U. S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

_____________________________________________



FORM 10-QSB



(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2003

[    ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to ________



Commission File Number 0-12914

_________________________________________________

ENVIRONMENTAL ENERGY SERVICES, INC.

(Exact name of small business issuer as specified in its charter)



|Delaware
(State or other jurisdiction of incorporation or organization) | 43-1953030
(IRS Employer Identification No.)
|----------------------------------------------------------------------- | --------------------------------------------

205 S. Bickford Avenue, El Reno, Oklahoma 73036

(Address of Principal Executive Offices)

(405) 262-0800

(Issuer's telephone number)



Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



Check whether the issuer  (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  X    No  __



APPLICABLE ONLY TO CORPORATE ISSUERS



State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: as of June 2, 2003, the Registrant had outstanding 291,583,631 shares of its Common Stock, $0.001 par value, which excludes certain shares issued pursuant to the Nikko Litigation which have not been recognized as valid by the Registrant.  See "Part I, Item 1, Notes to Financial Statements, Note 12."



Environmental Energy Services, Inc. and Subsidiaries



FORM 10-QSB REPORT INDEX



|                                                                                              | Page No.                                                                                      
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|PART I.  FINANCIAL INFORMATION                                                                |                                                                                               
|Item 1.  Financial Statements (Unaudited)                                                     |                                                                                               
|                                                                                              | Consolidated Balance Sheet as of March 31, 2003                                               
|                                                                                              | Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2002      
|                                                                                              | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002      
|                                                                                              | Notes to Unaudited Consolidated Financial Statements for the Three Months Ended March 31, 2003
|Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operation | 11                                                                                            
|Item 3.   Controls and Procedures                                                             |                                                                                               
|PART II.  OTHER INFORMATION                                                                   | 12                                                                                            
|Item 1.  Legal Proceedings                                                                    | 12                                                                                            
|Item 2.  Changes in Securities                                                                | 12                                                                                            
|Item 3.  Defaults on Senior Securities                                                        | 12                                                                                            
|Item 4.  Submission of Matters to a Vote of Security Holders                                  | 12                                                                                            
|Item 5.  Other Information                                                                    | 12                                                                                            
|Item 6.  Exhibits and Reports on Form 8-K                                                     | 13                                                                                            
|Signatures                                                                                    | 13                                                                                            

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements



Environmental Energy Services, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEET

As of March 31, 2003 (Unaudited)



|ASSETS                                               |                        
|---------------------------------------------------- | -----------------------
|Current Assets:                                      |                        
|Cash                                                 | 57                     
|Total current assets                                 | 57                     
|                                                     |                        
|Fixed Assets:                                        |                        
|Total property, plant and equipment                  | 0                      
|                                                     |                        
|Other Assets:                                        |                        
|Marketable securities                                | 244,825                
|Investment in Royalty Agreement, net of amortization | 181,459                
|Investment - Gas and Oil Leases                      | 550,000                
|                                                     |                        
|Total other assets                                   | 976,284                
|                                                     |                        
|Total assets                                         | $               976,341





The accompanying notes are an integral part of these statements





Environmental Energy Services, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEET

As of March 31, 2003 (Unaudited)

|LIABILITIES AND STOCKHOLDERS EQUITY                                                                     |                        
|------------------------------------------------------------------------------------------------------- | -----------------------
|                                                                                                        |                        
|Current liabilities:                                                                                    |                        
|Accounts payable, accrued interest, and other liabilities                                               | $               550,472
|Convertible debentures                                                                                  | 382,947                
|Short-term notes payable                                                                                | 367,061                
|Officer advances                                                                                        | 549,000                
|Total current liabilities                                                                               | 1,849,480              
|                                                                                                        |                        
|Long-term debt and deferred items                                                                       | 0                      
|                                                                                                        |                        
|Stockholders' equity:                                                                                   |                        
|Common stock, $0.001 par value; 500,000,000 shares authorized; 291,583,631shares issued and outstanding | 291,584                
|Additional paid-in capital                                                                              | 90,017,266             
|Unrealized gain/loss on marketable securities                                                           | 115,800                
|Accumulated Deficit                                                                                     | (91,287,789)           
|Total Stockholders' Equity                                                                              | (863,139)              
|                                                                                                        |                        
|Total Liabilities and Stockholders' Equity                                                              | $               976,341







The accompanying notes are an integral part of these financial statements.





