the estimated useful lives of 5-10 years. ~~Amortization~~Depreciation expense for property and equipment for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010 was $~~943~~5,~~778~~322 and $04,088, respectively.

~~“Landfills”~~NOTE ~~represents the capitalized expenses attributable to the construction of the portion of the Harbin landfill that is currently functional~~4. ~~Landfill~~ LANDFILL ~~costs~~DEVELOPMENT are amortized using a units of measure method over the contract term, commencing when the landfill was first put into use. The Company has no obligations relating to capping, closure or other post-closure obligations; accordingly no reserve for post-closure activities has been established.COSTS

13Landfill development costs consisted of the following:

	March 31, 2011			December 31, 2010
Machinery and equipment	$	1,207,216		$	1,197,396
Landfill		2,358,915			2,339,725
Construction in progress		3,770,089			3,689,304
Advances to suppliers		4,259,813			4,215,693
Subtotal		11,596,033			11,442,118
Less: accumulated depreciation		(4,178,651	)		(3,814,934	)
Total Landfill development costs, net	$	7,417,382		$	7,627,184

Landfill development costs represent the capitalized expenses attributable to the construction of the Harbin landfill. Landfill development costs are amortized using a units of measure method over the contract term, commencing when the landfill was first put into use. The Company amortizes estimated total landfill development costs (currently estimated at $17.2 million), using the ratio of actual tonnage disposed in the landfill in proportion to the total anticipated capacity of the landfill, based on the Company’s assessment that it is probable that the Company will continue to utilize the Harbin landfill for the full term of the Build-Operate-Transfer (“BOT”) agreement and that, in that period, the landfill will be filled to capacity. The Company determined that the units of measure method of accounting for landfill development costs more accurately correlates the cost of building the landfill with the revenue recognized with each ton of waste disposed of in the landfill over the life of the landfill.

Landfill development costs also include advances to suppliers representing payments made for machinery, supplies and equipment related to the construction of the landfill. The Company made a determination that it would not establish a reserve against the advances to suppliers that are included in landfill development costs on the Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010. The determination was based on the continuance of operations at the Landfill, and the probability that the advances will be utilized for purchase of construction materials and equipment during the next two years. The Company also determined that depreciation of equipment over the life of the landfill was appropriate, as the equipment is, for the most part, heavy earth-moving equipment with a useful life approximately equal to the term of the BOT Agreement. In addition, the BOT Agreement provides that equipment used at the landfill will be surrendered to HMUAB upon termination of the BOT Agreement.

The Company has no obligations relating to capping, closure or other post-closure obligations; accordingly no reserve for post-closure activities has been established.

The landfill will be constructed over a period of years as one (1) whole unit. However, the construction will be completed in different stages in order to comply with certain structural requirements. In order to start the next phase of construction, the prior phase must be completed. The Company anticipates the total landfill capacity of approximately 7.8 million tons. That estimate is made on a gross basis, however. The tonnage actually deposited should exceed the estimate, due to (a) the fact that we reduce the space used by removing recyclables, and (b) the fact that organic material included in the tonnage degrades and uses a reduced space.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4. LANDFILL DEVELOPMENT COSTS ~~AND PROPERTY AND EQUIPMENT~~ (Continued)

~~Construction~~The inbuild ~~progress~~outs represents direct costs of construction or acquisition and design fees incurred for the Company’s new operating site and equipment. Capitalization of these costs ceases and the construction in progress is transferred to ~~plant~~accommodate ~~and equipment when substantially all~~ the ~~activities~~gross ~~necessary~~estimate ~~to prepare the assets for their intended use~~ are ~~completed.~~as Commencing at that time, the capitalized expenses will be amortized over the life of the Build-Operate-Transfer (“BOT”) agreement. Interest expense in the amount of $32,324 was capitalized for the three months ended September 30, 2010 and $110,383 for the nine months ended September 30, 2010. Interest was not capitalized during the nine months ended September 30, 2009 due the suspension of operations. follows:

The Harbin landfill is scheduled to have a capacity of 7.8 million tons, when completed, of which 3.27 million tons will be deposited in an underground sector developed by the Company. As of September 30, 2010, the capacity of the Harbin landfill was 1.6 million tons, of which 1,419,389 tons of capacity had been utilized. As of December 31, 2009, the capacity of the Harbin landfill was 1.6 million tons, of which 880,000 tons of capacity had been utilized. The following table sets forth management’s estimate of the costs and timing to complete the remaining underground portion of the Landfill:

	·	Phase 1 totals approximately 1.60 mil tons (below ground and 20.51% of total tonnage)
	·	Phase 2 totals approximately 0.67 mil tons (below ground and 8.59% of total tonnage)

Project	Additional Capacity (Tons)	Estimated Additional Cost to Complete	Estimated Date of Completion
	·	Phase 3 totals approximately 1.00 mil tons (below ground and 12.82% of total tonnage)
Phase II	670,000	$3.66 million	October 2011
	·	Phase 4 totals approximately 4.53 mil tons (above ground and 58.08% of total tonnage)
Phase III	1,000,000	$4.48 million	October 2014

~~When~~Each ~~the~~earlier ~~underground~~phase ~~portion~~acts ofto support the ~~Landfill~~later ~~is complete~~phases, ~~with~~meaning ~~3.27~~the ~~million~~next ~~tons~~phase ~~capacity,~~cannot commence until the ~~Company~~prior ~~will~~phase beis ~~able~~constructed toand ~~utilize~~filled anwith ~~above~~waste. Moreover, ~~ground~~the ~~capacity~~revenue generation is for ~~4.53~~the ~~million~~entire ~~tons~~period of ~~waste,~~landfill ~~for~~operations. Since athe ~~total~~Company ~~Landfill~~believes ~~capacity~~the cost structure should mirror the fundamental interrelationship of ~~7.8~~all ~~million~~four ~~tons. The~~phases, the Company has ~~amortized~~evaluated the ~~estimated~~ total cost of completing the ~~landfill~~full ~~over~~construction of the ~~estimated~~landfill ~~total~~and ~~capacity~~viewed of the landfill. ~~(See~~as ~~Note~~one 2(1) unit for accounting purposes.

~~NOTE~~Interest 5expense in the amount of $40,769 was capitalized for the three months ended March 31, 2010. ~~INVENTORY~~ The capitalized interest is amortized as landfill development costs. No interest expense was capitalized during the three months ended March 31, 2011 because the Company has completed the Phase 1 construction and has not started the Phase 2 construction during that period.

~~Inventory~~The ~~consists~~Company reviews its estimate of the ~~following:~~total construction cost of the landfill at the end of each quarter. The estimate, revised if necessary, is then converted from RMB to dollars based on the historical conversion rate for previously capitalized costs and the current conversion rate for estimated future costs. As of March 31, 2011, the Company estimated that the total construction for the landfill will be $17,235,000, which was consistent with the Company’s estimate as of December 31, 2010. These costs are for the completion of the three underground phases with minimal costs expected for the 4th phase above ground.

	September 30, 2010		December 31, 2009
Raw material	$	51,233	$	36,837
Low-value consumables		5,429		5,813
Total	$	56,662	$	42,650

Landfill amortization expense for the three months ended March 31, 2011 and 2010 was $330,902 and $300,827, respectively. During the three months ended March 31, 2011 and 2010, the Company disposed of 134,452 tons of waste and 126,855 tons of waste, respectively, in the landfill.

