diff --git a/cmd/easm/examples/jump.asm b/cmd/easm/examples/jump.asm
new file mode 100644
index 0000000000..154fadcb6b
--- /dev/null
+++ b/cmd/easm/examples/jump.asm
@@ -0,0 +1,8 @@
+jump @main
+	push 1
+other:
+	push 0
+	push 0
+	mstore
+main:
+	push 1
diff --git a/cmd/easm/examples/prog.asm b/cmd/easm/examples/prog.asm
new file mode 100644
index 0000000000..6b99b9ef1d
--- /dev/null
+++ b/cmd/easm/examples/prog.asm
@@ -0,0 +1,17 @@
+	jump @main
+my_label:
+	push 0
+	push 1
+	mstore
+
+	push 0
+	push 5
+	push 10
+	log1
+	stop
+main:
+	push 1
+	push 1
+	eq
+
+	jumpi @my_label
diff --git a/cmd/easm/examples/push.asm b/cmd/easm/examples/push.asm
new file mode 100644
index 0000000000..4ae02681a7
--- /dev/null
+++ b/cmd/easm/examples/push.asm
@@ -0,0 +1,3 @@
+push 1
+push 2
+add
diff --git a/cmd/easm/lexer.go b/cmd/easm/lexer.go
index ce2ff9822b..00bb37d59e 100644
--- a/cmd/easm/lexer.go
+++ b/cmd/easm/lexer.go
@@ -1,6 +1,7 @@
 package main
 
 import (
+	"fmt"
 	"strings"
 	"unicode"
 	"unicode/utf8"
@@ -31,6 +32,7 @@ const (
 	invalidStatement                 // any invalid statement
 	element                          // any element during element parsing
 	label                            // label is emitted when a labal is found
+	labelDef                         // label definition is emitted when a new label is found
 	number                           // number is emitted when a number is found
 	stringValue                      // stringValue is emitted when a string has been found
 
@@ -48,12 +50,13 @@ func (it itemType) String() string {
 }
 
 var stringItemTypes = []string{
-	eof:              "eof",
+	eof:              "EOF",
 	invalidStatement: "invalid statement",
 	element:          "element",
-	lineEnd:          "bol",
-	lineStart:        "eol",
+	lineEnd:          "end of line",
+	lineStart:        "new line",
 	label:            "label",
+	labelDef:         "label definition",
 	number:           "number",
 	stringValue:      "string",
 }
@@ -69,21 +72,26 @@ type Lexer struct {
 
 	lineno            int // current line number in the source file
 	start, pos, width int // positions for lexing and returning value
+
+	debug bool // flag for triggering debug output
 }
 
 // lex lexes the program by name with the given source. It returns a
 // channel on which the items are delivered.
-func lex(name, source string) chan item {
+func lex(name string, source []byte, debug bool) <-chan item {
 	ch := make(chan item)
 	l := &Lexer{
-		input: source,
+		input: string(source),
 		items: ch,
 		state: lexLine,
+		debug: debug,
 	}
 	go func() {
+		l.emit(lineStart)
 		for l.state != nil {
 			l.state = l.state(l)
 		}
+		l.emit(eof)
 		close(l.items)
 	}()
 
@@ -157,19 +165,26 @@ func (l *Lexer) blob() string {
 
 // Emits a new item on to item channel for processing
 func (l *Lexer) emit(t itemType) {
-	l.items <- item{t, l.lineno, l.blob()}
+	item := item{t, l.lineno, l.blob()}
+
+	if l.debug {
+		fmt.Printf("%04d: (%-20v) %s\n", item.lineno, item.typ, item.text)
+	}
+
+	l.items <- item
 	l.start = l.pos
 }
 
 // lexLine is state function for lexing lines
 func lexLine(l *Lexer) stateFn {
-	l.emit(lineStart)
 	for {
 		switch r := l.next(); {
 		case r == '\n':
-			l.lineno++
-			l.ignore()
 			l.emit(lineEnd)
+			l.ignore()
+			l.lineno++
+
+			l.emit(lineStart)
 		case isSpace(r):
 			l.ignore()
 		case isAlphaNumeric(r) || r == '_':
@@ -177,6 +192,7 @@ func lexLine(l *Lexer) stateFn {
 		case isNumber(r):
 			return lexNumber
 		case r == '@':
+			l.ignore()
 			return lexLabel
 		case r == '"':
 			return lexInsideString
@@ -221,10 +237,13 @@ func lexNumber(l *Lexer) stateFn {
 }
 
 func lexElement(l *Lexer) stateFn {
-	l.acceptRun(Alpha + "_")
+	l.acceptRun(Alpha + "_" + Numbers)
 
