================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
           EXCHANGE ACT OF 1934

           For the quarterly period ended: DECEMBER 31, 2001


                           Commission File No. 0-19566

                           EARTH SEARCH SCIENCES, INC.
                           ---------------------------
             (Exact Name of Registrant as Specified in its Charter)

             UTAH                                                87-0437723
             ----                                                ----------
(State or other Jurisdiction of                               (IRS Employer ID)
 Incorporation or Organization)


                  1729 MONTANA HIGHWAY 35, KALISPELL, MT 59901
                  --------------------------------------------
          (Address of Principal Executive Offices, Including Zip Code)

Registrant's telephone number, including area code:         (406) 751-5200

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. Yes  [X]   No  [_]

The number of shares outstanding of each of the registrant's classes of common
stock, as of December 31, 2001, covered by this report: 155,822,466 shares. The
registrant has only one class of common stock.

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<PAGE>

                           EARTH SEARCH SCIENCES, INC.

                                    FORM 10-Q

                         QUARTER ENDED DECEMBER 31, 2001

                                     PART I
                                     ------
                              FINANCIAL INFORMATION
                              ---------------------
                                TABLE OF CONTENTS
                                -----------------

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS                               PAGE
                                                                        ----
            Consolidated Balance Sheets as of December 31, 2001,
              (unaudited) and March 31, 2001.                            3

            Consolidated Statements of Loss for the Three and Nine
              Months Ended December 31, 2001 and 2000 (unaudited).       4

            Consolidated Statements of Cash Flows for the Nine
              Months Ended December 31, 2001 and 2000 (unaudited).       5

            Selected Notes to Consolidated Financial Statements.         6-8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS              9-11

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
               MARKET RISK                                               11

                                     PART II
                                     -------
                           OTHER INFORMATION REQUIRED
                           --------------------------

Item 1.     Legal Proceedings                                            12
Item 2.     Changes in Securities                                        12
Item 3.     Defaults Upon Senior Securities                              12
Item 4.     Submission of Matters of a Vote of Security Holders          12
Item 5.     Other information                                            12
Item 6.     Exhibits and Reports on Form 8-K                             12

                                                                               2
<PAGE>

Earth Search Sciences, Inc.
Consolidated Balance Sheets
<TABLE><CAPTION>
------------------------------------------------------------------------------------------------------
                                                                 December 31, 2001         March 31,
                                                                   (unaudited)                2001
                                                                   ------------           ------------
<S>                                                                <C>                    <C>
Assets
Current assets:
    Cash                                                           $    126,678           $    367,902
    Accounts receivable, net                                          1,325,878                900,531
    Other current assets                                                148,583                 73,408
                                                                   ------------           ------------
Total current assets                                                  1,601,139              1,341,841
Property and equipment, net                                          18,725,903             18,368,285
                                                                   ------------           ------------
Total assets                                                       $ 20,327,042           $ 19,710,126
                                                                   ============           ============
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
    Notes payable                                                  $    361,368           $    352,425
    Capital lease obligation                                          3,231,644              3,058,603
    Accounts payable                                                  8,256,052              7,216,731
    Accrued expenses                                                     77,823                107,422
    Accrued interest                                                    459,587                356,983
    Investor deposit                                                  1,000,000              1,000,000
                                                                   ------------           ------------
Total current liabilities                                            13,386,474             12,092,164

Long-term liabilities
    Shareholder loans                                                 2,337,906                825,844
    Deferred officers' compensation                                   2,720,044              2,178,195
    Minority interest                                                 1,982,378              2,249,096
                                                                   ------------           ------------

Total liabilities                                                    20,426,802             17,345,299