Environmental Energy Services, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2003 and 2002

(Unaudited)



|                                                      | Three Months ended March 31
|----------------------------------------------------- | ---------------------------
|                                                      | 2003                       
|                                                      |                            
|Revenues                                              | $                         0
|                                                      |                            
|Expenses                                              |                            
|Selling, general and administrative                   | 223,768                    
|Amortization                                          | 15,556                     
|Total Expenses:                                       | 239,324                    
|                                                      |                            
|Loss from operations                                  | (239,324)                  
|                                                      |                            
|Other income (expense)                                |                            
|Interest expense, net                                 | (19,335)                   
|Loss on valuation of long lived assets (Note 2)       | 0                          
|Issuance of Warrants                                  | 87,107                     
|Settlement - Global                                   | 0                          
|                                                      |                            
|Total other income (expense)                          | 67,772                     
|                                                      |                            
|Net Income (Loss)                                     | (171,552)                  
|                                                      |                            
|Unrealized Gain (Loss)                                | 60,964                     
|                                                      |                            
|Comprehensive Income (loss)                           | (110,588)                  
|                                                      |                            
|Earnings per share:                                   |                            
|Basic                                                 | 0.00                       
|Diluted                                               | 0.00                       
|                                                      |                            
|Weighted average number of common shares outstanding: |                            
|Basic                                                 | 291,579,631                
|Diluted                                               | N/A                        



The accompanying notes are an integral part of these financial statements.

Environmental Energy Services, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2003 and 2002

(Unaudited)



|INCREASE (DECREASE) IN CASH                                                                          | 2003      | 2002       
|---------------------------------------------------------------------------------------------------- | --------- | -----------
|                                                                                                     |           |            
|Cash flow from operating activities:                                                                 |           |            
|Net income (loss)                                                                                    | (110,588) | (1,037,859)
|Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |           |            
|Depreciation and amortization                                                                        | 15,556    | 23,696     
|Stock issued in lieu of cash payment                                                                 | 200       | 730,237    
|Unrealized (gain) loss on marketable securities                                                      | (87,107)  | 9,677      
|Impairment loss                                                                                      | 0         | 442,448    
|Changes in assets and liabilities:                                                                   |           |            
|Accts payable, accrued interest and other liabilities                                                | 242,871   | (18,845)   
|                                                                                                     |           |            
|Net cash provided by (used in) operating activities                                                  | (32)      | 130,000    
|                                                                                                     |           |            
|Cash flow from investing activities                                                                  | 0         | 0          
|                                                                                                     |           |            
|Net cash provided by (used in) investing activities                                                  | 0         | 0          
|                                                                                                     |           |            
|Cash flows from financing activities:                                                                |           |            
|Shareholder Advances                                                                                 | 0         | 70,000     
|Net proceeds (repayment) from loans                                                                  | 0         | (200,000)  
|                                                                                                     |           |            
|Net cash provided by (used in) financing activities:                                                 | 0         | (130,000)  
|                                                                                                     |           |            
|Net increase (decrease) in cash                                                                      | (32)      | 0          
|                                                                                                     |           |            
|Cash and cash equivalents at beginning of period                                                     | 89        | 0          
|                                                                                                     |           |            
|Cash and cash equivalents at end of period                                                           | 57        | 0          
|                                                                                                     |           |            
|Cash paid for interest                                                                               | 0         | 0          





The accompanying notes are an integral part of these financial statements.

Environmental Energy Services, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2003 and 2002

(Unaudited)

SUPPLEMENTARY DISCLOSURE OF NONCASH TRANSACTIONS

|                                                          | 2003               | 2002                
|--------------------------------------------------------- | ------------------ | --------------------
|Common stock issued for services and settlements          | $              200 | $            422,500
|Common stock issued for interest                          | 0                  | 60,737              
|Common stock issued for debt repayment                    | 0                  | 200,000             
|Common stock issued for payable                           | 0                  | 27,000              
|Common stock issued for repayment of shareholder advances | 0                  | 20,000              
|Warrant Extension                                         | 87,107             | 0                   









The accompanying notes are an integral part of these statements



Environmental Energy Services, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2003 (Unaudited)

1.       Basis of Presentation

The accompanying unaudited financial statements have been prepared by Environmental Energy Services, Inc. (the "Company") pursuant to the rules and regulations of the U. S. Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. This Form 10-QSB Report should be read in conjunction with the Form 10-KSB Report of Environmental Energy Services, Inc. for the fiscal year ended December 31, 2002, as filed with the U. S. Securities and Exchange Commission.