14The following table shows landfill usage during the three month periods ended March 31, 2011 and 2010:

	Three Months Ended March 31,2011			Three Months Ended March 31, 2010
Estimated total landfill capacity (tons)		7,800,000			7,800,000
Total cumulative tons disposed in landfill		1,690,071			1,149,490
Percentage of landfill used		21.7	%		14.7	%

Total tons disposed during period		134,452			126,855
Percentage of landfill used		1.7	%		1.6	%

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 65. ~~OTHER RECEIVABLES~~ INVENTORIES

AsInventories consist of ~~December 31, 2009, other receivables primarily represent a third-party loan with interest at 5.31% to Harbin Jiayi Import and Export Co., Ltd. (“Jiayi”) from~~ the ~~Company. The loan was unsecured and was repaid in March 2010.~~following:

NOTE 7. RELATED PARTY TRANSACTIONS

	March 31, 2011		December 31, 2010
Material for use in landfill	$	22,795	$	45,203
Consigned plastics	-			207,172
Total	$	22,795	$	252,375

~~Loans~~NOTE to6. LOAN ~~related parties consists the following:~~RECEIVABLE

	September 30, 2010		December 31, 2009
Shibin Jiang	$	-	$	4,744
Yan Feng		-		38,084
Total loans to related parties	$	-	$	42,828

As of March 31, 2011 and December 31, 2010, the loan to an unrelated party represents a short-term loan the Company lent to Heilongjiang Guoan Real Estate Development Corp (“HGRE”) in November 2010. The amount of the loan is RMB30 million, secured by real estate of the unrelated party. The term is one year. The repayment schedule is divided into two parts. HGRE will make the first repayment of 15 million RMB on September 30, 2011. The balance of the loan, 15 million RMB, will be due on November 29, 2011. The interest rate is 6.372%, higher than the base interest rates of People's Bank of China by 20 basis points. The interest is paid quarterly. Management intends and expects that the Company will hold the loan until it matures. Accordingly, due to the short-term nature of the loan, it is being carried on the Company’s books at cost.

~~Ms.~~NOTE ~~Yan Feng is the CEO of the Company and Mr~~7. MAJOR ~~Shibin Jiang is the COO of the Company. Both Ms. Feng and Mr. Jiang are also shareholders of the Company.~~CUSTOMERS

~~NOTE~~On 8September 1, 2003, the Company signed an exclusive 17-year agreement with Harbin Municipal Urban Administrative Bureau (“HMUAB”) to dispose of approximately one-third of the city’s solid waste disposal. ~~MAJOR~~The ~~CUSTOMERS~~contract will expire on August 30, 2020. The revenue from HMUAB accounted for 27%% of the gross revenue for the three months ended March 31, 2011 and 29% of the gross revenue for the three months ended March 31, 2010.

On September 1, 2003, the Company signed an exclusive 17-year agreement with Harbin Municipal Urban Administrative Bureau (“HMUAB”) to dispose of approximately one-third of the city’s solid waste disposal. The contract will expire on August 30, 2020. The revenue from HMUAB accounted for 100% of the gross revenue for the years ended December 31, 2009.

In January 2010, the Company signed a PET bottle processing agreement and a consignment sales agreement with Harbin Dongxin Group (“Dongxin”). In accordance with the agreements, Dongxin shall be responsible for processing, packaging and selling the PET bottles sorted from the landfill or purchased by the Company. The Company shall pay a processing fee to Dongxin in return. Dongxin sells the processed PET bottles at an agreed price. The Company fixes a minimum resale price, which Harbin Dongxin Group must collect and remit to the Company upon sale of the recycled PET. Harbin Dongxin Group is entitled to retain any revenue it obtains from the resale in excess of the fixed minimum price.

In March 2010, the Company signed a plastic bottle cap processing and consignment sales agreements with Harbin Bin County Welfare Plastic Products Co., Ltd (“HBC”). In accordance with the agreements, HBC will be responsible for processing the plastic bottle caps sorted from the landfill. The Company will pay a processing fee to HBC in return. The processed plastic granules will be sold by HBC at an agreed price. The Company fixes a minimum resale price, which HBC must collect and remit to us upon sale of the granules. HBC is entitled to retain any revenue it obtains from the resale in excess of the fixed minimum price.

15 The following table presents sales from major customers with individual sales over 10% of total net revenue for the three months ended March 31, 2011 and 2010:

	Three months ended March 31,
	2011					2010
	Sales		% of			Sales		% of
	Sales		Total Sales			Sales		Total Sales
HMUAB	$	1,233,016		27	%	$	1,122,699		71	%
Dongxin		3,090,743		68	%		465,055		29	%
HBC		213,865		5	%

Total	$	4,537,624		100	%	$	1,587,754		100.00	%

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 87. MAJOR CUSTOMERS (Continued)

The following table presents sales from major customers with individual sales over 10% of total net revenue for the three and nine months ended September 30, 2010 and 2009:

	Ended September 30, 2010										Ended September 30, 2009
	Nine Months					Three Months					Nine Months					Three Months
	Sales		% of Total Sales			Sales		% of Total Sales			Sales		% of Total Sales			Sales (1)		% of Total Sales
HMUAB	$	3,530,736		31	%	$	1,221,208		26	%	$	1,342,554		100	%	$	452,533		100	%
Consignment sales through Dongxin		6,834,700		59	%		3,024,663		65	%		-		0	%		-		0	%
Consignment sales through HBC		1,125,264		10	%		413,323		9	%		-		0	%		-		0	%
Total	$	11,490,700		100	%	$	4,659,194		100	%	$	1,342,554		100	%	$	452,533		100	%

(1) Represents landfill minimum fee.

Accounts receivable related to HMUAB, Dongxin and HBC are as follows:

	September 30, 2010					December 31, 2009
	March 31, 2011					December 31, 2010
	Accounts Receivables		% of Accounts Receivables			Accounts Receivables		% of Accounts Receivables
	Accounts		% of Accounts			Accounts		% of Accounts
HMUAB	$	3,034,593		50	%	$	4,253,203		100	%
	Receivables		Receivables			Receivables		Receivables
Dongxin		2,728,718		45	%		-		0	%
HMUAB	$	1,238,699		28	%	$	1,246,873		23	%
HBC		356,080		6	%		-		0	%
Dongxin		3,020,927		67	%		3,930,912		72	%
Total	$	6,119,391		100	%	$	4,253,203		100	%
HBC		208,377		5	%		267,633		5	%
Total	$	4,468,003		100	%	$	5,445,418		100	%

NOTE 98. SEGMENT INFORMATION

The Company identified two operating segments for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2010~~2011: landfill operation and plastic bottle sorting and recycling. The landfill operating segment provides non-hazardous municipal solid waste processing and disposal services. The plastic bottle recycling segment sorts the waste plastic bottles from the landfill the Company is operating, outsources the processing function to Dongxin and HBC and sells the processed PET bottles and plastic granules on consignment basis through Dongxin and HBC. In addition, the Company ~~has~~records ~~recorded~~ as a separate element of revenues the Landfill Minimum Fees, which are the payments made to the Company for landfill services when the minimum daily delivery was not met.

All of the Company’s revenue ~~are~~is from customers in the PRC.

The measurement of segment income is determined as earnings before income taxes. Segment incomes are reported to the Company’s chief operating decision maker (“CODM”) using the same accounting policies as those used in the preparation of these condensed consolidated financial statements. Items that are not allocated to the Company’s operating segments are comprised primarily of selling, general and administrative expenses, interest income and expenses, other income and expenses and income taxes.

16The segment information for the reportable segments for the three months ended March 31, 2011 and 2010 and the reconciliation of reportable segment net sales and net income to the consolidated total are as follows:

For the Three Months Ended March 31, 2011
	Landfill		PET		Consolidated
	Disposal Fees		Bottle Fees		Total
Revenue	$	1,233,016	$	3,304,608	$	4,537,624
Cost of revenue		407,300		2,691,355		3,098,655
Gross profit	$	825,716	$	613,253	$	1,438,969

Selling, General and Administrative Expense					$	218,095
Income from operations					$	1,220,874
Other income					$	73,424
Income before income taxes					$	1,294,298

Provision for income taxes					$	168,002
Net income					$	1,126,296

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 98. SEGMENT INFORMATION (Continued)

The segment information for the reportable segments for the three and nine months ended September 30, 2010 and 2009 and the reconciliation of reportable segment net sales and net income to the consolidated total are as follows:

For the Three Months Ended March 31, 2010
	Landfill Disposal Fees		PET Bottle Fees		Consolidated Total

Revenue	$	1,122,699	$	465,055	$	1,587,754
Cost of revenue		356,730		95,614		452,344
Gross profit	$	765,969	$	369,441	$	1,135,410

Selling, General and Administrative Expense					$	145,918
Income from operations					$	989,492