Commitments and contingencies                                              --                     --
Redeemable common stock, $.001 par value;
    110,993 shares outstanding                                           17,981                 17,981
Nonredeemable shareholders' equity (deficit)
 Series A preferred stock; 200,000 shares authorized,
    issued and outstanding                                            1,000,000              1,000,000
 Common stock, $.001 par value; 200,000,000 shares
    authorized; 155,711,473 and 154,090,616 shares at
   December 31 and  March 31, 2001 issued and outstanding               155,711                154,091
 Additional paid-in capital                                          29,931,471             29,561,847
 Treasury stock                                                        (200,000)              (200,000)
 Accumulated deficit                                                (31,004,923)           (28,169,092)
                                                                   ------------           ------------
                                                                       (117,741)             2,346,846
                                                                   ------------           ------------
Total liabilities and shareholders' equity (deficit)               $ 20,327,042           $ 19,710,126
                                                                   ============           ============
</TABLE>

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

                                                                               3
<PAGE>

Earth Search Sciences, Inc.
Consolidated Statements of Loss (unaudited)
<TABLE><CAPTION>
----------------------------------------------------------------------------------------------------------------------

                                                      For the Three Months                   For the Nine Months
                                                       Ended December 31,                     Ended December 31,
                                                --------------------------------      --------------------------------
                                                     2001               2000               2001              2000
                                                -------------      -------------      -------------      -------------
<S>                                             <C>                <C>                <C>                <C>
Revenue                                         $   1,603,999      $   1,159,048      $   4,103,747      $   1,881,925
Costs of revenue                                   (1,443,225)          (508,598)        (4,182,563)        (1,815,860)
                                                -------------      -------------      -------------      -------------
Gross profit (deficit)                                160,774            650,450            (78,816)            66,065

General and administrative expenses                   685,565          3,873,239          2,465,348          5,776,845
                                                -------------      -------------      -------------      -------------
                                                     (524,791)        (3,222,789)        (2,544,164)        (5,710,780)
Loss from operations
Other income (expense)
  Interest income                                         392             15,653              4,567             93,433
  Interest expense                                   (226,095)          (363,137)          (562,952)          (756,906)
                                                -------------      -------------      -------------      -------------
Loss before minority interest                        (750,494)        (3,570,273)        (3,102,549)        (6,374,253)
Minority interest in losses of consolidated
  subsidiaries                                         76,491             65,186            266,718            208,577
                                                -------------      -------------      -------------      -------------
Net loss                                        $    (674,003)     $  (3,505,087)     $  (2,835,831)     $  (6,165,676)
                                                =============      =============      =============      =============


Shares applicable to basic and                    155,142,599        134,509,211        154,519,159        131,391,092
  diluted loss per share
Basic and diluted loss per share                $       (0.01)     $       (0.03)     $       (0.02)     $       (0.05)
</TABLE>










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

                                                                               4
<PAGE>

Earth Search Sciences, Inc.
Consolidated Statements of Cash Flows (unaudited)
<TABLE><CAPTION>
------------------------------------------------------------------------------------------------------

                                                                            For the Nine Months
                                                                             Ended December 31,
                                                                         2001                  2000
                                                                     -----------           -----------
<S>                                                                  <C>                   <C>
Cash flows from operating activities:
   Net loss                                                          $(2,835,831)          $(6,165,676)
Adjustments to reconcile net loss to net cash
    used in operating activities:

   Common stock issued for services and interest expense                  40,000                83,958
   Non-cash compensation expense                                          81,245             2,937,749
   Loss attributed to minority interest                                 (266,718)             (208,577)
   Depreciation, amortization and depletion                              371,101               415,172

   Write-off of capitalized costs on oil and gas properties              476,522                  --

   Interest on lease obligation                                          173,041                  --
Changes in assets and liabilities:
   Accounts receivable                                                  (425,347)              (91,829)
   Other current assets                                                  (75,175)              276,425
   Accounts payable and accrued expenses                               1,009,722             1,188,053
   Accrued interest                                                      102,604                  --
   Deferred officers compensation                                        541,849                87,015
                                                                     -----------           -----------
Net cash used in operating activities                                   (806,988)           (1,477,710)
                                                                     -----------           -----------
Cash flows from investing activities:
   Capital expenditures                                                 (955,241)           (4,308,958)
                                                                     -----------           -----------
Net cash used in investing activities                                   (955,241)           (4,308,958)
                                                                     -----------           -----------

