UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-K


þ
            
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
the Fiscal Year Ended March 31, 2008


OR


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


for
the transaction period from to


Commission
File Number 000-19566




EARTH
SEARCH SCIENCES, INC.


(Name of
Small Business Issuer in its charter)


Nevada
            
            870437723(State
      or other jurisdictionof
      incorporation)
            
            (I.R.S.
      EmployerIdentification
      No.)306
      Stoner Loop Road, #6, Lakeside, Montana
            
            59922(Address
      of principal executive offices)
            
            (Zip
      code)





Issuer’s
telephone number (406) 751-5200


Securities
registered under Section 12(b) of the Exchange Act: None




Title
      of each class
            
            Name
      of each exchange on whichRegistered




Securities
registered pursuant to Section 12(b) of the Act: None


Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per
share





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  £
Yes   S
No
  Indicate
by check mark if the registrant is not required to file reports pursuant to
section 13 and section 15(d) of the Act. £





Check
whether the issuer (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such 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  S   No
£





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. S





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
            
            S  Smaller
      reporting company








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





Issuer’s
revenues for its most recent fiscal year were $0.





The
aggregate market value of the issuer’s voting and non-voting common equity held
by non-affiliates (56,096,763 shares) was approximately $8,975,482, based on the
average closing bid and ask price of $0.16 for such common equity as of
September 28, 2007.





As of
June 27, 2008, there were 121,495,796 outstanding shares of the issuer’s Common
Stock, par value $0.001.





Transitional
Small Business Disclosure Format (check one): Yes  o   No  S







1


FORWARD
LOOKING STATEMENTS





Some of
the statements under “Management’s Discussion and Analysis of Financial
Condition or Plan of Operations,” and “Description of Business” in this Annual
Report on Form 10-KSB are forward-looking statements. These statements involve
known and unknown risks, uncertainties and other factors that may cause our
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by forward-looking statements.





In some
cases, you can identify forward-looking statements by terminology such as “may,”
“should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative
of these terms or other comparable terminology. You should read statements that
contain these words carefully, because they discuss our expectations about our
future operating results or our future financial condition or state other
“forward-looking” information. There may be events in the future that we are not
able to accurately predict or control. Before you invest in our securities, you
should be aware that the occurrence of any of the events described in this
Annual Report could substantially harm our business, results of operations and
financial condition, and that upon the occurrence of any of these events, the
trading price of our securities could decline and you could lose all or part of
your investment. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
growth rates, levels of activity, performance or achievements. We are under no
duty to update any of the forward-looking statements after the date of this
Annual Report to conform these statements to actual results.


2


TABLE OF CONTENTS





PART
      I
            
            4Item
      1 -
            Business
            4Item
      1A
            Risk
      Factors
            5Item
      1B
            Unresolved
      Staff Comments
            6Item
      2 -
            Properties
            6Item
      3 -
            Legal
      Proceedings
            7Item
      4 -
            Submission of
      Matters to a Vote of Security Holders
            7PART
      II
            
            7Item
      5 -
            Market for the
      Registrant's Common Stock Equity and Related Shareholder
      Matters
            7Item
      7 -
            Management's
      Discussion and Analysis or Plan of
    Operations
            10Item
      8 -
            Financial
      Statements
            F-1Item
      9 -
            Changes in and
      Disagreements with Accountants on Accounting and Financial
      Disclosure
            12Item
      9A(T)
            Controls and
      Procedures
            12Item
      9B -
            Other
      Information
            13PART
      III
            
            13Item
      10 -
            Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance With Section 16(a) of the Exchange
      Act
            13Item
      11 -
            Executive
      Compensation
            15Item
      12 -
            Security Ownership
      of Certain Beneficial Owners and Management and Related Stockholder
      Matters
            17Item
      13 -
            Certain
      Relationships and Related Transactions, and Director
      Independence
            17Item
      14 -
            Principal
      Accountant Fee and Services
            17Item
      15 -
            Exhibits, Financial
      Statement Schedules
            18SIGNATURES
            20


3
 Table of Contents


PART I


ITEM 1.
              BUSINESS


Earth
Search Sciences, Inc. was incorporated in 1984 in Utah. We did not generate any
revenue during fiscal year 2008, have no current business operations and are
currently focused on two potential business ventures.





First, we
are seeking joint venture opportunities with private industry, universities
and state and federal agencies to develop, package and deliver, through the
application of our hyperspectral remote sensing solutions, applications and
associated technologies, a superior airborne mapping products and services. Our
airborne hyperspectral remote sensing technology is designed to identify
specific surface substances and materials by measuring the reflectance of light
from their surface. Their first spectroscopic instrument, the PROBE 1, was
initially developed with the assistance of NASA and used a small aircraft as the
instrument platform to obtain data from high altitudes over many different
terrains. The information was precise enough to enable detailed analysis of a
dynamic environment or object in a manner previously unattainable, and can be
used for the discovery of certain natural resources.





Second,
we are working with certain investors to develop and employ technology in the
extraction of oil and gas from oil shale. We are currently seeking joint-venture
relationships to fund the research and fabrication of technology used to extract
oil and gas from oil shale.





Hyperspectral
Remote Sensing Solutions





In the
past, we have utilized an aircraft mounted hyperspectral remote sensing
instrument to gather precise geological data from the surface of the Earth.
Solar energy is reflected from surface materials and the instrument, called
"Probe-1", captures the data in digital form. The Probe-1 is a "whiskbroom
style" instrument that collects data in a cross-track direction by mechanical
scanning and in an along-track direction by movement of the airborne platform.
The instrument acts as an imaging spectrometer in the reflected solar region of
the electromagnetic spectrum (0.4 to 2.5 nm). In the VNIR and SWIR, the
at-sensor radiance is dispersed by four spectrographs onto four detector arrays.
Spectral coverage is nearly continuous in these regions with small gaps in the
middle of the 1.4 and 1.9 nm atmospheric water bands. In order to avoid
geometric distortions in the recorded imagery, the Probe-1 is mounted on a 3
axis, gyro-stabilized mount. Geolocation of nadir pixels is assisted by the
recording of aircraft GPS positional data and tagging each scan line with a time
that is referenced to the UTC time interrupts from the GPS
receiver.





The
spectral data is processed to identify unique spectra in the image. The captured
and processed spectra are compared to a library of known material spectra called
"digital fingerprints" and the output allows the identification of mineral,
compounds and organic matter and the determination of vegetative
conditions.





We are
actively seeking funding to engineer and manufacture a third generation probe
instrument, which will be capable of analyzing substantially more data inputs,
including chemical, light, pressure, vibration, and acceleration. The new design
will operate at extremely high speed with excellent resolution. We expect that
the combination of substantially improved analysis and higher resolution will
open up new markets.





We are
currently evaluating hyperspectral imagery collected to date so that we can
determine whether this archive of information can be used to locate mineral
properties.





Our
aircraft was grounded in 2006 for FAA required maintenance and repairs. As a
result, our hyperspectral remote sensing operations have ceased until such time
that we raise sufficient funding to repair our aircraft or purchase a new
aircraft.





Exploitation
of Oil and Gas From Oil Shale





General
Synfuels International, Inc., (GSI) a Nevada private company, owns the
world-wide proprietary rights, patent, technology, construction plans and
materials and operational capability for a gasification process recover the oil
and gas from oil shale. Petro Probe, Inc. signed a non-exclusive license
agreement with GSI to obtain the use of these rights in Utah, Wyoming and
Colorado. To utilize this technology, PPI will pay a license fee in the amount
of $500,000 and will issue to GSI 500,000 shares of PPI Common Stock, $.001 par
value per share. Such fee will be paid in such amounts and at such times as are
agreed to in the future by PPI and GSI. PPI also assigned to GSI an overriding
net revenue interest of five and one-half percent (5.5%) of the hydrocarbons
produced.


4
 Table of Contents


PPI is
currently examining various oil shale sites in Colorado and Utah for a test
plant. Five acres of premium oil shale land is sought. The test plant is
budgeted for approximately $3 million as a first stage development cost. The
purpose of this plant is to prove the technology. The second and third stages
will cost approximately $8 million more at which time the plant could operate at
full capacity. All development costs will be paid for by PPI.





We are
also examining other available technologies, including one based in micro-wave
technology and another, which is an adaptation of fuel cell energy.





Other





Employees





As of
March 31, 2008, we had 2 full-time employees and no part time
employees.





Available
Information





The
Securities and Exchange Commission maintains an internet site at http://www.sec.gov
that contains reports and financial information filed by us. We maintain an
internet site at http://www.earthsearch.com
that contains information about our business, markets and technology.
Information on our internet site is not incorporated by reference in this
report.





Risk Factors That Could
Affect Liquidity, Operating Results And Market Price Of
Stock




ITEM 1A.
              RISK
      FACTORS


Competitive
pressures may adversely affect our operating revenues.The Company has numerous
competitors in the remote sensing services (airborne hyperspectral services) and
natural resource development industries. These companies are also developing new
technology improvements and applications that could adversely affect our
operating revenues and in turn, our business and financial
condition.





