10-Q

U. S. Securities and Exchange Commission

Washington, D.C. 20549

______________

FORM 10-Q

______________

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to____________

Commission File No. 000-52825

4TH Grade Films, Inc.

(Exact name of the issuer as specified in its charter)

Utah	20-8980078
(State or Other Jurisdiction of	(I.R.S. Employer I.D. No.)
incorporation or organization)

1338 South Foothill Drive #163

Salt Lake City, UT 84108

(Address of Principal Executive Offices)

(801) 649-3519

(Issuer’s Telephone Number)

Check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [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 [X]   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 definition 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 [  ] 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]

1

APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court.  Yes [  ] No [  ]

Not applicable.

Indicate the number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date.

The number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date:

Class	Outstanding as of May 7, 2012
Common Capital Voting Stock, $0.01 par value per share	2,345,000 shares

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, Financial Statements and Notes to Financial Statements contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.

PART I - FINANCIAL STATEMENTS

Item 1. Financial Statements.

March 31, 2012

C O N T E N T S

Condensed Balance Sheets	3
Condensed Statements of Operations	4
Condensed Statements of Cash Flows	5
Notes to Condensed Financials Statements	6

2

4th Grade Films, Inc.

(A Development Stage Company)

Condensed Balance Sheets

March 31, 2012 and June 30, 2011

(Unaudited)

	3/31/2012			6/30/2011
ASSETS
Assets
Current Assets
Cash	$	508		$	99
Accounts Receivable		-			1,019
Total current assets		508			1,118
Film Costs		12,307			12,412
Total Assets	$	12,815		$	13,530
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Current Liabilities
Accounts Payable	$	3,000		$	2,650
Accrued Liabilities - related party		18,576			17,474
Income Taxes Payable		-			100
Total Current Liabilities		21,576			20,224
Long Term Liabilities
Note Payable - Shareholder		62,633			45,889
Total Long Term Liabilities		62,633			45,889
Total Liabilities		84,209			66,113
Stockholders' Deficit
Preferred Stock - 5,000,000 shares		-			-
authorized at $0.01 par; 0 shares
issued and outstanding (Series  A
Convertible)
Common Stock - 50,000,000 shares
authorized at $0.01 par; 2,345,000 and
2,345,000 shares issued and outstanding, respectively		23,450			23,450
Additional Paid-in Capital		123,762			123,762
Deficit Accumulated during the development stage		(218,606	)		(199,795	)
Total Stockholders' Deficit		(71,394	)		(52,583	)
Total Liabilities and Stockholders' Deficit	$	12,815		$	13,530

See accompanying notes to condensed financial statements.

3

4th Grade Films, Inc.

 (A Development Stage Company)

Condensed Statements of Operations

For the Three and Nine Months Ended March 31, 2012 and 2011, and

For the Period from Inception [April 25, 2007] through March 31, 2012

(Unaudited)

	For the			For the			For the			For the
	Three			Three			Nine			Nine			Since
	Months			Months			Months			Months			Inception
	Ended			Ended			Ended			Ended			through
	3/31/2012			3/31/2011			3/31/2012			3/31/2011			3/31/2012
Revenues	$	106			250		$	106			987		$	1,125
Cost of Revenues		106			250			106			987			1,125
Gross Profit		-			-			-			-			-
Operating Expenses
Professional Expenses		1,900			3,669			13,855			10,883			88,671
SG&A		218			8,502			883			10,810			31,390
Impairment of unamortized film -
development costs		-			-			-			-			86,717
Total Operating Expenses		2,118			12,171			14,738			21,693			206,778
Net Loss from Operations		(2,118	)		(12,171	)		(14,738	)		(21,693	)		(206,778	)
Interest Expense - Related Party		(1,523	)		(986	)		(4,073	)		(2,356	)		(11,328	)
Net Loss Before Income Taxes		(3,641	)		(13,157	)		(18,811	)		(24,049	)		(218,106	)
Provision for Income Taxes		-			-			-			-			500
Net Loss	$	(3,641	)	$	(13,157	)	$	(18,811	)	$	(24,049	)	$	(218,606	)
Loss Per Share - Basic and Diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.11	)
Basic and Diluted Weighted
Average Shares Outstanding		2,345,000			2,345,000			2,345,000			2,345,000			1,973,556

See accompanying notes to condensed financial statements.