Cash flows from financing activities:
   Proceeds from notes payable                                             8,943                  --
   Repayment of notes payable                                            (21,938)              (25,000)
   Proceeds from shareholder loans                                     1,534,000               141,000

   Issuance of common stock for cash                                        --                 407,913

   Proceeds from subsidiary stock sales                                     --                 410,003
                                                                     -----------           -----------
Net cash provided by financing activities                              1,521,005               933,916
                                                                     -----------           -----------

Net decrease in cash                                                    (241,224)           (4,852,752)
Cash at beginning of period                                              367,902             6,119,562
                                                                     -----------           -----------
Cash at end of period                                                $   126,678           $ 1,266,810
                                                                     ===========           ===========

Noncash investing and financing activities:
  Capital asset acquired with common stock                           $   250,000           $    63,485
                                                                     ===========           ===========
</TABLE>

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

                                                                               5
<PAGE>

                           EARTH SEARCH SCIENCES, INC

               SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          December 31, 2001 (unaudited)

1. FINANCIAL STATEMENTS

The unaudited consolidated financial statements of Earth Search Sciences, Inc.
(the Company) have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations.
The results of operations for interim periods are not necessarily indicative of
the results to be expected for the entire fiscal year ending March 31, 2002. The
accompanying unaudited consolidated financial statements and related notes
should be read in conjunction with the audited consolidated financial statements
and the Form 10-K of the Company for its fiscal year ended March 31, 2001.

2. GOING CONCERN

The Company is experiencing working capital deficiencies because of operating
losses and capital expenditures. The Company has operated with funds received
from the sale of its common stock and the issuance of notes. The ability of the
Company to continue as a going concern is dependent upon continued debt or
equity financings until or unless the Company is able to generate sufficient
operating revenues to sustain ongoing operations. The Company plans to increase
the number of revenue producing services through the use of additional
hyperspectral instruments and thereby continue as a going concern.

3. NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141 (SFAS 141), BUSINESS COMBINATIONS. SFAS
141 applies to all business combinations initiated after June 30, 2001. The
Statement also applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1, 2001 or later. The
adoption of SFAS 141 will not have an impact on the Company's financial
statements.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 (SFAS 142), GOODWILL AND OTHER INTANGIBLE
ASSETS. The provisions of SFAS 142 are required to be applied starting with
fiscal years beginning after December 15, 2001 with earlier application
permitted for entities with fiscal years beginning after March 15, 2001 provided
that the first interim financial statements have previously been issued. The
statement is required to be applied to all goodwill and other intangible assets
recognized in its financial statements to that date. The initial application of
SFAS 142 will have no impact on the Company's financial statements.

In October 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) 144, ACCOUNTING FOR THE IMPAIRMENT OR
DISPOSAL OF LONG-LIVED Assets. SFAS 144 supersedes SFAS 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of, and APB
Opinion 30, Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for segments of a business to be disposed of.
SFAS 144 is effective for fiscal years beginning after December 15, 2001. The
Company is currently evaluating the potential effect of the initial application
of the SFAS 144 on its consolidated financial statements.

                                                                               6
<PAGE>

4. MINERAL PROPERTIES

In the first three quarters of fiscal 2002, the Company incurred additional
expenditures on existing working interests in oil and gas properties of $557,163
of which $410,001 and $147,162 was incurred in the second and first quarter of
fiscal 2002, respectively. Of the second quarter amount of $410,001 for oil and
gas property expenditures, $250,000 was paid by the issuance of Company common
stock. The Company wrote-off $10,000 and $466,522 of previously capitalized
costs on two oil and gas drillings that were determined to be uneconomical wells
in the third quarter and first quarter of fiscal 2002, respectively. Based on
the agreements for the Company's oil and gas working interests, the Company will
proportionately share in future revenues as well as future exploration, drilling
and operating costs. For new drillings on existing properties, the Company will
have the right but not the obligation to participate in new drilling efforts. On
a case by case basis the Company will determine whether or not to participate in
these new drilling efforts.