The
Company may need to expend significant capital to keep pace with technological
developments in our industry. The remote sensing industry, as well as the
computing industry’s processing of the raw data, is constantly undergoing
development and change and it is likely that new technology, whether embodied in
new equipment or techniques, will be introduced in the future. In order to keep
pace with any new developments, the Company is planning to expend significant
capital to develop or acquire the next level of developments in new remote
sensing equipment and to train our employees in the new techniques. The Company
is pursuing financing to develop additional remote sensing instruments; however,
we may not be able to raise sufficient funds, and if the Company does so, there
is no guaranty that the new instruments will out perform instruments used by our
competitors. In addition, the Company’s ability to raise needed capital may be
influenced by general economic conditions and the strength of capital markets.
To ensure its ability to continue operations the Company will undergo a
re-organization to include a stock re-structuring.





The
Company may incur significant expenses to comply with new or more stringent
governmental regulation. The sale of our imagery is regulated by the Department
of Commerce. Although the Company (through its acquisition of STDC) has acquired
a Department of Commerce (DOC) Remote Sensing License that permits the Company
to market it’s hyperspectral and panchromatic imagery globally, there is no
guarantee that the government will not impose restrictions on sales if the
quality of our imagery were to substantially increase. Because our license was
the first issued DOC Remote Sensing License, the Company cannot anticipate how
the DOC specifically will treat our license or how the airborne remote sensing
industry will be regulated in the future.


5
 Table of Contents


Risks Related to Our
Business





The
Company may not realize our anticipated return on capital commitments made to
expand our capabilities. The Company purchased an aircraft and an airborne
hyperspectral instrument, as well as oil and gas property rights. The aircraft
and airborne hyperspectral instrument were purchased to increase our capacity to
conduct airborne surveys. If the Company does not experience continued demand
for our remote sensing services, the Company may incur significant expense
without generating corresponding revenues. The oil and gas property rights were
acquired in order to exploit suspected natural resources located within certain
properties. If these properties do not contain sufficient natural resources to
warrant exploitation, the Company may incur significant expenses without
generating corresponding revenues. There are were no prospects for new oil and
gas contracts from existing properties in fiscal 2008.





In
addition, from time to time, the Company expects to make significant capital
expenditures to implement new processes and to increase both efficiency and
capacity. Some of these projects may require additional training for our
employees and not all projects may be implemented as anticipated. If any of
these projects do not achieve the anticipated increase in efficiency or
capacity, our returns on these capital expenditures may not be as
expected.





Our
ability to grow is dependent upon, and may be limited by, among other things,
our capital structure, the price of our stock and our existing financing
arrangements. If additional funding sources are needed, the Company may not be
able to obtain the additional capital necessary to pursue our internal growth
and acquisition strategy or, if the Company can obtain additional financing, the
additional financing may not be on financial terms that are satisfactory to
us.





The
Company’s database of spectral information may not be marketable or may not
garner a price, which makes processing or analyzing the data economically
reasonable. The Company has a substantial archive of Probe 1 hyperspectral
imagery that was not gathered under contract with a client. From time to time,
the Company continues to gather hyperspectral imagery without having sold the
rights to that data. The collection process requires variable as well as fixed
expenditures that must be recouped though marketing the collected data. Although
we do not carry the value of our existing Probe 1 hyperspectral archives as an
asset on our balance sheet, the future success of the Company depends to some
extent upon our ability to market this archived data.





Cancellations,
reductions or delays in customer orders may adversely affect our results of
operations. Our overall operating results are affected by many factors,
including the timing of survey contracts from large clients, the timing of
capital expenditures to increase our capacity for gathering data in anticipation
of future sales of products and services, and the weather which can affect
whether or not a customers target of interest can be collected at a certain
stage of vegetal growth. Although a large portion of our expenses are fixed; a
significant portion of our operational expenses vary with the number of airborne
surveys. Because several of our subsidiaries are new businesses and have not
obtained long-term commitments from our clients, we must anticipate the future
demand for our services based upon our discussions with clients. Cancellations,
reductions or delays in orders by a client or group of clients could have a
material adverse effect on our business, financial condition and results of
operations.





The
unavailability of skilled personnel may have an adverse effect on our
operations. From time to time, the Company or some of our subsidiaries may
experience difficulties in attracting and retaining skilled personnel to process
and interpret the substantial volume of imagery data that is already collected
or is expected to be collected in the future. The Company’s ability to operate
successfully could be jeopardized if we are unable to attract and retain a
sufficient number of skilled personnel to conduct our business.





ITEM 1B.
            UNRESOLVED
      STAFF COMMENTS





None





ITEM 2.
            PROPERTIES


6
 Table of Contents


The
Company headquarters consist of approximately 1,500 square feet of office space
in Lakeside, Montana.





As a 50%
member of ESSI Probe I LC, an Idaho limited liability company (“Probe I LC”),
the Company owns 50% of the hyper-spectral instrument owned by Probe I LC. The
Company shares its ownership with the two other members of ESSI Probe I LC,
Arthur W. McClain Trust and Francisco Elmudesi (the “Woodstock members”).
Pursuant to an agreement dated June 3, 1997 (the “Equipment Usage Agreement”),
the Company had the right to purchase the hyper-spectral instrument until June
3, 2007 for the purchase price of $2,250,000. The Company is in the process of
negotiating an extension to the renewal period.





ITEM 3.
            LEGAL
      PROCEEDINGS





On March
23, 2005, we entered into a settlement agreement (2005 Settlement Agreement)
with Accuprobe to return an airborne hyperspectral sensor (Probe) and to settle
the outstanding obligations under the related capital lease. Under the 2005
Settlement Agreement, we were required to return the Probe on or before August
31, 2005. Due to continuing disputes over various issues, the probe was not
returned until 2007. As the Probe was not returned by the August 2005 due date,
we were subject to a shipping, handling and disposition fee of $250,000. In
addition, we were subject to interest charges that began accruing on September
2, 2005 at an annual rate of prime plus 4%; rent on the probe of $250,000 per
year beginning April 10, 2000 with interest on any unpaid rent accruing at a
rate of prime plus 2% through August 31, 2005. After August 31, 2005, interest
related to the unpaid rent ceased and was replaced with a 5% late fee calculated
on the entire balance due at the end of each month.





Because
we were unable to reach Accuprobe and make arrangements for the return of the
probe, in January 2007, we shipped the probe to an acquaintance of Accuprobe
with instructions to hold the probe until Accuprobe provided further
instructions. We obtained confirmation in December 2007 that Accuprobe had
contacted the acquaintance and instructed them to begin certain repairs and
calibrations on the probe. As a result of this confirmation, we discontinued
accruing rent, interest and late fees on the probe.





The
estimated settlement obligation increased $3,252,565 as of March 31, 2008
compared to the March 31, 2007 balance. This increase is related to interest
expense of $21,967, rent expense of $187,368 and late fees of $3,043,320. Rent
expense is reflected in general and administrative expense.




ITEM 4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS





None.








PART
II





ITEM 5.
            MARKET
      FOR THE REGISTRANT’S COMMON STOCK EQUITY AND RELATED STOCKHOLDER
      MATTERS





(a)
            Principal
      Market or Markets. The Company's common stock trades on the OTC Bulletin
      Board under the symbol “ESSE”. The range of reported high and low bid
      quotations for the Company’s common stock, as set forth below, reflect
      interdealer bid prices, without retail markups, markdowns, commissions, or
      adjustments as reported in on the OTCBB and do not represent actual
      transactions.





Quarter
      Ended
            High
            LowJune
      30, 2006
            .36
            .32September
      30, 2006
            .17
            .12December
      31, 2006
            .16
            .10March
      31, 2007
            .30
            .26June
      30, 2007
            .06
            .06September
      30, 2007
            .07
            .06December
      31, 2007
            .16
            .15March
      31, 2008
            .24
            .16


7
 Table of Contents




(b)
            Approximate Number of Holders of
      Common Stock. The number of record owners of the Company's $.001 par value
      common stock at March 31, 2008 was approximately 1324. This does not
      include shareholders that hold stock in their accounts at
      brokers/dealers.





(c)
            Dividends. Holders of the
      Company’s common stock are entitled to receive such dividends as may be
      declared by the Company's Board of Directors. No dividends have been paid
      with respect to the Company's common stock and no dividends are
      anticipated to be paid in the foreseeable
  future.




(d)
            In the last three years, the
      Company has made the following sales of unregistered securities, all of
      which sales were exempt from the registration requirements of the
      Securities Act of 1933, as amended, pursuant to Section 4(2) or as
      otherwise indicated:


8
 Table of Contents




Recent
      Sales of Unregistered SecuritiesDate
            
            Amount
      of Securities Sold
            
            Price
      per Share ($)
            
            Total
      Cash Proceeds ($)
            
            
            
            Date
            
            Amount
      of Securities Sold
            
            Price
      per Share ($)
            
            Total
      Cash Proceeds ($)4/7/2006
            
            26,029
            
            $0.19
            
            $4,425
            
            (1)
            
            5/3/2006
            
            1,500,000
            
            $0.22
            
            $330,000
            
            (1)5/16/2006
            
            400,000
            
            $0.18
            
            $72,000
            
            (2)
            
            5/17/2006
            
            13,719
            
            $0.35
            
            $4,390
            
            (1)6/14/2006
            
            13,813
            
            $0.44
            
            $5,525
            
            (1)
            
            7/6/2006
            
            21,861
            
            $0.36
            
            $7,870
            
            (1)7/6/2006
            
            375,000
            
            $0.20
            
            $75,000
            
            (2)
            
            8/8/2006
            
            19,643
            
            $0.21
            
            $4,125
            
            (1)9/1/2006
            
            410,000
            
            $0.21
            
            $123,117
            
            (1)
            