4

4th Grade Films, Inc.

(A Development Stage Company)

Condensed Statements of Cash Flows

For the Nine Months Ended March 31, 2012 and 2011, and

For the Period from Inception [April 25, 2007] through March 31, 2012

 (Unaudited)

	For the			For the
	Nine			Nine			Since
	Months			Months			Inception
	Ended			Ended			through
	3/31/2012			3/31/2011			3/31/2012
Cash Flows from Operating Activities
Net Loss	$	(18,811	)	$	(24,049	)	$	(218,606	)
Adjustments to reconcile net loss to net cash
Provided by/(Used in) by Operating Activities:
Impairment of capitalized film development costs		-			-			86,717
Additions to Capitalized Film Costs		-			-			(100,148	)
Amortization of Film Costs		106			987			1,125
(Increase)/Decrease in Accounts Receivable		1,019			(987	)		-
(Increase)/Decrease in Prepaid Expenses		-			625			-
Increase/(Decrease) in Accounts Payable		350			1,497			3,000
Increase/(Decrease) in Accrued Liabilities - related party		1,102			675			18,576
Increase/(Decrease) in Income Taxes Payable		(100	)		(100	)		-
Accrued Interest included in Notes Payable Balance		4,073			2,356			11,327
Issued Common Stock in Exchange for Payment of Expenses		-			-			5,212
Net Cash Used in Operating Activities		(12,261	)		(18,996	)		(192,797	)
Cash Flows from Financing Activities
Proceeds from Loan from Shareholder		12,670			18,181			71,305
Payments on Loan from Shareholder		-			-			(20,000	)
Issued Common Stock for Cash		-			-			52,000
Issued Preferred Stock for Cash		-			-			90,000
Net Cash from Financing Activities		12,670			18,181			193,305
Net Increase (Decrease) in cash		409			(815	)		508
Beginning Cash Balance		99			830			-
Ending Cash Balance	$	508		$	15		$	508
Supplemental Schedule of Cash Flow Activities
Cash paid for
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	500
Common Stock Issued in Exchange for Payment of Expenses	$	-		$	-		$	5,212

See accompanying notes to condensed financial statements.

5

4th Grade Films, Inc.

(A Development Stage Company)

Notes to Condensed Financial Statements

March 31, 2012

(Unaudited)

NOTE 1 BASIS OF PRESENTATION

The accompanying financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The interim financial statements reflect all adjustments, consisting of normal recurring adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011. The results of operations for the period ended March 31, 2012, are not necessarily indicative of the operating results for the full year.

NOTE 2 LIQUIDITY/GOING CONCERN

The  Company  has  accumulated  losses  since  inception,  has minimal assets,  and has a net loss of $3,641 for the three months ended March 31, 2012.  Because the Company has accumulated losses since inception, has minimal liquid current assets, and has limited sales activity there is substantial doubt about the Company's ability to continue as a going concern. Management plans include continuing to develop, finance, produce, market and distribute films within the independent film community.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 REVENUE RECOGNITION

The Company recognizes revenue from the distribution of its films when earned and reported to it by its distributor, Vanguard International Cinema.  The Company recognizes revenues derived from its feature films net of reserves for returns, rebates and other incentives after the distributor has retained a distribution fee as a percentage of revenue.

Because a third party is the principal distributor of the Company’s films, the amount of revenue that is recognized from films in any given period is dependent on the timing, accuracy and sufficiency of the information received from the distributor.  As is typical in the film industry, the distributor may make adjustments in future periods to information previously provided to the Company that could have a material impact on the Company’s operating results in later periods.  Furthermore, management may, in its judgment, make material adjustments in future periods to the information reported by the distributor to ensure that revenues are accurately reflected in the Company’s financial statements.  To date, the distributor has not made subsequent, nor has the Company made, material adjustments to information provided by the distributor and used in the preparation of the Company’s historical financial statements.

