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,
2009
 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 jurisdiction of
      incorporation)
                    
                    (I.R.S. Employer Identification
      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 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    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  
   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.
 
 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
              
                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  
 
 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 (104,256,473
shares) was approximately $2,085,129, based on the average closing bid and ask
price of $0.02 for such common equity as of March 31, 2009.
 
 As of June 26, 2009, there were
194,655,705 outstanding shares of the issuer’s Common Stock, par value
$0.001.
 
 Transitional Small Business Disclosure
Format (check one):
Yes     No  
   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
                                  7Item
      2 -
                                  Properties
                                  7Item
      3 -
                                  Legal
      Proceedings
                                  7Item
      4 -
                                  Submission
      of Matters to a Vote of Security Holders
                                  7PART
      II
                                  
                                  8Item
      5 -
                                  Market
      for the Registrant's Common Stock Equity and Related
      Shareholder Matters
                                  8Item
      7 -
                                  Management's
      Discussion and Analysis or Plan of Operations
                                  10Item
      8 -
                                  Financial
      Statements
                                  F1 - F13Item
      9 -
                                  Changes
      in and Disagreements with Accountants on Accounting
      and Financial Disclosure
                                  24Item 9A(T)
                                  Controls
      and Procedures
                                  24Item
      9B -
                                  Other
      Information
                                  25PART
      III
                                  
                                  26Item
      10 -
                                  Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance With Section 16(a)
      of the Exchange Act
                                  26Item
      11 -
                                  Executive
      Compensation
                                  28Item
      12 -
                                  Security
      Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters
                                  29Item
      13 -
                                  Certain
      Relationships and Related Transactions, and Director
      Independence
                                  30Item
      14 -
                                  Principal
      Accountant Fee and Services
                                  30Item
      15 -
                                  Exhibits,
      Financial Statement Schedules
                                  31SIGNATURES
                                  34
 
 
 
  3
  
 
 PART I
 
 ITEM
1. BUSINESS
 Earth Search Sciences, Inc. (ESSI) was
incorporated in 1984 in Utah.  We did not generate any revenue during
fiscal year 2009, have no current business operations and are currently focused
on two potential business ventures.
 
 First, we
are working with certain investors to develop and employ technology in the
extraction of oil and gas from oil shale. During the third quarter ESSI acquired
General Synfuels International, Inc, owner of the world-wide proprietary rights,
patent, technology, construction plans and materials and operational capability
for a gasification process to recover the oil and gas from oil shale. GSI has
begun to refine the design and begin development of our proof of concept
prototype.  However, the current state of the financial markets has
negatively impacted our ability to raise the additional funds necessary to
complete our prototype.  Our current plan is to begin a field test of
this technology as early as the fourth quarter of 2009 and subsequent commercial
development as early as 2011.  Additionally we have secured oil shale
land in both Wyoming and Colorado.
 
 GSI
continues to develop additional patents related to our technology and as part of
that process we are exploring a tar sands and carbon sequestration
application.  We anticipate the tar sands application to be used
internationally.
 
 Second,
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, 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.
 
 Exploitation of Oil and Gas from Oil
Shale
 On August
15th
of 2008 ESSI acquired all of the outstanding shares of General Synfuels
International, Inc. (GSI), an entity controlled by certain management and
directors of ESSI. This transaction was accounted for as an asset purchase due
to the fact that GSI was dormant, did not have customers or employees and only
held certain proprietary rights, patent, technology and construction plans for a
gasification process to recover the oil and gas from oil shale.  In
addition, the asset was recorded at its historical cost due to the fact that
this transaction was between entities under common control. Prior to the
acquisition, both entities were controlled by certain members of
management.  The $5,494,700 value in excess of the historical cost of
the asset was recorded as compensation expense.
 
 ESSI paid
the individual GSI Shareholders $5,500,000: 33,333,333 shares of common stock
valued at $3,000,000 based on the closing price of ESSI’s stock on the date of
the transaction; and $2,500,000 in the form of promissory notespayable to the GSI shareholders in five
equal payments of $500,000.  ESSI is currently negotiating a change in
the payment terms of the notes at ESSI’s election, each promissory note
payable can be converted into ESSI common stock at a 40% discount to the average
trading price of ESSI common stock 5 days prior to the emission of
payment.  Because this transaction was between related parties, the
patent asset was recorded at its historical cost of $5,300 and the remaining value of
$5,494,700 was recorded as compensation expense for the period ended September
30, 2008, as the shareholders didn’t contribute any additional assets, tangible
or intangible of value.ESSI has also entered into a Consulting Agreement
with each of the GSI Shareholders.  The GSI Shareholders are Ken
Danchuk, Ron McQueen and Larry Vance.
 
 Due to
the current market conditions and fund raising environment ESSI is currently in
negotiations with the GSI acquisition note holders to restructure the promissory
notes.  These notes are currently in default.
 
 GSI has
secured private oil shale sites in Colorado and Wyoming for a test
plant.  Although delayed GSI has started the process of applying for a
Bureau of Land Management R&D oil shale lease.  The test plant is
budgeted for approximately $8 million as a first stage development
cost.  The purpose of this plant is to prove the
technology.
 
 We have
engaged Industrial Systems, Inc. (ISI) as the primary engineering and
fabrication firm supporting our Oil Shale Recovery Project. ISI is strategically
located and has the growth potential needed to support our future commercial
developments.  During the year ending March 31, 2009 we capitalized
approximately $915,000 in payments to ISI, in the form of deposits, related to
the development of our oil shale gasification prototype.  The deposits
were used to fund design and construction costs incurred during the period ended
March 31, 2009.  Once the prototype is complete, further investment
will be required for commercial production.
 
 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.
 