            9/8/2006
            
            33,829
            
            $0.17
            
            $5,751
            
            (1)10/25/2006
            
            45,682
            
            $0.11
            
            $5,025
            
            (1)
            
            3/13/2007
            
            11,400,000
            
            $0.10
            
            $1,140,000
            
            (1)3/16/2007
            
            90,750
            
            $0.10
            
            $9,075
            
            (1)
            
            3/15/2007
            
            250,000
            
            $0.10
            
            $25,000
            
            (1)3/31/2007
            
            800,000
            
            
            
            
            
            (3)
            
            3/28/2007
            
            2,500,000
            
            $0.10
            
            $250,000
            
            (2)4/18/2007
            
            65,000
            
            $0.40
            
            $26,000
            
            (2)
            
            4/27/07
            
            265,451
            
            $0.11
            
            $29,350
            
            (1)6/19/2007
            
            34,386
            
            $0.29
            
            $10,000
            
            (1)
            
            7/18/2007
            
            377,130
            
            $0.22
            
            $82,968
            
            (1)8/10/2007
            
            98,012
            
            $0.24
            
            $23,523
            
            (1)
            
            9/14/2007
            
            58,824
            
            $0.19
            
            $11,177
            
            (1)10/16/2007
            
            141,763
            
            $0.11
            
            $15,594
            
            (1)
            
            11/13/2007
            
            500,000
            
            $0.05
            
            $25,000
            
            (4)11/30/2007
            
            557,143
            
            $0.06
            
            $35,000
            
            (4)
            
            12/17/2007
            
            4,285,714
            
            $0.07
            
            $300,000
            
            (4)1/18/2008
            
            1,865,000
            
            $0.06
            
            $111,900
            
            (1)
            
            2/13/2008
            
            1,893,387
            
            $0.06
            
            $113,603
            
            (1)3/1/2008
            
            500,000
            
            $0.05
            
            $25,000
            
            (4)




(1)
      Consideration paid for the shares was employee and/or consulting
      services.(2)
      Shares issued for debt consideration.(3)
      Consideration paid for Directorship.(4)
      Consideration received in a private
placement.





Securities authorized for
issuance under Equity Compensation Plans





The
following table sets forth certain information on the Company’s Equity
Compensation Plans as of March 31, 2008 See Note 10 to the Notes to Consolidated
Financial Statements for additional information on equity compensation including
material terms of options granted that have not been approved by security
holders.





Plan
      category
            
            (a)
            
            (b)
            
            (c)Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
            
            Weighted-average
      exercise price of outstanding options, warrants and rights
            
            Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a)Equity
      compensation plans approved by security
      holders
            
            -
            
            -
            
            -Equity
      compensation plans not approved by security holders
            
            -
            
            -
            
            14,076,743Total
            
            -
            
            -
            
            14,076,743


9
 Table of Contents


ITEM
      7.
            MANAGEMENT'S DISCUSSION AND
      ANALYSIS OF FINANCIAL
CONDITION




The
following discussion should be read in conjunction with other sections of this
Form 10-KSB including Part 1, “Item 1: Business” and Part II, “Item 7: Financial
Statements.” Various sections of management’s discussion and analysis
(“MD&A”) contain statements that are forward-looking. These statements are
based on current expectations and assumptions that are subject to risks and
uncertainties. Actual results could differ materially due to factors discussed
in this report, as well as factors not within our control. We undertake no duty
to update any forward-looking statement to conform the statement to actual
results or changes in our expectations.




Our
MD&A is provided as a supplement to our audited financial statements to help
provide an understanding of our financial condition, changes in financial
condition and results of operations.





Results of
Operations





Our
aircraft was grounded in 2006 for required FAA repairs and maintenance and
remained grounded through the issuance of this report. As a result, we have not
generated any revenue in fiscal year 2008 and only $91,429 of revenue in fiscal
year 2007.





General
and administrative costs were $1,454,008 in fiscal year 2008 compared with
$3,540,337 in 2007. This decrease was primarily due to additional consulting
expenses in 2007 that did not occur in 2008. These 2007 consulting fees were
principally paid for by issuing common stock, which was valued using the quoted
stock price on the date of grant.





Interest
expense was $520,850 in fiscal year 2008 compared to $594,550 in 2007. Our
interest expense primarily consists of interest from our notes payable, the
probe settlement agreement and related party debt.





Late fees
related to settlement agreement was $3,043,230 in fiscal year 2008 compared to
$2,335,237 in 2007. On March 23, 2005, we entered into a settlement agreement
(2005 Settlement Agreement) with Accuprobe to return an airborne hyperspectral
sensor (Probe) and to settle the outstanding obligations under the related
capital lease. Under the 2005 Settlement Agreement, we were required to return
the Probe on or before August 31, 2005. Due to continuing disputes over various
issues, the probe was not returned until 2007. As the Probe was not returned by
the August 2005 due date, we were subject to a shipping, handling and
disposition fee of $250,000. In addition, we were subject to interest charges
that began accruing on September 2, 2005 at an annual rate of prime plus 4%;
rent on the probe of $250,000 per year beginning April 10, 2000 with interest on
any unpaid rent accruing at a rate of prime plus 2% through August 31, 2005.
After August 31, 2005, interest related to the unpaid rent ceased and was
replaced with a 5% late fee calculated on the entire balance due at the end of
each month.





Because
we were unable to reach Accuprobe and make arrangements for the return of the
probe, in January 2007, we shipped the probe to an acquaintance of Accuprobe
with instructions to hold the probe until Accuprobe provided further
instructions. We obtained confirmation in December 2007 that Accuprobe had
contacted the acquaintance and instructed them to begin certain repairs and
calibrations on the probe. As a result of this confirmation, we discontinued
accruing rent, interest and late fees on the probe.





The
estimated settlement obligation increased $3,252,565 as of March 31, 2008
compared to the March 31, 2007 balance. This increase is related to interest
expense of $21,967, rent expense of $187,368 and late fees of $3,043,320. Rent
expense is reflected in general and administrative expense.





We
recognized a net loss of $5,106,887 in fiscal year 2008 compared with net income
of $3,648,892 in 2007. This significant change in income was due primarily to
the one-time gain on debt retirement of $10,132,522 in 2007, discussed in
Liquidity and Capital Resources.




Liquidity and Capital
Resources





At March
31, 2008, we had $8,821 of cash and cash equivalents and a working capital
deficit of $16,146,002. During fiscal year 2008, we used $452,202 in operating
activities. Net cash used in operating activities was $274,632 in 2007,
resulting primarily from payments for salaries and services.


10
 Table of Contents


In March
2007, we recorded a $10,132,522 net gain on the settlement of certain debt
incurred in connection with a U.S. Government project called Naval Earth Map
Observer (NEMO). This agreement was originated on January 21, 1999, however, the
NEMO project was subsequently cancelled and all work on the project ceased. At
that time, the Company, through its subsidiary Space Technology Development
Corporation (STDC), recorded liabilities associated with the subcontract
agreements totaling $10,132,522. There is no settlement agreement in place with
regards to the subsequent recorded gain and the Company has never paid any of
the amounts due. As of March 31, 2008, no significant claims had been filed
against the Company, STDC or any the Company subsidiaries related to the NEMO
contract. STDC ceased performance in November 2000, so any breach of contract
would have occurred over six years ago. The Company believes that action against
the Company, STDC or any of its subsidiaries would be barred by the applicable
statute of limitations under federal law and the laws of California, Virginia,
Maryland and Delaware. Accordingly, we recorded the gain pursuant to SFAS
140.





Net cash
provided by financing activities was $437,841 in 2008 as compared to $258,000 in
2007 with the increase due to increased cash from sales of our common stock
totaling $385,000 as well as proceeds from subscription receivable of
$250,000.





We do not
intend to pay cash dividends to the holders of its common stock and intends to
retain future earnings to finance the expansion and development of its
business.





As shown
in the accompanying financial statements, we incurred losses from
operations of $4,601,086 and $5,889,080 for the years ended March 31, 2008
and 2007, respectively and we have an accumulated deficit of $63,341,776 and
negative working capital of $16,146,002 as of March 31, 2008. These conditions
raise substantial doubt as to our ability to continue as a going concern.
Management is trying to raise additional capital through sales of stock. The
financial statements do not include any adjustments that might be necessary if
we are unable to continue as a going concern.





There can
be no assurance that additional capital beyond the amounts currently forecasted
will be required or that any such required additional capital will be available
on reasonable terms, at such time or times as required by the Company. The Board
of Directors have appointed a management committee to examine the option of
re-organizing and re-structuring the company to ensure that a viable avenue is
available for the attraction of capital. The management committee will also
recommend priority new management appointments. In June 2008, we issued
8,000,000 shares of common stock for cash proceeds of $370,000.




In
February 2007, two officers of the Company agreed to loan the Company $500,000,
which is evidenced by a promissory note. $170,000 of the net loan proceeds
were received in March 2007 and the remaining balance was received in April
2007. The note, along with accrued interest, is due in February 28, 2008 and
carries a 15% per annum interest rate, compounded monthly. The note is secured
by 10,000,000 shares of the Company’s common stock, which becomes payable upon
default. In addition, the Company received a $250,000 loan from another
shareholder, which was received in April 2007.




Critical Accounting
Policies





Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. We
evaluate long-lived assets to determine potential impairment by comparing the
carrying amount to the undiscounted estimated future cash flows of the related
assets.