-	if l.accept(":") {
-		l.emit(label)
+	if l.peek() == ':' {
+		l.emit(labelDef)
+
+		l.accept(":")
+		l.ignore()
 	} else {
 		l.emit(element)
 	}
diff --git a/cmd/easm/main.go b/cmd/easm/main.go
index d542ef9a00..4fc7fb5252 100644
--- a/cmd/easm/main.go
+++ b/cmd/easm/main.go
@@ -1,29 +1,323 @@
 package main
 
-import "fmt"
+import (
+	"errors"
+	"fmt"
+	"io/ioutil"
+	"math/big"
+	"os"
+	"path/filepath"
+	"strings"
+
+	cli "gopkg.in/urfave/cli.v1"
+
+	"github.com/ethereum/go-ethereum/common"
+	"github.com/ethereum/go-ethereum/core/vm"
+	"github.com/ethereum/go-ethereum/logger/glog"
+)
+
+var (
+	app *cli.App
+
+	DebugFlag = cli.BoolFlag{
+		Name:  "debug",
+		Usage: "outputs lexer and compiler debug output",
+	}
+)
+
+func init() {
+	app = cli.NewApp()
+	app.Name = filepath.Base(os.Args[0])
+	app.Author = ""
+	app.Email = ""
+	app.Version = "0.1"
+
+	app.Flags = []cli.Flag{
+		DebugFlag,
+	}
+	app.Action = run
+}
+
+func run(ctx *cli.Context) {
+	debug := ctx.GlobalBool(DebugFlag.Name)
+
+	if len(ctx.Args()) == 0 {
+		glog.Exitln("err: <filename> required")
+	}
+
+	fn := ctx.Args().First()
+	src, err := ioutil.ReadFile(fn)
+	if err != nil {
+		glog.Exitln("err:", err)
+	}
+
+	compiler := newCompiler(debug)
+	compiler.feed(lex(fn, src, debug))
+
+	bin, errors := compiler.compile()
+	if len(errors) > 0 {
+		// report errors
+		for _, err := range errors {
+			got, want := err.Error()
+			fmt.Printf("%s:%d: syntax error: unexpected %v, expected %v\n", fn, err.Lineno(), got, want)
+		}
+		os.Exit(1)
+	}
+	fmt.Println(bin)
+}
 