5. OPERATING SEGMENT AND GEOGRAPHIC INFORMATION

        Business Segment Information Year to Date as of December 31, 2001
<TABLE><CAPTION>
                                         Airborne                                                   Adjustments
                                       Hyperspectral    Satellite    Oil and Gas     Terranet &         and
                                         Services      Development   Properties       Skywatch     Eliminations     Combined
                                       ------------   ------------   ------------   ------------   ------------   ------------
<S>                                    <C>            <C>            <C>            <C>            <C>            <C>
Revenue                                $    378,904   $  3,420,525   $    304,318   $          -   $          -   $  4,103,747
                                       ============   ============   ============   ============   ============   ============
Operating Loss                         $   (366,917)  $ (1,343,783)  $   (479,175)  $   (354,289)  $          -   $ (2,544,164)
                                       ============   ============   ============   ============   ============   ============
Interest income                        $      2,104   $      2,463   $          -   $          -   $          -   $      4,567

Interest expense                           (190,418)      (372,534)             -              -              -       (562,952)
Income from continuing operations
 before income taxes and minority
 interests                                        -              -              -              -              -     (3,102,549)

Identifiable assets at 12/31/2001      $  4,726,525   $ 14,086,106   $  1,402,834   $    111,577   $          -   $ 20,327,042
                                       ============   ============   ============   ============   ============   ============
Total Assets at 12/31/2001                        -              -              -              -              -   $ 20,327,042
                                                                                                                  ============
Depreciation, amortization and
 depletion for the period ending
 12/31/2001                            $    331,944   $          -   $     37,865   $      1,292   $          -   $    371,101
                                       ============   ============   ============   ============   ============   ============
Capital expenditures for the
 period ending 12/31/2001              $     41,164   $    606,914   $    557,163   $          -   $          -   $  1,205,241
                                       ============   ============   ============   ============   ============   ============

        Business Segment Information Year to Date as of December 31, 2000

                                         Airborne                                                   Adjustments
                                       Hyperspectral    Satellite    Oil and Gas     Terranet &         and
                                         Services      Development   Properties       Skywatch     Eliminations     Combined
                                       ------------   ------------   ------------   ------------   ------------   ------------
Revenue                                $  1,161,241   $    433,014   $    287,670   $          -   $          -   $  1,881,925
                                       ============   ============   ============   ============   ============   ============
Operating Loss                         $ (4,202,794)  $ (1,210,710)  $     65,854   $   (363,130)  $          -   $ (5,710,780)
                                       ============   ============   ============   ============   ============   ============
Interest income                        $     24,272   $     69,161   $          -   $          -   $          -   $     93,433
Interest expense                           (308,156)      (448,750)             -              -              -       (756,906)
Income from continuing operations
 before income taxes and minority
 interests                                        -              -              -              -              -     (6,374,253)

Identifiable assets at 12/31/2000      $  5,586,261   $ 11,649,466   $  1,108,012   $    108,414   $          -   $ 18,452,153
                                       ============   ============   ============   ============   ============   ============
Total Assets at 12/31/2000                        -              -              -              -              -   $ 18,452,153
                                                                                                                  ============
Depreciation, amortization and
 depletion for the period ending
 12/31/2000                            $    403,464   $          -   $      9,985   $      1,723   $          -   $    415,172
                                       ============   ============   ============   ============   ============   ============
Capital expenditures for the
 period ending 12/31/2000              $  1,618,274   $  1,978,852   $    674,067   $    101,250   $          -   $  4,372,443
                                       ============   ============   ============   ============   ============   ============
</TABLE>
                                                                               7
<PAGE>