NOTE 4 DIRECTOR COMPENSATION EXPENSES / RELATED PARTY TRANSACTIONS

As of March 31, 2012,  James Doolin, a shareholder of the Company and a former officer and director,  loaned  the  Company  an  aggregate  of  $44,742 on an unsecured  line of credit.  The total funding available to the Company under the line of credit is $50,000.  The line accrues interest at 10% per annum and matures on December 31, 2014. As of March 31, 2012, the outstanding balance owed to the shareholder was $54,474 including accrued interest. For the three months ended March 31, 2012 the Company accrued interest of $1,325 on the line.

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As of March 31, 2012, Michael Doolin, a shareholder of the Company, loaned the Company an aggregate of $6,563 on an unsecured line of credit.  The total funding available to the Company under the line of credit is $50,000.  The line accrues interest at 10% per annum and matures on December 31, 2014.  As of March 31, 2012, the outstanding balance owed to the shareholder was $8,159, including accrued interest.  For the three months ended March 31, 2012 the Company has accrued interest of $198 on the line.

As of March 31, 2012, approximately 77.9% of the Company's issued and outstanding common stock is controlled by one family giving them effective power to control the vote on substantially all significant matters without the approval of other stockholders.

The Company rents office space from a shareholder of the Company at a cost of $75 per month. The Company has accrued $4,050 in unpaid rental fees from this arrangement.

NOTE 5 FILM COSTS

Film costs consisted of the following as of March 31, 2012 and June 30, 2011:

	March 31, 2012			June 30, 2011
Opening Balance	$	12,412		$	24,825
Additions		-			-
	$	12,412		$	24,825
Amortization		(106	)		(1,019	)
Impairment		-			(11,394	)
Ending Balance	$	12,307 .		$	12,412 .
Development/Preproduction	$	-		$	-
Production		-			-
Completed not released		-			-
Completed released		12,307			12,412
	$	12,307		$	12,412

The Company is unable to estimate the expected amortization over the next twelve months as international distribution is currently being evaluated.

NOTE 6 RECENT ACCOUNTING PRONOUNCEMENTS

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.

7

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

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

Accordingly, results actually achieved may differ materially from expected results in these statements.  Forward-looking statements speak only as of the date they are made.  We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Plan of Operation

The Company’s plan of operations for the next 12 months is to continue with its current efforts in the independent film production arena.  4th Grade has been involved in the film production primarily focused on developing, financing, producing, marketing and distributing film content within the independent film market.

The Company will continue to seek opportunities developing, financing, producing, marketing and distributing additional media content. During the quarter ended March 31, 2012, the Company continued it’s pre-production of two film projects. Both projects are feature length films, and the screenplays have been developed in-house by Shane Thueson, the Company’s President. The two screenplays are “Working Late” and “Devil Music” (working title). The Company’s Board of Directors have reviewed the scripts and believe that “Devil Music” needs continued revisions. To increase the screenplay’s potential as marketable film projects within the film industry the screenplay will be revised to improve dramatization, clarity, structure, characters, dialogue, and overall style.  The Board anticipates that both screenplays will be finalized shortly and the Company will begin marketing both screenplays.

The Company plans to market the screenplays to contacts throughout the film community to procure interest in one or both of the projects. Over the past few years the Company’s management has developed a network and database of contacts within film studios, productions companies, literary agencies, and management companies, to whom it will concentrate its marketing efforts for these two screenplays. The Board of Directors recently reviewed its database of contacts and has begun work to revise and add contacts that the Company believes may be interested in representing, acquire or produce one or both of the Company’s current screenplay projects. Management will also use the Company’s film, Four Stories of St. Julian, to help promote its projects as a demonstration of the Company’s capabilities. The Company believes that using the completed screenplays and the completed film is the best resource at this time to obtain financing and ultimately to begin production of one or both of these future projects.

