SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended: June 30, 1998
                           Commission File No. 0-19566

                       EARTH SEARCH SCIENCES, INCORPORATED
             (Exact Name of Registrant as Specified in its Charter)

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


                  502 North 3rd Street, #8 McCall, Idaho 83638
          (Address of Principal Executive Offices, Including Zip Code)

Registrant's telephone number, including area code:  (208) 634-7080

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 the close of the period, covered by this report: 89,334,269 shares.
The registrant has only one class of common stock.
<PAGE>

                           EARTH SEARCH SCIENCES, INC.

                                    FORM 10-Q
                                   (Unaudited)

                           QUARTER ENDED JUNE 30, 1998

                                     PART I

                              FINANCIAL INFORMATION

                                TABLE OF CONTENTS

Item 1.  Financial Statements                                    Page

         Consolidated Balance Sheet
          as of June 30, 1998 and March 31, 1998.                  3

         Consolidated Statement of Operations for the
          Three Months Ended June 30, 1998 and 1997.               4

         Consolidated Statement of Cash Flows for the
          Three Months Ended June 30, 1998.                        5

         Selected Notes to Consolidated Financial
          Statements.                                             6-8

Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations           8-10

                                     PART II

                           OTHER INFORMATION REQUIRED

Item 1.  Legal Proceedings                                         11
Item 2.  Changes in Securities                                     11
Item 3.  Defaults Upon Senior Securities                           11
Item 4.  Submission of Matters of a Vote of
          Security Holders                                         11
Item 5.  Other information                                         11
Item 6.  Exhibits and Reports on Form 8-K                          11

<PAGE>


EARTH SEARCH SCIENCES, INC
(A Development Stage Company)
Consolidated Balance Sheet
<TABLE>
<CAPTION>

                                                                              June 30,               March 31,
                                                                                1998                   1998
                                                                           ----------------       ----------------
<S>                                                                        <C>                     <C>
Assets
Current assets:
    Cash                                                                          $ 53,562               $ 42,600
    Accounts Receivable                                                            100,270                675,648
    Prepaid expenses & other assets                                                663,415                      -
                                                                           ----------------       ----------------

       Total current assets                                                        817,247                718,248

Property and equipment                                                           4,054,771              3,979,179
Other long-term assets                                                             183,225                183,225
                                                                           ----------------       ----------------

Total assets                                                                   $ 5,055,243            $ 4,880,652
                                                                           ================       ================

Liabilities, Redeemable Common Stock and
Nonredeemable Shareholders' Deficit
Current liabilities:
Notes payable                                                                     $ 78,399               $ 89,080
Accounts payable (Note 2)                                                          708,337                671,332
Accrued payroll taxes                                                                    -                 18,449
Accrued interest                                                                   288,918                281,750
Payable to Probe 1 Joint Venture (Note 4)                                          500,000                500,000
Unearned revenue                                                                     8,000                 40,000
Cash advances and deposits                                                               -                      -
                                                                           ----------------       ----------------

Total current liabilities                                                        1,583,654              1,600,611

Long-term liabilities:
Shareholder loans (Note 6)                                                         262,090                104,090
Capital lease obligation                                                         2,150,733              2,029,410
Deferred officers' compensation                                                  1,500,338              1,387,461
Minority interests                                                               2,247,000              2,247,000
                                                                           ----------------       ----------------

Total liabilities                                                                7,743,815              7,368,572
                                                                           ----------------       ----------------

Commitments and contingencies

Redeemable common stock, $.001 par value, 1,725,914 shares
  issued and outstanding at March 31, 1998 and 1997                                517,845                517,845
                                                                           ----------------       ----------------

Nonredeemable shareholders' deficit:
    Series A preferred stock; 200,000 shares
      authorized, issued and outstanding at March 31, 1998                       1,000,000              1,000,000
Common stock, $.001 par value; 200,000,000 shares
  authorized; 87,608,355 and 84,792,576 shares, respectively,
  issued and outstanding                                                            87,608                 84,792
Additional paid-in capital                                                      10,367,064              9,827,644
Common stock subscribed                                                                  -                165,000
Deficit accumulated during the development stage                               (14,661,089)           (14,083,201)
                                                                           ----------------       ----------------