5. OPERATING SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)

             Business Segment Information for Third Quarter of 2002
<TABLE><CAPTION>

                                         Airborne                                                   Adjustments
                                       Hyperspectral    Satellite    Oil and Gas     Terranet &         and
                                         Services      Development    Properties      Skywatch     Eliminations     Combined
                                       ------------   ------------   ------------   ------------   ------------   ------------
<S>                                    <C>            <C>            <C>            <C>            <C>            <C>
Revenue                                $    211,748   $  1,305,112   $     87,139   $          -   $          -   $  1,603,999
                                       ============   ============   ============   ============   ============   ============
Operating Loss                         $     78,397   $   (462,471)  $    (30,792)  $   (109,925)  $          -   $   (524,791)
                                       ============   ============   ============   ============   ============   ============
Interest income                        $         49   $        343   $          -   $          -   $          -   $        392
Interest expense                           (118,388)      (107,707)             -              -              -       (226,095)
Income from continuing operations
 before income taxes and minority
 interests                                        -              -              -              -              -       (750,494)
Identifiable assets at 12/31/2001      $  4,726,525   $ 14,086,106   $  1,402,834   $    111,577   $          -   $ 20,327,042
                                       ============   ============   ============   ============   ============   ============
Total Assets at 12/31/2001                        -              -              -              -              -   $ 20,327,042
                                                                                                                  ============
Depreciation, amortization and
 depletion for the period ending
 12/31/2001                            $    137,694   $          -   $     12,540   $        430   $          -   $    150,664
                                       ============   ============   ============   ============   ============   ============
Capital expenditures for the
 period ending 12/31/2001              $      4,567   $    138,438   $          -   $          -   $          -   $    143,005
                                       ============   ============   ============   ============   ============   ============

             Business Segment Information for Third Quarter of 2001

                                         Airborne                                                   Adjustments
                                       Hyperspectral    Satellite    Oil and Gas     Terranet &         and
                                         Services      Development    Properties      Skywatch     Eliminations     Combined
                                       ------------   ------------   ------------   ------------   ------------   ------------
Revenue                                $    871,378   $          -   $    287,670   $          -   $          -   $  1,159,048
                                       ============   ============   ============   ============   ============   ============
Operating Loss                         $ (2,958,510)  $   (360,514)  $    206,424   $   (110,189)  $          -   $ (3,222,789)
                                       ============   ============   ============   ============   ============   ============
Interest income                        $          -   $     15,653   $          -   $          -   $          -   $     15,653

Interest expense                           (206,718)      (156,419)             -              -              -       (363,137)
Income from continuing operations
 before income taxes and minority
 interests                                        -              -              -              -              -     (3,570,273)
Identifiable assets at 12/30/2000      $  5,586,261   $ 11,649,466   $  1,108,012   $    108,414   $          -   $ 18,452,153
                                       ============   ============   ============   ============   ============   ============
Total Assets at 12/31/2000                        -              -              -              -              -   $ 18,452,153
                                                                                                                  ============
Depreciation, amortization and
 depletion for the period ending
 12/31/2000
                                       $    136,230   $          -   $      9,985   $          -   $          -   $    146,215
                                       ============   ============   ============   ============   ============   ============
Capital expenditures for the
 period ending 12/31/2000              $     81,535   $  1,142,653   $    422,793   $    101,250   $          -   $  1,748,231
                                       ============   ============   ============   ============   ============   ============
</TABLE>

6. NET LOSS PER SHARE

Basic loss per share is based on the weighted average number of shares
outstanding during each quarter and income available to common shareholders.
Loss per share assuming dilution is based on the assumption that outstanding
stock options were exercised. The weighted average shares for computing basic
loss per share were 155,142,599 and 134,509,211 for the three months ended
December 31, 2001 and 2000, respectively and 154,519,159 and 131,391,092 for the
nine months ended December 31, 2001 and 2000, respectively. At December 31, 2001
17,575,500 stock options were exercisable, respectively. Because of the net loss
for the three months ended December 30, 2001 and 2000, potentially dilutive
common stock issuances were not included in the calculation of diluted loss per
share as their inclusion would be anti-dilutive.

                                                                               8
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
---------------------
Included in the financial statements of the Company is Space Technology
Development Corporation (STDC), which was acquired on December 21, 1999.

STDC is developing a remote sensing satellite in cooperation with the U.S. Navy
and several corporate partners under the congressionally sanctioned Joint Dual
Use Applications Program (JDUAP). This joint development provides for a
long-term cooperative relationship with the U.S. Navy and substantial federal
funding for what will be a commercially owned and operated hyperspectral remote
sensing satellite called the Naval EarthMap Observer (NEMO).