Other income					$	23,106
Income before income taxes					$	1,012,598

Provision for income taxes					$	139,273
Net income					$	873,325

For the Three Months Ended September 30,
	Landfill		PET		Landfill		Consolidated
	Disposal Fees		Bottle Fees		Minimum Fees		Total
2010
Revenue	$	1,221,208	$	3,437,986	$	-	$	4,659,194
Cost of revenue		393,719		1,908,896		-		2,302,615
Gross profit		827,489		1,529,090		-		2,356,579
Income from operations								2,201,999
Income before income taxes								2,203,352
Provision for income taxes								284,325
Net income							$	1,919,027
2009 (Restated)
Revenue	$	-	$	-	$	452,533	$	452,533
Cost of revenue		-		-		-		-
Gross profit		-		-		452,533		452,533
Income from operations								307,534
Income before income taxes								256,435
Provision for income taxes								51,551
Net income							$	204,884

NOTE 9. BANK LOAN PAYABLE

17On November 18, 2004, the Company received a long-term loan from Industrial and Commercial Bank of China, Harbin Branch in the amount of $4,832,960, secured by the Company’s building. The loan had a 5-year term, maturing November 15, 2009. Pursuant to the loan agreement, the interest rate for the first year was set at 7.605%. Starting from the second year and thereafter, the rates become adjustable based on the change of the official rates at the time. In addition to paying the quarterly interest, the Company is also required to make $241,648 pre-determined principal repayments every quarter, with the exception of the final two quarters in 2011, when the quarterly payment will be $302,060.

On November 13, 2009, the Company obtained an extension for the above loan. The extended loan has a fixed interest rate at 6.534% per annum and matures on December 25, 2011. In accordance with the loan extension agreement, the Company will be required to make the regular quarterly repayments as previously agreed.

As of March 31, 2011 and December 31, 2010, the loan payable consists of the following:

	March 31, 2011		December 31, 2010
Loan payable	$	845,768	$	1,087,416
Less: current portion		845,768		1,087,416
Loan payable - non-current portion	$ 　-		$	-

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 910. INCOME ~~SEGMENT INFORMATION (Continued)~~TAXES

For the Nine Months Ended September 30,
	Landfill		PET		Landfill		Consolidated
	Disposal Fees		Bottle Fees		Minimum Fees		Total
2010
Revenue	$	3,530,736	$	7,959,964	$	-	$	11,490,700
Cost of revenue		1,133,679		4,173,824		-		5,307,503
Gross profit		2,397,057		3,786,140		-		6,183,197
Income from operations								5,733,692
Income before income taxes								5,758,480
Provision for income taxes								753,510
Net income							$	5,004,970
2009 (Restated)
Revenue	$	-	$	1,342,554	$	-	$	1,342,554
Cost of revenue		-		-		-		-
Gross profit		-		1,342,554		-		1,342,554
Income from operations								844,328
Income before income taxes								690,219
Provision for income taxes								145,130
Net income							$	545,089

NOTE 10. BANK LOAN PAYABLE

On November 18, 2004, the Company received a long-term loan from Industrial and Commercial Bank of China, Harbin Branch in the amount of $4,832,960, secured by the Company’s building. The loan had a 5-year term, maturing November 15, 2009. Pursuant to the loan agreement, the interest rate for the first year was set at 7.605%. Starting from the second year and thereafter, the rates become adjustable based on the change of the official rates at the time. In addition to paying the quarterly interest, the Company is also required to make $241,648 pre-determined principal repayments every quarter.

Upon the suspension of the Company’s landfill operation as discussed in Note 13, the Company renegotiated with the Bank for a temporarily reduced quarterly principal repayment in the amount of RMB 200,000 ($29,278) each quarter, starting in the third quarter of 2007.

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10. BANK LOAN PAYABLE (continued)

The Company recommenced the landfill operation in October 2009 and obtained an extension for the above loan on November 13, 2009. The extended loan has a fixed interest rate at 6.534% per annum and matures on December 25, 2011. In accordance with the loan extension agreement, the Company will be required to make the regular quarterly repayments as previously agreed. For the nine months ended September 30, 2010, the Company repaid $896,700 to the lender. Interest expense incurred for the three and nine months ended September 30, 2010 amounted to $32,324 and $110,383, and was capitalized a construction in progress. Interest expense incurred for the three and nine months ended September 30, 2009 amounted to $51,571 and $162,736 and was expensed during the suspension of operations from July 1, 2007 through September 30, 2009.

As of September 30, 2010 and December 31, 2009, the loan payable consists of the following:

	September 30, 2010		December 31, 2009
Loan payable	$	1,329,064	$	2,054,008
Less: current portion		1,027,004		966,592
Loan payable - non-current portion	$	302,060	$	1,087,416
Maturities of the long-term payable:
Twelve months ending
September 30
2011	$	1,027,004
2012		302,060
	$	1,329,064

NOTE 11. INCOME TAXES

PRC Tax

Two of the Company’s operating subsidiaries, Harbin Yifeng and Yifeng Zhiye, are both registered and operate in Harbin, China. They are governed by the Income Tax Law of the People’s Republic of China concerning private-run enterprises, which are subject to tax at a statutory rate of 25%. Management anticipates that substantially all of the profits generated by the Company’s subsidiaries will be retained in the PRC and not repatriated, except for transfers to the U.S. to pay administrative expenses of the parent corporation.

Upon the acquisition of Harbin Yifeng by ~~AEEC~~the Company, Harbin Yifeng applied to be treated as a Wholly Foreign Owned Enterprise (“WFOE”). In accordance with the relevant income tax laws, the profits of WFOEs are fully exempted from income tax for two years, from the first profit making calendar year of operations after offset of accumulated taxable losses, followed by a 50% income tax reduction for the immediate next three calendar years (“tax holiday”).

Harbin Yifeng was granted the status of WFOE in the fourth quarter of 2006 ~~upon the reserve merger~~ with ~~USIP with~~ a choice of starting the tax holiday immediately or the next calendar year. Harbin Yifeng elected for this tax holiday to commence in January 2007. Its two-year tax exemption period was from January 1, 2007 to December 31, 2008 and the three-year income tax reduction period will be from January 1, 2009 to December 31, 2011.

The estimated tax savings as a result of tax holidays for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010 amounted to $~~848~~201,~~587~~276, and $~~123~~169,~~622~~587, respectively. The net effect on earnings per share had the income tax been applied would decrease basic earnings per share for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010 from $~~041~~0.09 to $0.3407 and from $0.0407 to $0.0306, respectively.

OnUnited ~~March~~States 16, 2007, National People's Congress passed a new corporate income tax law (the “New CIT Law”), which became effective on January 1, 2008. This new corporate income tax unified the corporate income tax rate, cost deductions and tax incentive policies for both domestic and foreign-invested enterprises in China. Under the new CIT law, the corporate income tax rate applicable to all Companies is 25%, replacing the previous tax rate of 33%. However, companies previously approved for any income tax holiday will not be subject to the new enacted tax rate until the holiday runs out. Accordingly, the applicable corporate income tax rate of our Chinese subsidiaries will incrementally decrease to 12.5% (50% of new applicable rate of 25%) for the three-year income tax reduction period.Tax

19The Company was incorporated in the United States. It incurred net operating losses for U.S. income tax purposes for the three months ended March 31, 2011 and 2010. Net operating loss carry forwards, including amortization of share-based compensation, for United States income tax purposes amounted to $1,196,357 and $1,154,669 as of March 31, 2011 and December 31,2010, respectively, which may be available to reduce future periods' U. S. taxable income. These carry forwards will expire, if not utilized, beginning in 2028 through 2029. Management believes that the realization of the benefits arising from this loss appear to be uncertain due to Company's limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance at March 31, 2011 for the temporary difference related to the loss carry-forwards. Management reviews this valuation allowance periodically and makes adjustments as warranted.

Deferred tax assets and the related valuation allowance are set forth in the table below. The deferred tax asset for purposes of Chinese income tax is based on the amortization of landfill development costs.