 Other
 Employees
 As of March 31, 2009, we had 4 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 (Oil shale
development).  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 oil shale industry is currently
evolving with many large and small competitors developing processes of their
own.  The Company may face significant competition from these
competitors.  Additionally our technology is very early stage and
there is no guarantee that it will produce oil in the quantity at the price we
anticipate.  The Company will need to expend significant capital to
develop and commercialize our oil shale technology.  The Company may
not be able to raise the necessary capital required to move our technology
forward due to the current economic environment.
 
 The Company may need to expend
significant capital to keep pace with technological developments in the remote
sensing industries.  The remote sensing industry 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 hire and train 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.
 
 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.
 
 Risks Related to Our
Business
 The Company may not realize our
anticipated return on capital commitments made to expand our capabilities in
both of our focus industries.  The company has expended capital in the
development of our oil shale extraction technology prototype.  If the
Company is unable to raise additional capital to complete development of your
prototype or testing of the technology does not produce the anticipated results,
the company may not generate revenues from this endeavor.
 
 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 were no prospects
for new oil and gas contracts from existing properties in fiscal
2009.
 
 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
customer’s 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
 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 continues 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 did
not increase as of March 31, 2009 compared to the March 31, 2008
balance.
 
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
 None.
 
  7
  
 
 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,
    2007
                .06
                .06September 30,
      2007
                .07
                .06December 31,
      2007
                .16
                .15March 31,
    2008
                .24
                .16June 30,
    2008
                .09
                .04September 30,
      2008
                .13
                .05December 31,
      2008
                .07
                .01March 31,
    2009
                .02
                .00
 
 (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, 2009 was approximately 1,257. 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
  
 Recent Sales of Unregistered
Securities
 
 Date
                      
                      Amount of Securities
      Sold
                      
                      Price per Share
      ($)
                      
                      Total Cash Proceeds
      ($)
                      
                      
                      
                      Date
                      
                      Amount of Securities
      Sold
                      
                      Price per Share
      ($)
                      
                      Total Cash Proceeds
      ($)3/13/2007
                      
                      11,400,000
                      
                      $0.10
                      
                      $1,140,000
                      
                      (1)
                      
                      3/15/2007
                      
                      250,000
                      
                      $0.10
                      
                      $25,000
                      (1)3/16/2007
                      
                      90,750
                      
                      $0.10
                      
                      $9,075
                      
                      (1)
                      
                      3/28/2007
                      
                      2,500,000
                      
                      $0.10
                      
                      $250,000
                      (2)3/31/2007
                      
                      800,000
                      
                      
                      
                      
                      
                      (3)
                      
                      4/18/2007
                      
                      65,000
                      
                      $0.40
                      
                      $26,000
                      (2)4/27/2007
                      
                      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)4/14/2008
                      
                      1,000,000
                      
                      $0.06
                      
                      $62,000
                      
                      (1)
                      
                      5/9/2008
                      
                      392,736
                      
                      $0.06
                      
                      $2
                      (1)5/9/2008
                      
                      1,694,418
                      
                      $0.08
                      
                      $128,868
                      
                      (6)
                      
                      5/12/2008
                      
                      14,472
                      
                      $0.08
                      
                      $1,101
                      (6)5/12/2008
                      
                      582,770
                      
                      $0.05
                      
                      $29,131
                      
                      (1)
                      
                      6/10/2008
                      
                      3,000,000
                      
                      $0.03
                      
                      $95,000
                      (4)6/11/2008
                      
                      5,000,000
                      
                      $0.05
                      
                      $250,000
                      
                      (4)
                      
                      6/19/2008
                      
                      2,841,667
                      
                      $0.06
                      
                      $170,500
                      (1)7/7/2008
                      
                      7,500,000
                      
                      $0.04
                      
                      $300,000
                      
                      (4)
                      
                      7/7/2008
                      
                      2,000,000
                      
                      $0.06
                      
                      $120,000
                      (1)7/14/2008
                      
                      368,228
                      
                      $0.08
                      
                      $27,617
                      
                      (1)
                      
                      7/14/2008
                      
                      1,250,000
                      
                      $0.04
                      
                      $50,000
                      (4)7/22/2008
                      
                      350,877
                      
                      $0.05
                      
                      $17,544
                      
                      (6)
                      
                      7/22/2008
                      
                      400,001
                      
                      $0.06
                      
                      $24,800
                      (6)7/29/2008
                      
                      6,779,999
                      
                      $0.08
                      
                      $508,500
                      
                      (4)
                      
                      8/8/2008
                      
                      625,000
                      
                      $0.09
                      
                      $56,250
                      (1)8/8/2008
                      
                      1,200,000
                      
                      $0.05
                      
                      $60,000
                      
                      (4)
                      
                      8/15/2008
                      
                      34,753,788
                      
                      $0.09
                      
                      $3,127,841
                      (5)9/26/2008
                      
                      229,906
                      
                      $0.06
                      
                      $14,254
                      
                      (6)
                      
                      9/26/2008
                      
                      2,463,672
                      
                      $0.07
                      
                      $172,457
                      (1)10/6/2008
                      
                      1,397,773
                      
                      $0.06
                      
                      $83,866
                      
                      (1)
                      
                      11/5/2008
                      
                      2,608,844
                      
                      $0.03
                      
                      $78,265
                      (1)12/10/2008
                      
                      2,160,087
                      
                      $0.02
                      
                      $45,362
                      
                      (1)
                      
                      12/10/20088
                      
                      312,504
                      
                      $0.06
                      
                      $19,375
                      (6)12/10/2008
                      
                      759,230
                      
                      $0.05
                      
                      $34,925
                      
                      (6)
                      
                      2/10/2009
                      
                      6,000,000
                      
                      $0.01
                      
                      $72,000
                      (1)
  (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.
 (5)
Shares issued in connection with the acquisition of assets from the shareholders
of General Synfuels International.
 (6)
Shares issued for stock payable.
 
