SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





Amendment
No.1


FORM
10-QSB/A





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


OF
1934





For the
quarterly period ended:  DECEMBER 31, 2006


Commission
File No. 000-19566





EARTH
SEARCH SCIENCES, INC.


(Exact
Name of Registrant as Specified in its Charter)





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








306 STONER LOOP ROAD,
LAKESIDE, MT 59922


(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 TNo £





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





The  number  of
shares outstanding of each of the registrant's classes of common
stock,  as of December 31, 2006, covered by this report: 81,286,723
shares.  The
registrant  has  only  one  class  of  common  stock.





Transitional
Small Business Disclosure Format (check
one):    Yes £No T












EXPLANATORY
NOTE
 
 This
Amendment No.1 to Form 10QSB (“Amendment”) is filed to correct certain
disclosures.  The “Consolidated Statements of Operations” on page 4
has been revised.   Revised disclosures regarding the capital
lease obligation with Accuprobe pursuant to which the Registrant continues to
accrue liabilities may be found on page 6 under the heading “Note 3 –
Litigation” and on page 15 under the heading
“Litigation”.









EARTH
SEARCH SCIENCES, INC.





TABLE OF
CONTENTS





FORM
10-QSB





QUARTER
ENDED DECEMBER 31, 2006





PART I





FINANCIAL
INFORMATION








ITEM
      1.
            
            CONSOLIDATED
      FINANCIAL STATEMENTS
            
            PAGEConsolidated
      Balance Sheets as of December 31, 2006and March 31, 2006
      (unaudited)
            
            3Consolidated
      Statements of Operations for the Three and Nine Months Ended December 31,
      2006 and 2005 (unaudited)
            
            4Consolidated
      Statements of Cash Flows for the Nine Months Ended December 31, 2006 and
      2005 (unaudited)
            
            5Selected
      Notes to Consolidated Financial Statements
            
            6-7ITEM
      2.
            
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            
            7-13ITEM
      3.
            
            CONTROLS
      AND PROCEDURES
            
            14








PART II





OTHER INFORMATION
REQUIRED





Item
      1.
            
            Legal
      Proceedings
            
            14Item
      2.
            
            Changes
      in Securities
            
            14Item
      3.
            
            Defaults
      Upon Senior Securities
            
            14Item
      4.
            
            Submission
      of Matters of a Vote of Security Holders
            
            14Item
      5.
            
            Other
      information
            
            14Item
      6.
            
            Exhibits
      and Reports on Form 8-K
            
            14





2





Earth
Search Sciences, Inc.


Consolidated
Balance Sheets (Unuadited)





December 31,
      2006
            
            
            March 31,
      2006Current
      assets:Cash
            
            $
            31,187
            
            
            $
            40,900Accounts
      receivable, net of  $0 allowance for doubtful
      accounts
            
            
            132
            
            
            
            16,971Loan
      costs, net of $364,333 and $227,075 accumulated
    amortization
            
            
            29,311
            
            
            
            166,569Total
      current assets
            
            
            60,630
            
            
            
            224,440Property
      and equipment, net of $806,246 and $735,635 accumulateddepreciation and amortization
            
            
            334,820
            
            
            
            413,793TOTAL
      ASSETS
            
            $
            395,450
            
            
            $
            638,233LiabilitiesCurrent
      liabilities:Current
      portion of notes payable
            
            $
            843,947
            
            
            $
            880,934Settlement
      obligation
            
            
            4,630,489
            
            
            
            2,820,099Accrued
      officers' compensation
            
            
            1,086,900
            
            
            
            907,983Accounts
      payable
            
            
            11,644,896
            
            
            
            11,641,757Accrued
      payroll & payroll taxes
            
            
            246,455
            
            
            
            179,890Due
      to related parties
            
            
            2,709,209
            
            
            
            2,368,509Total
      current liabilities
            
            
            21,161,896
            
            
            
            18,799,172Long
      Term LiabilitiesNotes
      payable less current portion
            
            
            337,283
            
            
            
            349,303Total
      liabilities
            
            $
            21,499,179
            
            
            $
            19,148,475Commitments
      and contingenciesStockholders'
      deficitSeries
      A preferred stock; 200,000 shares authorized, none issued and outstanding;
      liquidation preference $1,000,000
            