	March 31, 2011			December 31, 2010
USA	$	406,761		$	392,587
China		155,137			120,719
Less: Valuation Allowance		(406,761	)		(392,587	)
Net	$	155,137		$	120,719

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1110. INCOME TAXES (Continued)

~~United~~For ~~States~~the ~~Tax~~three months ended March 31, 2011 and 2010, the provision for income taxes were as follows:

EESC is subject to United States of America tax law. No provision for income taxes in the United States or elsewhere has been made, as EESC had no taxable income subject to U.S. taxes for the nine months ended September 30, 2010 and 2009.

	March 31, 2011			March 31, 2010
Current	$	201,276		$	169,587
Deferred tax benefit		(33,274	)		(30,314	)
Total	$	168,002		$	139,273

~~The~~NOTE ~~Company was incorporated in the United States~~11. ItSTATUTORY incurred net operating losses for U.S. income tax purposes for the three and nine months ended September 30, 2010 and 2009. The net operating loss carry forwards, including amortization of share-based compensation, for United States income tax purposes amounted to $1,112,982 and $852,267 as of September 30, 2010 and December 31,2009, respectively, which may be available to reduce future periods' taxable income. These carry forwards will expire, if not utilized, beginning in 2028 through 2029. Management believes that the realization of the benefits arising from this loss appear to be uncertain due to Company's limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance at September 30, 2010 for the temporary difference related to the loss carry-forwards. Management reviews this valuation allowance periodically and makes adjustments as warranted.RESERVES

~~Deferred~~EESC’s subsidiaries in China are required to allocate a portion of their after tax ~~assets~~profits ~~and~~to the ~~related~~statutory ~~valuation~~reserve. Appropriations ~~allowances~~to ~~were~~the asstatutory ~~follows:~~reserve are required to be at least 10% of an enterprise’s after tax retained earnings. When the surplus reserve account balance is equal to or greater than 50% of the Company’s registered capital, no further allocation to the surplus reserve account is required. EESC’s combined registered capital is RMB 28 million, which when 50% is converted to U. S. currency, the maximum reserve is approximately $ 2,049,000 at March 31, 2011.

	September 30, 2010			December 31, 2009
Current
USA	$	385,464		$	289,771
China		85,863			(10,631	)
Deferred
Allowance for doubtful accounts		--			--
Valuation allowance		(385,464	)		(289,771	)
Net Deferred Asset/Liability	$	85,863		$	(10,631	)

The statutory reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing stockholders in proportion to their shareholdings or by increasing the par value of shares currently held by them, provided that the remaining statutory surplus reserve balance after such issue is not less than 25% of the registered capital.

~~Income~~If ~~tax~~the ~~returns~~accumulated balance of the Company’s statutory reserve is not enough to make up for the losses of the Company’s previous year, the current years’ ~~prior~~profit shall first be used for making up the losses before the statutory reserve is drawn. As of March 31, 2011 and 2010 the Company had accumulated after tax profits of $ 1,126,296 and $873,325, respectively and therefore is required to ~~2007~~make ~~are~~accumulative nocontributions ~~longer~~of ~~subject~~$112,630 and $87,333, respectively, to ~~examination~~the bystatutory ~~tax~~surplus ~~authorities~~reserve account.

2015

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1211. ~~STOCK-BASED~~ STATUTORY ~~COMPENSATION~~RESERVES (Continued)

	31-Mar-11			31-Mar-10
After tax profits	$	1,126,296		$	873,325
Percentage applied		10	%		10	%
Addition to Accumulated Statutory Surplus Reserve	$	112,630		$	87,333
Accumulated Statutory Surplus Reserve	$	1,338,011		$	655,054

NOTE 12. DIVIDEND POLICY

EESC’s ability to meet its obligations in the United States depends upon the receipt of dividends or other payments from Harbin Yifeng, its operating subsidiary in China. The payment of dividends by entities organized in China is subject to limitations, procedures and formalities. In addition, Harbin Yifeng, from time to time, may be subject to restrictions on its ability to make distributions, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.

NOTE 13. STOCK-BASED COMPENSATION

In May 2007, the Board of Directors of the Company adopted and approved the 2007 Employee Incentive Stock Option Plan (the “2007 Plan”), which authorized the issuance of up to 2,000,000 shares of common stock under the 2007 Plan. Subject to the terms and provisions of the 2007 Plan, the Board of Directors, at any time and from time to time, may grant shares of stock to eligible persons in such amounts and upon such terms and conditions as the Board of Directors shall determine.

The Company granted a total of 2,000,000 shares of its common stock to twenty two employees in 2007 under the 2007 Plan with a weighted average grant price of $0.49 and average vesting period of 3 years.

In April 2008, the Board of Directors of the Company adopted and approved the 2008 Employee Incentive Stock Option Plan (the “2008 Plan”), which authorized the issuance of up to 3,000,000 shares of common stock under the 2008 Plan. Subject to the terms and provisions of the 2008 Plan, the Board of Directors, at any time and from time to time, may grant shares of stock to eligible persons in such amounts and upon such terms and conditions as the Board of Directors shall determine.

The Company granted a total of 2,950,000 shares of its common stock to consultants and seven employees omon April 28, 2008 under the Plan with a weighted average grant price of $0.45 and average vesting period of 10 years.

OnThese ~~June~~restricted 9,stock ~~2010,~~issuances ~~the~~are ~~Company~~accounted ~~entered~~for ~~into~~at ~~Independent~~fair ~~Directors~~value, ~~Contracts~~based ~~with~~upon ~~two~~the ~~new~~closing ~~directors.~~stock ~~The~~price ~~Company~~at ~~agreed~~the todate ~~pay~~of ~~these~~grant. The ~~directors~~corresponding aexpense ~~total~~is ~~cash~~amortized ~~fee~~over ofthe ~~$54,000~~vesting ~~per~~period. A ~~annum~~summary ~~and~~of tothe ~~issue~~status toof ~~them~~the ~~common~~Company’s ~~stock~~non-vested ~~valued~~shares atas ~~$60,000~~of onMarch ~~June 9~~31, 2011, ifand ~~they~~changes ~~remain~~during on the ~~Board~~three onmonths ~~that~~ended ~~date.~~March 31, 2011, is presented below:

	Shares		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2010		2,426,666	$	1,197,333
Granted		-		-
Vested		83,750		41,688
Forfeited		-		-
Non-vested at March 31, 2011		2,342,916	$	1,155,645

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1213. STOCK-BASED COMPENSATION (Continued)

A summary of the status of the Company’s ~~non-vested~~deferred ~~shares~~stock compensation under the Plan as of ~~September~~March 3031, ~~2010~~2011, and changes ~~during~~for the ~~six~~three months ended ~~September~~March 3031, ~~2010~~2011, is presented below:

Non-vested Shares	Shares			Weighted-Average Grant Date Fair Value
Deferred stock compensation as of December 31, 2010	$	1,195,916
Non-vested at December 31, 2009		3,144,999		$	1,510,138
Compensation expenses debited to statement of operations with a credit to additional paid-in capital		(41,688	)
Granted		-			-
Deferred stock compensation as of March 31, 2010	$	1,154,228
Vested		634,538			271,118
Forfeited		-			-
Non-vested at September 30, 2010		2.510.416		$	1,239,020

AThe ~~summary~~total ofremaining ~~the~~unrecognized ~~status~~compensation ofrelated ~~the~~to ~~Company’s~~ deferred stock ~~compensation~~issuances ~~under~~will ~~the~~be ~~Plan~~amortized asover ~~of September 30, 2010, and changes for~~ the ~~three~~weighted-average ~~months~~remaining ~~ended~~requisite ~~September~~service ~~30,~~period ~~2010,~~of iseight ~~presented below:~~years.

Deferred stock compensation as of December 31, 2009	$	1,498,319
Compensation expenses debited to statement of operations
with a credit to additional paid-in capital		(260,715	)
Deferred stock compensation as of September 30, 2010	$	1,237,604

On June 9, 2010, the Company entered into Independent Directors Contracts with two new directors. The Company agreed to pay these directors a total cash fee of $54,000 per annum and to issue to them common stock valued at $60,000 on June 9, 2011, if they remain on the Board on that date.