 
 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, 2009 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.
 
 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))Plan
    category
                            
                            (a)
                            
                            (b)
                            
                            (c)Equity compensation plans approved
      by security holders
                            
                            -
                            
                            -
                            
                            -Equity compensation plans not
      approved by security holders
                            
                            -
                            
                            -
                            
                            14,076,743Total
                            
                            -
                            
                            -
                            
                            14,076,743
 
 
 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 from
our Hyperspectralremote sensing in fiscal year 2009 and
2008.
 
 General and administrative costs were
$7,737,533 in fiscal year 2009 compared with $1,454,008 in 2008. This increase
was primarily due to the acquisition of all of the outstanding shares of General
Synfuels International, Inc. (GSI) an entity controlled by certain management
and directors of ESSI.  This transaction was accounted for as an asset
purchase due to the fact GSI was dormant.  The $5,494,700 value in
excess of the historical cost of the asset was recorded as compensation
expense.
 
 Interest expense was $654,867 in fiscal
year 2009 compared to $520,850 in 2008. Our interest expense primarily consists
of interest from our notes payable and related party debt.
 
 Late fees related to settlement
agreement were zero in fiscal year 2009 compared to $3,043,230 in fiscal year
2008.  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 did
not increase as of March 31, 2009 compared to the March 31, 2008
balance.  ESSI continues to work for a resolution to this
obligation.
 
 We recognized a net loss of $8,496,248
in fiscal year 2009 compared with a net loss of $5,106,887 in
2008.  This significant change in income was due primarily to the
acquisition cost of $5,494,700 for GSI in fiscal 2009, discussed in Liquidity
and Capital Resources.
  Liquidity and Capital
Resources
 At March 31, 2009, we had $70,618 of
cash and cash equivalents and a working capital deficit of
$18,570,363.  During fiscal year 2009, we used $832,476 in operating
activities, resulting primarily from payments for salaries,
services.  Net cash used in operating activities was $452,202 in
2008
 
 On August
15th
of 2008 ESSI acquired all of the outstanding shares of General Synfuels
International, Inc. (GSI), an entity controlled by certain management and
directors of ESSI.  This transaction was accounted for as an asset
purchase due to the fact that GSI was dormant, did not have customers or
employees and only held certain proprietary rights, patent, technology and
construction plans for a gasification process to recover the oil and gas from
oil shale.  In addition, the asset was recorded at its historical cost
due to the fact that this transaction was between entities under common
control.  Prior to the acquisition, both entities were controlled by
certain members of management, who were also shareholders and/or
Directors.  The $5,494,700 value in excess of the historical cost of
the asset was recorded as compensation expense.
 
 ESSI paid
the individual GSI Shareholders $5,500,000: 33,333,333 shares of common stock
valued at $3,000,000 based on the closing price of ESSI’s stock on the date of
the transaction; and $2,500,000 in the form of promissory notespayable to the GSI shareholders in five
equal payments of $500,000.  ESSI is currently negotiating a
restructuring of terms.At ESSI’s election, each promissory note payable
can be converted into ESSI common stock at a 40% discount to the average trading
price of ESSI common stock 5 days prior to the emission of
payment.  Because this transaction was between related parties, the
patent asset was recorded at its historical cost of $5,300 and the remaining value of
$5,494,700 was recorded as compensation expense for the period ended September
30, 2008, as the shareholders didn’t contribute any additional assets, tangible
or intangible of value.
 
 In addition, ESSI evaluated the
conversion option of the promissory note under SFAS No. 133 and EITF 00-19 and
determined that the feature does not have characteristics of a liability because
the conversion is not at the note holder’s option.
 
 Net cashused by investing activities was
$770,000 in 2009 as compared to $0 in 2008, the increase in cash used in
investing is primarily due to deposit related to our oil shale recovery
prototype .
 
 Net cash provided by financing
activities was $1,664,273 in 2009 as compared to $437,841 in 2008 with the
increase due to increased cash from sales of our common stock totaling
$1,363,500 as well as proceeds from convertible notes of
$390,000.
 
 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 $7,841,381 and $4,601,086 for
the years ended March 31, 2009 and 2008, respectively and we have an accumulated
deficit of $71,838,024 and negative working capital of $18,570,363 as of March
31, 2009.  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.
 
 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.
 
  
  
 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, 2009
                      F-3Consolidated Statements of
      Operations for the years ended March 31, 2009 and
    2008
                      F-4Consolidated Statement of Changes
      in Stockholders’ Deficit for theyears ended
      March 31, 2009 and 2008
                      F-5Consolidated Statements of Cash
      Flows for the years ended March 31, 2009 and 2008
                      F-6Notes to consolidated financial
      statements
                      F-7 –
  F-12
 
  F -
1
  
 
 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, 2009
and 2008, 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, 2009 and 2008, and the
results of its operations and its cash flows for each of the 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 for fiscal 2009 and 2008 and
has a working capital deficit as of March 31, 2009. These factors 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
 June 26, 2009
  F -
2
  
 EARTH SEARCH SCIENCES,
INC.
 CONSOLIDATED BALANCE
SHEETS
 
 March
31,2009
                                              
                                              
                                              2008ASSETSCurrent
    assets:Cash
                                              
                                              $
                                              70,618
                                              
                                              $
                                              8,821Prepaid
      expenses
                                              
                                              
                                              13,448
                                              
                                              
                                              -Loan costs, net of accumulated
      amortization of $258,003 and $229,987, respectively
                                              
                                              
                                              17,567
                                              
                                              
                                              45,583Total current
      assets
                                              
                                              
                                              101,633
                                              
                                              
                                              54,404Property and equipment, net
      accumulated depreciation of $1,040,180 and $936,332
      respectively
                                              