The Company does not currently have any projects in production or post-production, but as mentioned above, has commenced pre-production on two film projects. The Company’s management may advance the Company monies, not to exceed $100,000, to finance future projects or fund working capital requirements. The monies advanced from the Company’s management will be non-secured loans to the Company. The loan will be on terms no less favorable to the Company than would be available from a commercial lender in an arm’s length transaction.  The Company is also seeking financing from outside sources to fund future projects. These funds may be raised as either debt or equity, but management does not have any plans or relationships currently in place and can provide no assurance that it will be able to obtain such funds.

8

The Company has accumulated losses since inception and has not been able to generate profits from operations. As mentioned above, the Company signed a distribution agreement with Vanguard Cinema to distribute St. Julian through various media channels throughout the United States, Puerto Rico and Canada. Effective February 1, 2011 the Company signed a foreign distribution agreement to distribute St. Julian to all other worldwide markets. The Company received $106 in revenue for the quarter ended March 31, 2012. The Company can provide no assurance that revenue generated will be sufficient to fund future operating activities. Operating capital, including the proceeds to finance the Film has been raised through the Company’s shareholders and management.

The Company’s plan of operation for the next twelve months will continue to be managed and operated solely by the Company’s officers and directors. Other than the Company officers and directors the Company does not have any employees nor does it anticipate hiring any employees over the next twelve months.

The Company has not been able to generate positive cash flow from operations since inception. This along with the above mentioned factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s common stock currently trades on the Over-the-Counter Bulletin Board (OTCBB) under the symbol FHGR.

Results of Operations

Three Months Ended March 31, 2012 compared to Three Months Ended March 31, 2011

Operating Results – Overview

The three month period ended March 31, 2012, resulted in a net loss of $3,641.  The Basic Loss per Share for the three month period ended March 31, 2012 was ($0.01).  Details of changes in revenues and expenses can be found below.

Operating Results – Revenue

In the quarter ended March 31, 2012 the Company generated $106 in revenue from the distribution agreement the Company has with its film St. Julian. The Company generated a net loss of $3,641 for the quarter ended March 31, 2012. For the quarter ended March 31, 2011 the Company generated $250 in revenue and a net loss of $13,157.  The Company will not provide any forecasts of future earnings or profitability.  The future success of the Company cannot be ascertained with any certainty. Through two different distribution agreements with Vanguard Cinema the Company has licensed the rights of St. Julian to be distributed through various media channels throughout the world. The Company has received nominal revenue from this distribution agreement, and can provide no assurance or forecast of revenue that will be generated from this agreement or any further productions in the future.

Operating Results – Cost of Goods Sold / Cost of Revenues

The Company generated $106 in revenue during the quarter ended March 31, 2012, and $106 in cost of revenue. The Company incurred $250 in revenue and cost of revenue for the quarter ended March 31, 2011.

Operating Results – Operating Expenses

Operating expense for the three month period ended March 31, 2012, was $2,118 compared with $12,171 for the three month period ended March 31, 2011. Operating expenses included professional fees, and general administrative expenses.

The Company's professional fees include accounting, legal fees and EDGAR filing fees.

Accounting expenses incurred in the three month period ended March 31, 2012 totaled $1,500 and $1,500 for the period ended March 31, 2011.

9

The Company incurred $0 in legal fees in the quarter ended March 31, 2012 compared to $2,169 in legal fees in the quarter ended March 31, 2011. The increase in legal fees for the quarter ended March 31, 2011 were due to legal opinions rendered regarding the Company’s DTC application and legal review of other documents. The Company incurred $400 in EDGAR filing fees in the quarter ended March 31, 2012 compared to $0 in the quarter ended March 31, 2011. The increase in EDGAR filing fees for the quarter ended March 31, 2012 can be attributed to the Company’s implementation of XBRL.

Operating Results – Interest Expenses

The Company  incurred  $1,523 in  interest  expense  for the  quarter  ended March 31, 2012 and $986 in interest  expense for the quarter  ended  March 31, 2011.  The increase in interest expense for the quarter ended March 31, 2012, was attributed to an increase in the outstanding loan balance from James Doolin and Michael Doolin, shareholders of the Company.