            $
            -
            
            
            $
            -Common
      stock, $.001 par value; 200,000,000 shares authorized; 81,286,723 and
      77,697,642 shares, issued and outstanding
            
            
            81,287
            
            
            
            77,698Additional
      paid-in capital
            
            
            44,321,812
            
            
            
            43,495,841Treasury
      stock
            
            
            (200,000
            )
            
            
            (200,000
            )Accumulated
      deficit
            
            
            (65,306,828
            )
            
            
            (61,883,781
            )Total
      stockholders' deficit
            
            
            (21,103,729
            )
            
            
            (18,510,242
            )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            395,450
            
            
            $
            638,233





See
accompanying notes to consolidated financial statements





3





Earth
Search Sciences, Inc.


Consolidated
Statement of Operations (unaudited)







Three
      Months
            
            
            Nine
      MonthsEnded
      December 31,
            
            
            Ended
      December 31,2006
            
            
            2005
            
            
            2006
            
            
            2005Revenue
            
            $
            -
            
            
            $
            116,699
            
            
            $
            91,429
            
            
            $
            388,365ExpensesGeneral
      and administrative
            
            
            (847,399
            )
            
            
            (349,414
            )
            
            
            (2,964,580
            )
            
            
            (1,241,545
            )Depreciation
      and Amortization Expense
            
            
            (27,048
            )
            
            
            (13,352
            )
            
            
            (78,973
            )
            
            
            (120,169
            )Loss
      from operations
            
            
            (874,447
            )
            
            
            (246,067
            )
            
            
            (2,952,124
            )
            
            
            (973,349
            )Other
      income (expense)Interest
      expense
            
            
            (46,474
            )
            
            
            (148,950
            )
            
            
            (470,923
            )
            
            
            (437,241
            )Net
      loss
            
            $
            (920,921
            )
            
            $
            (395,017
            )
            
            $
            (3,423,047
            )
            
            $
            (1,410,590
            )Basic
      and diluted loss per share
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.04
            )
            
            $
            (0.02
            )Weighted
      average common
            
            
            81,281,201
            
            
            
            75,696,817
            
            
            
            80,574,567
            
            
            
            74,724,184





See
accompanying notes to consolidated financial statements





4





Earth
Search Sciences, Inc.


Consolidated
Statements of Cash Flows (unaudited)








Nine
      MonthsEnded
      December 31,2006
            
            
            2005Cash
      flows from operating activities:Net
      loss
            
            $
            (3,423,047
            )
            
            $
            (1,410,590
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation,
      amortization and depletion
            
            
            78,973
            
            
            
            93,027Amortization
      of deferred loan costs
            
            
            137,258
            
            
            
            219,476Common
      stock for services and interest expense
            
            
            753,833
            
            
            
            473,825Common
      stock for debt
            
            
            75,727
            
            
            
            9,600Warrants
      for services
            
            
            -
            
            
            
            17,182Changes
      in assets and liabilitiesAccounts
      receivable and other current assets
            
            
            16,839
            
            
            
            (18,315
            )Accounts
      payable and accrued expenses
            
            
            1,859,048
            
            
            
            89,274Accounts
      payable to related parties
            
            
            340,700
            
            
            
            100,607Accrued
      interest
            
            
            21,046
            
            
            
            169,502Deferred
      officers' compensation
            
            
            178,917
            
            
            
            180,000Net
      cash provided by (used in) operating activities
            
            
            39,294
            
            
            
            (76,412
            )Cash
      flows from financing activities:Proceeds
      from shareholder loans, net
            
            
            -
            
            
            
            72,014Proceeds
      from sale of stock
            
            
            -
            
            
            
            62,500Repayments
      on notes payable
            
            
            (49,007
            )
            
            
            (30,680
            )Net
      cash provided by (used in) financing activities
            
            
            (49,007
            )
            
            
            103,834Net
      increase (decrease) in cash
            
            
            (9,713
            )
            
            
            27,422Cash
      at beginning of period
            
            
            40,900
            
            
            
            9,175Cash
      at end of period
            
            $
            31,187
            
            
            $
            36,597Supplemental
      disclosures:Income
      taxes paid
            
            $
            -
            
            
            $
            -Interest
      paid
            
            
            -
            
            
            
            -Non-cash
      financing and investing activities:Common
      Stock issued for loan extension
            