                                              
                                              102,247
                                              
                                              
                                              206,096Intangible asset –
      patents
                                              
                                              
                                              25,300
                                              
                                              
                                              -Deposits
                                              
                                              
                                              914,516
                                              
                                              
                                              -TOTAL
ASSETS
                                              
                                              $
                                              1,143,696
                                              
                                              $
                                              260,500LIABILITIESCurrent
      liabilities:Accounts
      payable
                                              
                                              $
                                              1,513,631
                                              
                                              $
                                              1,345,174Accounts payable – related
      parties
                                              
                                              
                                              389,968
                                              
                                              
                                              381,456Accrued
      expenses
                                              
                                              
                                              3,395,875
                                              
                                              
                                              2,902,027Current portion of notes
      payable
                                              
                                              
                                              2,128,440
                                              
                                              
                                              1,092,126Settlement
      obligation
                                              
                                              
                                              8,686,824
                                              
                                              
                                              8,686,824Current portion of notes payable –
      related parties
                                              
                                              
                                              2,557,258
                                              
                                              
                                              1,792,799Total current
      liabilities
                                              
                                              
                                              18,671,996
                                              
                                              
                                              16,200,406Long term portion of notes
      payable
                                              
                                              
                                              500,000
                                              
                                              
                                              -Long term portion of notes payable
      – related party
                                              
                                              
                                              500,000
                                              
                                              
                                              -Total
      liabilities
                                              
                                              $
                                              19,671,996
                                              
                                              $
                                              16,200,406Commitments and
      contingencies
                                              
                                              
                                              -
                                              
                                              
                                              -STOCKHOLDERS’
      DEFICITPreferred stock, 300,000,000
      shares authorized, none issued and outstanding
                                              
                                              
                                              -
                                              
                                              
                                              -Common stock, $.001 par value;
      300,000,000 shares authorized;194,655,705 and 106,969,733 shares issued
      and outstanding, respectively
                                              
                                              
                                              194,654
                                              
                                              
                                              106,970Additional paid-in
      capital
                                              
                                              
                                              53,315,070
                                              
                                              
                                              47,494,900Treasury
    stock
                                              
                                              
                                              (200,000)
                                              
                                              
                                              (200,000)Accumulated
      deficit
                                              
                                              
                                              (71,838,024)
                                              
                                              
                                              (63,341,776)Total stockholders’
      deficit
                                              
                                              
                                              (18,528,300)
                                              
                                              
                                              (15,939,906)TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIT
                                              
                                              $
                                              1,143,696
                                              
                                              $
                                              260,500
 
 See accompanying summary of accounting
policies   and notes to financial statements.
   F -
3
  EARTH SEARCH SCIENCES,
INC.
 CONSOLIDATED STATEMENTS OF
OPERATIONS
 
 Years Ended March
      31,2009
                              
                              2008Operating
      expensesLate fees related to settlement
      agreement
                              
                              
                              -
                              
                              
                              3,043,230Depreciation and
      amortization
                              
                              
                              103,848
                              
                              
                              103,848General and
      administrative
                              
                              
                              7,737,533
                              
                              
                              1,454,008Total
    expenses
                              
                              
                              7,841,381
                              
                              
                              4,601,086Loss from
      operations
                              
                              
                              (7,841,381)
                              
                              
                              (4,601,086)Other income
      (expense)Gain on settlement of
      debt
                              
                              
                              -
                              
                              
                              15,049Interest
      expense
                              
                              
                              (654,867)
                              
                              
                              (520,850)Net Loss
                              
                              $
                              (8,496,248)
                              
                              $
                              (5,106,887)Basic and
      diluted:Loss per
    share
                              
                              $
                              (0.05)
                              
                              $
                              (0.05)Weighted average common shares
      outstanding
                              
                              
                              161,287,904
                              
                              
                              99,689,137
  See accompanying summary of accounting
policies and notes to financial statements.
 
 
  F -
4
  
 EARTH SEARCH SCIENCES,
INC.
 CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS’ DEFICIT
 Years Ended March 31, 2009 and
2008
 
 
 Common
                                                  Shares
                                                
                                                Stock Amount
                                                
                                                Additional Paid-in Capital
                                                
                                                Treasury Stock
                                                
                                                Subscription Receivable
                                                
                                                Accumulated Deficit
                                                
                                                TotalBalances 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)Issuance of common stock
      payable
                                                1,708,890
                                                
                                                
                                                1,708
                                                
                                                
                                                128,261
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                129,969Issuance of common stock
      for services
                                                25,913,750
                                                
                                                
                                                25,914
                                                
                                                
                                                1,153,844
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                1,179,758Issuance of common stock for
      cash
                                                26,729,999
                                                
                                                
                                                26,729
                                                
                                                
                                                1,336,771
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                1,363,500Issuance of common
      stock for GSI
                                                33,333,333
                                                
                                                
                                                33,333
                                                
                                                
                                                2,966,667
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                3,000,000Imputed
      interest
                                                
                                                
                                                
                                                
                                                
                                                
                                                234,627
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                234,627Net loss
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                (8,496,248
                                                )
                                                
                                                
                                                (8,496,248)Balances at March 31,
      2009
                                                194,655,705
                                                
                                                $
                                                194,654
                                                
                                                $
                                                53,315,070
                                                
                                                $
                                                (200,000
                                                )
                                                
                                                $
                                                -
                                                
                                                $
                                                (71,838,024
                                                )
                                                
                                                $
                                                (18,528,300)
  See accompanying summary of accounting
policies and notes to financial statements.
  