                                                                                (3,206,417)            (3,005,765)
                                                                           ----------------       ----------------
Total liabilities, redeemable common stock and
  nonredeemable shareholders' deficit                                          $ 5,055,243            $ 4,880,652
                                                                           ================       ================
</TABLE>
<PAGE>

EARTH SEARCH SCIENCES, INC.
(A Development Stage Company
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>

                                                                        For the Three Months
                                                                             Ended June 30,

                                                                       1998                   1997
                                                                 -----------------      -----------------
<S>                                                              <C>                    <C> 
Revenue:                                                                $ 250,270                    $ -
Cost of services provided                                                (141,448)                     -
                                                                 -----------------      -----------------
Gross margin                                                              108,822                      -

Expenses:
   Exploration                                                                  -                140,481
   Depreciation and Amortization                                            6,431                  7,500
   General and Administrative                                             370,218                546,513
                                                                 -----------------      -----------------
                                                                          376,649                694,494

Loss from operations                                                     (267,827)              (694,494)

Interest income                                                                 -                      -
Interest expense                                                         (177,596)              (100,515)
Other income (expense)                                                    (17,442)                     -
                                                                 -----------------      -----------------

Loss before minority interest                                            (462,865)              (795,009)

Minority interest in losses of
   consolidated subsidiaries                                                    -                      -
                                                                 -----------------      -----------------

Loss before extraordinary items                                          (462,865)              (795,009)

Extraordinary item (Debt
   extinguishment loss)                                                  (115,023)            (1,000,000)
                                                                 -----------------      -----------------

Net Loss                                                               $ (577,888)          $ (1,795,009)
                                                                 =================      =================

Shares applicable to basic loss per share
   and diluted loss per share                                          88,308,696             70,256,693

Basic and diluted loss per share                                          $ (0.01)               $ (0.03)

</TABLE>
<PAGE>


EARTH SEARCH SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
                                                                                   For the Three Months
                                                                                        Ended June 30,

                                                                              1998                     1997
                                                                        -----------------        -----------------
<S>                                                                     <C>                      <C>

Cash flows from operating activities:
   Net lncome                                                                 $ (577,888)            $ (1,795,009)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
   Issuance of common stock for services
     and interest expense                                                        102,729                   60,720
   Extraordinary items                                                           115,023                1,000,000
   Depreciation                                                                   68,931                    7,500
   Amortization of lease discount                                                121,323
   Changes in assets and liabilities:
      Accounts receivable                                                       (100,270)                       -
      Prepaid assets and deposits                                                 39,399                  (50,000)
      Accounts payable                                                           (21,961)                (697,713)
      Accured liabilities                                                        (11,281)                 108,914
      Unearned revenue                                                           (32,000)                       -
      Deferred officers compensation                                             112,877                   91,697
                                                                        -----------------        -----------------

  Net cash provided by operating activities                                     (183,118)              (1,273,891)
                                                                        -----------------        -----------------

Cash flows from investing activities:
   Capital expenditures                                                          (11,239)                       -
   Advance deposits                                                                    -                  341,000
                                                                        -----------------        -----------------

Net cash used by investing activities                                            (11,239)                 341,000
                                                                        -----------------        -----------------

Cash flows from financing activities:
  Repayment of notes payable                                                     (10,681)                       -
  Proceeds from shareholder loans                                                191,500                        -
  Repayments of shareholder loans                                                (33,500)                       -
  Issuance of common stock                                                        58,000                   46,000
  Proceeds from Probe 1 joint venture                                                  0                1,200,000
                                                                        -----------------        -----------------

Net cash provided from financing activities                                      205,319                1,246,000
                                                                        -----------------        -----------------

Net increase (decrease) in cash                                                   10,962                  313,109
Cash at beginning of period                                                       42,600                   51,666
                                                                        -----------------        -----------------
                                                                                                 =================
Cash at end of period                                                           $ 53,562                $ 364,775
                                                                        =================        =================
</TABLE>
<PAGE>
                           EARTH SEARCH SCIENCES, INC
                           A Development Stage Company

               SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            June 30, 1998 (unaudited)

Note 1 - CONDENSED FINANCIAL STATEMENTS

         The   consolidated   balance  sheet  as  of  June  30,  1998,  and  the
consolidated  statements of operations  and cash flow for the three months ended
June 30, 1998, and 1997, have been prepared by the Company without audit. In the
opinion of management,  all  adjustments  (which  include only normal  recurring
adjustments)  have been made that are necessary to present  fairly the financial
position, results of operation, and cash flows at June 30, 1998 and 1997.