            $
            72,000
            
            
            $
            123,726Warrants
      for loan extension
            
            
            -
            
            
            
            92,494





See
accompanying notes to consolidated financial statements





5





EARTH
SEARCH SCIENCES, INC


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1 -
BASIS OF PRESENTATION





The
accompanying unaudited interim financial statements of Earth Search Sciences,
Inc. ("ESSI") have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission ("SEC"), and should be read in conjunction
with the audited financial statements and notes thereto contained in ESSI's
Annual Report filed with the SEC on Form 10-KSB.  In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected
herein.  The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full
year.  Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for 2006
as reported in the 10-KSB have been omitted.





Certain
prior period amounts have been reclassified to confirm with current year
presentation.





NOTE 2 -
EQUITY





During
the quarter ended June 30, 2006:





-
            ESSI
      issued 1,553,561 common shares valued at market of $533,326 to various
      individuals for consulting
services.





-
            ESSI
      issued 400,000 common shares to a debtor for a loan extension to September
      15, 2006. The shares were valued at market of
  $72,000.





During
the quarter ended September 30, 2006:





-
            ESSI
      issued 485,333 common shares valued at market of $140,745 to various
      individuals for consulting
services.





-
            ESSI
      issued 375,000 common shares valued at market of $75,000 to an individual
      that elected to convert a promissory note with right of
      conversion.





During
the quarter ended December 31, 2006:





-
            ESSI
      issued 45,682 common shares valued at market of $7,766 to an individual
      for consulting services.





NOTE 3 -
LITIGATION





ESSI was
in dispute with another party over a leaseback purchase agreement for a
Hyperspectral Probe.  During the fourth quarter of fiscal 2005, both
parties signed a mutual release in which ESSI was to return the Probe and ESSI
would be released of amounts owed to the other party as of the date the Probe is
returned.  ESSI agreed to return the Probe at the end of August 2005;
however, as of December 31, 2006, ESSI has not returned the Probe.  As
a result, ESSI is in default, and based on the terms of the settlement
agreement, ESSI is obligated to pay significant late fees.  Based on
the terms of the settlement agreement, as of December 31, 2006, management
estimates the settlement obligation to be $4,630,489.  The estimated
settlement obligation increased $1,811,389 to $4,630,570 at December 31, 2006,
compared to $2,820,099 at March 31, 2006.  The increase is related to
interest expense of $20,964, rent expense of $187,500 and late fees of
$1,602,925, which are reflected as interest expense and general and
administrative in our statement of operations for the six months ended December
31, 2006.  As of December 31, 2006, management has recognized an
accrual for the estimated obligation.





6





NOTE 4 -
GOING CONCERN





As shown
in the accompanying financial statements, ESSI incurred recurring net losses of
$3,423,047 and $1,410,590 for the nine-month periods ended December 31, 2006 and
2005, respectively and has an accumulated deficit of $65,306,828 and a working
capital deficit of $21,101,266 as of December 31, 2006.  These
conditions raise substantial doubt as to ESSI's ability to continue as a going
concern.  Management is trying to raise additional capital through
sales of stock.  The financial statements do not include any
adjustments that might be necessary if ESSI is unable to continue as a going
concern.








MANAGEMENT'S
DISCUSSION AND ANALYSIS


OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS





CORPORATE
FOCUS





In
December, 1985 the Company acquired all of the outstanding shares of common
stock of a privately held company known as Earth Search Sciences, Inc. (ESSI), a
Utah corporation formed on August 29, 1985.  The Company issued
13,639,600 shares of its common stock in exchange for ESSI's outstanding
shares.  This merger was a reverse acquisition and accounted for as a
pooling of interests. Accordingly, the assets and liabilities of the two
companies were combined at their recorded net book values.  ESSI's
principal assets were unpatented mining claims in Alaska that were acquired from
ESSI's incorporators at a cost of $126,715.  ESSI's operations were
the continuing operations of the Company, and ESSI was the entity which had
substance and control both before and after the merger.





In
August, 1987 the Company changed its name to Earth Search Sciences, Inc. and in
November, 1987 ESSI was dissolved.