  F -
5
  
 EARTH SEARCH SCIENCES,
INC.
 CONSOLIDATED STATEMENTS OF
OPERATIONS
 Years Ended March 31, 2009 and
2008
 
 2009
                            
                            
                            2008CASH FLOWS FROM OPERATING
      ACTIVITIESNet loss
                            
                            $
                            (8,496,248)
                            
                            $
                            (5,106,887)Adjustments to reconcile net loss
      to cash used in operating activities:Depreciation and
      amortization
                            
                            
                            103,848
                            
                            
                            103,848Amortization of deferred finance
      costs
                            
                            
                            28,016
                            
                            
                            29,989Imputed
      interest
                            
                            
                            234,627
                            
                            
                            45,226Gain on settlement of
      debt
                            
                            
                            -
                            
                            
                            (15,049)Common stock issued for
      services
                            
                            
                            1,179,758
                            
                            
                            472,262Common stock issued for services
      related to the purchase of asset – General Synfuels
      Int.
                            
                            
                            2,994,700
                            
                            
                            -Payable issued for services
      related to the purchase of asset – General Synfuels
      Int.
                            
                            
                            2,500,000
                            
                            
                            -Changes in assets and
      liabilities:Accrued interest – related
      party
                            
                            
                            118,584
                            
                            
                            217,217Accounts payable and accrued
      expenses
                            
                            
                            511,231
                            
                            
                            542,153Accounts payable – related
      party
                            
                            
                            8,512
                            
                            
                            6,342Prepaid and other current
      assets
                            
                            
                            (15,504)
                            
                            
                            132Accrued settlement
      liability
                            
                            
                            -
                            
                            
                            3,252,565NET CASH USED IN OPERATING
      ACTIVITIES
                            
                            
                            (832,476)
                            
                            
                            (452,202)CASH FLOWS FROM INVESTING
      ACTIVITIESPatent
costs
                            
                            
                            (20,000)
                            
                            
                            -Cash paid for
      prototype
                            
                            
                            (750,000)
                            
                            
                            -NET CASH USED IN INVESTING
      ACTIVITIES
                            
                            
                            (770,000)
                            
                            
                            -CASH FLOWS FROM FINANCING
      ACTIVITIESProceeds from stockholder
      loans
                            
                            
                            103,000
                            
                            
                            341,500Payment on stockholder
      loans
                            
                            
                            (88,541)
                            
                            
                            (377,000)Proceeds from subscription
      receivable
                            
                            
                            -
                            
                            
                            250,000Financing
    costs
                            
                            
                            -
                            
                            
                            (47,347)Proceeds from issuance of common
      stock
                            
                            
                            1,363,500
                            
                            
                            385,000Proceeds from issuance of
      convertible notes
                            
                            
                            390,000
                            
                            
                            -Payment on short-term
      debt
                            
                            
                            (103,686)
                            
                            
                            -Payment on long-term
      debt
                            
                            
                            -
                            
                            
                            (114,312)NET CASH PROVIDED BY FINANCING
      ACTIVITIES
                            
                            
                            1,664,273
                            
                            
                            437,841NET DECREASE IN
      CASH
                            
                            
                            61,797
                            
                            
                            (14,361)CASH AT BEGINNING OF
      PERIOD
                            
                            
                            8,821
                            
                            
                            23,182CASH AT END OF
      PERIOD
                            
                            $
                            70,618
                            
                            $
                            8,821SUPPLEMENTAL CASH FLOW
      INFORMATION:Interest
    paid
                            
                            $
                            215,157
                            
                            $
                            68,481Taxes paid
                            
                            
                            -
                            
                            
                            -Non-cash financing and investing
      activities:Common stock issued for debt
      repayment
                            
                            $
                            -
                            
                            $
                            26,000Common stock for GSI – non
      compensation piece
                            
                            
                            5,300Capitalized prototype cost in
      accounts payable
                            
                            $
                            162,460
                            
                            
                            -Stock issued for vendor
      payable
                            
                            $
                            129,969
 See accompanying summary of
accounting policies and notes to financial statements.
  F -
6
   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 year ended March 31, 2007.
 
 We have five wholly-owned subsidiaries:
Skywatch Exploration, Inc., Polyspectrum Imaging, Inc., Geoprobe, Inc., STDC,
Inc., and General Synfuels International.  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 except General Synfuels International
are inactive.
 
 We did
not generate any revenue during fiscal year 2009 and 2008, and have no current
business operations.
 
 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.  Depreciation on our property and
equipment is recognized 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.
 
 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.
 
 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, 2009 and
2008, ESSI had no stock option issuances.
 
 RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS
 We do 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 $7,841,381 and
$4,601,086 for the years ended March 31, 2009 and 2008, respectively and we have
an accumulated deficit of $71,838,024 and negative working capital of
$18,570,363 as of March 31, 2009.  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, 2009:
 
 Life
                
                AmountAircraft
                10 years
                
                $
                925,795Equipment
                5 years
                
                
                216,3571,142,152Less: accumulated
      depreciation
                
                
                
                (1,039,905)Property and equipment,
      net
                
                
                $
                102,247
 
 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 $530,000.  We expect to
complete the repairs as our cash flows permit.
 
 Depreciation expense totaled $103,848 in
both fiscal 2009 and 2008.
 
 
 NOTE 4 – ACQUISITION OF ASSET FROM ENTITY
UNDER COMMON CONTROL
 On August
15th
of 2008 ESSI acquired all of the outstanding shares of General Synfuels
International, Inc. (GSI), an entity controlled by certain management and
directors of ESSI. This transaction was account for as an asset purchase due to
the fact that GSI was dormant, did not have customers or employees and only held
certain proprietary rights, patent, technology and construction plans for a
gasification process to recover the oil and gas from oil shale. In addition, the
asset was recorded at its historical cost due to the fact that this transaction
was between entities under common control. Prior to the acquisition, both
entities were controlled by certain members of management who were also
stockholders and or Directors. The $5,494,700 value in excess of the historical
cost of the asset was recorded as compensation expense.
 