Nine Months Ended March 31, 2012 compared to Nine Months Ended March 31, 2011

Operating Results – Overview

The nine month period ended March 31, 2012, resulted in a net loss of $18,811.  The Basic Loss per Share for the nine month period ended March 31, 2012 was ($0.01).  Details of changes in revenues and expenses can be found below.

Operating Results – Revenue

In the nine months ended March 31, 2012 the Company generated $106 in revenue from the distribution agreement the Company has with its film St. Julian. The Company generated a net loss of $18,811 for the nine months ended March 31, 2012. For the nine months ended March 31, 2011 the Company generated $987 in revenue and a net loss of $24,049.  The Company will not provide any forecasts of future earnings or profitability.  The future success of the Company cannot be ascertained with any certainty. Through two different distribution agreements with Vanguard Cinema the Company has licensed the rights of St. Julian to be distributed through various media channels throughout the world. The Company has received nominal revenue from this distribution agreement, and can provide no assurance or forecast of revenue that will be generated from this agreement or any further productions in the future.

Operating Results – Cost of Goods Sold / Cost of Revenues

The Company generated $106 in revenue during the nine months ended March 31, 2012, and incurred $106 in cost of revenue. The Company incurred $987 in revenue and cost of revenue for the nine months ended March 31, 2011.

Operating Results – Operating Expenses

Operating expense for the nine month period ended March 31, 2012, was $14,738 compared with $21,693 for the nine month period ended March 31, 2011. Operating expenses included professional fees, and general administrative expenses.

The Company's professional fees include accounting, legal fees and EDGAR filing fees.

Accounting expenses incurred in the nine month period ended March 31, 2012 totaled $10,885 and $8,288 for the period ended March 31, 2011. The increase in accounting fees can be attributed to increased oversight due to implementation of XBRL and higher rate charged by the accountant.

10

The Company incurred $427 in legal fees in the nine months ended March 31, 2012 compared to $2,596 in legal fees in the nine months ended March 31, 2011. The legal fees for the quarter ended March 31, 2011 were due to legal opinions rendered regarding the Company’s DTC application and legal review of other documents. The Company incurred $2,463 in EDGAR filing fees in the nine months ended March 31, 2012 compared to $0 in the nine months ended March 31, 2011. The increase in EDGAR filing fees for the nine months ended March 31, 2012 can be attributed to the Company’s implementation of XBRL.

The Company estimates annual accounting expenses to be approximately $11,000. Management estimates legal expenses for the fiscal year to be approximately $2,500.

Operating Results – Interest Expenses

The Company incurred $4,073 in interest expense for the nine months ended March 31, 2012 and $2,356 in interest expense for the nine months ended March 31, 2011.  The increase in interest expense for the nine months ended March 31, 2012, was attributed to an increase in the outstanding loan balance from James Doolin and Michael Doolin, shareholders of the Company.

Liquidity and Capital Requirements

As of March 31, 2012, the Company had current assets of $508 and $21,576 in current liabilities.  The Company had no inventory as of March 31, 2012, but has capitalized film development costs of $12,307.

The Company has a cash balance of $508 as of March 31, 2012.  Management does not anticipate that the Company's existing cash balance will cover the Company's general expenses of operation for the next twelve months. However, the Company’s management will continue to advance the Company monies not to exceed $100,000, as loans to the Company. The loan will be on terms no less favorable to the Company than would be available from a commercial lender in an arm's length transaction.  Currently two shareholders, James Doolin and Michael Doolin, have loaned the Company money. James Doolin has loaned the Company approximately $44,742 in principal. Michael Doolin has loaned the Company $6,563 in principal. If the Company needs funds in excess of $100,000, it will be up to the Company's management to raise such monies. These funds may be raised as either debt or equity, but management does not have any plans or relationships currently in place to raise such funds. The Company can provide no assurances that if additional funds are needed the Company will be able to obtain financing.