We issue
stock as compensation to employees and outside consultants for services provided
to the company. Employee share-based awards are accounted for in accordance with
SFAS 123(R), which requires us to measure the cost of employee services received
based on the grant-date fair value of the award. We account for non-employee
share-based awards in accordance with EITF No. 96-18, “Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquisition, or in
Conjunction with Selling, Goods or Services.”





Off Balance Sheet
Arrangements





None.


11
 Table of Contents


ITEM
      8.
            FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA





INDEX TO
FINANCIAL STATEMENTS





Report
      of Registered Independent Public Accounting Firm
            F-2Consolidated
      Balance Sheets as of March 31, 2008
            F-3Consolidated
      Statements of Operations for the years endedMarch
      31, 2008 and 2007
            F-4Consolidated
      Statements of Cash Flows for the years endedMarch
      31, 2008 and 2007
            F-5Consolidated
      Statement of Changes in Stockholders’ Deficit for the years ended March
      31, 2008 and 2007
            F-6Notes
      to consolidated financial statements
            F-7
      – F-12


F-1
 Table of Contents


Report
of Independent Registered Public Accounting Firm




To the
Board of Directors


Earth
Search Sciences, Inc.


Lakeside,
Montana








We have
audited the accompanying consolidated balance sheets of Earth Search Sciences,
Inc. as of March 31, 2008 and 2007, and the related consolidated statements of
operations, stockholders' deficit, and cash flows for each of the years then
ended. These financial statements are the responsibility of Earth Search's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Earth Search Sciences Inc., as of
March 31, 2008, and the results of its operations and its cash flows for each of
the two years then ended, in conformity with accounting principles generally
accepted in the United States of America.





The
accompanying financial statements have been prepared assuming that Earth Search
will continue as a going concern. Earth Search incurred losses
from operations of $4,601,086 and $5,889,080 for fiscal 2008 and 2007,
respectively and has an accumulated deficit of $63,341,776 and a working capital
deficit of $16,146,002 as of March 31, 2008. These factors, among others, as
discussed in Note 2 to the financial statements; raise substantial doubt about
Earth Search's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.











Malone
& Bailey, PC


Houston,
Texas


www.malone-bailey.com


July 1,
2008


F-2
 Table of Contents




EARTH
      SEARCH SCIENCES, INC.
              CONSOLIDATED
      BALANCE SHEETSMarch
      31,2008
            
            
            2007ASSETSCurrent
      assets:Cash
            
            $
            8,821
            
            
            $
            23,182Accounts
      receivable
            
            
            -
            
            
            
            132Loan
      costs, net of accumulated amortization of $229,987 and $199,998,
      respectively
            
            
            45,583
            
            
            
            28,225Total
      current assets
            
            
            54,404
            
            
            
            51,539Property
      and equipment, net accumulated depreciation of $936,332 and $832,208
      respectively
            
            
            206,096
            
            
            
            309,944TOTAL
      ASSETS
            
            $
            260,500
            
            
            $
            361,483LIABILITIESCurrent
      liabilities:Accounts
      payable
            
            $
            1,345,174
            
            
            $
            1,151,437Accrued
      expenses
            
            
            2,189,269
            
            
            
            1,881,903Notes
      payable - current portion
            
            
            1,092,126
            
            
            
            836,618Settlement
      obligation
            
            
            8,686,824
            
            
            
            5,434,259Short-term
      debt – related parties
            
            
            2,887,013
            
            
            
            2,698,954Total
      current liabilities
            
            
            16,200,406
            
            
            
            12,003,171Notes
      payable less current portion
            
            
            -
            
            
            
            369,820Total
      liabilities
            
            
            16,200,406
            
            
            
            12,372,991Commitments
      and contingencies
            
            
            -
            
            
            
            -STOCKHOLDERS’
      DEFICITPreferred
      stock, 300,000,000 shares authorized,none
      issued and outstanding
            
            
            -
            
            
            
            -Common
      stock, $.001 par value; 300,000,000 shares authorized;106,969,733
      and 96,327,474 shares issued and outstanding, respectively
            
            
            106,970
            
            
            
            96,328Additional
      paid-in capital
            
            
            47,494,900
            
            
            
            46,577,053Treasury
      stock
            
            
            (200,000
            )
            
            
            (200,000
            )Subscription
      receivable
            
            
            -
            
            
            
            (250,000
            )Accumulated
      deficit
            
            
            (63,341,776
            )
            
            
            (58,234,889
            )Total
      stockholders’ deficit
            
            
            (15,939,906
            )
            
            
            (12,011,508
            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
            
            $
            260,500
            
            
            $
            361,483





See accompanying summary of accounting
policies  and notes to financial
statements.




F-3
 Table of Contents




EARTH
      SEARCH SCIENCES, INC.
              CONSOLIDATED
      STATEMENTS OF OPERATIONSYears
      Ended March 31,2008
            
            
            2007Revenues
            
            $
            -
            
            
            $
            91,429Operating
      expensesLate
      fees related to settlement agreement
            
            
            3,043,230
            
            
            
            2,335,237Depreciation
      and amortization
            
            
            103,848
            
            
            
            104,935General
      and administrative
            
            
            1,454,008
            
            
            
            3,540,337Total
      expenses
            
            
            4,601,086
            
            
            
            5,980,509Loss
      from operations
            
            
            (4,601,086
            )
            
            
            (5,889,080
            )Other
      income (expense)Gain
      on settlement of debt
            
            
            15,049
            
            
            
            10,132,522Interest
      expense
            
            
            (520,850
            )
            
            
            (594,550
            )Net
      income (loss)
            
            $
            (5,106,887
            )
            
            $
            3,648,892Basic
      and diluted:Loss
      per share
            
            $
            (0.05
            )
            
            $
            0.04Weighted
      average common shares outstanding
            
            
            99,689,137
            
            
            
            81,385,420




See accompanying summary of accounting
policies  and notes to financial
statements.


F-4
 Table of Contents




EARTH
      SEARCH SCIENCES, INC.
              CONSOLIDATED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
              Years
      Ended March 31, 2008 and 2007Common
              Shares
            
            
            Stock
              Amount
            
            
            Additional
              Paid-in
              Capital
            
            
            Treasury
              Stock
            
            
            Subscription
              Receivable
            
            
            Accumulated
              Deficit
            
            
            TotalBalances
      at March 31, 2006
            
            
            77,697,642
            
            
            
            77,698
            
            
            
            43,495,841
            
            
            
            (200,000
            )
            
            
            -
            
            
            
            (61,883,781
            )
            
            
            (18,510,242
            )Issuance
      of common stock for loan and interest conversion
            
            
            375,000
            
            
            
            375
            
            
            
            74,625
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            75,000Shares
      issued under subscription receivable
            
            
            2,500,000
            
            
            
            2,500
            
            
            
            247,500
            
            
            
            
            
            
            
            (250,000
            )
            
            
            
            
            
            
            -Issuance
      of common stock for  services
            
            
            14,554,831
            
            
            
            14,555
            
            
            
            2,475,132
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,489,687Issuance
      of common stock for a loan extension
            
            
            400,000
            
            
            
            400
            
            
            
            71,600
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            72,000Issuance
      of common stock to directors
            
            
            800,000
            
            
            
            800
            
            
            
            119,200
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            120,000Imputed
      interest
            
            
            
            
            
            
            
            
            
            
            93,155
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            93,155Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3,648,892
            
            
            
            3,648,892Balances
      at March 31, 2007
            
            
            96,327,473
            
            
            $
            96,328
            
            
            $
            46,577,053
            
            
            $
            (200,000
            )
            
            $
            (250,000
            )
            
            $
            (58,234,889
            )
            
            $
            (12,011,508
            )Payment
      of subscription receivable
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            250,000
            
            
            
            
            
            
            
            250,000Issuance
      of common stock for  debt
            
            
            65,000
            
            
            
            65
            
            
            
            25,935
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            26,000Issuance
      of common stock for  services
            
            
            4,734,403
            
            
            
            4,734
            
            
            
            467,528
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            472,262Issuance
      of common stock for cash
            
            
            5,842,857
            
            
            
            5,843
            
            
            
            379,158
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            385,001Imputed
      interest
            
            
            
            
            
            
            
            
            
            
            45,226
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            45,226Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            (5,106,887
            )
            
            
            (5,106,887
            )Balances
      at March 31, 2008
            
            
            106,969,733
            
            
            $
            106,970
            
            
            $
            47,494,900
            
            
            $
            (200,000
            )
            
            $
            -
            
            
            $
            (63,341,776
            )
            
            $
            (15,939,906
            )




See accompanying summary of accounting
policies  and notes to financial
statements.