 ESSI paid
the individual GSI Shareholders $5,500,000: 33,333,333 shares of common stock
valued at $3,000,000 based on the closing price of ESSI’s stock on the date of
the transaction; and $2,500,000 in the form of promissory notespayable to the GSI shareholders in five
equal payments of $500,000, commencing on the first business day of February
2009, and continuing on the first business day of each sixth calendar month
thereafter until paid.  These notes are currently in default
and ESSI is negotiating a restructuring of the notes which may entail a swap for
preferred equity. At ESSI’s election, each promissory note payable can be
converted into ESSI common stock at a 40% discount to the average trading price
of ESSI common stock 5 days prior to the emission of payment. Because this
transaction was between related parties, the patent asset was recorded at its
historical cost of $5,300 and the
remaining value of $5,494,700 was recorded as compensation expense for the
period ended December 31, 2008, as the shareholders didn’t contribute any
additional assets, tangible or intangible of value.
 
 In addition, ESSI evaluated the
conversion option of the promissory note under SFAS No. 133 and EITF 00-19 and
determined that the feature does not have characteristics of a liability because
the conversion is not at the note holder’s option.
 
 On August 15, 2008, ESSI entered into
three Consulting Agreements (the “Consulting Agreement”) with each of the GSI
Shareholders, Ken Danchuk, Larry Vance, and Ron McQueen.
 
 Under the terms of the Mr. Danchuk’s
Consulting Agreement, performed services for a period of six months and received
a fee of $125,000, $50,000 of which was paid upon the execution of the
agreement. The remaining $75,000 was paid in the form of a note payable, which
during the quarter ending March 31, 2009 the payment schedule was restructured
to provide for a stock payment valued at issuance of $12,000 and two cash
payments of $12,500 each.  The equity payment was paid in February,
2009 and one cash payment was made during February, 2009.  The
remaining cash payment of $12,500 was due on April 15, 2009 and was paid on that
date.Mr. Danchuk advised ESSI on the corporate requirements structure of
GSI so as to integrate GSI into a successful ESSI subsidiary company as well as
the selection and implementation of a new internet website and corporate
communication system.  Mr. Danchuk also assisted ESSI in the analysis,
planning and production of corporate executive planning documents.
 
 Pursuant to the terms of the Consulting
Agreement, Mr. Vance was to be paid $250,000 on December 31,
2008.  ESSI negotiated a stock payment valued at issuance of $60,000
as payment of this agreement.Mr. Vance advised ESSI in a
variety of areas, such as; the direction and strategy for successful mineral and
hydrocarbon exploration and exploitation, implementation of the oil shale
gasification technology, selection and preparation of superior oil and shale
land sites, and the highest and best use of the hyperspectral remote sensing
technology. Mr. Vance will also act in an executive managerial capacity as
required and hold the position of chairman of the technical Advisory Board for
ESSI.
 
 In August
2008, ESSI entered into a one year consulting agreement with Ron McQueen to
provide advice to ESSI in technical areas such as construction and installation
of the oil shale gasification technology. In consideration for services
rendered, Mr. McQueen received 1,420,455 shares of our common stock valued at
$127,841, which represents that market value on the date of grant. These shares
were issued effective as of the agreement date therefore we recorded expense of
$127,841 during the second quarter.
 
 
 NOTE 5 - Debt
 Notes payable consists of the
following:
 
 2009
                        
                        
                        2008Installment note payable,
      currently in default, secured by our assets, with interest at
      15%
                        
                        $
                        687,533
                        
                        $
                        747,656Installment note payable,
      currently in default, with interest at 15%
                        
                        
                        298,907
                        
                        
                        342,470GSI acquisition installment note
      payable, currently in default(see Note4)
                        
                        
                        2,500,000
                        
                        
                        -Convertible promissory notes,
      issued by GSI, with interest at 10%
                        
                        
                        479,000
                        
                        
                        -Other
                        
                        
                        2,000
                        
                        
                        2,000Total
                        
                        $
                        3,967,440
                        
                        $
                        1,092,126
 
 
 As of
March 31, 2009 ESSI had two outstanding installment notes with a 15% interest
rate both currently in default.  An extension of payment terms are
currently being negotiated for both loans.
 
 As of
March 31, 209 ESSI  had $2,500,000 outstanding in the form of
promissory notespayable to the
GSI shareholders in five equal payments of $500,000, commencing on the first
business day of February 2009, and continuing on the first business day of each
sixth calendar month thereafter until paid.  These notes are
currently in default and ESSI is negotiating a restructuring of the notes which
may entail a swap for preferred equity. At ESSI’s election, each promissory note
payable can be converted into ESSI common stock at a 40% discount to the average
trading price of ESSI common stock 5 days prior to the emission of
payment.
 
 As of March 31, 2009 our subsidiary
General Synfuels International issued 10% convertible promissory notes in the
amount of $479,000 of which $89,000 is due to the company from CEO Luis
Lugo.  These one year notes carry an automatic conversion into equity
of GSI equity, at a price equal to 70% of the purchase price per share paid by
equity investors, upon an equity financing in GSI of at least
$3,000,000.  If GSI is sold before conversion occurs an amount of 1.5
times the principal amount becomes due and payable.
 
 We evaluated the conversion option of
the promissory note under SFAS No. 133 and EITF 00-19.  Contracts that
are indexed in and potential settled in the stock of a subsidiary is excluded
from the scope of EITF 00-12.  Further, EITF 99-01 clarifies that debt
convertible into a stock of a consolidated subsidiary should be accounted for in
accordance with APB 14 since such instrument is not subject to SFAS No.
133.  APB14 states that no portion of the proceeds should be accounted
for as attributable to the conversion feature.  Therefore, these
instruments are not considered to be a derivative nor contain a beneficial
conversion feature.
 