         Certain  information  and  footnote  disclosures  normally  included in
financial  statements  prepared in accordance with generally accepted accounting
principals have been condensed or omitted.  It is suggested that these financial
statements  and notes thereto in the Company's form 10-K for March 31, 1998. The
results  of  operation  for  the  three  months  ended  June  30,  1998  are not
necessarily  indicative  of the  operating  results to be expected  for the full
fiscal year.

Note 2 - REVENUE AND ACCOUNTS RECEIVABLE

         The company recognized $250,270 in revenue during the first quarter for
remote  sensing  services  performed on behalf of the Noranda Group in Australia
and Mexico.  The Company  recorded  $8,000 as unearned  revenue when it received
payment from NASA-MSU Techlink for remote sensing services to begin early in the
second quarter of fiscal 1999.

Note 3 - NOTES PAYABLE

         The Company  obtained interim working capital in prior years by issuing
promissory notes with rights of conversion. The terms of these debts instruments
are for an initial period of ninety days but renewable every ninety days for one
year, and bear interest at 12.5% to 12.99%.  Holders of the notes have the right
to convert the loan amount plus interest into restricted  shares of the Companys
common  stock,  subject  to the terms in the  promissory  notes.  There  were no
conversion during the first quarter of fiscal 1999.

         The Notes Payable balance also includes  financing for the insurance on
the Probe  1-1.  As of June 30,  1998,  $14,274  was still  outstanding  on this
balance.

Note 4 - Probe 1 JOINT VENTURE

     Effective June 3, 1997, the Company formed a new company,  ESSI Probe 1 LC,
to acquire the second Probe 1 instrument  manufactured by Integrated Spectronics
Pty Ltd.  of  Australia.  The new  company is a joint  venture  managed by Earth
Search Sciences and owned 50 percent by Earth Search Sciences, which contributed
certain  instrument rights and a promise to pay $500,000,  and 50 percent by two
shareholders,  who contributed  $1,000,000 million for their interest in the new
company.  Under  the  terms  of the  joint  venture  arrangement,  Earth  Search
Sciences,  Inc.  will use the  Probe 1  instrument  for the  identification  and
exploitation  of  minerals  as  well  as  environmental  remediation  and  other
projects.  The joint  venture  hopes to receive  certain  royalties  on minerals
discovered and exploited  through use of the  instrument,  as well as other fees
paid by third parties for data gathered by the  instrument.  This  instrument is
scheduled  for delivery  during  fiscal 1999. As ESSI controls the joint venture
pursuant to the terms of the joint venture agreement, the joint venture has been
consolidated into the Company's financial statements.

<PAGE>
Note 5 - ADVANCES FROM SHAREHOLDERS

         The Company has continued in existence through the use of advances from
shareholders.  The company obtained  $191,500 in shareholder  loans this quarter
for use as working capital.

Note 6 - CAPITAL LEASE OBLIGATIONS

     On June 10, 1997, the Company  completed a  sales/leaseback  transaction of
its first airborne  hyperspectral scanner "Probe 1." The instrument was sold for
its cost of  $2,500,000.  The  terms of the  leaseback  are as  follows:  1) the
Company will lease Probe 1 for $250,000 per year bearing  interest of prime plus
2% for three  years;  2) at anytime  during the above lease  period but no later
than April 10, 2000,  the Company must  repurchase the instrument for $3,500,000
net of any lease payments; 3) at anytime prior to the repurchase, the lessor may
convert the remaining  obligation into shares of Quasar  Resources,  Inc. common
stock at a conversion  rate of 40% of the stock's then fair market value. In the
event  Quasar is not the  operator at the time of  exercise  of the option,  the
lessee shall substitute  comparable equity securities or other rights subject to
reasonable  approval of lessor;  4) the Company  issued to the lessor  1,000,000
unregistered  shares of the  Company's  common stock and warrants to purchase an
additional  1,000,000  unregistered  shares of the Company's  common stock at an
exercise price of $2 per share;  and 5) the lessor will receive  certain royalty
rights to revenues  generated from mineral sites  identified by the  instrument.
Accordingly,  the Company has recorded a capital lease  obligation of $2,125,000
(net of a debt discount of  $1,375,000)  and $375,000 in  shareholders'  deficit
related to the shares of common stock and stock  purchase or warrants  issued in
conjunction with the above transaction. In January 1998, the Company settled the
$2,200,000  note  plus  accrued  interest  of  $142,000  by  issuing   8,076,800
restricted  shares of the  Company's  common  stock and a  warrant  to  purchase
1,000,000  restricted  shares of the Company's common stock at an exercise price
of $2 per share. No value was assigned to the warrant.