F-5
 Table of Contents




EARTH
      SEARCH SCIENCES, INC.
              CONSOLIDATED
      STATEMENTS OF OPERATIONS
              Years
      Ended March 31, 2008 and 20072008
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (loss) income
            
            $
            (5,106,887
            )
            
            $
            3,648,892Adjustments
      to reconcile net loss to cash used in operating
activities:Depreciation
      and amortization
            
            
            103,848
            
            
            
            104,935Amortization
      of deferred finance costs
            
            
            29,989
            
            
            
            138,344Imputed
      interest
            
            
            45,226
            
            
            
            93,155Common
      stock issued for services
            
            
            472,262
            
            
            
            2,681,687Gain
      on settlement of debt
            
            
            (15,049
            )
            
            
            (10,132,522
            )Bad
      debt
            
            
            -
            
            
            
            22,819Changes
      in assets and liabilities:Accounts
      receivable
            
            
            132
            
            
            
            (5,980
            )Accrued
      interest – related party
            
            
            217,217
            
            
            
            -Accounts
      payable and accrued expenses
            
            
            542,153
            
            
            
            691,356Accounts
      payable – related party
            
            
            6,342
            
            
            
            147,445Accrued
      settlement liability
            
            
            3,252,565
            
            
            
            2,335,237NET
      CASH USED IN OPERATING ACTIVITIES
            
            
            (452,202
            )
            
            
            (274,632
            )CASH
      FLOWS FROM INVESTING ACTIVITIESCapital
      expenditures
            
            
            -
            
            
            
            (1,086
            )NET
      CASH USED IN INVESTING ACTIVITIES
            
            
            -
            
            
            
            (1,086
            )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from stockholder loans
            
            
            341,500
            
            
            
            258,000Payment
      on stockholder loans
            
            
            (377,000
            )
            
            
            -Proceeds
      from subscription receivable
            
            
            250,000
            
            
            
            -Financing
      costs
            
            
            (47,347
            )
            
            
            -Proceeds
      from issuance of common stock
            
            
            385,000
            
            
            
            -Payment
      on long-term debt
            
            
            (114,312
            )
            
            
            -NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            437,841
            
            
            
            258,000NET
      DECREASE IN CASH
            
            
            (14,361
            )
            
            
            (17,718
            )CASH
      AT BEGINNING OF PERIOD
            
            
            23,182
            
            
            
            40,900CASH
      AT END OF PERIOD
            
            $
            8,821
            
            
            $
            23,182SUPPLEMENTAL
      CASH FLOW INFORMATION:Interest
      paid
            
            $
            68,481
            
            
            $
            -Taxes
      paid
            
            
            -
            
            
            
            -Non-cash
      financing and investing activities:Common
      stock issued for debt repayment
            
            $
            26,000
            
            
            $
            75,000Common
      stock issued for loan extension
            
            
            -
            
            
            
            72,000




See accompanying summary of accounting
policies  and notes to financial
statements.




F-6
 Table of Contents





EARTH
SEARCH SCIENCES, INC.


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE
1 - SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES





Earth
Search Sciences, Inc. (“ESSI”) ceased all operations in the prior year ended
March 31, 2007.





We have
four wholly-owned subsidiaries: Skywatch Exploration, Inc., Polyspectrum
Imaging, Inc., Geoprobe, Inc., and STDC, Inc. In addition, there are five
majority-owned consolidated subsidiaries: Earth Search Resources, Inc., Eco
Probe, Inc., ESSI Probe 1 LC, Petro Probe, Inc. and Terranet,
Inc.  All of these subsidiaries are inactive.





In fiscal
2007, we operated our airborne hyperspectral sensors under contracts with third
parties in several areas around the United States. Contracts to operate the
sensors in the United States as an ecological, agricultural, hydrocarbon, and
target identification contributed approximately $91,429 to revenue in fiscal
2007.





RECLASSIFICATION





Certain
prior year amounts have been reclassified to conform with the current year
presentation





USE OF ESTIMATES IN THE
PREPARATION OF FINANCIAL STATEMENTS





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





CASH AND CASH
EQUIVALENTS





We
consider all highly liquid investments with a maturity of three months or less
at the time of purchase to be cash equivalents.





FAIR MARKET VALUE OF
FINANCIAL INSTRUMENTS





The
estimated fair value of cash and cash equivalents, accounts receivable, accounts
payable, accrued expenses and other liabilities approximate their carrying
amounts in the financial statements.





PROPERTY AND
EQUIPMENT





Property
and equipment are stated at cost, less accumulated depreciation. When we had
operations, we recognized depreciation on our property and equipment using the
straight-line method over estimated useful lives ranging from five years for
computers and software, vehicles and equipment to ten years for the Airplane and
hyperspectral sensors.





The
airplane is the only remaining asset with a net book value.  It is not
in a useable condition and is carried at the estimated value if it were to be
sold.





REVENUE
RECOGNITION





We
recognize revenue when persuasive evidence of an arrangement exists, services
have been rendered, the sales price is fixed or determinable, and collectibility
is reasonably assured. This typically happens when services are rendered under
contracts for airborne hyperspectral services and imaging processing
services.





IMPAIRMENT OF LONG-LIVED
ASSETS





Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. We
evaluate long-lived assets to determine potential impairment by comparing the
carrying amount to the undiscounted estimated future cash flows of the related
assets.




INCOME
TAXES





We
recognize deferred tax assets and liabilities based on differences between the
financial reporting and tax bases of assets and liabilities using the enacted
tax rates and laws that are expected to be in effect when the differences are
expected to be recovered. We provide a valuation allowance for deferred tax
assets for which it does not consider realization of such assets to be more
likely than not.


F-7
 Table of Contents


NET LOSS PER COMMON
SHARE





Net loss
per common share has been computed based on the weighted average number of
common shares outstanding. Common stock equivalents have not been considered in
the diluted net loss per share calculation because their effect on net loss per
share is anti-dilutive.





STOCK-BASED
COMPENSATION





We issue
stock as compensation to employees and outside consultants for services provided
to the company. Employee share-based awards are accounted for in accordance with
SFAS 123(R), which requires us to measure the cost of employee services received
based on the grant-date fair value of the award. We account for non-employee
share-based awards in accordance with EITF No. 96-18, “Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquisition, or in
Conjunction with Selling, Goods or Services.”





For the
years ended March 31, 2008 and 2007, ESSI had no stock option
issuances.





RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS





ESSI does
not expect the adoption of any recently issued accounting pronouncements to have
a significant impact on its financial position, results of operations or cash
flows.




NOTE
2 - GOING CONCERN





As shown
in the accompanying financial statements, we incurred losses from
operations of $4,601,086 and $5,889,080 for the years ended March 31, 2008
and 2007, respectively and we have an accumulated deficit of $63,341,776 and
negative working capital of $16,146,002 as of March 31, 2008. These conditions
raise substantial doubt as to our ability to continue as a going concern.
Management is trying to raise additional capital through sales of stock. The
financial statements do not include any adjustments that might be necessary if
we are unable to continue as a going concern.





NOTE
3 - PROPERTY AND EQUIPMENT





Property
and equipment consists of the following at March 31, 2008:





Life
            
            AmountAircraft
            10
      years
            
            $
            925,795Equipment
            5
      years
            
            
            216,3571,142,152Less:
      accumulated depreciation
            
            
            
            (936,056
            )Property
      and equipment, net
            
            
            $
            206,096





Our
aircraft has been grounded since 2006 due to required FAA repairs and upgrades.
The total repairs required to make the aircraft flight ready is estimated at
$550,000. As of March 31, 2008, approximately $185,000 of these repairs have
been completed. We determined that these repairs do not qualify for
capitalization and were expensed. We expect to complete the remaining repairs as
our cash flows permit.





Depreciation
expense totaled $103,848 and $104,935 in fiscal 2008 and 2007,
respectively.





NOTE 4
- NOTES PAYABLE





Notes
payable consists of the following at March 31, 2008:





Installment
      note payable, currently in default, secured by our assets, with interest
      at 15%
            
            $
            747,656Installment
      note payable, currently in default, with interest at 15%
            
            
            342,470Other
            
            
            2,000Total
            
            $
            1,092,126


F-8
 Table of Contents




NOTE
5 - STOCKHOLDER LOANS





We have
has financed our operations in part by funds received from shareholders. These
advances are in the form of unsecured promissory notes and bear interest at
rates ranging from 8% to 10%. As of March 31, 2008, stockholder loans totaled
$2,887,013 including interest accrued on such advances of $712,758.





NOTE
6 - ACCRUED OFFICERS' COMPENSATION





Accrued
compensation consists of the cumulative unpaid compensation due to two corporate
officers (Chairman, Chief Executive Officer, Chief Financial Officer and
Secretary). We recorded officer compensation of $240,000 and $240,000 during
fiscal 2008 and 2007, and included these amounts in general and administrative
expenses. We were accruing the employer portion of payroll taxes and interest on
the accrued compensation balances through fiscal 2005. We discontinued accruing
interest and taxes due to the uncertainty of our ability to pay these accrued
wages. As of March 31, 2008, accrued officers’ compensation, including accrued
interest and taxes, totaled $1,377,486 and is included in accrued expenses
..




NOTE 7 - INCOME
TAXES





ESSI
recorded no provision for income taxes in fiscal 2008 and 2007 due to the
operating losses incurred from inception to date.





The tax
effect of temporary differences between financial reporting and the tax bases of
assets and liabilities relate to the following:





At March
31, 2008, deferred tax assets consisted of the following:





Deferred
      tax assets:Net
      operating losses
            
            $
            6,609,437Less:
      valuation allowance
            
            
            (6,609,437
            )Net
      deferred tax asset
            
            $
            -





The
cumulative net operating loss carry-forward is approximately $19,440,000 at
March 31, 2008, and will expire in the years 2015 through 2028. The deferred tax
asset has been fully reserved because we are unable to anticipate future taxable
income to realize the potential benefits of the gross deferred tax
asset.





The
annual amount of tax loss carryforward, which can be utilized, may be limited
due to the substantial changes in the company's ownership as defined by section
382 of the Internal Revenue Code, which may occur in the future. Such
limitations could result in the expiration of a part or all of the loss
carryforwards before their utilization.





NOTE
8 - STOCK OPTIONS





For
fiscal 2008 and 2007, there were no options granted. During fiscal 2008, all of
the options exercisable as of March 31, 2007 expired leaving no stock options
outstanding and exercisable as of March 31, 2008.