2217

EASTERN ENVIRONMENT SOLUTIONS, CORP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13. SIGNIFICANT EVENTS

On June 13, 2007, the Company filed a Form 8-K with the SEC, announcing that in accordance with the PRC National Environment Protection Bureau’s request in relation to landfills and adjustments to their peripheral inhabitants’ well-being, the Harbin municipal government city administrative bureau was carrying out certain adjustments to the original landfill plans of the Company's subsidiary, Harbin Yifeng Eco-environment Co. Ltd. (“Harbin Yifeng”). Such adjustments resulted in the relocation of some peripheral inhabitants of the landfill and its waste water disposal plant. The costs of such adjustments have been absorbed by the Harbin municipal government city administrative bureau. These measures disrupted Harbin Yifeng’s normal operations. After careful consideration, the Company's Board of Directors decided to temporarily suspend Harbin Yifeng’s operations while the measures were being carried out. However, Harbin Yifeng was still entitled to collect the minimum fixed fees for the Suspension Period as per the “Special Permission Operation Rights Contract”, which Harbin Yifeng had signed with the Harbin municipal government city administrative bureau on September 1, 2003. The bureau was required to compensate and pay Harbin Yifeng a sum equivalent to the fee for disposing 800 tons of waste per day during the Suspension Period.

On November 16, 2009, the Company issued a press release, announced that it has reopened its MSW landfill in Harbin. As notified by the Harbin Municipal Urban Administrative Bureau (HMUAB), the Company recommenced its operations at the landfill on October 30, 2009. Since then, the landfill has been in full production and returned to the level of operations it carried on prior to the landfill suspension in June 2007.

On January 20, 2010, the Company signed a supplementary agreement with HMUAB. According to the supplementary agreement, from January 1, 2010, the waste disposal subsidy was raised from 42 RMB per ton as set in the original franchise contract to 60 RMB per ton.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS

Forward-Looking Statements: No Assurances Intended

In addition to historical information, this Quarterly Report contains forward-looking statements, which are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions. These forward-looking statements represent Management’s belief as to the future of Eastern Environment Solutions, Corp. Whether those beliefs become reality will depend on many factors that are not under Management’s control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in Section 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010 entitled “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

Results of Operations

The ~~growth~~agreements we made with Harbin Dongxin Group and Harbin Bin County Welfare Plastic Products Co. in 2010 marked the expansion of our business ~~was~~from ~~delayed~~waste instorage ~~June~~toward ~~2007,~~the ~~when~~efficient ~~the~~recycling ~~Harbin~~of ~~Municipal~~waste ~~Urban~~into ~~Administrative~~value-added ~~Bureau~~products. The use of polyethylene terephthalate (“~~HMUAB~~PET”), ~~which~~by ~~was~~the ~~our~~bottling ~~only~~industry ~~customer~~has atincreased ~~that~~dramatically ~~time,~~in ~~was~~the ~~mandated~~past bydecade, as has the ~~PRC~~demand ~~National~~for ~~Environment~~recycled ~~Protection~~PET ~~Bureau~~for toa ~~carry~~variety ~~out~~of ~~certain~~industrial ~~modifications~~purposes, toespecially ~~the~~as ~~development~~a component of ~~its~~solar-heating ~~landfill~~installations. With both supply and demand for PET established, the ~~protection~~logic of ~~local~~positioning ~~residents~~ourselves as middleman becomes evident. ~~The~~Since ~~modifications~~January ~~involved~~2010, ~~the~~we ~~relocation~~have ofbeen ~~certain~~removing ~~neighboring~~the ~~residents,~~PET asbottles ~~well~~from aswaste ~~the~~deposited ~~relocation~~in ofthe ~~our~~Harbin ~~wastewater~~landfill ~~disposal~~and ~~plant. The~~delivering ~~cost~~the ofbottles ~~the~~to ~~modifications~~Harbin ~~was~~Dongxin ~~borne~~Group ~~entirely~~on bya ~~the~~consignment ~~HMUAB~~basis. ~~Nevertheless,~~Since ~~while~~April ~~these~~2010 ~~modifications~~we ~~were~~have ~~ongoing,~~also webeen ~~suspended~~purchasing ~~our~~PET ~~operations~~bottles atfrom ~~the~~third ~~Landfill,~~parties ~~which~~and ~~were~~consigning ~~our~~them ~~only~~to ~~source~~Harbin ofDongxin ~~revenue~~Group. ~~The~~We ~~suspension~~pay ~~was~~Harbin ~~lifted~~Dongxin inGroup ~~November~~a ~~2009~~per-ton fee for processing the bottles into usable PET, and then we ~~have~~consign ~~now~~the ~~returned~~resulting PET to ~~full~~Harbin ~~operations~~Dongxin Group for resale to industry. ~~Our~~We ~~condensed~~fix ~~consolidated~~a ~~financial~~minimum ~~statements~~resale ~~for~~price, which Harbin Dongxin Group must collect and remit to us upon sale of the ~~nine~~recycled ~~months~~PET. Harbin ~~ended~~Dongxin ~~September~~Group ~~30,2009,~~is ~~reflect~~entitled to retain any revenue it obtains from the ~~results~~resale in excess of ~~suspended~~the ~~operations~~fixed minimum price.

In the first quarter of 2010, our business prospects brightened considerably. The most significant events that occurred in that quarter were:

· In January 2010 we executed an agreement with the HMUAB that increased the fee payable to us for waste disposal from 42 RMB ($6.28) per ton to 60 RMB ($8.97) per ton, based on current exchange rates.

· In February 2010 the HMUAB increased the limits on our operations from 1,200 tons of waste per day to 1,500 tons per day.

· In January 2010 we took the first major step towards implementing our plan to commercialize the resources available in the waste deposited in the landfill, as we engaged Harbin Dongxin Group as our agent to process and distribute the polyethylene terephthalate (“PET”) bottles that we remove from the landfill.

· In March 2010 we signed a plastic bottle cap processing and consignment sales agreement with Harbin Bin County Welfare Plastic Products Co., Ltd., under which we engaged Harbin Bin County Welfare Plastic Products Co. as our agent to process the bottle caps that we remove from the landfill and resell the granules.

Our agreements with Harbin Dongxin Group and Harbin Bin County Welfare Plastic Products Co. mark the expansion of our business from waste storage toward the efficient recycling of waste into value-added products. The use of PET by the bottling industry has increased dramatically in the past decade, as has the demand for recycled PET for a variety of industrial purposes, especially as a component of solar-heating installations. With both supply and demand for PET established, the logic of positioning ourselves as middleman becomes evident. Since January 2010, we have been removing the PET bottles from waste deposited in the Harbin landfill and delivering the bottles to Harbin Dongxin Group on a consignment basis. We pay Harbin Dongxin Group a per-ton fee for processing the bottles into usable PET, and then we consign the resulting PET to Harbin Dongxin Group for resale to industry. We fix a minimum resale price, which Harbin Dongxin Group must collect and remit to us upon sale of the recycled PET. Harbin Dongxin Group is entitled to retain any revenue it obtains from the resale in excess of the fixed minimum price.

The terms of our agreement with Harbin Bin County Welfare Plastic Products Co. mimic the agreement with Harbin Dongxin Group. Since we re-started operations at the Harbin landfill in November 2009, we have been removing plastic bottle caps from the waste deposited there. In March 2010 we engaged Harbin Bin County Welfare Plastic Products Co. to accept the bottle caps on a consignment basis. We pay Harbin Bin County Welfare Plastic Products Co. a per-ton fee for grinding the bottle caps into plastic granules, and then we consign the resulting granules to Harbin Bin County Welfare Plastic Products Co. for resale to industry. We fix a minimum resale price, which Harbin Bin County Welfare Plastic Products Co. must collect and remit to us upon sale of the granules. Harbin Bin County Welfare Plastic Products Co. is entitled to retain any revenue it obtains from the resale in excess of the fixed minimum price.

