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, 2002

[    ] 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, Oklahoma City, OK  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      No  X



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 May 17, 2002, the Registrant had outstanding 233,591,631 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, 2002                                               
|                                                                                              | Consolidated Statements of Operations for the Three Months Ended March 31, 2002 and 2001      
|                                                                                              | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2002 and 2001      
|                                                                                              | Notes to Unaudited Consolidated Financial Statements for the Three Months Ended March 31, 2002
|Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operation | 11                                                                                            
|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, 2002 (Unaudited)



|ASSETS                                               |                        
|---------------------------------------------------- | -----------------------
|Current Assets:                                      |                        
|Total current assets                                 | 0                      
|                                                     |                        
|Fixed Assets:                                        |                        
|Total property, plant and equipment                  | 0                      
|Other Assets:                                        |                        
|Marketable securities                                | 325,788                
|Investment in Royalty Agreement, net of amortization | 357,746                
|Investment in Ace Waste Services, Inc.               | 0                      
|Note receivable - Ace Waste Services, Inc.           | 75,000                 
|Loan origination fees, net of amortization           | 19,779                 
|Total other assets                                   | 778,313                
|                                                     |                        
|Total assets                                         | $               778,313





The accompanying notes are an integral part of these statements





Environmental Energy Services, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEET

As of March 31, 2002 (Unaudited)

|LIABILITIES AND STOCKHOLDERS EQUITY                                                                      |                        
|-------------------------------------------------------------------------------------------------------- | -----------------------
|                                                                                                         |                        
|Current liabilities:                                                                                     |                        
|Accounts payable, accrued interest, and other liabilities                                                | $               474,961
|Current maturities of long-term debt and convertible debentures                                          | 375,000                
|Short-term notes payable                                                                                 | 513,061                
|Officer advances                                                                                         | 103,542                
|                                                                                                         |                        
|Total current liabilities                                                                                | 1,466,564              
|                                                                                                         |                        
|Long-term debt and deferred items                                                                        | 0                      
|                                                                                                         |                        
|Stockholders' equity:                                                                                    |                        
|Preferred stock, $0.001 par value; 5,000,000 shares authorized and outstanding                           | 50,000                 
|Common stock, $0.001 par value; 500,000,000 shares authorized; 233,591,631 shares issued and outstanding | 2,335,917              
|Additional paid-in capital                                                                               | 87,235,560             
|Unrealized gain/loss on marketable securities                                                            | 196,763                
|Accumulated Deficit                                                                                      | (90,506,491)           
|Total Stockholders' Equity                                                                               | (688,251)              
|                                                                                                         |                        
|Total Liabilities and Stockholders' Equity                                                               | $               778,313







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, 2002 and 2001

(Unaudited)



|                                                      | Three Months ended March 31
|----------------------------------------------------- | ---------------------------
|                                                      | 2002                       
|                                                      |                            
|Revenues                                              | $                         0
|Cost of Goods Sold                                    | 0                          
|Gross Profit                                          | 0                          
|                                                      |                            
|Expenses                                              |                            
|Selling, general and administrative                   | 322,500                    
|Bad debt                                              | 0                          
|Depreciation and amortization                         | 23,696                     
|Total Expenses:                                       | 346,196                    
|                                                      |                            
|Loss from operations                                  | (346,196)                  
|                                                      |                            
|Other income (expense)                                |                            
|Interest expense, net                                 | (58,892)                   
|Loss on investment - Ace                              | 0                          
|Loss on valuation of long lived assets (Note 2)       | (442,448)                  
|Settlement - Nikko                                    | 0                          
|Settlement - Solomon                                  | 0                          
|Other income (expense), net                           | (200,000)                  
|                                                      |                            
|Total other income (expense)                          | (701,340)                  
|                                                      |                            
|Net Income (Loss)                                     | $        (1,047,536)       
|                                                      |                            
|Unrealized Gain (Loss)                                | (9,677)                    
|                                                      |                            
|Comprehensive Income (loss)                           | (1,037,859)                
|                                                      |                            
|Earnings per share:                                   |                            
|Basic                                                 | $                 (0.01)   
|Diluted                                               | $                    0.00  
|                                                      |                            
|Weighted average number of common shares outstanding: |                            
|Basic                                                 | 185,153,298                
|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, 2002 and 2001