The results of operations for the period ended March 31, 2003 are not indicative of the results that may be expected for the full year.

2.        Summary of Significant Accounting Policies

Nature of Operations.  	Since June 2001, the Company has not conducted active operations, but has announced its intention to enter the business of acquiring, developing and operating coal, gas and other energy related assets in Alaska.  However, the Company's entry into the energy industry is subject to the satisfaction of certain contingencies, including the settlement or satisfaction of certain indebtedness of the Company, that have not occurred to date.  Therefore, the Company is not in active operations at this time.

Consolidated Statements.  The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as well as affiliated companies in which the Company has a controlling financial interest and exercises control over their operations ("majority controlled affiliates").  All material intercompany transactions and balances have been eliminated in consolidation.  Investments in affiliated companies which are 50% or less, owned and where the Company exercises significant influence over operations are accounted for using the equity method.

The Company's interest in Ace Waste Services, Inc. is accounted for under the equity method rather than as a consolidated subsidiary. During the quarter of 2002, the Company recognized an impairment loss of $442,448 investment for its entire investment during the forth quarter on December 31, 2001. As a result of the impairment the Company no longer accounts for the interest in Ace.

Revenue Recognition.  With respect to the Company's prior waste operations, revenues are recognized when waste is received and when services are rendered.

Amortization.  Amortization was calculated by the straight-line method based on the following useful lives:



|Loan origination fees - | 2 years
|----------------------- | -------
|Royalty agreement -     | 6 years



Depreciation and amortization expense for the quarters ended March 31, 2003 and 2002 was $15,556 and $23,696, respectively.

Long Lived Assets.  In March 1995, Statement of Financial Accounting Standards SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of was issued.  SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  During the first quarter of 2002, the Company recognized and impairment loss of $442,448 for the entire investment in ACE Waste Services, Inc.

Concentration of Credit Risk.  The only remaining assets of the Company is an illiquid investments in Startec, Inc. and an interest in a royalty agreement. The Company has not received its certificates representing the investment in Startec, Inc. and may be forced to take legal action for performance.

Use of Estimates.  The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Liquidity.  As shown in the accompanying financial statements, the Company incurred net operating income/(losses) of $258,659 and $1,047,536 during the quarters ended March 31, 2003 and 2002, respectively.  As of March 31, 2003, the Company's liabilities exceed its assets by $873,196 and a majority of the net assets are in the form of illiquid investments.

As of March 31, 2003 the Company had no active operations.  Because the Company lacked active operations, the Company did not have any cash to satisfy routine administrative obligations.  Consequently, the Company was dependent on the issuance of its common stock for managerial and legal services, and depended on short-term loans from third parties, including its officers and directors, for the funds to satisfy miscellaneous expenses.  Since March 31, 2003, the Company has reached an agreement that enables it to receive quarterly royalty payments in an amount that it believes is sufficient to satisfy routine managerial, accounting and legal services, as well as miscellaneous general and administrative expenses.

Earnings Per Share.  The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share," specifying the computation, presentation and disclosure requirements of earnings per share information.  Basic earnings per share has been calculated based upon the weighted average number of common shares outstanding.  Diluted net income per share is calculated based on the weighted average number of common shares and common stock equivalents outstanding during the year.

Advertising.  The Company expenses advertising costs as incurred.  There was no advertising expense for the quarters ended March 31, 2003 and 2002.