The NEMO agreement with the U.S. Navy's Office of Naval Research obligates the
government to provide approximately $70 million in funding, of which
approximately $69 million has already been spent. STDC is required to raise
approximately $125 million, the balance of funds needed to complete the
satellite and launch it, as well as to establish the commercial business to sell
products based on the imagery the satellite will collect. Work on the satellite
is proceeding as the Company and STDC raise funds to meet the industry
commitment.

Included in the Satellite Development business segment is additional costs of
satellite and sensor construction reimbursed to the Company through the US
Navy's Office of Naval Research.

In the Airborne Hyperspectral Services business segment in the third quarter of
2002, the Company projects were environmental and governmental agency related
contracts and sales of archive data.

In the Oil and Gas Properties business segment in the third quarter of 2002, the
Company continued with its strategic plan of investing in projects that explore
and develop oil and gas properties.

The Company recognized revenue of $1,603,999 in the third quarter of 2002
compared with $1,159,048 in the second quarter of 2001. Included in the third
quarter of 2002 is $87,139 in revenue from Oil and Gas Properties and revenue of
$1,305,112 from STDC. Revenue for the nine months ended December 30, 2001 and
2000, was $4,103,747 and $1,881,925, respectively. Included in revenue for the
nine months ended December 31, 2001and 2000 is $3,420,525 and $433,014,
respectively from STDC. Revenue from airborne hyperspectral services was
$378,904 and $1,161,241 for the nine months ended December 31, 2001 and 2000,
respectively. Revenue from oil and gas properties was $304,318 and $287,670 for
the nine months ended December 31, 2001 and 2000, respectively.

The Company recognized costs of revenue of $1,443,225 in the three months ended
December 31, 2001 compared with $508,598 for the three months ended December 31,
2000. Included in the three months ended December 31, 2001 and 2000 is STDC cost
of revenue of $1,305,112 and $0, respectively. Cost of revenue for the nine
months ended December 31, 2001 and 2000, was $4,103,747 and $1,815,860,
respectively. Included in cost of revenue for the nine months ended December 31,
2001and 2000 is $3,420,525 and $1,089,865, respectively from STDC. Cost of
revenue from airborne hyperspectral services was $236,844 and $1,059,482 for the
nine months ended December 31, 2001 and 2000, respectively. Cost of revenue from
oil and gas properties was $525,194 for the nine months ended December 31, 2001.
There was no cost of revenue from oil and gas properties for the nine months
ended December 31, 2000.

                                                                               9
<PAGE>

General and administrative expenses for the three months ended December 31, 2001
were $685,565 compared with $3,873,239 for the three months ended December 31,
2000. General and administrative expenses for the nine months ended December 31,
2001 were $2,465,348 compared with $5,776,845 for the nine months ended December
31, 2000. The three and nine months ended December 31, 2000 included non-cash
compensation expense of $2,926,000 from the issuance of shares of stock to
employees as a bonus.

Interest income for the three months and nine months ended December 31, 2001 was
$392 and $4,567, respectively compared to $15,653 and 93,433 for the same
periods in 2000 due to significantly lower average cash balances in the 2002
compared to the 2001.

Interest expense for the three and nine months ended December 31, 2001 was
$226,095 and $562,952 compared to $363,137 and $756,906 for the same periods in
2000 due to lower average interest bearing liability balances in 2002 compared
to the 2001.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash decreased in the third quarter of 2002 due to capital expenditures and
operating losses. Capital expenditures in the third quarter of 2002 were
primarily expenditures for the Company's satellite program.

Net cash used in operating activities was $806,988 for the nine months ended
December 31, 2001, resulting primarily from a net loss of $2,835,831 net of
certain non-cash expenses. Net cash used in operating activities was $1,477,713
for the nine months ended December 31, 2000, resulting primarily from a net loss
of $6,165,676 net of certain non-cash expenses.