(Unaudited)



|INCREASE (DECREASE) IN CASH                                                                          | 2002                         | 2001                     
|---------------------------------------------------------------------------------------------------- | ---------------------------- | -------------------------
|                                                                                                     |                              |                          
|Cash flow from operating activities:                                                                 |                              |                          
|Net income (loss)                                                                                    | (1,037,859)                  | 186,198                  
|Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: |                              |                          
|Depreciation and amortization                                                                        | 23,696                       | 23,405                   
|Stock issued in lieu of cash payment                                                                 | 730,237                      | 949,439                  
|Unrealized (gain) loss on marketable securities                                                      | 9,677                        | (421,136)                
|Impairment loss                                                                                      | 442,448                      | 0                        
|Changes in assets and liabilities:                                                                   |                              |                          
|Accounts receivable and prepaid expenses                                                             | 0                            | 43,876                   
|Accts payable, accrued interest and other liabilities                                                | (18,845)                     | (1,047,632)              
|                                                                                                     |                              |                          
|Net cash provided by (used in) operating activities                                                  | 130,000                      | (290,878)                
|                                                                                                     |                              |                          
|Cash flow from investing activities:                                                                 |                              |                          
|Share of loss from Ace                                                                               | 0                            | 34,331                   
|Asset acquisitions                                                                                   | 0                            | (89,000)                 
|                                                                                                     |                              |                          
|Net cash provided by (used in) investing activities                                                  | 0                            | (54,669)                 
|                                                                                                     |                              |                          
|Cash flows from financing activities:                                                                |                              |                          
|Shareholder Advances                                                                                 | (76,000)                     | 123,000                  
|Net proceeds (repayment) from loans                                                                  | (54,000)                     | 125,000                  
|                                                                                                     |                              |                          
|Net cash provided by (used in) financing activities:                                                 | (130,000)                    | 248,000                  
|                                                                                                     |                              |                          
|Net increase (decrease) in cash                                                                      | $                          0 | $                4,480   
|                                                                                                     |                              |                          
|Cash and cash equivalents at beginning of period                                                     | $                          0 | $              36,432    
|                                                                                                     |                              |                          
|Cash and cash equivalents at end of period                                                           | $                          0 | $              40,912    
|                                                                                                     |                              |                          
|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, 2002 and 2001

(Unaudited)

SUPPLEMENTARY DISCLOSURE OF NONCASH TRANSACTIONS

|                                                          | 2002                   | 2001                
|--------------------------------------------------------- | ---------------------- | --------------------
|Common stock issued for services and settlements          | $              422,500 | $            949,439
|Common stock issued for interest                          | 60,737                 | 0                   
|Common stock issued for debt repayment                    | 200,000                | 0                   
|Common stock issued for payable                           | 27,000                 | 0                   
|Common stock issued for repayment of shareholder advances | 20,000                 | 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, 2002 (Unaudited)

1.       Basis of Presentation

The accompanying unaudited financial statements have been prepared by Environmental Energy Services, Inc. (the "Company" or "Environmental Energy Services") 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, 2001, as filed with the U. S. Securities and Exchange Commission.

The results of operations for the period ended March 31, 2002 are not indicative of the results that may be expected for the full year.

2.        Summary of Significant Accounting Policies

Nature of Operations.  	The Company engages in solid waste processing, transportation and disposal.

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.  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, 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 will no longer account for the interest in ACE Waste Services, Inc.

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

|Machinery              | 7-10 years
|---------------------- | ----------
|Vehicles               | 5 years   
|Furniture and fixtures | 5 years   
|Loan origination fees  | 2 years   
|Royalty agreement      | 6 years   



Depreciation and amortization expense for the quarters ended March 31, 2002 and 2001 was $23,696.

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.  Assets of the Company include illiquid investments in Global Eco-Logical Services, Inc. (Global), Startec, Inc. and a royalty agreement. The common stock held by the Company in Global has a very thin volume and various trading restrictions until March 2003.  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 $(1,047,536) and $234,938 during the quarters ended March 31, 2002 and 2001, respectively.  As of March 31, 2002, the Company had no current assets. The Company's liabilities exceed its assets by $688,251 at March 31, 2002 and a majority of the net assets are in the form of one illiquid investments.

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, 2002 and 2001.

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.	Significant Equity Investments.

On November 1, 2000, the Company sold all operating assets of All Waste to Ace Waste Services, Inc. (Ace) in exchange for shares of common stock of ACE representing 51% ownership.  However, pursuant to shareholder agreement executed in connection with the acquisition, the Company is only entitled to appoint 50% of the board members.  In the event the board members cannot reach agreement on an issue, the shareholders' agreement provides that the deadlock will be resolved by the vote of an attorney who normally represents the minority shareholder of Ace. Therefore, the Company does not have control of Ace. During the first quarter of 2002, the Company recognized an impairment loss of one hundred percent (100%) of its investment.  Relevant financial information of Ace, as a significant equity investee, for the quarter ended March 31, 2001 is as follows:

|                    | 2001     
|------------------- | ---------
|Revenue             | $766,667 
|Gross Profit        | 100,574  
|Net Income (loss)   | (116,334)
|Share of loss (51%) | (59,331) 