Influence of Government Regulation.  The Company's existing and potential operations are and would be subject to and substantially affected by extensive federal, state and local laws, regulations, orders and permits, which govern environmental protection, health and safety, zoning and other matters.  These regulations may impose restrictions on operations that could adversely affect the Company's results, such as limitations on the expansion of disposal facilities, limitations on or the banning of disposal of out-of-state waste or certain categories of waste or mandates regarding the disposal of solid waste.  Because of heightened public concern, companies in the waste management business may become subject to judicial and administrative proceedings involving federal, state or local agencies.  These governmental agencies may seek to impose fines or to revoke or deny renewal of operating permits or licenses for violations of environmental laws or regulations or to require remediation of environmental problems at sites or nearby properties, or resulting from transportation or predecessors' transportation and collection operations, all of which could have a material adverse effect on the Company.  Liability may also arise from actions brought by individuals or community groups in connection with the permitting or licensing of operations, any alleged violations of such permits and licenses or other matters.  The Forward Looking Statements assume that there will be no materially negative impact on its operations due to governmental regulation.

Potential Environmental Liability.  The Company may incur liabilities for the deterioration of the environment as a result of its past and potential future operations.  Any substantial liability for environmental damage could materially adversely affect the operating results and financial condition of the Company.  Due to the limited nature of insurance coverage of environmental liability, if the Company were to incur liability for environmental damage, its business and financial condition could be materially adversely affected.

Marketable Securities.  The Company accounts for marketable securities in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities."  This statement requires securities which are available for sale to be carried at fair value, with changes in fair value recognized as a separate component of stockholders' equity.  As a result of disputes surrounding the Company's investment in Startec, certain trading restrictions and thin trading activity, the Company has classified the securities as long-term assets.  Marketable securities consist of the investment in shares of Startec, Inc.

Comprehensive Income.  The Company has adopted Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income."  SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements.  The effect of SFAS 130 is reflected in these financial statements.

3.	Royalty Agreement

On December 21, 1999, WasteMasters acquired by transfer and assignment a royalty interest in exchange for 9,000,000 shares of common stock valued at $1,530,000.  The transfer and assignment agreement provides that the Company will receive all right and interest of the assignor in certain royalty payments due to Startec, Inc. from licensing certain proprietary technology.  The royalty agreement expires December 31, 2007 with certain provision for earlier termination.  The cost of the agreement is being amortized over the term of the Agreement.  As of December 31, 2002, the Company was not receiving any payments under the royalty agreement due to disputes over the validity of the Company's interest in the royalty agreement, and the percentage interest that the Company has in each royalty payment.  In March 2003, the Company settled all disputes relating to the royalty agreement.  On April 3, 2003 the Company received its first payment under the agreement.

4.	Accounts Payable, Accrued Interest and Other Liabilities

Accounts payable, accrued interest and other liabilities at March 31, 2003, consist of the following:



|Trade payables | 490,808    
|-------------- | -----------
|Interest       | 146,771    
|               | $   637,579

5.	Notes and Loans Payable - Current Liabilities

As of March 31, 2003, the Company was indebted under notes in the aggregate amount of $300,000 to an unaffiliated party.  The notes bear interest at 12% per annum, and are payable within ninety days from the date of issuance.  The Company did not pay the notes on their maturity date.  In 2003, the Company granted the noteholder a lien on the Company's interest in a royalty agreement to secure the notes.  In 2003, the Company issued the noteholder and related parties 4,325,000 warrants to purchase common stock at $0.05 per share, and in consideration the noteholder foregave any accrued interest on the notes, which resulted in a gain to the Company of $87,107.

As of March 31, 2003, the Company was indebted to certain officers for advances in the aggregate amount of $549,000.  The advances are not evidenced by a note, are not collateralized, do not bear interest, and are payable on demand.

As of March 31, 2003, the Company was indebted under its 10% Senior Secured Convertible Debentures in the aggregate amount of $388,896 inclusive of accrued interest and liquidated damages as of December 31, 2002, plus additional interest at 9% per annum since that date.  The 10% Debentures are secured by 800,000 shares of common stock of Intercontinental Holdings, Inc. (f/k/a Global Eco-Logical Services, Inc.)  At the option of the investors, the Debentures are convertible into shares of the Company 's common stock at the lesser of 70% of the average of the closing bid prices for the Company's common stock for 5 trading days prior to the closing date or 75% of the average of the five lowest closing bid prices for 22 days prior to the date of any conversion.  The beneficial conversion feature of the convertible debenture results in the Company recognizing interest expense. The Company received funding of $250,000 under the agreement in 2000, and another $125,000 in the first quarter of 2001. The Company recognized $130,434 of interest expense related to funding received under the debenture agreements.  As consideration for loaning the Company funds pursuant to the Debenture, the Company agreed to issue the investors warrants entitling them to purchase, in the aggregate, 2,250,000 shares of the Company's common stock at 105% of the closing price for the common stock on the date of closing.  The debentures also placed restrictions on the use of proceeds until fully paid. The Company defaulted by virtue of the failure of the Company to make payments of interest thereon, and to file a registration statement to register the shares of common stock into which the 10% Debentures are convertible.