ESSI has
four wholly-owned subsidiaries: Skywatch Exploration, Inc., Polyspectrum
Imaging, Inc., Geoprobe, Inc., and STDC, Inc. In addition, there are five
majority-owned consolidated subsidiaries: Earth Search Resources, Inc., Eco
Probe, Inc., ESSI Probe 1 LC, Petro Probe, Inc. and Terranet, Inc. The 50% owned
subsidiary ESSI Probe 1 LC was formed as a joint venture to own and operate
hyperspectral instruments. All subsidiaries except Petro Probe were inactive
during fiscal 2006 and 2007.





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





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





7





In the
fiscal years from 2004 to 2006 the Company's sensors were operated in the United
States and abroad.  Contracts to operate the sensors in the United
States as an ecological, mining, agricultural, and hydrocarbon target
identification tool produced revenues of $302,901, $192,297 and $258,843, to
revenue in fiscal 2006, 2005, and 2004, respectively.





In 1997
the Company began a two year contract with Noranda Minerals Inc. to provide
hyperspectral remote sensing data over multi-continents The agreements called
for a series of flights for Noranda Mining and Exploration Inc. and its
affiliates including Falconbridge Limited (collectively, the "Noranda Group").
The agreements provided the Noranda Group with an exclusive license to use the
instruments for commercial mining exploration, as long as the Noranda Group
continued to purchase remote sensing services from the Company in certain
specified quantities.  The  Company was entitled to receive
fees for services and net smelter royalties or net profit interest royalties
from certain discoveries by the Noranda Group. The licensing agreement with the
Noranda Group provided a $1,000,000 equity investment in ESSI by way of 200,000
preferred shares, convertible into 1,000,000 shares of common stock and an
option to purchase 1,000,000 shares of ESSI common stock at a price of $2.00 per
share. Targets were flown in Chile, Peru and the North West Territories in
Canada.





Since
1997, the Company has also collected and holds a substantial archive of Probe 1
imagery from Kazakhstan, Australia, British Columbia, Ontario, Quebec, Chile,
Mexico, California, Nevada, Arizona, Idaho, Montana, and Utah.  At the
present time the value of this data archive has not been independently appraised
nor is the value of this archive reflected in the financial statements. Various
industry contacts allowed the Company to expand rapidly. The
Company concluded a memorandum of agreement with Boeing that included the use of
a unique Boeing aircraft possessing exceptional slow flight characteristics to
be used in a variety of applications, the first being the flight over
Yellowstone National Park as part of a NASA/Yellowstone Ecosystems Studies
(Y.E.S.) project utilizing ESSI's Probe 1 hyperspectral imaging technology to
collect one meter data to be utilized in addressing riparian
issues.  Several test flights were performed during the period using
the Probe 1 technology onboard a Boeing heliocourier aircraft.





The
Company collected hyperspectral data for the Geosat Committee. The Geosat
committee was funded from contribution by major U.S. resource
companies.  The Committee was operated by the University of Texas at
El Paso under Director, Dr. Rebecca Dodge.  The project completed for
the Geosat's "Hyperspectal Group Shoot" provided Probe 1 hyperspectral imagery
to the oil and minerals exploration, environmental assessment, and agriculture
end-user community, for an evaluation by these communities of its application
potential.





The
Company teamed with the University of Idaho in a joint proposal to the Farm
Bureau and won a contract to overfly the Snake River Basin (Hell's
Canyon).  The Company also collected hyperspectral data for the
control and eradication of noxious weed intrusion.  The test results
were published and  initial results proved that airborne hyperspectral
imagery is a useful tool for control of weeds, as well as providing information
regarding economic indicators pertaining to forecasting crop yield





The
Company collected hyperspectral data for Desert Research Institute ("DRI") in
the Kelso Dunes area in southeastern California.  The project
completed for DRI was to detect change in arid vegetation cover using
Hyperspectral data in the region known as the Providence
Mountains.  Detection of disturbance in these regions would aid in
assessment of ecosystem status and global climate change. The remote sensing
data combined with ground measurements examined spectral changes occurring
concurrently with observed changes in percent green cover.





The
Company co-operated with the Dian Fossey Gorilla Fund International organization
to utilize hyperspectral remote sensing in a unique project to examine the
detail of vegetation in the gorillas'
habitat in the jungles of Rwanda.  Hyperspectral imagery revealed the
abundance and distribution of the gorillas' principal foods in the Virungas.
This information was used to determine the number of gorillas the habitat can
support. National Geographic Explorer chronicled the mission in a television
documentary that was subsequently played on numerous following
dates.