The sale of recovered PET bottles and bottle caps produced 69% of our revenue ($7,959,964) in the first nine months of 2010. With the $3,530,736 contributed by HMUAB reimbursements for our landfill operations, we increased revenue from $1,342,554 in the first nine months of 2009 to $11,490,700 in the first nine months of 2010, during which we accrued only the minimum fee guaranteed by HMUAB in our agreement. In the third quarter, revenue increased from $452,533 to $4,659,194. For the future we expect growth to continue. Having now returned to operations, we will endeavor to expand our waste processing operations by (a) pursuing strategic acquisitions, (b) developing additional landfills, and (c) implementing additional recycling technologies that will provide additional revenue sources, such as the sale of methane to the electric power industry. Given China’s continuing growth, we believe there will be numerous market opportunities.18

~~Although~~The sale of recovered materials has quickly become our ~~revenue~~leading insource of revenue. In the first ~~nine~~quarter ~~months~~of 2011 the sale of ~~2009~~recovered ~~was~~PET ~~achieved~~bottles ~~without~~and ~~any~~bottle ~~production~~caps onproduced ~~our~~73% ~~part,~~of weour ~~incurred~~revenue ($~~185~~3,~~630 expenses~~304,608). ~~These~~With ~~costs~~the ~~were~~$1,233,016 ~~attributable~~contributed toby ~~the~~HMUAB ~~fact~~reimbursements ~~that~~for weour ~~retained~~landfill ~~our~~operations, ~~core~~we ~~employees~~increased onrevenue ~~salary~~from ~~during~~$1,587,754 in the ~~suspension~~first ~~period. These~~three ~~costs~~months ~~have~~of ~~classified~~2010 asto ~~Administrative~~$4,537,624 ~~expenses. Management~~in ~~determined~~the ~~that~~first ~~eliminating~~three ~~the~~months ~~Company’s~~of ~~employee~~2011. At ~~base~~March ~~during~~31, ~~the~~2011 ~~landfill~~we ~~suspension~~had ~~would~~no ~~make~~PET itin ~~very~~inventory, ~~difficult~~as toa ~~return~~result ~~the~~of ~~landfill~~which tosecond ~~full~~quarter ~~operations~~PET ~~when~~sales may lag the ~~suspension~~first ~~ended~~quarter. ~~This~~For ~~decision~~the ~~proved~~future, ~~advantageous as in 2010~~however, as we ~~were~~expect ~~able~~growth to ~~return~~continue. We ~~promptly~~plan to ~~full-scale~~expand ~~operation~~our ~~without~~waste ~~significant~~processing ~~start-up~~operations ~~costs~~by or(a) ~~inefficiencies. During~~pursuing ~~the~~strategic ~~nine~~acquisitions, ~~months~~(b) ~~ended~~developing ~~September~~additional 30landfills, ~~2010~~and ~~the~~(c) ~~expenses~~implementing ~~attributable~~additional torecycling ~~our~~technologies ~~landfill~~that ~~operations~~will ~~increased~~provide toadditional ~~$5.3~~revenue ~~million~~sources, ~~compared~~such as the sale of methane to nothe ~~landfill~~electric ~~operating~~power ~~costs~~industry. Given inChina’s ~~2009~~continuing growth, ~~except~~we ~~the~~believe ~~payroll~~there ~~costs~~will ~~for~~be ~~retaining~~numerous ~~our~~market ~~labor force~~opportunities.

25Our landfill operations during the three months ended March 31, 2011 yielded a gross margin of 67% - i.e. $825,716 in gross profit. The primary component of our cost of landfill sales is amortization of the landfill cost - $336,224 out of total landfill costs of $407,300 in the three months ended March 31, 2011. We initiated operations at the landfill when only the lowest level of the landfill had been made ready for use. However, since each level is dependent on the levels below it, we determined that the landfill expense could best be correlated with revenue by amortizing the estimated total landfill development cost, using the ratio of actual tonnage disposed in the landfill to the total anticipated capacity of the landfill. As of March 31, 2011, our estimate of the total cost of constructing the landfill was $17,235,000. We determine the quarterly amortization amount by multiplying that estimated total investment by the ratio of the landfill capacity used during the three months ended March 31, 2011 (134,342 tons - i.e. 1.7% of total capacity) to the estimated total capacity (7,800,000 tons).

~~The~~Our ~~relative~~estimate ~~efficiency~~that ofthe ~~our~~total ~~operations~~capacity ~~and~~of the ~~decision~~landfill towill ~~retain~~be ~~our~~7,800,000 ~~employees~~tons onwas ~~salary~~made ~~during~~on ~~the~~a ~~suspension~~gross ofbasis. Actual ~~operations~~usage ~~were~~should ~~demonstrated~~exceed bythat ~~the~~amount. This ~~modest~~occurs, ~~((7%) increase~~ in ~~selling~~part, ~~general~~because ~~and~~we ~~administrative~~are ~~expenses~~actively ~~that~~removing wePET ~~experienced~~recyclables and may in the ~~first~~future ~~nine~~remove ~~months~~other ofrecyclable ~~2010. In~~materials, ~~both~~which ~~periods,~~releases ~~the~~space ~~majority~~for ofadditional ~~our~~deposits. Additional ~~selling,~~space ~~general~~is ~~and~~also ~~administrative~~released ~~expense~~as ~~was~~organic ~~attributable~~material toin the ~~expensing~~waste ofdegrades. As ~~stock~~a ~~compensation~~result ~~that~~of ~~we awarded~~these tofactors, ~~employees~~the ~~and~~Phase ~~consultants~~1 inportion ~~2008~~of asthe ~~incentives for future services: $260~~landfill,~~715~~ inwhich ~~the~~has ~~first~~an ~~nine~~estimated ~~months~~capacity of ~~2010~~1. ~~Total~~6 ~~SG&A~~million ~~for nine months ended September 30~~tons, ~~2010~~is ~~was~~still ~~$449,505,~~in ~~verses~~use ~~$498,226~~after ~~for~~1.69 ~~the~~million ~~same~~tons ~~period~~have ~~last~~been ~~year~~deposited. ~~SG&A~~When ~~for~~Phase ~~the~~1 ~~nine~~is ~~months ended September 30~~complete, ~~2009,~~we ~~$498,226,~~will ~~includes~~recalculate ~~$79,185~~our estimate of ~~operating~~total ~~costs,~~landfill ~~primarily~~capacity ~~labor,~~based on that ~~was~~experience, ~~reclassified~~and, as ~~Administrative~~needed, ~~expense~~adjust ~~during~~our ~~the~~amortization ~~suspension period~~schedule. ~~The~~An ~~$1,237,604~~increase in ~~deferred~~our ~~stock~~estimate ~~compensation~~of ~~expense~~total ~~remaining~~landfill atcapacity ~~September 30, 2010~~ will beresult ~~amortized~~in asa ~~expenses~~reduction ~~over~~in the ~~expected~~amortization ~~terms~~rate ofand ~~service of~~ the ~~employees~~corresponding ~~and~~quarterly ~~consultants~~landfill ~~who~~amortization ~~received the shares~~expense.