 For the year ending March 31, 2009 and
2008, we recorded interest expense of $654,867 and $520,850,
respectively.
 
 
 NOTE 6 – RELATED
PARTIES
 We have 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%.  Stockholder loans totaled $1,718,258 and $1,792,799 and accrued
interest of $831,342 and $712,758 for 2009 and 2008,
respectively.
 
 
 NOTE 7 - ACCRUED OFFICERS'
COMPENSATION
 Accrued compensation consists of the
cumulative unpaid compensation due to four corporate officers (Chairman, Chief
Executive Officer, Chief Financial Officer and Secretary).  We
recorded officer compensation of $572,083 and $240,000 during fiscal 2009 and
2008, respectively, and included these amounts in general and administrative
expenses. Accrued officers’ compensation, including accrued interest and taxes,
totaled $1,824,235 and $1,377,486 for 2009 and 2008 respectively and is included
in accrued expenses.
  
 NOTE 8 - INCOME
TAXES
 ESSI recorded no provision for income
taxes in fiscal 2009 and 2008 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, 2009, deferred tax assets
consisted of the following:
 
 Deferred tax
      assets:Net operating
      losses
                  
                  $
                  9,064,882Less: valuation
      allowance
                  
                  
                  (9,064,882)Net deferred tax
      asset
                  
                  $
                  -
 
 The cumulative net operating loss
carry-forward is approximately $26,661,419 at March 31, 2009, and will expire in
the years 2016 through 2029. 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 9 - STOCK
OPTIONS
 For fiscal 2009 and 2008, 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, 2009.
 
 The following table summarizes the
employee stock option transactions described above:
 
 Shares under
      Option
                                  
                                  
                                  Weighted-average exercise
      priceBalance, March 31,
      2007
                                  
                                  
                                  28,125
                                  
                                  
                                  $
                                  1.31Options
    granted
                                  
                                  
                                  -Options
    expired
                                  
                                  
                                  (28,125
                                  )
                                  
                                  
                                  (1.31
                                  )Options
      exercised
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Balance, March 31,
      2008
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
 
 
 NOTE 10 – STOCK
TRANSACTIONS
  COMMON
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.  The 4,734,403 shares vest immediately and therefore
      $472,262 was expensed during the period.·
              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.
 
 During fiscal 2009, we
issued:
 ·
              25,913,750 shares of stock for
      services valued at $1,179,758 using the grant-date quoted price of the
      stock.  22,072,083 shares vest immediately and therefore
      $947,258 was expensed during the period.·
              26,729,999 shares of stock for
      cash of $1,363,500.·
              1,708,890 shares of stock valued
      at $129,969 for s stock payable pursuant to a consulting
      agreement.·
              33,333,333 shares of stock valued
      at $3,000,000 in connection with the acquisition of assets from the
      shareholders of General Synfuels
  International.
 
 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.”
 
 Stock Payable
 In September 2007, we retained a
consultant to provide accounting and reporting advice and oversight through a
one year consulting agreement which was not renewed. In consideration for
services rendered, the consultant received 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 proceeding 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. As of March 31, 2009 there was no liability accrued.
 
 
 NOTE 11 – 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 this 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 as
of March 31, 2009 was $8,686,824.
 
 
 NOTE 12 – 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 13 – DEPOSITS
 During fiscal year 2009, we recorded
$914,516 in deposits related to the development of a prototype related to the
oil shale gasification process acquired through GSI.  Of this amount,
$750,000 was paid during the year, with the balance of $162,460 recorded as
accounts payable, which represent a legel liability for work performed related
to the prototype.
 
 
 NOTE 14 - SUBSEQUENT
EVENTS
 In May 2009, our subsidiary General
Synfuels International issued 10% convertible promissory notes in the amount of
$250,000.
 
 
 
  F -
12
  
 
 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, 2009. 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:
 
 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, 2009, 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.
 
 Name
              Age
              PositionLarry F.
    Vance
              74
              ChairmanLuis Lugo
              40
              Chief Executive
      OfficerCharles
    Bridge
              42
              Chief Financial
      OfficerTami J
Story
              46
              Director
      Secretary/Treasurer/Director
 
 (1)
                Effective July, 2008, Mr. Lugo was
      appointed as Chief Executive Officer of the
  Company.(2)
                Effective September, 2008, Mr.
      Bridge was appointed as Chief Financial Officer of the
      Company.(3)
                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 to July 2008. 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.
 
 Luis Lugo served as Chief Executive
Officer of the company since July 2008.Mr. Lugo brings
substantial experience in oil, gas and other process industries. He previously
served as Director of Finance and Strategy for 3AG Distribution (Elf Aquitaine
Oil Lubricants Venezuela) and was involved in securing capital investment and in
developing the distribution system which helped the company achieve six percent
of the Venezuelan lubricants market in its first three years of
operations.   Mr. Lugo also served as Engagement Manager of
global chemicals and strategy practices for Arthur D. Little Management
Consulting and as Strategy Analyst for BP Amoco where he developed analytical
and financial modeling and valuation of acquisition targets for Latin America,
Europe and East Asia.   Mr. Lugo holds an MBA in International
Business Finance and an MA in International Economics from The George Washington
University in Washington D.C
 
 Charles G. Bridge has served as Chief
Financial Officer since September 1, 2008.Mr. Bridge brings a wealth of
experience connecting investors with viable corporate partners, raising capital
for corporate entities, and managing financial and corporate accounting, SEC and
NASD reporting, human resources, and corporate risk matters. Mr. Bridge has held
CFO positions in the investment and venture capital fields since
1997.  Mr. Bridge most recently served as Managing Director and Chief
Financial Officer with Brooke Private Equity Advisors in Boston where he helped
grow the firm to $800 million in assets under management. Prior to that, he
served as CFO for Boston Capital Ventures. Mr. Bridge was also CFO for Capital
Resource Advisors/Wellesley Group, Inc.  Mr. Bridge holds an M.B.A.
from Northeastern University and a B.S. from the University of
Maine.
 