8








In 1999
the company was approached by the US Navy to participate in a joint venture to
acquire ownership of a proposed remote sensing satellite. Under the direction of
Office of Naval Research's Naval Space Science and Technology Program Office,
the Naval EarthMap Observer (NEMO) satellite would be capable of meeting the
hyperspectral and panchromatic needs of many end users with timeliness and
spatial resolution improved over existing commercial systems. The Navy's
environmental models supporting operations in the littoral would be considerably
enhanced by hyperspectral imagery and data products provided by NEMO to improve
knowledge of the littoral environment with information on bathymetry, water
clarity and trafficability.





The ONR
signed an Other Transaction with the Space Technology Development Corporation
(STDC) of Arlington, VA to develop NEMO in conjunction with the Defense Advanced
Research Projects Agency (DARPA) Dual Use Applications Program (DUAP). DUAP is a
joint program of the Army, Navy, Air Force, DARPA, Director Defense Research and
Engineering (DDR&E), and the Deputy Under Secretary of Defense for
International and Commercial Programs.  Earth Search Sciences Inc.
subsequently acquired STDC and its prime contractor partner position with the
ONR. The project was to have a cost of approximately $150 million with the
private sector portion approximately one-half of that amount. Earth Search
Sciences Inc. undertook to meet the key funding milestone payments necessary to
ensure progress of the project.





The
Hyperspectral Imager (HSI) would sample over a 30 km swath width with a 60 m
ground sample distance (GSD) with the option to go to 30 m GSD by utilizing the
systems attitude control system to 'nod' (i.e. use a satellite pitch maneuver to
slow down the ground track of the field of view). A 5m panchromatic imager will
provide simultaneous high spatial resolution imagery (black & white
photography). A sun-synchronous circular orbit of 600 km will allow continuous
repeat coverage of the whole earth in 7 days providing hyperspectral data over a
1,000,000 sq. km area each day.





The
combined HSI and panchromatic images would satisfy a number of requirements of
the commercial and science communities for moderate spatial and high spectral
resolution remote sensing data over land and water such as agriculture,
forestry, environmental monitoring , geology/mineralogy, hydrology and land use.
Specific areas of interest for the Navy included bathymetry, water clarity,
currents, oil slicks, bottom type, atmospheric visibility, tides,
bioluminescence, beach characterization, underwater hazards, total column
atmospheric water vapor, and detection and mapping of subvisible
cirrus.





It was
anticipated that NEMO would be launched in early 2002. Its subsequent data flow
would be in the order of 56 gigabytes per day. Much of the commercial
information was to be marketed through  Earth Search Sciences Inc.
Under  the original  agreement  with the ONR, STDC
needed to raise private industry  funds of  approximately
$125,000,000 in order to complete, launch and operate  the
hyperspectral imaging satellite and instrument. Subsequent to March
31,  2002, STDC  received notification from the ONR that it
would not be giving STDC an extension to the agreement. The payment of
approximately $8,216,424 of STDC accounts payable due subcontractors and vendors
on  the  NEMO program is being resolved.





These
examples and others indicated the world-wide interest in the technology and a
bright future for the industry and Company. Unfortunately the advent of the
September 11, 2001 tragedy changed the approach of individual countries to the
acceptance of data collection over their borders and an industry-wide slow down
occurred as a result. The commercial interest in developing satellite technology
also changed as investors decided the risk level had dramatically increased due
to international tensions.





9




CURRENT
BUSINESS





As a
result of the changes in the market for geological remote sensing data, the
Company changed its strategy from operating as a service provider to
establishing a group of subsidiary companies focused on specific market
applications. Petro Probe, Inc. was a new subsidiary company formed for the oil
& gas industry while Geo Probe, Inc. was formed for mineral
exploration.





The
resurgence of the mining industry and the emphasis for new sources of supply for
oil and gas in recent years created a greater interest in using exploration
tools that were faster and more accurate. The new subsidiary companies would
seek joint ventures with partners who could provide technologies, human and
capital resources to synergize with the Company's assets. This strategy will
lead to the creation of more demand for ESSI's hyperspectral remote sensing
services while providing the company with prospects for more diversified revenue
generation.