~~The~~Our ~~Company’s~~PET ~~revenue~~bottle ~~less~~and ~~expenses~~cap ~~resulted~~sales inyielded a ~~pre-tax~~gross ~~income~~margin of ~~$5,758,480~~19% ~~for the nine months ended September 30, 2010, compared to pre~~-~~tax~~ ~~income~~i.e. of $~~690~~613,~~219~~253 ~~during~~in ~~nine~~gross ~~months ended September 30, 2009, when operations were suspended~~profit. AsThis represented a ~~result~~marked ofreduction ~~Chinese tax laws that reward foreign investment in China, Yifeng was entitled to exemption~~ from ~~income~~the ~~taxes during 2007 and 2008, followed by a 50~~41% ~~abatement~~gross ofmargin ~~taxes~~we ~~from~~achieve ~~2009~~on toPET ~~2011. In~~operations ~~the~~in ~~first nine months of~~ 2010, ~~after accruing $848,587 for income taxes, our net income was $5,004,970, representing $0.41~~ (~~diluted~~79% ~~$0.33)~~in ~~per share, compared to net income of $545,089 for~~ the first ~~nine~~quarter ~~months~~ of ~~2009~~2010). ~~Net~~The ~~income~~primary ~~for~~components ~~the~~of ~~third~~our ~~quarter~~cost of ~~2010~~bottle ~~was~~and ~~$1,919,027,~~cap ~~compared~~sales ~~to $204,884 in the third quarter of 2009.~~are:

~~During~~· the ~~three~~purchase ~~and~~price ~~nine~~for ~~months~~bottles ~~ended~~that ~~September~~we ~~30,~~purchase 2009, no disposal took place at the landfill during a suspension of operations order by HMUAB. During the three months and nine months ended September 30, 2010, 136,398 and 396,754 actual tonnage was disposed after the suspension was lifted. During this same period in 2010, 1404 and 3,785 tons of plastic, respectively, was recycled from ~~the~~third ~~landfill~~party ~~through the Company’s distributors Harbin Dongxin Group and Harbin Bin County Welfare Plastic Products Co., Ltd.~~providers;

~~Our~~· ~~business~~the ~~operates~~salaries ~~entirely in Chinese Renminbi, but~~ we ~~report~~pay ~~our~~labor ~~results in our SEC filings in U.S. Dollars. The conversion of our accounts from RMB~~ to ~~Dollars~~extract ~~results in translation adjustments. While our net income is included in~~ the ~~retained~~plastics earnings on our balance sheet; the translation adjustments are included in a line item on our balance sheet labeled “accumulated other comprehensive income,” since it is more reflective of changes in the relative values of U.S. and Chinese currencies than of the success of our business. During the first nine months of 2010, the effect of converting our financial results from ~~RMB to U.S. Dollars was to increase our accumulated other comprehensive income by $188,908. During~~ the ~~first~~Landfill; ~~nine months of 2009, the effect of converting our financial results from RMB to U.S. Dollars was to reduce our accumulated other comprehensive income by $(21,671).~~and

the fees that we pay to have the bottles and caps processed for resale as PET.

The reduction in PET bottle and cap gross margin from 2010 to the first quarter of 2011 is primarily attributable to the fact that the greater portion of the PET we sold in 2011 was purchased from third party providers, and market prices have been increasing. In addition, the value added tax was imposed on sales in the recent quarter at a rate of 17%, compared to a 3% value added tax on sales in the first quarter of 2010.

Overall, our gross margin for the first quarter of 2011 was 32%, as we recorded $1,438,969 in gross profit. Despite the 185% increase in our revenues, our gross profit increased from March 31, 2010 to March 31, 2011 by only $303,559 - 27% - due to the low margin on our PET bottle and cap sales.

Our selling, general and administrative expenses (“SG&A”) continued to be modest relative to revenues: $218,095 in the three months ended March 31, 2011 (4.8% of revenue), and $145,918 in the three months ended March 31, 2010 (9.1% of revenue). The increase in SG&A expense was primarily attributable to the fee of $73,039 payable to our ex-CFO and our independent directors for services during the first quarter of 2011. In both periods, a large component of our SG&A expense was the expensing of stock compensation that we gave to employees and consultants in 2008 as incentives for future services: $41,688 in the three months ended March 31, 2011 and $95,688 in the three months ended March 31, 2010. The $1,154,229 in deferred stock compensation expense remaining at March 31, 2011 will be amortized as expenses over the expected terms of service of the employees and consultants who received the shares.

The Company’s revenue less expenses resulted in a pre-tax income of $1,294,298 for the first quarter of 2011, compared to pre-tax income of $1,012,598 during the first quarter of 2010. As a result of Chinese tax laws that reward foreign investment in China, Yifeng was entitled to exemption from income taxes during 2007 and 2008, followed by a 50% abatement of taxes from 2009 to 2011. In the first quarter of 2011, after accruing $168,002 for income taxes, our net income was $1,126,296, representing $0.09 (diluted $0.08) per share, compared to net income of $873,325 ($.07 per share; $.06 per share fully diluted) in the first quarter of 2010.

Our business operates entirely in Chinese Renminbi, but we report our results in U.S. Dollars. The conversion of our accounts from RMB to Dollars results in translation adjustments. While our net income is included in the retained earnings on our balance sheet; the translation adjustments are included in a line item on our balance sheet labeled “accumulated other comprehensive income,” since it is more reflective of changes in the relative values of U.S. and Chinese currencies than of the success of our business. During the first quarter of 2011, the effect of converting our financial results from RMB to U.S. Dollars was to increase our accumulated other comprehensive income by $102,199. During the first quarter of 2010, the effect of converting our financial results from RMB to U.S. Dollars was to reduce our accumulated other comprehensive income by $48,918.

Liquidity and Capital Resources

To date, we have financed our operation and met capital expenditure requirements primarily through bank loans and operating income. On November 18, 2004, the Company received a long-term loan from Industrial and Commercial Bank of China, Harbin Branch in the amount of $4,832,960, secured by the Company’s building. The loan was for a 5-year term, maturing November 15, 2009 with interest adjustable based on official rates. The loan agreement does not include any financial covenants with which the Company must comply. In November 2009 the Bank extended the due date of the loan to December 25, 2011 and fixed the interest rate at 6.534% per annum. In addition to paying the quarterly interest, the Company is also required to make $241,648 pre-determined principal repayments every quarter, with exception of the final two quarters wherein the payment will be $302,060.

2620

~~The~~As ~~table~~the ~~below~~loan ~~sets~~from ~~forth~~the ~~our~~Industrial and Commercial Bank of China is payable in full at the end of 2011, the Company had no long-term debt service obligations as of ~~September~~March 3031, ~~2010~~2011.

			Less than
Contractual Obligations	Total		Year 1		Year 2		Year 3		More Than 3 Years
Long-Term Debt Obligations	$	1,329,064	$	966,592	$	362,472		--		--
TOTAL	$	1,329,064	$	966,592	$	362,472		--		--

Our working capital at March 31, 2011 totaled $12,079,564, an increase of $1,449,984 from our working capital at December 31, 2010. The increase was mainly attributable to our net income, as our operations during the first quarter of 2011 provided us $2,743,980 in cash.

~~Our~~The largest component of working capital at ~~September~~March 3031, ~~2010~~2011 ~~totaled~~was a loan to unrelated party of $84,~~932~~581,~~720~~132. This loan was made in November 2010 to the Heilongjiang Guoan Real Estate Development Corp., and is secured by a pledge of real estate by an ~~increase~~unrelated party. Half of $4the principal of the loan is due on September 30,~~970~~ 2011,~~379~~ ~~from~~the ~~our~~remainder ~~working~~on ~~capital~~November 29, 2011. Interest is payable quarterly at ~~December~~6.372% ~~31,~~per ~~2009~~annum. ~~The~~Harbin ~~increase~~Yifeng ~~was~~made ~~mainly~~the ~~attributable~~loan in order to ~~our~~obtain ~~net~~a ~~income~~better return on its cash reserves than can be obtained from bank deposits in China. The borrower is a well-established entity, and management does not believe that there is an unreasonable risk of default.