The
following table summarizes the employee stock option transactions described
above:





Shares
      under Option
            
            
            Weighted-average
      exercise priceBalance,
      March 31, 2006
            
            
            28,125
            
            
            $
            1.31Options
      granted
            
            
            -
            
            
            
            -Options
      expired
            
            
            -
            
            
            
            -Options
      exercised
            
            
            -
            
            
            
            -Balance,
      March 31, 2007
            
            
            28,125
            
            
            $
            1.31Options
      granted
            
            
            -Options
      expired
            
            
            (28,125
            )
            
            
            (1.31
            )Options
      exercised
            
            
            -
            
            
            
            -Balance,
      March 31, 2008
            
            
            -
            
            
            $
            -





F-9
 Table of Contents


NOTE 9
– STOCK TRANSACTIONS




COMMON STOCK:





During
fiscal 2007, we issued:





·
            14,954,831
      shares of stock for services valued at $2,561,687 using the grant-date
      quoted price of the stock.





·
            375,000
      shares of stock for debt valued at $75,000 using the grant-date quoted
      price of the stock.





·
            800,000
      shares of stock for director compensation valued at $120,000 using the
      grant-date quoted price of the
stock.





During
fiscal 2008, we issued:





·
            4,734,403
      shares of stock for services valued at $472,262 using the grant-date
      quoted price of the stock.





·
            65,000
      shares of stock for debt valued at $26,000 using the grant-date quoted
      price of the stock.





·
            5,842,857
      shares of stock for cash of
$385,001.





Stock
Payable





In
September 2007, we retained a consultant to provide accounting and reporting
advice and oversight through a one year consulting agreement. In consideration
for services rendered, the consultant is to receive shares of our common stock
valued at $20,000 per month based on the average closing price of ESSI’s common
stock on the five trading days preceding each month. As of March 31, 2008, the
consultant earned 1,708,889 shares of common stock valued at $129,969. We are
accounting for this service arrangement in accordance with EITF No. 96-18, which
requires us to recognize the fair value of the services using a measurement date
that is the earlier of the performance commitment date or the date in which the
services are completed. We determined that the services under this arrangement
are completed at the end of each quarter and therefore the measurement date is
the last day of each quarter. Shares earned during each quarter are valued using
the quoted share price on the last day of each quarter. We recognize the expense
as the services are performed and accrue a liability until the shares are
actually issued. The liability is included in accrued expenses.





NOTE
10 – SETTLEMENT AGREEMENT





On March
23, 2005, we entered into a settlement agreement with Accuprobe to return an
airborne hyperspectral sensor (Probe) and to settle the outstanding obligations
under the related capital lease. Under thisagreement, we were required to return
the Probe on or before August 31, 2005. Due to continuing disputes over various
issues, the probe was not returned until 2007. As the Probe was not returned by
the August 2005 due date, we were subject to a shipping, handling and
disposition fee of $250,000. In addition, we were subject to interest charges
that began accruing on September 2, 2005 at an annual rate of prime plus 4%;
rent on the probe of $250,000 per year beginning April 10, 2000 with interest on
any unpaid rent accruing at a rate of prime plus 2% through August 31, 2005.
After August 31, 2005, interest related to the unpaid rent ceased and was
replaced with a 5% late fee calculated on the entire balance due at the end of
each month.





Because
we were unable to reach Accuprobe and make arrangements for the return of the
probe, in January 2007, we shipped the probe to an acquaintance of Accuprobe
with instructions to hold the probe until Accuprobe provided further
instructions. We obtained confirmation in December 2007 that Accuprobe had
contacted the acquaintance and instructed them to begin certain repairs and
calibrations on the probe. As a result of this confirmation, we discontinued
accruing rent, interest and late fees on the probe.





The
estimated settlement obligation increased $3,252,565 as of March 31, 2008
compared to the March 31, 2007 balance. This increase is related to interest
expense of $21,967, rent expense of $187,368 and late fees of $3,043,230. Rent
expense is reflected in general and administrative expense.


F-10
 Table of Contents


NOTE
11 – GAIN ON SETTLEMENT OF DEBT





In March
2007, we recorded a $10,132,522 net gain on the settlement of certain debt
incurred in connection with a U.S. Government project called Naval Earth Map
Observer (NEMO). This agreement was originated on January 21, 1999, however, the
NEMO project was subsequently cancelled and all work on the project ceased. At
that time, ESSI, through its subsidiary Space Technology Development Corporation
(STDC), recorded liabilities associated with the subcontract agreements totaling
$10,132,522. As of March 31, 2007, no significant claims had been filed against
ESSI, STDC or any ESSI subsidiaries related to the NEMO contract. STDC ceased
performance in November 2000, so any breach of contract would have occurred over
six years ago. Action against ESSI, STDC or any ESSI subsidiary would be barred
by the applicable statute of limitations under federal law and the laws of
California, Virginia, Maryland and Delaware. Accordingly, we recognized the gain
pursuant to SFAS 140.





In April
2007, we recorded a $15,049 net gain on the settlement of certain debt owed to a
vendor. We executed a settlement with them to issue 65,000 shares of our common
stock valued at $26,000, using the quoted price of our common stock on the grant
date, for settlement of $41,049 in outstanding debt.





NOTE
12 - SUBSEQUENT EVENTS




In April
2008, we granted 485,345 shares of common stock to settle a vendor invoice of
$19,414. The common shares were valued at $30,091 using the grant-date quoted
stock price.
 
 In April
2008, we issued 514,655 as a retainer for future services. The common shares
were valued at $31,909 using the grant-date quoted stock price.
 
 In May
2008, we granted 597,242 shares of common stock for services. The common shares
were valued at $35,835 using the grant-date quoted stock price.
 
 In June
2008, we granted 2,841,667 shares of common stock to settle a vendor invoice of
$124,000. The common shares were valued at $142,083 using the grant-date quoted
stock price.
 
 In June
2008, we issued 8,000,000 shares of common stock for cash proceeds of
$370,000.
 
 In June
2008, we made $158,198 in payments on our notes payable.




F-11
 Table of Contents




ITEM
      9.
            CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
  DISCLOSURE





None.





ITEM
      9A.(T)
            CONTROLS AND
      PROCEDURES




Evaluation
of Disclosure Controls and Procedures





Our
management, principally our chief financial officer and chief executive officer,
evaluated the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report. Based on that evaluation, our
management concluded that our disclosure controls and procedures as of the end
of the period covered by this report were not effective such that the
information required to be disclosed by us in reports filed under the Securities
Exchange Act of 1934 is (i.) recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms and (ii) accumulated and
communicated to our management, including our chief executive officer and chief
financial officer, as appropriate to allow timely decisions regarding
disclosure. In particular, we have identified the following material weakness of
our internal controls:





-
            There
      is an over-reliance upon independent financial reporting consultants
      for review of critical accounting areas and disclosures and material
      non-standard transactions.





-
            There
      is a lack of sufficient accounting staff which results in a lack of
      segregation of duties necessary for a good system of internal
      control.





Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
and Exchange Act of 1934, as amended) for the company.





In order
to ensure whether our internal control over financial reporting is effective,
management has assessed such controls for its financial reporting as of March
31, 2008. This assessment was based on criteria for effective internal control
over financial reporting described in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”).





In
performing this assessment, management has identified the following material
weaknesses:


12
 Table of Contents


There is
an absence of adequate segregation of duties relating to oversight and
management of our systems. This resulted primarily from the fact that certain
parts of the work of our chief financial officer are not monitored or reviewed.
The absence of adequate segregation of duties may have an effect on the systems
which we use in the evaluating and processing of certain accounts and areas and
in the posting and recording of journal entries into certain accounts, as
described below:





o
            Financial
      statements closing process – There was a material weakness in the
      process of closing and consolidating our financial statements which
      resulted from the fact that the work of processing the trial balance,
      evaluating and implementing accounting policies and practices, and
      drafting the consolidated financial statements and related footnotes is
      performed by consultants and not reviewed by qualified accountant within
      our company.





As a
result of these material weaknesses in our internal control over financial
reporting, our management concluded that our internal control over financial
reporting as of March 31, 2008, was not effective based on the criteria set
forth by COSO in Internal Control – Integrated Framework. A material
weakness in internal control over financial reporting is a deficiency, or a
combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of the
company’s annual or interim financial statements will not be prevented or
detected on a timely basis.





Management’s
Plan for Remediation of Material Weaknesses





Based on
our financial condition, there are limitations to the level of remediation
possible. If we restart our operations, management will implement the following
plan intended to remediate our ineffectiveness and to strengthen our internal
controls over financial reporting:





o
            Hire
      a qualified accounting staff to manage, review and verify the day-to-day
      accounting and the financial statement close
  process.





o
            Improving
      the control and oversight of the duties relating to the systems we use in
      the evaluation and processing of certain accounts and areas in the posting
      and recording of journal entries into certain accounts. This improvement
      should include reviews by management of the accounting processes as well
      as a reorganization of some of the accounting
  functions.





o
            The
      segregation of duties relating to the processing of accounts and the
      recording of journal entries into certain
  accounts.




This
annual report does not include an attestation report of our public accounting
firm regarding internal control over financial reporting. Management’s report
was not subject to attestation by our registered public accounting firm pursuant
to temporary rules of the Securities and Exchange Commission that permit us to
provide only management’s report in this annual report.