The  Company  experiences  the  highest  demand
for its collection services
April  through  October  in the Northern
Hemisphere and October through April in
the  Southern  Hemisphere.  Contracts are being
sought in the following market segments: mining, hydrocarbon, agriculture,
ecological and environmental monitoring. With the advent of the world-wide
recognition for control of global-warming issues the Company will commence the
development of an environmentally focused marketing plan to portray the
advantages of airborne hyperspectral remote sensing to these market
segments.





SUBSIDIARY
COMPANIES





Petro
Probe, Inc.'s goal is to develop the competitive advantages of its
resource  mapping  capability,  combine that with
conventional hydrocarbon
exploration  tools  and  then  apply
newer value-added technologies to identify good oil and gas
properties.





Geo
Probe, Inc. will use the hyperspectral mapping technology to find new
mineral  deposits and monitor the environmental impact of active and
past-producing  mines,  mills, smelters, refineries and
pipelines.  The
Company's  mapping  agreement  with Noranda
Minerals provided  the  ability to develop and prove these
new approaches to mineral exploration.


Geo Probe
has also attracted potential new alliance partners,  Advanced
Exploration   Inc.  and  Geological  Business
Inc., two Canadian companies, have discussed the formation of
new  exploration  and mine development  business
with the Company. Further discussions are forthcoming.





Eco
Probe, Inc. was formed to pursue hyperspectral remote sensing applications in
the environmental industry.  The Company has strived to take an
industrial leadership
role  in  working  with  U.S.  government  agencies  such  as  the
Environmental Protection Agency, the Bureau of Land Management and the Office of
Surface  Mining  on  setting  up  applications  for  commercial  monitoring  of
mineral industries,  forest  inventory and health issues,
slope stability assessment and
the  spread  of  noxious  weeds.





ESSI and
Eco Probe, Inc. have performed important hyperspectral surveys and research in
aquatic and vegetation-related projects. The environmental markets are vast,
however the Company's current lack of resources dictates continued priority be
assigned to mineral and hydrocarbon exploration.





10





The  Company
formed Terranet, Inc. to act as a imagery product distribution
conduit  and  perform  as  the  Company's  e-commerce
content provider. Recognizing  that
imagery  collected  today  and yesterday
could  be  sold
repeatedly  to  multiple  end users the Company's
subsidiary company, Terranet, completed the copyright design and testing
of  a  database  and  internet
centered  marketing  system.  Terranet anticipates
new joint venture partners to be available when the hyperspectral industry
begins to grow again.





Of the
other ESSI wholly-owned subsidiaries: Skywatch Exploration, Inc., Polyspectrum
Imaging, Inc., and Space Technology Development Corp.are inactive. Of the other
majority-owned consolidated subsidiaries: Earth Search Resources, Inc. and ESSI
Probe 1 LC are inactive.





RESULTS OF
OPERATIONS





Historically
ESSI's core business has been focused on collecting and processing airborne
hyperspectral data for the production of detailed surface maps. These maps
indicate the exact chemical and physical characteristics of all the materials
exposed on the surface of the Earth. The Company was one of the early pioneers
in developing the technology globally and has now served a number of clients in
various countries.





The
company realizes that opportunity exists in using the technology to discover
properties for mineral and hydrocarbon exploitation. It was a natural growth
step to create a strategy of developing subsidiary companies in key natural
resource markets wherein exploration discoveries could be maximized by
"in-house" development. The company is currently pursuing these avenues in the
mineral and oil and gas industries





The ESSI
data collection aircraft, a turbo prop Aero Commander, was grounded for repairs
in the summer of 2006. Both engines needed complete overhauls as well as other
FAA required servicing. This interruption in the ability to service
hyperspectral clients was detrimental to the Company's revenues in 2006. It is
expected the aircraft will be fully operational for the 2007
season.





Contracts  to  operate  the  sensors  in  the  United
States contributed approximately $302,901, $192,297 and $258,843, to revenue in
fiscal 2006,  2005, and  2004,  respectively. The
shortened 2006 season limited the work schedule to one major
client.