Off-balance Sheet Arrangements

None; not applicable

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and Vice President, to allow timely decisions regarding required disclosures.

11

Under the supervision and with the participation of our management, including our President and Vice President, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).  Based upon that evaluation, our President and Vice President concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the most recent fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None; not applicable.

Item 1A. Risk Factors

Not required.

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

None; not applicable.

Item 3. Defaults Upon Senior Securities

None; not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

None; not applicable.

Item 5. Other Information

None; not applicable.

Item 6. Exhibits

(a) Exhibits

Exhibit No.	Identification of Exhibit
31.1	Certification of Shane Thueson Pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	Certification of Nicholl Doolin Pursuant to Section 302 of the Sarbanes-Oxley Act.
32	Certification of Shane Thueson and Nicholl Doolin Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

12

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

(b) Reports on Form 8-K

Form 8-K – Current Report filed on or about March 6, 2012 regarding the resignation of James Doolin as a director and the President and the election of Nicholl Doolin to fill the vacancy on the Board of Directors and Shane Thueson, the Company’s Vice President and a director, appointment as President and Principal Executive Officer.  Nicholl Doolin was appointed Vice President and Principal Financial Officer.

SIGNATURES

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

4TH GRADE FILMS, INC.

(Issuer)

Date:	May 7, 2012	By:	/s/Shane Thueson
			Shane Thueson, Principal Executive Officer, President & Director

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Quarterly Report has also been signed below by the following person on behalf of the Registrant and in the capacities and on the dates indicated.

Date:	May 7, 2012	By:	/s/Nicholl Doolin
			Nicholl Doolin, Principal Financial Officer, Vice President & Director

12

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shane Thueson, certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of the 4th Grade Films, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.  The Registrant other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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 principals;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.  The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:	May 7, 2012	By:	/s/Shane Thueson
			Shane Thueson, Principal Executive Officer, President & Director

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nicholl Doolin, certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of the 4th Grade Films, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.  The Registrant other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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 principals;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.  The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:	May 7, 2012	By:	/s/Nicholl Doolin
			Nicholl Doolin
			Principal Financial Officer / Vice President & Director

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of 4th Grade Films, Inc. (the “Registrant”) on Form 10-Q for the quarter ending March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), we, Shane Thueson, President and Director, and Nicholl Doolin, Vice President and Director, of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.

Date:	May 7, 2012	By:	/s/Shane Thueson
			Shane Thueson
			Principal Executive Officer
			President & Director
Date:	May 7, 2012	By:	/s/Nicholl Doolin
			Nicholl Doolin
			Principal Financial Officer,
			Vice President & Director

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Director Compensation Expenses / Related Party Transactions

9 Months Ended

Mar. 31, 2012

Related Party Transactions [Abstract]

Director Compensation Expenses / Related Party Transactions

NOTE 4 DIRECTOR COMPENSATION EXPENSES / RELATED PARTY TRANSACTIONS

As of March 31, 2012, James Doolin, a shareholder of the Company and a former officer and director, loaned the Company an aggregate of $44,742 on an unsecured line of credit. The total funding available to the Company under the line of credit is $50,000. The line accrues interest at 10% per annum and matures on December 31, 2014. As of March 31, 2012, the outstanding balance owed to the shareholder was $54,474 including accrued interest. For the three months ended March 31, 2012 the Company accrued interest of $1,325 on the line.

As of March 31, 2012, Michael Doolin, a shareholder of the Company, loaned the Company an aggregate of $6,563 on an unsecured line of credit. The total funding available to the Company under the line of credit is $50,000. The line accrues interest at 10% per annum and matures on December 31, 2014. As of March 31, 2012, the outstanding balance owed to the shareholder was $8,159, including accrued interest. For the three months ended March 31, 2012 the Company has accrued interest of $198 on the line.

As of March 31, 2012, approximately 77.9% of the Company's issued and outstanding common stock is controlled by one family giving them effective power to control the vote on substantially all significant matters without the approval of other stockholders.