 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, 2009. 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.
 
 To strengthen our controls, during a
portion of fiscal year 2009 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, 2009 and 2008:
(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,
2009 and 2008; 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, 2009 and 2008 and who were employed by us at March 31,
2009.
 SUMMARY COMPENSATION
TABLE
 
 Name and
      Principal Position
                
                Year
                
                Salary
                  ($)
                
                Bonus
                  ($)
                
                StockAwards
                  ($) (5)
                
                Total Compensation
      ($)Larry Vance
                  Chief Executive
      Officer
                
                2009
                  2008
                
                176,666 (1)
                  160,000 (1)
                
                0
                  0
                
                12,000
                  0
                
                188,666
                  160,000Luis Lugo
                
                2009
                
                180,000 (2)
                
                120,000 (2)
                
                0
                
                300,000Chief Executive
      Officer
                
                2008
                
                0
                
                0
                
                0
                
                0Charles
    Bridge
                
                2009
                
                116,667 (3)
                
                33,750 (3)
                
                0
                
                150,417Chief Financial
      Officer
                
                2008
                
                0
                
                0
                
                0
                
                0Tami J. Story
                  Secretary
      Treasurer
                
                2009
                  2008
                
                98,750 (4)
                  80,000 (4)
                
                0
                  0
                
                12,000
                  0
                
                110,750
                  80,000
 
 (1)
              The entire amount of Mr. Vance’s
      salary was accrued during the fiscal years 2009 and
      2008.  During the 2009 fiscal year, Mr. Vance was paid $35,000
      in accrued salaries earned in prior periods.(2)
              The entire amount of Mr. Lugo’s
      salary was accrued during the fiscal years 2009.   Mr.
      Lugo’s 2009 bonus was paid in stock.(3)
              The $50,332 of Mr. Bridge’s salary
      was accrued during the fiscal years 2009.   Mr. Bridge’s
      2009 bonus was paid in stock.(4)
              The entire amount of Ms. Story’s
      salary was accrued during the fiscal years 2008 and 2007. During the 2009
      fiscal year, Ms. Story was paid $24,000 in accrued salaries earned in
      prior periods.(5)
              In fiscal year 2009, each of Mr.
      Vance and Ms. Story received 200,000 shares of our common stock valued at
      $0.06 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, 2009.
 
 Director
Compensation
 The Company does not currently have any
non-employee directors; in fiscal year 2009, each of Mr. Vance and Ms. Story
received 200,000 shares of our common stock valued at $0.06 per share as
compensation for serving as a director of the Company.
 
 Employment Contracts
 On January 1, 2009, 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 $200,000. 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 January 1, 2009, 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 $125,000. 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 July 1, 2008, the Company entered
into an employment agreement with Mr. Luis Lugo. Pursuant to the agreement, the
Company will pay Mr. Vance an annual salary of $240,000. In the event of
termination of Mr. Lugo without cause or due to a change in control, the Company
will pay Mr. Lugo one year of annual salary.
 
 On September 1, 2008, the Company
entered into an employment agreement with Mr. Charles Bridge. Pursuant to the
agreement, the Company will pay Mr. Bridge an annual salary of $200,000. In the
event of termination of Mr. Bridge without cause or due to a change in control,
the Company will pay Mr. Bridge six months of annual salary.
 
 
 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,
2009 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
                
                65,075,302
    (2)
                
                72 %P.O. Box
763Lakeside,
      MT 59922Tami Story
                
                19,258,922
                
                21%P.O. Box
763Lakeside,
      MT 59901Luis Lugo
                
                3,250,000
                
                4%45B Water
      StreetNatick, MA
      01760Charles
    Bridge
                
                2,819,444
                
                3%30 Kaileys
    WayGroton, MA
      01450All directors and
      officers
                
                90,403,668
                
                100%
  ___________________________
 (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, 2009 and March 31, 2008 and fees billed for other services rendered by
Malone & Bailey during those periods.
  Fiscal 2009
                        
                        
                        Fiscal
  2008Audit Fees
    (1)
                        
                        $
                        61,769
                        
                        
                        $
                        54,215Audit Related
      Fees
                        
                        $
                        -
                        
                        
                        $
                        -Tax Fees
                        
                        $
                        -
                        
                        
                        $
                        -All Other
    Fees
                        
                        $
                        -
                        
                        
                        $
                        20,000Total
                        
                        $
                        61,769
                        
                        
                        $
                        74,215
 
 
 Policy Related to Board of Directors
Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Accounting Firm
 
 As we do not 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.
 
 
  
  
 ITEM
15.       EXHIBITS, FINANCIAL STATEMENT
SCHEDULES
 (a)(1) and (2)
  Consolidated Balance Sheets as of
      March 31, 2009
              F-3Consolidated Statements of
      Operations for the years ended March 31, 2009 and
    2008
              F-4Consolidated Statements of Cash
      Flows for the years ended March 31, 2009 and 2008
              F-5Consolidated Statement of Changes
      in Stockholders’ Deficit for the years ended March 31, 2009 and
      2008
              F-6Notes to consolidated financial
      statements
              F-7 –
  F-12
  (a)(3)
  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).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)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/Luis
      LugoLuis
LugoChief Executive
      OfficerDate: June 26,
      2009
 
 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/Luis
      Lugo
              Chief Executive Officer and
      DirectorLuis Lugo
              (Principal Executive
      Officer)Date:  June 26,
      2009/s/Charles G.
      Bridge Jr.
              Chief Financial
      OfficerCharles G. Bridge
      Jr.
              (Principal Financial
      Officer)Date:  June 26,
      2009