ITEM
      9B.
            OTHER
      INFORMATION





None.








PART
III





ITEM
      10.
            DIRECTORS, EXECUTIVE OFFICERS,
      PROMOTERS, CONTROL PERSON AND CORPORATE GOVERNANCE; COMPLIANCE WITH
      SECTION 16(a) OF THE EXCHANGE
ACT





COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT





Section
16(a) of the Securities Exchange Act of 1934 requires our officers, directors
and persons who own more than 10% of a registered class of our equity securities
to file reports of ownership and changes in ownership with the SEC and Nasdaq.
Officers, directors, and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on our review of copies of the Section 16(a) reports filed
for the fiscal year ended March 31, 2008, we believe that all filing
requirements applicable to its officers, directors, and greater than 10%
beneficial owners were complied with.





DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS





The
following table sets forth certain information with respect to the executive
officers of the Company for fiscal 2008 to the present.


13
 Table of Contents





Name
            Age
            PositionLarry
      F. Vance
            73
            Chairman
      and Chief Executive OfficerTami
      J Story
            45
            Director
      Secretary/Treasurer/Director





(1)
            Effective April, 1985, Mr. Vance
      was appointed as Chief Executive Officer of the
      Company.


(2)
            Effective April, 1993, Ms. Story
      was appointed as Secretary and Treasurer of the
      Company.





Certain
additional information concerning the individuals named above is set forth
below. This information is based on information furnished to us by each
individual noted.





Larry F.
Vance served as Chief Executive Officer of the Company from April 1985. Since
April 8, 1995, Mr. Vance has served as Chairman of the Company. Mr. Vance is
also a director of the Company and has been a full-time employee of the Company
since 1985. Mr. Vance’s training is in business and marketing. He served in a
management capacity for the 3M companies, IBM, and Computer Usage Corporation
prior to founding the Company.





Tami J.
Story, Secretary, Treasurer and Director. Tami J. Story served in an
administrative support capacity for the Company from 1991 until April 1993.
Since April 1993, Ms. Story has served as Secretary and Treasurer of the
Company. Ms. Story also serves as a director of the Company. Ms. Story holds a
degree with a major in Nursing and a minor in Business
Administration.





Family
Relationships





There are
no family relationships between or among the directors, executive officers or
persons nominated or charged by us to become directors or executive
officers.





Involvement In Legal
Proceedings





To the
best of our knowledge, during the past five years, none of the following
occurred with respect to a present or former director or executive officer of
the Company: (1) any bankruptcy petition filed by or against such person
or any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that
time; (2) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses); (3)
being subject to any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of any competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; and (4) being found
by a court of competent jurisdiction (in a civil action), the SEC or the
Commodities Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or vacated.





Code of
Ethics





The
Company has adopted a code of ethics. The Company will provide to any person
without charge, upon request, a copy of its code of ethics upon written request
to our corporate headquarters or request emailed to
earthsrch@aol.com.





Board of Directors
      Meetings and Subcommittees





Meetings





Our Board
of Directors held several meetings during the fiscal year ended March 31, 2008.
All board actions were completed through unanimous written
consents.





Audit
      Committee and Financial Expert





Our Board
of Directors does not have a separate audit committee. The Board has determined
that it does not have a member of its Board that qualifies as an “audit
committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation
S-B.


14
 Table of Contents


To
strengthen our controls, we have retained the services of an outside consultant,
HF Services LLC to assist with quarterly and annual reviews of our accounting
data.





Compensation
Committee





As all
our executive officers are currently under employment agreements, we do not have
a separate compensation committee. At this point, we do not intend to establish
a separate compensation committee as this function will be performed by our full
Board of Directors.





Nominating
Committee





We do not
currently have a separate nominating committee as this function is performed by
our full Board of Directors.





Shareholder
Communication





We
communicate regularly with shareholders through press releases, as well as
annual and quarterly reports. Our Chief Executive Officer addresses investor
concerns on an on-going basis.





Interested
parties, including shareholders and other security holders, may communicate
directly with our Board of Directors or with individual directors by writing to
our Chief Executive Officer at 306 Stoner Loop Road, #6, Lakeside,
Montana 59922.





Securities Authorized for
Issuance under Equity Compensation Plans





For
information regarding securities authorized for issuance under Equity
Compensation Plans, and the equity compensation plan information table see Part
II, “Item 5: Market for Common Equity and Related Stockholder
Matters.”





ITEM 11.
            EXECUTIVE
      COMPENSATION





The
following table sets forth, for the years indicated, all compensation awarded
to, paid to or earned by the following type of executive officers for the fiscal
years ended March 31, 2008 and 2007: (i)individuals who served as, or acted in
the capacity of, our principal executive officer and principal financial officer
for the years ended March 31, 2008 and 2007; and (ii) our two other most highly
compensated executive officers, who together with the principal executive
officer are our most highly compensated officers whose salary and bonus exceeded
$100,000 with respect to the years ended March 31, 2007 and 2007 and who were
employed by us at March 31, 2008.


SUMMARY
COMPENSATION TABLE





Name
      and Principal Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)(3)
            
            Total
      Compensation ($)Larry
      Vance
              Chief
      Executive Officer
            
            2008
              2007
            
            160,000
      (1)
              160,000
      (1)
            
            0
              0
            
            0
              40,000
      (3)
            
            160,000
              200,000Tami
      J. Story
              Secretary
      Treasurer and Chief Financial Officer
            
            2008
              2007
            
            80,000
      (2)
              80,000
      (2)
            
            0
              0
            
            0
              40,000
      (3)
            
            80,000
              120,000





(1)
            The
      entire amount of Mr. Vance’s salary was accrued during the fiscal years
      2008 and 2007.


(2)
            The
      entire amount of Ms. Story’s salary was accrued during the fiscal years
      2008 and 2007. During the 2008 fiscal year, Ms. Story was paid $10,500 in
      accrued salaries earned in prior
periods.


(3)
            In
      fiscal year 2007, each of Mr. Vance and Ms. Story received 400,000 shares
      of our common stock valued at $0.10 per share as compensation for serving
      as a director of the Company.





Outstanding Equity Awards at
Fiscal Year End





There
were no outstanding equity awards held by our officers at March 31,
2008.





Director
      Compensation





The Company does not
currently have any non-employee directors; neither director was paid
compensation for services as a director
for the fiscal year ended March 31, 2008.




15
 Table of Contents




Employment
Contracts





In
October 28, 2000, the Company entered into an employment agreement with Mr.
Larry Vance. Pursuant to the agreement, the Company will pay Mr. Vance an annual
salary of $160,000. In the event of termination of Mr. Vance without cause or
due to a change in control, the Company will pay Mr. Vance two years of annual
salary. Mr. Vance’s options and vesting criteria are described above and in Note
8 to the attached consolidated financial statements. The term of this agreement
is four years. On October 28, 2004 the Company extended the employment
agreement with Mr. Vance for an additional four years.





On
October 28, 2000, the Company entered into an employment agreement with Ms. Tami
Story. Pursuant to the agreement, the Company will pay Ms. Story an annual
salary of $80,000. In the event of termination of Ms. Story without cause or due
to a change in control, the Company will pay Ms. Story two years of annual
salary. Ms. Story ’s options and vesting criteria are described above and in
Note 8 to the attached consolidated financial statements. The term of this
agreement is four years. On October 28, 2004 the Company extended the
employment agreement with Ms. Story for an additional four
years.


16
 Table of Contents


ITEM 12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
  MANAGEMENT





The
following table sets forth certain information regarding ownership of the
Company’s Common Stock as of March 31, 2008 by each person known by the Company
to own beneficially more than five percent of the Common Stock and by all
directors and officers and as a group:




Name
      and address of beneficial owner
            
            Amount
      and nature of beneficial ownership (1)
            
            Percent
      of classLarry
      Vance
            
            55,060,644
      (2)
            
            74
      %P.O.
      Box 763Lakeside,
      MT 59922Tami
      Story
            
            10,338,389
            
            16%P.O.
      Box 763Lakeside,
      MT 59901All
      directors and officers
            
            65,399,033
            
            90%




___________________________


(1)           Pursuant
to the rules and regulations of the Securities and Exchange Commission, shares
of common stock that an individual or group has a right to acquire within 60
days pursuant to the exercise of options or warrants are deemed to be
outstanding for the purposes of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purposes of
computing the percentage ownership of any other person shown in the table. All
shares are held directly with sole voting and investment power unless otherwise
indicated.


(2)           Includes
4,439 shares held by Universal Search Technology, a private company owned by Mr.
Vance.





ITEM 13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE




In
February 2007, Larry Vance and Tami Story, officers of the Company, together
agreed to loan the Company $500,000. $170,000 of the net loan proceeds were
received in March 2007 and the balance was received April 2007. The loan, along
with accrued interest, is due February 26, 2008 and carries a 15% annual
interest rate, compounded monthly. The loan is secured by 10,000,000 shares of
the Company's common stock.





None of
our directors are independent, as determined under the rules of
Nasdaq.





ITEM 14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES





The
following table presents fees, including reimbursements for expenses, for
professional audit services rendered by Malone & Bailey for the audits of
our annual financial statements and interim reviews of our quarterly financial
statements for the years ended March 31, 2008 and March 31, 2007 and fees billed
for other services rendered by Malone & Bailey during those
periods.