The Company is experiencing working capital deficiencies because of operating
losses and capital expenditures. The Company has operated with funds received
from the sale of its common stock and the issuance of notes. The ability of the
Company to continue as a going concern is dependent upon continued debt or
equity financings until or unless the Company is able to generate operating
revenues to sustain ongoing operations. The Company plans to increase the number
of revenue producing services through the use of additional hyperspectral
instruments and thereby continue as a going concern.

Over the next 6 to 12 months, the Company expects to raise sufficient capital
through a combination of debt and sale of equity in its subsidiaries. Additional
capital will enable the Company to pursue an acquisition plan intended to
further its market leadership position in airborne and space based hyperspectral
remote sensing technology and to attract highly specialized technical,
managerial and marketing staff to assist each subsidiary in the execution of its
business plan. Further, additional capital will enable the Company to finish the
construction and launch of the NEMO I satellite and to start feasibility
studies, engineering, and design of next generation airborne remote sensing
instruments and the NEMO II satellite.

CURRENT WORLD SITUATION AND FUTURE OPERATIONS
---------------------------------------------
The World Trade Center and Pentagon attacks were horrible events. They have
resulted in unprecedented civil defense and military activity in the United
States. Part of this activity involves a need for intelligence information, some
of which must be drawn from the remote sensing segment of American industry. The
U.S. government believes this war against terrorism will be an extended
engagement and will require intelligence information from a variety of sources.
Both the Company's current airborne remote sensing capability and the future
launch of the hyperspectral imaging satellite, NEMO, will provide imagery and
intelligence data both at home and abroad that will improve military
effectiveness and related actions. Some of the intelligence data provided by
NEMO are obvious,

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<PAGE>

while others do not fall in the releasable for public consumption domain. The
Company is already engaged in talks with U.S. government officials in regards to
the "Homeland Defense" initiative.

The Company has active aerial hyperspectral capabilities today. The NEMO
satellite is currently 14-22 months away from launch and full operation. The
Company believes it is most important that the country have hyperspectral
capabilities as quickly as possible. Fast tracking the NEMO launch to 14 months
is an objective shared by both the Company and the government.

The events of September 11, 2001 are, without question, the most catastrophic
events in the country's history. However, it has served to re-awaken the United
States to the fact that the continental United States is not a safe haven
excluded from the world's evils. These events have also introduced various U.S.
agencies to the Company's leadership position in hyperspectral imagery and the
various roles it can play in responding to this latest threat to the continental
U.S. It is already apparent that this new wide-scale awareness to hyperspectral
technology and the Company's capabilities should result in profitable revenue
growth for the Company over the next several years with most of these revenues
coming from the Department of Defense and other State and Federal government
agencies.

The value of hyperspectral to the defense and intelligence communities
notwithstanding, the Company fully intends to continue with its more commercial
endeavors in the environmental market and oil and gas business segment as well
as to pursue sales of hyperspectral services for surveying and processing, to
third parties in the mineral, hydrocarbon, forestry and environmental areas. In
addition, the Company intends to continue to perform remote sensing surveys for
its own use with applications in mineral and hydrocarbon exploration as well as
hyperspectral validation surveys that will assist the Company in future
marketing activities.

The Company's subsidiary office in Washington, D.C. will focus on aforementioned
business development efforts with the federal government, as well as executing
the NEMO project. The Company believes U.S. Governmental agencies, especially
the Department of Defense and intelligence agencies will not only have great
interest in NEMO generated products, but will also engage the Company's aerial
remote sensing capabilities.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
Not applicable

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<PAGE>

                                     PART II

                           OTHER INFORMATION REQUIRED
                           --------------------------


    Item 1.   Legal proceedings                                        None
    Item 2.   Changes in securities                                    None
    Item 3.   Defaults upon senior securities                          None
    Item 4.   Submission of matters to a vote of security holders      None
    Item 5.   Other information                                        None


                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned.

                                           EARTH SEARCH SCIENCES, INC.



Date: February 14, 2002                    /s/ Rory J. Stevens
                                           ------------------------------------
                                           Rory J. Stevens
                                           Chief Financial Officer





















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