The Company rents office space from a shareholder of the Company at a cost of $75 per month. The Company has accrued $4,050 in unpaid rental fees from this arrangement.

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Revenue Recognition

9 Months Ended

Mar. 31, 2012

Revenue Recognition [Abstract]

Revenue Recognition

NOTE 3 REVENUE RECOGNITION

The Company recognizes revenue from the distribution of its films when earned and reported to it by its distributor, Vanguard International Cinema. The Company recognizes revenues derived from its feature films net of reserves for returns, rebates and other incentives after the distributor has retained a distribution fee as a percentage of revenue.

Because a third party is the principal distributor of the Company’s films, the amount of revenue that is recognized from films in any given period is dependent on the timing, accuracy and sufficiency of the information received from the distributor. As is typical in the film industry, the distributor may make adjustments in future periods to information previously provided to the Company that could have a material impact on the Company’s operating results in later periods. Furthermore, management may, in its judgment, make material adjustments in future periods to the information reported by the distributor to ensure that revenues are accurately reflected in the Company’s financial statements. To date, the distributor has not made subsequent, nor has the Company made, material adjustments to information provided by the distributor and used in the preparation of the Company’s historical financial statements.

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Condensed Balance Sheets (Unaudited) (USD $)	Mar. 31, 2012	Jun. 30, 2011
Current Assets
Cash	$ 508	$ 99
Accounts Receivable	0	1,019
Total current assets	508	1,118
Film Costs	12,307	12,412
Total Assets	12,815	13,530
Current Liabilities
Accounts Payable	3,000	2,650
Accrued Liabilities - related party	18,576	17,474
Income Taxes Payable	0	100
Total Current Liabilities	21,576	20,224
Long Term Liabilities
Note Payable - Shareholder	62,633	45,889
Total Long Term Liabilities	62,633	45,889
Total Liabilities	84,209	66,113
Stockholders' Deficit
Preferred Stock - 5,000,000 shares authorized at $0.01 par; 0 shares issued and outstanding (Series A Convertible)	0	0
Common Stock - 50,000,000 shares authorized at $0.01 par; 2,345,000 and 2,345,000 shares issued and outstanding, respectively	23,450	23,450
Additional Paid-in Capital	123,762	123,762
Deficit Accumulated during the development stage	(218,606)	(199,795)
Total Stockholders' Deficit	(71,394)	(52,583)
Total Liabilities and Stockholders' Deficit	$ 12,815	$ 13,530

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Basis of Presentation

9 Months Ended

Mar. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

NOTE 1 BASIS OF PRESENTATION

The accompanying financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The interim financial statements reflect all adjustments, consisting of normal recurring adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011. The results of operations for the period ended March 31, 2012, are not necessarily indicative of the operating results for the full year.

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Liquidity Going Concern

9 Months Ended

Mar. 31, 2012

Liquidity Going Concern

Liquidity Going Concern

NOTE 2 LIQUIDITY/GOING CONCERN

The Company has accumulated losses since inception, has minimal assets, and has a net loss of $3,641 for the three months ended March 31, 2012. Because the Company has accumulated losses since inception, has minimal liquid current assets, and has limited sales activity there is substantial doubt about the Company's ability to continue as a going concern. Management plans include continuing to develop, finance, produce, market and distribute films within the independent film community. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Condensed Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2012	Jun. 30, 2011
Statement of Financial Position [Abstract]
Preferred Stock, Series A Convertible, par value per share	$ 0.01	$ 0.01
Preferred Stock, Series A Convertible, shares authorized	5,000,000	5,000,000
Preferred Stock, Series A Convertible, shares issued	0	0
Preferred Stock, Series A Convertible, shares outstanding	0	0
Common Stock, par value per share	$ 0.01	$ 0.01
Common Stock, shares authorized	50,000,000	50,000,000
Common Stock, shares issued	2,345,000	2,345,000
Common Stock, shares outstanding	2,345,000	2,345,000