     On January 5, 1998,  1,725,000  restricted  shares of the Company's  common
stock were issued in lieu of the first two lease  payments due on April 10, 1998
and 1999. As further  consideration,  the Company  agreed to issue an additional
1,000,000  restricted shares of the Company's common stock to retire the warrant
issued in conjunction with the sale/leaseback transaction mentioned above. These
shares wer not issued as of March 31, 1998; the value of these shares were shown
as common stock  subscribed in the Company's  financial  statements at March 31,
1998 and were issued in the first quarter of fiscal 1999. The Company recognized
an  extraordinary  loss of $165,000 (basis and diluted loss per share of $0.002)
from the debt extinguishment during the forth quarter of fiscal 1998 as a result
of the settlement of the lease payments.

     During the first quarter of fiscal 1999, an additional  547,727 shares were
issued to the lessor in relation to the two years of lease  payments.  According
to the  agreement,  the  Company  was to issue  1,000,000  free  trading  shares
however,  in the forth  quarter of fiscal  1998,  the Company  issued the lessor
restricted shares in lieu of the free trading shares. It was agreed in the first
quarter of fiscal 1999 to compensate for the discounted  value of the restricted
shares, the additional 547,727 shares were issued. The value of these additional
shares issued does not reduce the capital lease obligation further,  but rather,
represents  the cost of  extinguishing  the initial two years of the probe lease
commitment.  Accordingly,  the $115,023 value of this transaction is recorded as
an extraordinary item loss of extinguishment of debt.

<PAGE>
Note 7 - LOSS PER COMMON SHARES

         Loss per common share is based on the weighted average number of shares
outstanding  during each period.  For period  ended June 30, 1998 and 1997,  the
weighted   average  number  of  these  shares   outstanding  is  88,308,696  and
71,818,693, shares, respectively.

Note 8 - ISSUANCE OF COMMON STOCK

     During the three  months ended June 30, 1998,  the Company  issued  404,166
shares of common stock for $58,000 and issued 313,886 shares of common stock for
services. The Company issued 85,000 shares with a total value of $17,540 in lieu
of interest on shareholders  debt. During the quarter 1,000,000 shares of common
stock was issued to Accuprobe in settlement of the Common Stock  Subscribed that
was previously held.

         In addition,  the Company  issued 465,000  restricted  shares of common
stock in  conjunction  with the  purchase  of  Skywatch  Northern  on  behalf of
Skywatch  Exploration  (a  Canadian  company  wholly  owned by the  Company)  in
exchange  for  all  the  outstanding  shares  of  Skywatch  Northern.   Skywatch
Exploration  received assets  primarily  consisting of a 320 Cessna airplane and
assumed liabilities totaling $58,966 from Skywatch Northern.

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

Material Changes in Financial Condition

         During the  quarter  ended  June 30,  1998,  the  Company  had  limited
operating  revenues.  In addition,  the Company's operating payables and accrued
liabilities increased.  The large operating payables and short-term notes create
a substantial working capital deficiency.

Results of Operations

         During the fiscal year ended March 31,  1998,  Earth  Search  Sciences,
Inc. signed a funding  agreement with Swancorp Equities Inc. to provide over $15
million in funding.  The funding  agreement  contemplates  Swancorp in assisting
Earth Search in obtaining  $5 million of capital in a direct  private  placement
with a  potential  additional  $5  million  through  the  exercise  of  attached
warrants.  Swancorp is prepared to assist Earth Search  through a combination of
shares and warrants offered in a private placement with varying exercise prices.
To date,  Swancorp has positioned Earth Search in front of ten potential funding
sources. Of the initial ten qualified investment banking institutions or funding
sources interviewed,  one, IBK Capital, has signed an engagement letter bringing
the total to two  companies  committed  to  assisting  Earth Search in obtaining
sufficient  capital to purchase  additional  instruments  and to meet  operating
requirements  during the next fiscal year. Earth Search management has presented
the Company's plans for use of proceeds,  along with the anticipated  returns on
investment  that  can  reasonably  be  expected  from the  addition  of a second
instrument  to the  Company's  fleet.  As  proposed,  Earth  Search  expects  to
recognize additional revenues beginning late in the third quarter of 1998 as the
result of providing additional services with the second instrument.  The Company
is encouraged  by its bookings for June through  August and hopes that the trend
will continue into the next fiscal year.  As the sun angle  degrades  during the
fall and winter months,  the Canadian mapping  conditions  degrade and logistics
dictate the need to move south to the United  States and South  America in order
to take advantage of better sun angle and stable weather which are prerequisites
for hyperspectral imaging.