A judgment has been rendered against the Company in a lawsuit styled Esquire Trade and Finance, Inc. and Stonestreet, L.P. v. WasteMasters, Inc., now known as WasteMasters Holdings, Inc. and Environmental Energy Services, Inc., pending the Supreme Court of the State of New York, County of New York, Index No. 604184/01.  In the suit, the plaintiffs seek to recover a judgment on $375,000 principal amount of the Company's 10% Senior Secured Convertible Debentures, plus interest at 10% per annum and liquidated damages in the amount of $7,500 per month for the Company's failure to file a registration statement with the SEC.  The Company did not defend the action, and default judgments for $384,250 and $192,125 were entered in favor of Esquire and Stonestreet, respectively.  The default judgments provide that each judgment bears interest at the post judgment rate in New York, which is 9% per annum.

On March 22, 2002, the Company entered into a Satisfaction Agreement to settle its liability under the default judgments.  The Satisfaction Agreement provided for a cash payment of $15,000 at execution to reimburse the plaintiffs for legal fees and the fees of an escrow agent retained to implement the settlement, and further cash payments of $152,000 in three installments in 2002.  In addition, the satisfaction Agreement provided that a remaining balance of $412,500 would be satisfied by applying the net proceeds from the sale of the Company's common stock into which the Debentures were convertible.  The Company placed 20,000,000 common shares in escrow with an independent escrow agent, with instructions that 277,778 shares and 138,889 shares on behalf of Esquire and Stonestreet, respectively, would be released from escrow every seven days for sale until the net sum of $412,500 was realized.  Further, the Company is obligated to replenish the escrow account with additional shares to the extent the amount originally placed in escrow is insufficient to generate net proceeds of $412,500.  The Company paid all cash payments required by the Satisfaction Agreement. In addition, Esquire has sold 2,088,000 shares for net proceeds of $39,878.50, thereby reducing the balance owed to $372,621.50.

A representative of Esquire and Stonestreet contends that the Company is in default under the Satisfaction Agreement, but the Company has not received any formal written notice of the nature of the default.  If the Company is in default under the Satisfaction Agreement, then the amount owed the plaintiffs would increase by the amount of any post judgment interest at the statutory rate in New York, and the creditors would be entitled to take any action permitted by law to collect the judgment.

6.	Commitments and Contingencies

Global Eco-Logical Services, Inc. Notes

The Company is contingently obligated to issue its shares of common stock on conversion of a series of notes originally issued by Global Eco-Logical Services, Inc. in the original principal amount of $1,590,000. The conversion price is the market price of the Company's common stock at the time of conversion, subject to a minimum conversion price of $0.10 per share. Certain noteholders have requested conversion of the notes into common stock, but the Company has not complied with the request.  Specifically, the noteholders requested conversion based upon total indebtedness calculated at the default rate in the notes (18%), instead of the base rate (6%).  However, the notes provide that the default rate is not applicable until after notice of default has been sent, and the noteholders were unable to establish that a notice of default had been sent.  Therefore, the Company refused to issue shares based on the higher debt amount.

Shares Issued In Nikko Action

As of result of the holding company reorganization effected by the Company in 2001, the Company is obligated to treat as valid any shares of WasteMasters, Inc. that were validly issued and outstanding as of the date of the reorganization.  In 1998, WasteMasters, Inc. issued approximately 63,000,000 shares of common stock of WasteMasters, Inc. in settlement of litigation brought by the holders of its Series A and Series B Convertible Debentures (the "Debentures").  However, by an Order dated March 14, 2000, the court which originally approved the settlement set aside its order approving the settlement as a result of a finding of fraud and collusion.  As a result, WasteMasters, Inc., and subsequently the Company, has treated all shares issued pursuant to the original settlement as invalid, and accordingly such shares are not treated as outstanding on the Company's financial statements.  However, certain of the shares were transferred to person who may qualify as holders in due course, and therefore the Company may be obligated to recognize the validity of such shares.  The Company surveyed the current registered holders of the shares, and believes that approximately 14 million shares may be held by potential holders in due course, which shares the Company may be contingently obligated to recognize.  The Company has adopted a policy of recognizing such shares on a case-by-case basis.  During the quarter ended March 31, 2003, the Company recognized as valid 4,000 shares issued pursuant to the original settlement.