Fiscal
      2008
            
            
            Fiscal
      2007Audit
      Fees (1)
            
            $
            54,215
            
            
            $
            50,000Audit
      Related Fees
            
            $
            0
            
            
            $
            0Tax
      Fees
            
            $
            0
            
            
            $
            0All
      Other Fees
            
            $
            20,000
            
            
            $
            0Total
            
            $
            74,215
            
            
            $
            50,000








Policy Related to Board of
Directors Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Accounting Firm





As we do
no currently have an audit committee, our Board of Directors has a policy of
pre-approving all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related
services, tax services, and other services. Pre-approval is generally provided
for up to one year and any pre-approval is detailed as to the particular service
or category of services and is generally subject to a specific budget. The
independent auditors and management are required to periodically report to the
Board of Directors regarding the extent of services provided by the independent
auditors in accordance with this pre-approval, and the fees for the services
performed to date. The Board of Directors may also pre-approve particular
services on a case-by-case basis.


17
 Table of Contents


ITEM 15.      
EXHIBITS, FINANCIAL STATEMENT SCHEDULES




(a)(1) and (2)




Consolidated
      Balance Sheets as of March 31, 2008
            F-3Consolidated
      Statements of Operations for the years endedMarch
      31, 2008 and 2007
            F-4Consolidated
      Statements of Cash Flows for the years endedMarch
      31, 2008 and 2007
            F-5Consolidated
      Statement of Changes in Stockholders’ Deficit for the years ended March
      31, 2008 and 2007
            F-6Notes
      to consolidated financial statements
            F-7
      – F-12








2.1
            Agreement
      and Plan of Merger by and among Earth Search Sciences, Inc., ESS
      Acquisition Corp., Space Technology Development Corporation and the
      shareholders of Space Technology Development Corporation, dated December
      21, 1999 (Incorporated by reference to Exhibit 2.1 to the Registrant's
      Form 10-K for fiscal year ended March 31, 2000).3.1
            Articles
      of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 to
      the Registrant's Forms 10-K for the fiscal years ended March 31, 1995 and
      March 31, 1996).3.2
            Bylaws
      (Incorporated by reference to Exhibit 3.2 to the Registrants’ Form 10-K
      for the fiscal year ended March 31, 1995).4.1
            2007
      Stock Compensation Plan (Incorporated by reference to Exhibit 4.1 to the
      Registrants’ Form S-8 Registration No. 333-146798 filed on October 18,
      2007 ).10.1
            Memorandum
      of Understanding between the Registrant and Applied Signal and Imaging
      Technology, Inc. dated May 27, 1996 (Incorporated by reference to Exhibit
      10.1 to the Registrant's Form 10-K for fiscal year ended March 31,
      1996).10.2
            Contract
      of Sale and Leaseback dated June 10, 1997 between Registrant and
      Accuprobe, Inc. (Incorporated by reference to Exhibit 10.2 to the
      Registrant's Form 10-K for fiscal year ended March 31,
    2000).10.3
            Operating
      Agreement of ESSI Probe 1 LC, dated June 3, 1997 (Incorporated by
      reference to Exhibit 10.3 to the Registrant's Form 10-K for fiscal year
      ended March 31, 2000).10.4
            Hyperspectral
      Technology License Agreement between Earth Search Sciences, Inc. and
      Noranda Mining and Exploration, Inc. made as of December 16, 1997
      (Incorporated by reference to the Registrant’s for 8-K filed on February
      6, 1998).10.5
            Agreement
      between the Office of Naval Research and Space Technology Development
      Corporation Agreement for NAVY EARTHMAP OBSERVER (NEMO) dated December 10,
      1997 (Incorporated by reference to Exhibit 10.5 to the Registrant's Form
      10-K for fiscal year ended March 31, 2000).10.6
            Sales
      Contract between Science Applications International Corp. and Space
      Technology Development Corp. Dated: 30 March 1998, Contract No.:
      STDC-98-NEMO-0003 (Incorporated by reference to Exhibit 10.6 to the
      Registrant's Form 10-K for fiscal year ended March 31,
    2000).10.7
            Sales
      Contract between Science Applications International Corp. and Space
      Technology Development Corp. Dated: 30 March 1998, Contract No.:
      STDC-98-NEMO-004 (Incorporated by reference to Exhibit 10.7 to the
      Registrant's Form 10-K for fiscal year ended March 31,
    2000).10.8
            Sales
      Contract between Space Systems/Loral (SS/L) and Space Technology
      Development Corporation (STDC). Dated 21 January 1999, Contract Number:
      STDC-98-NEMO-0001 (Incorporated by reference to Exhibit 10.8 to the
      Registrant's Form 10-K for fiscal year ended March 31,
    2000).10.9
            Sales
      Contract between Litton Systems, Inc., Amecom Division (Litton Amecom) and
      Space Technology Development Corp. (STDC). Date 29 October 1998, Contract
      Number: STDC-98-NEMO-0009 (Incorporated by reference to Exhibit 10.9 to
      the Registrant's Form 10-K for fiscal year ended March 31,
      2000).




18
 Table of Contents




10.10
            Common
      Stock Purchase Agreement between Alpha Venture Capital, Inc. and Earth
      Search Sciences, Inc.. Dated May 23, 2001. (Incorporated by reference to
      Exhibit 10.10 to the Registrant's Form 10-K for fiscal year ended March
      31, 2001).10.11
            Registration
      Rights Agreement between Alpha Venture Capital, Inc. and Earth Search
      Sciences, Inc.. Dated May 23, 2001. (Incorporated by reference to Exhibit
      10.11 to the Registrant's Form 10-K for fiscal year ended March 31,
      2001).10.12
            Common
      Stock Purchase Warrant A between Alpha Venture Capital, Inc. and Earth
      Search Sciences, Inc. Dated May 23, 2001. (Incorporated by reference to
      Exhibit 10.12 to the Registrant's Form 10-K for fiscal year ended March
      31, 2001).10.13
            Common
      Stock Purchase Warrant B between Alpha Venture Capital, Inc. and Earth
      Search Sciences, Inc. Dated May 23, 2001. (Incorporated by reference to
      Exhibit 10.13 to the Registrant's Form 10-K for fiscal year ended March
      31, 2001).10.14
            Larry
      F. Vance employment agreement (Incorporated by reference to Exhibit 10.1
      to the Registrant's Form 10-Q for fiscal quarter ended December 31,
      2000).10.15
            John
      W. Peel employment agreement (Incorporated by reference to Exhibit 10.2 to
      the Registrant's Form 10-Q for fiscal quarter ended December 31,
      2000).10.16
            Rory
      J. Stevens employment agreement (Incorporated by reference to Exhibit 10.3
      to the Registrant's Form 10-Q for fiscal quarter ended December 31,
      2000).10.17
            Tami
      J. Story employment agreement (Incorporated by reference to Exhibit 10.4
      to the Registrant's Form 10-Q for fiscal quarter ended December 31,
      2000).10.18
            John
      J. Sciuto employment agreement (Incorporated by reference to Exhibit 10.18
      to the Registrant's Form 10-K for fiscal year ended March 31,
      2001).10.19
            Unrestricted
      License Agreement for Recovery of Products from Oil Shale bgetween GENERAL
      SYNSFUELS INTERNATIONAL and PETRO PROBE, INC. (Incorporated by reference
      to Exhibit 10.19 to the Registrant’s Form 10KSB for the fiscal year ended
      March 31, 2007).10.20
            Multi-platform
      HyperSpectral imaging "Micro Sectrometer" Development Proposal Number
      05080901. (Incorporated by reference to Exhibit 10.19 to the Registrant’s
      Form 10KSB for the fiscal year ended March 31, 2007).10.21
            Promissory
      Note due February 2008, dated February 2007. (Incorporated by
      reference to Exhibit 10.19 to the Registrant’s Form 10KSB for the fiscal
      year ended March 31, 2007).10.22
            Equipment
      Usage Agreement dated June 3, 1997, filed herewith.16.1
            Consent
      of Independent accountants re Registration Statement on Form No. S-1 (No.
      333-66100). (Incorporated by reference to Exhibit 16.1 to the Registrant’s
      form 10-K for fiscal year ended March 31, 2004).16.2
            Statement
      under oath of Principal Executive Officer and Principal Financial Officer
      regarding facts and circumstances relating to exchange act filings.
      (Incorporated by reference to Exhibit 16.2 to the Registrant’s form 10-K
      for fiscal year ended March 31, 2004).21.1.1
            List
      of Subsidiaries (Incorporated by reference to Exhibit 21.1.1 to the
      Registrant's Form 10-K for fiscal year ended March 31,
    2000)




19
 Table of Contents




23.1
            Consent
      of Malone & Bailey, filed herewith31.1
            Certification
      of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities
      Exchange Act of 1934, filed herewith31.2
            Certification
      of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities
      Exchange Act of 1934, filed herewith32.1
            Certification
      of Chief Executive Officer Pursuant to 18 U.S.C Section 1350, filed
      herewith32.2
            Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, filed
      herewith







SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.





EARTH
      SEARCH SCIENCES, INC.By:
      /s/ Larry F.
      VanceLarry
      F. VanceChief
      Executive OfficerDate:





Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.








Signature
            Title/s/Larry F.
      Vance
            Chairman,
      Chief Executive Officer and DirectorLarry
      F. Vance
            (Principal
      Executive Officer)Date:  July
      1, 2008/s/Tami J.
      Story
            Corporate
      Secretary, Treasurer, Chief Financial Officer and
  DirectorTami
      J. Story
            (Principal
      Financial Officer)Date:  July
      1, 2008






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