4.	Accounts Payable, Accrued Interest and Other Liabilities

Accounts payable, accrued interest and other liabilities at March 31, 2002, consist of the following:

|Trade payables     | $          228,010
|------------------ | ------------------
|Interest           | 152,701           
|Liquidated damages | 94,250            
|                   | $           474961

5.	Issuance of Common Stock for Services

During the first quarter of 2002, the Company issued a total of 72,950,000 of restricted common stock valued at $730,237 to satisfy various obligations, officers compensation, related party loans and consulting fees. (See Note 6)

6.	Related Party Transactions

In February 2002, the Company issued 26,000,000 shares of restricted common stock, valued at $260,737, to Mr. Blaser in satisfaction of a loan in the amount of $200,000 that had been made to the Company by an entity controlled by Mr. Blaser. In February 2002, the Company issued 12,000,000 shares of restricted common stock, valued at $120,000, to Greg Holsted to satisfy $20,000 of expenses and $100,000 of compensation.

Since December 31, 2001, Mr. Blaser has advanced the Company $90,000 to pay certain expenses. The loan is an unsecured demand loan and is not evidenced by a promissory note.

7.	Subsequent Events.

There were no significant subsequent events.

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, 2002 were $0 as compared to $75,028 in the prior year's quarter.  Revenues were adversely affected in the prior year's quarter by the cessation of operations at the Lisbon landfill in February 2001 as a result of regulatory violations and financial problems at the landfill.  During the current year, the Company did not engage in active operations.

The Company reported a loss from operations during the three months ended March 31, 2002 of ($346,196) as compared to a loss from operations of ($763,455) for the three months ended March 31, 2001.  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 $709,791 in the three months ended March 31, 2001 to $322,500 in the three months ended March 31, 2002.  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, 2002, the Company had a net loss of ($1,047,536), as compared to a net loss of ($234,938) in the three months ended March 31, 2001.  The increased net loss in the current quarter was the result primarily of the writeoff of the Company's investment in Ace Waste Services, Inc., offset by lower general and administrative expenses in the current quarter.

Liquidity and Sources of Capital

The Company's consolidated balance sheet as of March 31, 2002 reflects no cash or current assets, and a working capital deficit of ($1,466,564).  The Company still has substantial current liabilities that consist primarily of the convertible debentures, accrued expenses that are seriously delinquent, and advances made by related parties or consultants to the Company.

As of March 31, 2002, the Company had no active operations, and no ability to satisfy the claims against it. Because the Company lacks active operations, the Company does not have any cash to satisfy routine administrative obligations.  Consequently, the Company is currently dependent on the issuance of its common stock for managerial and legal services, and depends on short-term loans from third parties, including its officers and directors, for the funds to satisfy miscellaneous expenses.  For the foreseeable future, the Company expects that it will be required to acquire necessary administrative services and satisfy its indebtedness by issuing shares of its common stock.

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, 2001 is hereby incorporated by reference.

Item 2.  Changes in Securities and Use of Proceeds.

None.

Item 3.  Defaults Upon Senior Securities.

On November 3, 2000, the Company entered into a Convertible Debenture and Warrants Purchase Agreement, under which the Company agreed to issue up to $500,000 of its 10% Senior Secured Convertible Debentures (the "10% Debentures").  The Company issued $250,000 of 10% Debentures in November 2000, and $125,000 of 10% Debentures on January 31, 2001.  Under the terms of the 10% Debentures, the Company is obligated to pay interest quarterly, which the Company has not done.  In addition, the Company was obligated to file a registration statement to register the shares of common stock into which the 10% Debentures are convertible by December 14, 2000, and to obtain effectiveness of the registration statement within a certain period of time.  The Company had not filed the registration statement required by the 10% Debentures.  As a result, the 10% Debentures are in default.  In October 2001, the holders of the Company's 10% Senior Secured Convertible Debentures, with an outstanding principle amount of $375,000, filed suit in New York to recover a judgment on the debentures, and a default judgment in excess of $500,000 was entered against the Company.  In March 2002, the Company entered into a satisfaction agreement, under which the Company agreed to satisfy the judgment by a combination of deferred payments and the issuance of shares of common stock on conversion of the Debentures.  The Company is current on its obligations under the satisfaction agreement.

As of March 31, 2002, 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.

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.

None.

(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:  May 24, 2002 | /s/ Greg Holsted                         
|                    | By: Greg Holsted, Chief Financial Officer