Obligations under Gas Lease Purchase Agreement

Under an Asset Purchase Agreement dated June 29, 2002, the Company was obligated to make a payment of $950,000 to Northstar on or about August 31, 2002.  In addition, the Company has not issued Northstar the shares of common stock that it is entitled to under the Asset Purchase Agreement.  Northstar has a security interest in the leases, has sent the Company a default notice, and could foreclose on the leases; however, at this time, Northstar has not taken any steps to exercise any remedies.  The Company paid Northstar $50,000 in September 2002 in consideration for an extension of time to make the $950,000 payment. Subsequently, the Company and Northstar reached on oral agreement under which the Company agreed to reconvey its interest in the leases to Northstar in consideration for a 2% royalty in the leases, in which event the Company would not be obligated to make any additional payments to Northstar or issue Northstar any shares of common stock.  In addition, the Company would be entitled to drill on the leases in the event it raises funding to do so prior to Northstar.  To date, however, the oral agreement has not been reduced to writing.

Obligation to Issue Shares to Investor

Pursuant to an Agreement dated June 27, 2002, the Company agreed to issue an investor an additional 25,000,000 shares of common stock in the event the Company was not able to raise an additional $950,000 by August 31, 2002 in order to make a final payment on the Company's purchase of certain gas leases.  The Company failed to raise the funds, and has not made the final payment.  Accordingly, the Company may be obligated to issue the investor an additional 25,000,000 shares of common stock. The Company is negotiating to acquire the leases with the necessity of making the final $950,000 payment, in which event the Company may not be obligated to issue the investor 25,000,000 shares of common stock.

9.	Issuance of Common Stock and Warrants

At December 31, 2002, the Company's authorized capital stock was 495,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per share.  On that date, the Company had outstanding 291,583,631 shares of Common Stock and no shares of Preferred Stock.

During the first quarter of 2003, the Company recognized as valid 4,000 shares valued at $200 that had previously been treated as cancelled.

During the first quarter of 2003, the Company issued warrants to purchase 4,325,000 shares of common stock at $0.05 per share until December 7, 2005 to certain creditors and related entities in satisfaction of interest of $87,107 accrued on certain notes.

10.	Related Party Transactions

In March 2003, the Company entered into an agreement with GD Management Services, Inc., an Oklahoma corporation, to pay $50,000 per quarter for certain management and overhead services.  The Company's obligation to GD Management Services, Inc. is secured by the Company's interest in a technology royalty.  GD Management Services, Inc. is owned by Greg Holsted, the Company's chief financial officer and a director of the Company.

11.	Subsequent Events.

In April 2003 the Company amended its agreements with CVI to change its obligation to purchase shares from fifty percent (50%) of net payments the Company receives on the royalty agreement up to $2,500,000 to one hundred percent (100%) of any payments received, net of amounts used to satisfy prior liens on the payments.  In accordance with the agreement the Company purchased 13,383,580 shares of CVI for $1,672,948 with the proceeds of the first royalty payment.

In May 2003, the Company settled a lawsuit in which a former officer of the Company sought payment of a loan in the original amount of $146,000, plus accrued interest and attorney's fees.  Under the settlement agreement, the Company paid $150,000 and transferred 1,000,000 shares of common stock in Corporate Vision, Inc. to satisfy the former officer's obligation to a creditor of the former officer and the former officer agreed to transfer 20,000 shares of common stock in Startec, Inc. to the Company.