 func main() {
-	program := `
-	jump @main
-my_label:
-	push 0
-	push "hello"
-	mstore
-
-	push 0
-	push 5
-	push 10
-	log
-
-main:
-	push 1
-	push 1
-	eq
-
-	jumpif @my_label
-`
-	ch := lex("program.asm", program)
-	for i := range ch {
-		fmt.Printf("%04d: (%-20v) %s\n", i.lineno, i.typ, i.text)
+	if err := app.Run(os.Args); err != nil {
+		fmt.Fprintln(os.Stderr, err)
+		os.Exit(1)
+	}
+}
+
+// Compiler contains information about the parsed source
+// and holds the tokens for the program.
+type Compiler struct {
+	tokens []item
+	binary []interface{}
+
+	labels map[string]int
+
+	pc, pos int
+
+	debug bool
+}
+
+// newCompiler returns a new allocated compiler.
+func newCompiler(debug bool) *Compiler {
+	return &Compiler{
+		labels: make(map[string]int),
+		debug:  debug,
+	}
+}
+
+// feed feeds tokens in to ch and are interpreted by
+// the compiler.
+//
+// feed is the first pass in the compile stage as it
+// collect the used labels in the program and keeps a
+// program counter which is used to determine the locations
+// of the jump dests. The labels can than be used in the
+// second stage to push labels and determine the right
+// position.
+func (c *Compiler) feed(ch <-chan item) {
+	for i := range ch {
+		switch i.typ {
+		case number:
+			num := common.String2Big(i.text).Bytes()
+			if len(num) == 0 {
+				num = []byte{0}
+			}
+			c.pc += len(num)
+		case stringValue:
+			c.pc += len(i.text) - 2
+		case element:
+			c.pc++
+		case labelDef:
+			c.labels[i.text] = c.pc
+			c.pc++
+		case label:
+			c.pc += 5
+		}
+
+		c.tokens = append(c.tokens, i)
+	}
+	if c.debug {
+		fmt.Println("found", len(c.labels), "labels")
+	}
+}
+
+// compile compiles the current tokens and returns a
+// binary string that can be interpreted by the EVM
+// and an error if it failed.
+//
+// compile is the second stage in the compile phase
+// which compiles the tokens to EVM instructions.
+func (c *Compiler) compile() (string, []cerror) {
+	var errors []cerror
+	// continue looping over the tokens until
+	// the stack has been exhausted.
+	for c.pos < len(c.tokens) {
+		if err := c.compileLine(); err != nil {
+			errors = append(errors, err)
+		}
+	}
+
+	// turn the binary to hex
+	var bin string
+	for _, v := range c.binary {
+		switch v := v.(type) {
+		case vm.OpCode:
+			bin += fmt.Sprintf("%x", []byte{byte(v)})
+		case []byte:
+			bin += fmt.Sprintf("%x", v)
+		}
+	}
+	return bin, errors
+}
+
+// next returns the next token and increments the
+// posititon.
+func (c *Compiler) next() item {
+	token := c.tokens[c.pos]
+	c.pos++
+	return token
+}
+
+// compile line compiles a single line instruction e.g.
+// "push 1", "jump @labal".
+func (c *Compiler) compileLine() cerror {
+	n := c.next()
+	if n.typ != lineStart {
+		return compileErr(n, n.typ.String(), lineStart.String())
+	}
+
+	lvalue := c.next()
+	switch lvalue.typ {
+	case eof:
+		return nil
+	case element:
+		if err := c.compileElement(lvalue); err != nil {
+			return err
+		}
+	case labelDef:
+		c.compileLabel()
+	case lineEnd:
+		return nil
+	default:
+		return compileErr(lvalue, lvalue.text, fmt.Sprintf("%v or %v", labelDef, element))
+	}
+
+	if n := c.next(); n.typ != lineEnd {
+		return compileErr(n, n.text, lineEnd.String())
+	}
+
+	return nil
+}
+
+// compileNumber compiles the number to bytes
+func (c *Compiler) compileNumber(element item) (int, error) {
+	num := common.String2Big(element.text).Bytes()
+	if len(num) == 0 {
+		num = []byte{0}
+	}
+	c.pushBin(num)
+	return len(num), nil
+}
+
+// compileElement compiles the element (push & label or both)
+// to a binary representation and may error if incorrect statements
+// where fed.
+func (c *Compiler) compileElement(element item) cerror {
+	// check for a jump. jumps must be read and compiled
+	// from right to left.
+	if isJump(element.text) {
+		rvalue := c.next()
+		switch rvalue.typ {
+		case number:
+			// TODO figure out how to return the error properly
+			c.compileNumber(rvalue)
+		case stringValue:
+			// strings are quoted, remove them.
+			c.pushBin(rvalue.text[1 : len(rvalue.text)-2])
+		case label:
+			c.pushBin(vm.PUSH4)
+			pos := big.NewInt(int64(c.labels[rvalue.text])).Bytes()
+			pos = append(make([]byte, 4-len(pos)), pos...)
+			c.pushBin(pos)
+		default:
+			return compileErr(rvalue, rvalue.text, "number, string or label")
+		}
+	}
+	// push the operation
+	c.pushBin(toBinary(element.text))
+
+	// handle pushes. pushes are read from left to right.
+	if isPush(element.text) {
+		rvalue := c.next()
+		switch rvalue.typ {
+		case number:
+			// TODO figure out how to return the error properly
+			c.compileNumber(rvalue)
+		case stringValue:
+			// strings are quoted, remove them.
+			c.pushBin(rvalue.text[1 : len(rvalue.text)-1])
+		case label:
+			c.pushBin(vm.PUSH4)
+			pos := make([]byte, 4)
+			copy(pos, big.NewInt(int64(c.labels[rvalue.text])).Bytes())
+			c.pushBin(pos)
+		default:
+			return compileErr(rvalue, rvalue.text, "number, string or label")
+		}
+	}
+
+	return nil
+}
+
+// compileLabel pushes a jumpdest to the binary slice.
+func (c *Compiler) compileLabel() cerror {
+	c.pushBin(vm.JUMPDEST)
+	return nil
+}
+
+// pushBin pushes the value v to the binary stack.
+func (c *Compiler) pushBin(v interface{}) {
+	if c.debug {
+		fmt.Printf("%d: %v\n", len(c.binary), v)
+	}
+	c.binary = append(c.binary, v)
+}
+
+// isPush returns whether the string op is either any of
+// push(N).
+func isPush(op string) bool {
+	if op == "push" {
+		return true
+	}
+	return false
+}
+
+// isJump returns whether the string op is jump(i)
+func isJump(op string) bool {
+	return op == "jumpi" || op == "jump"
+}
+
+// toBinary converts text to a vm.OpCode
+func toBinary(text string) vm.OpCode {
+	if isPush(text) {
+		text = "push1"
+	}
+	return vm.StringToOp(strings.ToUpper(text))
+}
+
+type cerror interface {
+	Error() (string, string)
+	Lineno() int
+}
+
+type compileError struct {
+	got  string
+	want string
+
+	lineno int
+}
+
+func (c compileError) Error() (string, string) { return c.got, c.want }
+func (c compileError) Lineno() int             { return c.lineno }
+
+var (
+	errExpBol            = errors.New("expected beginning of line")
+	errExpElementOrLabel = errors.New("expected beginning of line")
+)
+
+func compileErr(c item, got, want string) cerror {
+	return compileError{
+		got:    got,
+		want:   want,
+		lineno: c.lineno,
 	}
 }