Although
the Company holds interests in seven oil and gas projects through its subsidiary
company, Petro Probe, Inc., as of September 30, 2006, all such interests were
fully impaired. In Fiscal 2006 and 2005 ESSI incurred unsuccessful oil and gas
properties write-offs of $27,318 and $386,628, respectively. During fiscal 2006
all the wells of ESSI were deemed to provide uneconomical future cash flows.
There are no prospects for new oil and gas contracts from existing properties in
2007.





The
Company recognized revenue of $0 for the three months ended December 31, 2006
compared with $116,699 for the three months ended December 31, 2005. Revenue for
the nine months ended December 31, 2006 was $91,429, compared to revenue of
$388,365 for the corresponding period in 2005. Revenues for both periods
decreased primarily due to inactive operations during fiscal year
2007.





Except
for fractional ownership and several wells on oil and gas producing properties,
ESSI has no other active operations at this time.





General
and administrative expenses were $848,125 for the three months ended December
31, 2006, compared to $349,414 for the corresponding period of 2005. General and
administrative expenses were $2,964,580 for the nine months ended December 31,
2006, compared to $1,241,545 for the corresponding period in 2005.





11





Interest
expense for the three months ended December 31, 2006 was $46,477, compared to
interest expense of $148,950 for the corresponding period in 2005.





LIQUIDITY  AND  CAPITAL  RESOURCES





Net cash
used by operating activities was $39,294 for the nine months ended December 31,
2006.  Net cash used in operating activities was $76,412 for the nine
months ended December 31, 2005 resulting primarily from a net loss of $1,410,590
net of certain non-cash expenses.





The
Company is experiencing working capital deficiencies because of operating losses
and capital expenditures. The Company and its subsidiaries have operated with
funds received from the sale of common stock, the issuance of notes and
operating revenue. 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 cash flows 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.
There can be no assurance that the Company can generate sufficient operating
cash flows or raise the necessary funds to continue as a going
concern.





FUTURE
OPERATIONS





The
Company is actively researching new exploration and exploitation technologies to
complement and integrate with its hyperspectral capabilities.





General
Synfuels International, Inc., (GSI) a Nevada private company, owns the
world-wide proprietary rights, patent, technology, construction plans and
materials and operational capability  for a gasification process
recover the oil and gas from oil shale. Petro Probe, Inc. signed a non-exclusive
license agreement with GSI to obtain the use of these rights in a world-wide
territory. PPI will pay a license fee in the amount of Five Hundred Thousand
United States Dollars ($500,000.00) and shall issue to GSI 500,000 fully paid
and non-assessable shares of PPI Common Stock, $.001 par value per
share.  PPI also agreed to assign to GSI an overriding net revenue
interest of five and one-half percent (5 %) of the hydrocarbonaceous products
produced by PPI, payable quarterly.





PPI is
examining various oil shale sites in Colorado and Utah for a test plant. Five
acres of premium oil shale land is sought. The test plant is budgeted for
approximately $1.5 million as a first stage development cost. This will prove
the technology. The second and third stages will cost approximately $8 million
more at which time the plant could operate at full capacity. The time line for
completion of all stages is one year.





In its
search for new complementing technologies, PPI encouraged the creation of an
alliance with two other companies in oil shale R&D. Independent Energy
Partners, Inc. (IEP) and Phoenix Wyoming Inc., (PWI) both Colorado private
companies, have their own non-competitive interests in oil shale. IEP owns the
exclusive rights to a broad, patented Geothermic Fuel CellTM (GFC) method, (US
Patent No. 6,684,948 B1-Apparatus and Method For Heating Subterranean Formations
Using Fuel Cells), to economically produce oil and natural gas from
unconventional resources such as oil shale, while producing electricity as a
byproduct.  IEP also has acquired the mineral rights on property in
Rio Blanco County, Colorado on some of the richest "Mahogany Zone" oil shale
property in the world, holding an estimated 1.4-2.4 billion barrels of oil. PWI
owns certain proprietary intellectual property and methods designed to bring the
advantages of microwave technology to an oil shale borehole. This alliance
effort is being examined by the parties.





Continuing
its interest to maintain an industry leadership positionin hyperspectral work
ESSI is developing a joint venture with Intellisense Corporation to design and
construct a third generation





12





hyperspectral
instrument design. This design is proposed in patent pending application
#0050046822 which the Company is negotiating an LOI position for purchase. The
new instrumentation would allow for faster, less expensive and more precise data
collection.