In June 2003, the Company reached an agreement with the holders of its 10% Senior Secured Convertible Notes to satisfy their judgment against the Company upon payment of a total of $250,000, of which $100,000 is payable on execution of the agreement, and the remaining $150,000 will be payable in three equal installments of $50,000 due on August 29, 2003, November 28, 2003 and February 27, 2004.  Upon completion of the payments, the Company will have no further obligation to the creditors, and the creditors will be obligated to return 800,000 shares of common stock of Intercontinental Holdings, Inc. (f/k/a Global Eco-Logical Services, Inc.) held as collateral, and 17,912,000 shares of common stock of the Company that are held in escrow for the benefit of the creditors.  The Company plans to make the first installment from funds provided by its chairman and chief executive officer.

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

Results of Operations

The Company's revenues in the three months ended March 31, 2003 were $0 as compared to $0 in the prior year's quarter.  During both periods, the Company did not have any revenues because it was not engaged in active operations.

The Company reported a loss from operations during the three months ended March 31, 2003 of ($239,324) as compared to a loss from operations of ($346,196) for the three months ended March 31, 2002.  The Company reported a smaller net operating loss as compared to the prior period as a result of lower general and administrative expenses.  Selling, general and administrative expenses decreased from $322,500 in the three months ended March 31, 2002 to $223,768 in the three months ended March 31, 2003.  The decrease in selling, general and administrative expenses in the three-month period was the result of lower compensation paid to employees, officers and consultants in the current period, as well as lower expenses to defend and settle litigation claims.

During the three months ended March 31, 2003, the Company had a net loss of ($171,552), as compared to a net loss of ($1,047,536) in the three months ended March 31, 2002.  The decreased net loss in the current quarter was the result primarily of lower general and administrative expenses in the current quarter, as well as nonrecurring charges in 2002 resulting from the writeoff of the Company's investment in Ace Waste Services, Inc. and a settlement with Global Eco-Logical Services, Inc.  In addition, in the quarter ended March 31, 2003, the Company recorded a gain of $87,107 resulting from the foregiveness of interest in that amount on certain obligations of the Company.

Liquidity and Sources of Capital

The Company's consolidated balance sheet as of March 31, 2003 reflects cash and current assets of $57, and a working capital deficit of ($1,849,423).  The Company still has substantial current liabilities that consist primarily of the Company's 10% Senior Secured Convertible Debentures, accrued expenses that are seriously delinquent, and advances made by related parties or consultants to the Company.

As of March 31, 2003, the Company had no active operations, and no ability to satisfy the claims against it.  Because the Company lacks active operations, the Company historically has not had any cash to satisfy routine administrative obligations. Consequently, the Company has been dependent on the issuance of its common stock for managerial and legal services, and dependent on short-term loans from third parties, including its officers and directors, for the funds to satisfy miscellaneous expenses.  After March 31, 2003, the Company concluded a settlement agreement regarding a royalty in which it has an interest that the Company believes will provide it with sufficient cash to meet its general and administrative expenses for the foreseeable future. The principle impediment to entering active operations is the existence of judgments against the Company by the holders of its 10% Senior Secured Convertible Debentures, and the Company has deferred any effort to acquire or start a business until it can find an acceptable resolution of the judgments.

Item 3.  Controls and Procedures.

The Company believes that it has sufficient internal controls and procedures for a company that is not engaged in active operations.  When and if the Company acquires or commences active operations, the Company anticipates instituting internal controls and procedures sufficient for the nature and scale of operations at that time.

PART II.  OTHER INFORMATION.

Item 1.  Legal Proceedings.

The Company is a party to a considerable number of legal proceedings.  The Company's disclosure of pending legal proceedings contained in Item 3 of its Annual Report on Form 10-KSB for the year ended December 31, 2002 is hereby incorporated by reference.

In May 2003, the Company settled a lawsuit in which a former officer of the Company sought payment of a loan in the original amount of $146,000, plus accrued interest and attorney's fees.  Under the settlement agreement, the Company paid $150,000 and transferred 1,000,000 shares of common stock in Corporate Vision, Inc. to satisfy the former officer's obligation to a creditor of the former officer and the former officer agreed to transfer 20,000 shares of common stock in Startec, Inc. to the Company.

Item 2.  Changes in Securities and Use of Proceeds.

During quarter ended March 31, 2003, the Company recognized as valid 4,000 shares valued at $200 that had previously been treated as cancelled.