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Document and Entity Information	9 Months Ended
	Mar. 31, 2012	May 07, 2012
Document And Entity Information
Entity Registrant Name	4th Grade Films Inc
Entity Central Index Key	0001400683
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,345,000
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

XML

Condensed Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended		59 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Income Statement [Abstract]
Revenues	$ 106	$ 250	$ 106	$ 987	$ 1,125
Cost of Revenues	106	250	106	987	1,125
Gross Profit	0	0	0	0	0
Operating Expenses
Professional Expenses	1,900	3,669	13,855	10,883	88,671
SG&A	218	8,502	883	10,810	31,390
Impairment of unamortized film - development costs	0	0	0	0	86,717
Total Operating Expenses	2,118	12,171	14,738	21,693	206,778
Net Loss from Operations	(2,118)	(12,171)	(14,738)	(21,693)	(206,778)
Interest Expense - Related Party	(1,523)	(986)	(4,073)	(2,356)	(11,328)
Net Loss Before Income Taxes	(3,641)	(13,157)	(18,811)	(24,049)	(218,106)
Provision for Income Taxes	0	0	0	0	500
Net Loss	$ (3,641)	$ (13,157)	$ (18,811)	$ (24,049)	$ (218,606)
Loss Per Share - Basic and Diluted	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.11)
Basic and Diluted Weighted Average Shares Outstanding	2,345,000	2,345,000	2,345,000	2,345,000	1,973,556

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Recent Accounting Pronouncements

9 Months Ended

Mar. 31, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

NOTE 6 RECENT ACCOUNTING PRONOUNCEMENTS

The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.

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Condensed Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended		59 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Cash Flows from Operating Activities
Net Loss	$ (18,811)	$ (24,049)	$ (218,606)
Adjustments to reconcile net loss to net cash Provided by (Used in) Operating Activities
Impairment of capitalized film development costs	0	0	86,717
Additions to Capitalized Film Costs	0	0	(100,148)
Amortization of Film Costs	106	987	1,125
(Increase)/Decrease in Accounts Receivable	1,019	(987)	0
(Increase)/Decrease in Prepaid Expenses	0	625	0
Increase/(Decrease) in Accounts Payable	350	1,497	3,000
Increase/(Decrease) in Accrued Liabilities - related party	1,102	675	18,576
Increase/(Decrease) in Income Taxes Payable	(100)	(100)	0
Accrued Interest included in Notes Payable Balance	4,073	2,356	11,327
Issued Common Stock in Exchange for Payment of Expenses	0	0	5,212
Net Cash Used in Operating Activities	(12,261)	(18,996)	(192,797)
Cash Flows from Financing Activities
Proceeds from Loan from Shareholder	12,670	18,181	71,305
Payments on Loan from Shareholder	0	0	(20,000)
Issued Common Stock for Cash	0	0	52,000
Issued Preferred Stock for Cash	0	0	90,000
Net Cash from Financing Activities	12,670	18,181	193,305
Net Increase (Decrease) in cash	409	(815)	508
Beginning Cash Balance	99	830	0
Ending Cash Balance	508	15	508
Supplemental Schedule of Cash Flow Activities
Cash paid for interest	0	0	0
Cash paid for income taxes	0	0	500
Common Stock Issued in Exchange for Payment of Expenses	$ 0	$ 0	$ 5,212

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Film Costs

9 Months Ended

Mar. 31, 2012

Film Costs [Abstract]

Film Costs

NOTE 5 FILM COSTS

Film costs consisted of the following as of March 31, 2012 and June 30, 2011:

	March 31, 2012		June 30, 2011
Opening Balance	$	12,412	$	24,825
Additions		-		-
	$	12,412	$	24,825
Amortization		(106)		(1,019)
Impairment		-		(11,394)
Ending Balance	$	12,307	$	12,412
Development/Preproduction	$	-	$	-
Production		-		-
Completed not released		-		-
Completed released		12,307		12,412
	$	12,307	$	12,412

The Company is unable to estimate the expected amortization over the next twelve months as international distribution is currently being evaluated.