The
capability to design and maintain new technologies is key to the Company's
success in future operations. It will be a vital component to allow continuing
exploration and exploitation of the Earth's natural resources.





The
Company has the knowledge and experience to build on the opportunities being
presented at this time.





Each
subsidiary will focus on a specific sector of commercial remote sensing and have
a management team with relevant skills and expertise.  The Company
will provide a license to use the Company's hyperspectral instruments and
processing support. This strategy creates a ready market for the Company, as
well as positioning the Company to receive a royalty from any resource
development that occurs as a result of the subsidiaries' use of the Company's
instruments and technology. Additional capital will be raised for each
subsidiary by means of private placements or public offerings.





The
Company's intent is to create partnerships, strategic alliances, mergers or
acquisitions for the subsidiaries as the most expeditious and cost-effective way
to grow the commercial hyperspectral remote sensing market.





The
Company's near-term plans are to continue pursuing:





1.
            contracts
      that produce revenues from the application of remote
    sensing;


2.
            the
      development of additional miniaturized remote sensing instruments and
      newer generation airborne instruments to replace the current PROBE-1
      model;


3.
            the
      integration of other advanced technology exploration instruments with
      hyperspectral technology to offer clients a "one-stop"
      convenience;


4.
            the
      development of promising mineral, oil and gas
  properties;


5.
            the
      acquisition of licenses or options to new technologies for minerals or oil
      and gas production that can assist the company to become a resource
      developer and producer as well as an exploration oriented
      business.





The
company will continue to develop a market for its securities under the new
trading symbol ESSE.





LITIGATION





The
company entered into a civil law suit in the United States District Court for
the Eastern District of Virginia as a plaintiff along with its subsidiary
company, Space Technology Development Corporation. The company charged that The
Boeing Company caused the plaintiffs substantial damages as a direct result of
their breach of the covenant of good faith and fair dealing.





ESSI was
in dispute with another party over a leaseback purchase agreement for a
Hyperspectral Probe.  During the fourth quarter of fiscal 2005, both
parties signed a mutual release in which ESSI was to return the Probe and ESSI
would be released of amounts owed to the other party as of the date the Probe is
returned.  ESSI agreed to return the Probe at the end of August 2005;
however, as of December 31, 2006, ESSI has not returned the Probe.  As
a result, ESSI is in default, and based on the terms of the settlement
agreement, ESSI is obligated to pay significant late fees.  Based on
the terms of the settlement agreement, as of December 31, 2006, management
estimates the settlement obligation to be $4,630,570 which reflects a 5% late
fee imputed each month on the outstanding balance
due.  As of December 31, 2006, management has recognized an accrual
for the estimated obligation.





13




ITEM  3.  CONTROLS  AND  PROCEDURES





The
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Chairman and Chief
Executive Officer of the Company and Chief Financial Officer of the Company, of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-15(e) as of the end of
the period covered by this report. Based upon that evaluation, the Chairman and
Chief Executive Officer and Chief Financial Officer concluded that, as of the
end of the period covered by this report, the Company's disclosure controls and
procedures were not effective. Specifically, the Company's independent auditors
identified deficiencies in controls related to revenue recognition, valuation of
share-based compensation, and recording of accrued expenses associated with the
Company's settlement obligation. The Company intends to take measures to remedy
this situation by working with the auditors and engaging outside advisors to
provide accounting advice and assistance with implementing internal procedures
to ensure that controls and procedures are adequate and effective. These
deficiencies have been reported to the Company's Board of Directors, and the
Company intends to improve and strengthen its controls and procedures. There has
been no change in our internal control over financial reporting that occurred
during the period covered by this report that has materially affected, or that
is reasonably likely to materially affect our internal control over financial
reporting.








PART
II





OTHER
INFORMATION REQUIRED








Item
      1.
            
            Legal
      proceedings
            
            NoneItem
      2.
            
            Changes
      in securities
            
            NoneItem
      3.
            
            Defaults
      upon senior securities
            
            NoneItem
      4.
            
            Submission
      of matters to a vote of security holders
            
            NoneItem
      5.
            
            Other
      information
            
            NoneItem
      6.
            
            Exhibits
      attached





14





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:  April
      21, 2007
            
            /s/  Larry
      F. VanceLarry
      F. VanceChief
      Executive Officer






15