During quarter ended March 31, 2003, the Company issued warrants to purchase 4,325,000 shares of common stock at $0.05 per share until December 7, 2005 to certain creditors and related entities.  In return, one of the creditors forgave $87,107 of accrued interest on his loans to the Company.  The warrants were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933.

Item 3.  Defaults Upon Senior Securities.

As of March 31, 2003, the Company was indebted under notes in the aggregate amount of $300,000 to an unaffiliated party that matured 90 days from issuance.  The Company did not pay the notes on their maturity date and therefore is in default thereunder.

As of March 31, 2003, the Company was indebted under its 10% Senior Secured Convertible Debentures in the original principal amount of $375,000, plus accrued interest and liquidated damages.  Default judgments for $384,250 and $192,125 have been rendered against the Company by the two holders of the 10% Senior Secured Convertible Debentures in a lawsuit styled Esquire Trade and Finance, Inc. and Stonestreet, L.P. v. WasteMasters, Inc., now known as WasteMasters Holdings, Inc. and Environmental Energy Services, Inc., pending the Supreme Court of the State of New York, County of New York, Index No. 604184/01.  The default judgments provide that each judgment bears interest at the post judgment rate in New York, which is 9% per annum.  On March 22, 2002, the Company entered into a Satisfaction Agreement to settle its liability under the default judgments.  The Satisfaction Agreement provided for a cash payment of $15,000 at execution to reimburse the plaintiffs for legal fees and the fees of an escrow agent retained to implement the settlement, and further cash payments of $152,000 in three installments in 2002.  In addition, the satisfaction Agreement provided that a remaining balance of $412,500 would be satisfied by applying the net proceeds from the sale of the Company's common stock into which the Debentures were convertible.  The Company placed 20,000,000 common shares in escrow with an independent escrow agent, with instructions that 277,778 shares and 138,889 shares on behalf of Esquire and Stonestreet, respectively, would be released from escrow every seven days for sale until the net sum of $412,500 was realized.  Further, the Company is obligated to replenish the escrow account with additional shares to the extent the amount originally placed in escrow is insufficient to generate net proceeds of $412,500.  The Company paid all cash payments required by the Satisfaction Agreement. In addition, Esquire has sold 2,088,000 shares for net proceeds of $39,878.50, thereby reducing the balance owed to $372,621.50.  A representative of Esquire and Stonestreet contends that the Company is in default under the Satisfaction Agreement, but the Company has not received any formal written notice of the nature of the default.  If the Company is in default under the Satisfaction Agreement, then the amount owed the plaintiffs would increase by the amount of any post judgment interest at the statutory rate in New York, and the creditors would be entitled to take any action permitted by law to collect the judgment.

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

None.

Item 5.  Other Information.

None.

Item 6.  Exhibits and Reports on Form 8-K.

(a)     Furnish the exhibits required by Item 601 of Regulation S-B.

|Exhibit Number | Description and Incorporation by Reference       
|-------------- | -------------------------------------------------
|99             | Certifications of A. Leon Blaser and Greg Holsted



(b)     Reports on Form 8-K.

None.



SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                    | ENVIRONMENTAL ENERGY SERVICES, INC.      
|------------------- | -----------------------------------------
|Date: June 17, 2003 | /s/ Greg Holsted                         
|                    | By: Greg Holsted, Chief Financial Officer





CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

SEC RELEASE NO. 33-8124



I, A. Leon Blaser, Chairman and Chief Executive Officer of the Company, certify that:

(1) I have reviewed this annual report on Form 10-QSB of Environmental Energy Services, Inc.;

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

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

(4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

(c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

(6) The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

|Dated: June 17, 2003 | /s/ A. Leon Blaser                                  
|-------------------- | ----------------------------------------------------
|                     | A. Leon Blaser, Chairman and Chief Executive Officer



CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

SEC RELEASE NO. 33-8124



I, Greg Holsted, Director and Chief Financial Officer of the Company, certify that:

(1) I have reviewed this annual report on Form 10-QSB of Environmental Energy Services, Inc.;

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

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

(4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

(c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

(6) The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

|Dated: June 17, 2003 | /s/ Greg Holsted                                  
|-------------------- | --------------------------------------------------
|                     | Greg Holsted, Director and Chief Financial Officer