The next largest component of our working capital at ~~September~~March 3031, ~~2010~~2011 consisted of $34,~~034~~468,~~593~~003 ~~owed~~in toaccounts ~~us by HMUAB~~receivable. ~~The~~This ~~receivable~~represents ~~had~~a ~~grown~~reduction ~~over $4.0 million during the suspension~~ of ~~operations. Although under the BOT agreement~~$977,415 ~~payments~~from ~~were~~our ~~due~~accounts ~~thirty~~receivable ~~days~~at ~~after~~December ~~each month~~31, ~~during~~2010. Our ~~the~~receivable ~~suspension~~from ~~of Landfill operations between June 2007 and October 2009,~~ HMUAB ~~made~~was ~~few payments. During 2009~~$1,238,699, ~~HMUAB made~~ no ~~payments~~portion atof ~~all~~which ~~during~~was ~~the~~more ~~first~~than ~~ten~~three months old. ~~However~~Accordingly, ~~since~~we ~~the~~do ~~Landfill~~not ~~re-opened~~consider inthe ~~November~~receivable ~~2009, HMUAB has begun~~ to ~~pay~~be ~~both~~at ~~current accounts and portions of the past due account~~risk. InThe ~~February~~remainder ~~2010 HMUAB also sent us a written acknowledgement~~ of ~~the~~our ~~$4,253,203~~receivables ~~that~~is it owed to us atby ~~December~~the ~~31,~~two ~~2009,~~companies ~~with~~to awhich ~~schedule~~we ofsell ~~payments~~PET ~~that~~bottles ~~will~~and ~~satisfy the receivable during 2010:~~caps. 4Our ~~million~~terms ~~RMB in the first quarter~~ of ~~2010,~~sale 5to ~~million~~these ~~RMB~~two incompanies ~~the~~require ~~second~~payment ~~quarter, 8 million RMB~~ in ~~the~~ninety ~~third quarter~~days, and ~~the~~each ~~balance~~ of ~~12.037~~them ~~million~~has ~~RMB~~paid inon ~~the~~time ~~fourth~~throughout ~~quarter. To~~the ~~date~~period ~~HMUAB has met that schedule~~ of ~~payments~~our relationship. ~~Accordingly,~~For wethese ~~do not consider the receivable to be at risk~~reasons, ~~and~~we have made no provision for doubtful accounts as of March 31, 2011.

~~After~~Our ~~our~~operations ~~investment~~during in the ~~Landfill~~first ~~development~~quarter ~~costs~~of ~~and~~2011 ~~accounts~~provided ~~receivable~~$2,743,980 ~~our~~in ~~largest~~net ~~asset~~cash, ~~category~~more atthan ~~September~~double ~~30,~~our ~~2010~~net ~~was~~income ~~“advances~~for the quarter. This is due to ~~suppliers,”~~the ~~totaling~~reduction ~~$4,159,714,~~in anour ~~increase~~accounts receivable and the sell-through of ~~$375,733~~the ~~(10%)~~PET ~~since~~bottle inventory that we held at December 31, ~~2009~~2010. ~~These~~During ~~amounts~~the ~~primarily~~first ~~represent~~quarter ~~payments~~of to2010, ~~contractors~~by ~~for~~comparison, ~~work~~our onoperations ~~the~~provided ~~Landfill. The~~$786,561 ~~asset~~in ~~will~~cash, bewhich ~~reclassified to~~was ~~“property~~slightly ~~and~~less ~~equipment”~~than ~~when~~our ~~the~~net ~~related~~income ~~construction~~for ~~projects~~that ~~are completed~~quarter.

27During the first quarter of 2010, a loan that we had made during the period when our operations were suspended was repaid to us, resulting in a substantial provision of net cash from investing activities. In the recent quarter our investing activities used $131,692 in cash, most of which was an expenditure for construction activity.

~~Our~~In ~~operations during~~ both the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September~~2011 ~~30,~~and ~~2010~~the ~~provided~~first ~~$4,506,202~~quarter inof ~~net~~2010 ~~cash. Net~~we ~~cash~~used ~~from~~$241,648 ~~operations was less than net income~~ for ~~the~~financing ~~period~~activities, ~~primarily~~specifically ~~due~~payments toon aaccount ~~increases~~of inour ~~accounts~~bank ~~receivable during the quarter~~loan. ~~Accounts~~The ~~receivable~~bank ~~increased~~loan ~~primarily~~will asbe asatisfied ~~result of the initiation of sales of PET, which resulted~~ in ~~sales~~December ~~in the third quarter for which we will collect in the fourth quarter. During the first nine months~~ of ~~fiscal~~this year ~~2009~~, byunless ~~comparison,~~we ~~our~~refinance ~~operations used $308,115 in cash, as our landfill operations were suspended during that period and HMUAB was accruing but not paying the minimum contractual fee~~it.

~~During~~Our ~~the~~operating ~~first nine months of 2009~~subsidiary, ~~when our operations were suspended~~Yifeng, wehas ~~utilized~~sufficient ~~our~~liquidity ~~cash reserves by making loans~~ to ~~third~~fund ~~parties,~~its tonear-term ~~achieve~~operations ~~better interest rates than were offered by local banks. We made a loan of $526,511 during that period to Harbin Jiayi Import~~ and ~~Export Co., Ltd., which agreed~~ to ~~pay~~fund ~~us 5.31% annual interest. During~~ the ~~same~~working ~~period~~capital wedemands ~~collected~~of a ~~loan~~modest expansion of ~~$234,518~~its ~~that we had previously made to Harbin Binjiang Freight Co~~operations., Based ~~Ltd.,~~on ~~which was owned by~~ our ~~then~~current ~~President. Our~~estimate ~~investing~~of ~~activities~~future ~~during~~usage ~~the first nine months~~ of ~~2009, therefore, used $247,313 in cash. During~~ the ~~first~~Harbin ~~quarter of 2010~~Landfill, we ~~collected~~expect ~~the~~to ~~remaining~~incur ~~balance of~~ the ~~loan~~following ~~made~~capital aexpenditures ~~year earlier~~ to ~~Harbin~~complete ~~Jiayi~~Phase ~~Import~~II and ~~Export~~Phase ~~Co. Our~~III ~~investing~~of ~~activities for~~ the ~~nine~~Landfill ~~months ended September 30, 2010 provided $367,121 in cash.~~project:

The cash provided by investing activities in the nine months ended September 30, 2010 was more than offset by $724,944 that we used during nine months ended September 30, 2010 to satisfy our bank loan obligations. In the first nine months of 2009, the bank had reduced our payment obligations due to the suspension of landfill operations, and we paid only $72,494 on account of our bank loan. Now that the landfill is operating again, we will incur quarterly payment obligations to the bank of $241,648 plus interest.21

Our operating subsidiary, Yifeng, has sufficient liquidity to fund its near-term operations and to fund the working capital demands of a modest expansion of its operations. In order to complete Phase II and Phase III of the Landfill project within the next six years, it will be necessary for us to obtain additional debt or equity financing. In addition, if we are to achieve critical mass in our industry by developing new landfills, we will require substantial infusions of capital. We do not know at this time whether we will be able to secure such financing, or on what terms it might be available.

	Additional Capacity	Incurred to Date	Estimated Additional Cost to Complete	Estimated Completion Date
Phase II	670,000 tons	$2.4 million	$1.30 million	2013
Phase III	1,000,000 tons	--	$4.48 million	2016
Total			$5.78 million

If we are able to maintain our recent level of cash flow from the Harbin Landfill operation, we should be able to fund the completion of Phase II and Phase III from our internal capital resources. However, if we are to achieve critical mass in our industry by developing or acquiring new landfills, we will require substantial infusions of capital. We do not know at this time whether we will be able to secure such financing, or on what terms it might be available.

Based upon the financial resources available to Yifeng, management believes that it has sufficient capital and liquidity to sustain operations for at least the next twelve months.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

The term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within required time periods. The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the controls and procedures were not effective. The weaknesses in the Company’s controls and procedures consisted of a lack of expertise in identifying and addressing complex accounting issued under U.S. Generally Accepted Accounting Principles among the personnel in the Company’s accounting department~~, which has resulted in certain errors in accounting identified in Note 2 to the Consolidated Financial Statements~~.

(b) Changes in internal controls.

The term “internal control over financial reporting” (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated any changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter covered by this report, and they have concluded that there was no change to the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes from the risk factors included in the Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Unregistered Sale of Equity Securities

None.

The Company did not repurchase any shares of its common stock during the ~~3rd~~1st quarter of ~~2010~~2011.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Reserved.

Item 5. Other Information.

None.

Item 6. Exhibits

31.1 Rule 13a-14(a) Certification –- CEO

31.2	Rule 13a-14(a) Certification - CFO

32	Rule 13a-14(b) Certifications

SIGNATURES

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

	EASTERN ENVIRONMENT SOLUTIONS, CORP.
Date: November 22, 2010	By: /s/ Feng Yan
Date: May 16, 2011	By: /s/ Feng Yan
	Feng Yan, Chief Executive Officer

30 24

Filing Compare · Eastern Environment Solutions Corp.