<PAGE>
         During the  quarter  ended June 30,  1998,  three  significant  mapping
prospects have been identified,  one is located in the U.S., one in Mexico,  and
the other is located in South America.  A contract vehicle is currently in place
between  Earth Search and the customer to receive funds for mapping these sites.
The  contract  allows  for a  negotiated  advance  against  the work plan  which
contributes  favorably  toward  covering the  Company's  cash flow  requirements
during the period of time between  initiation  of work and submittal of invoices
for payment. The contract also provides for invoicing progress payments, further
enhancing cash flow. These new sites are in the advanced  planning  stages.  The
Company  plans to revisit  Canada in late August  before  moving to the Southern
Hemisphere to take advantage of improved sun angle and weather conditions at the
two new sites.

         The Company has completed  mapping  assignments in Australia and Mexico
in partial  fulfillment  of its  contractual  obligations  to Noranda to map for
natural  resources on a global  scale.  In addition to the revenues and fees the
Company has invoiced for these services,  the Company  references its SEC filing
of its Noranda  contract in which it was  previously  disclosed that the Company
may receive either net smelter  royalties or net profits  interest on properties
not  previously  owned or  controlled  by Noranda upon which a discovery  should
occur as the  result of using the  Company's  Probe 1  technology  to locate the
mineral resource. To date, gigabyte quantities of imagery have been collected by
Earth  Search.  These data tapes are being  processed  and the  imagery is being
examined for the presence of mineral  properties  exhibiting the  qualifications
necessary to establish  them for  candidacy  as "Royalty  Properties".  While no
royalty  properties have been recorded at this time, the Company is operating on
two continents targeted by the mining industry as exhibiting significant mineral
potential.  A substantial backlog of collected imagery from these two continents
exists, and the evaluation  process continues to move forward.  Earth Search has
been able to benefit from good mapping weather and favorable  flying  conditions
from May  through  August.  As the  Company has moved from point A to point B in
fulfillment of its Noranda mapping contract,  it has enjoyed during the quarter,
added  mapping  assignments  from  new  customers  for  emerging  growth  areas,
including hydrocarbon  exploration,  and environmental damage assessments,  land
use planning,  and weed species  identification  from an airborne platform using
hyperspectral  imagery from its Probe 1 instrument.  These  additional  revenues
have enabled to the company to recognize  improvements over the previous quarter
as it emerges from a development  stage Company into an emerging growth business
entity.

         During the quarter ended June 30, 1998, the Company signed a Memorandum
of  Understanding  (MOU) to fly Cherry Creek Drainage,  in conjunction  with the
Forest  Wildlife  Protection  Agency,  State of Montana and  NASA/Techlink.  The
purpose of the flight is to collect data specific to the  restocking of the West
Slope Cutthroat Trout and riparian issues relating to the entire drainage area.

         During the quarter ended June 30, 1998,  the Company made a decision to
participate  in Geosat's  "Hyperspectral  Group Shoot  1998".  The Company  will
provide  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 applications potential.

         During  the  quarter  ended  June  30,  1998,  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 will aid in
assessment of ecosystem  status and global  climate  change.  The remote sensing
data combined with ground  measurements  will examine spectral changes occurring
concurrently  with  observed  changes in percent  green cover.  Before and after
disturbance  imagery will be collected  coincident  with ground  assessments  of
vegetation cover. Future collaboration is expected with DRI.

<PAGE>
         Dr. Larry Lass,  University of Idaho teamed with Earth Search  Sciences
on a joint  proposal  to the Farm Bureau and won a contract to overfly the Snake
River  Basin  (Hell's  Canyon)  to prove the use of  hyperspectral  imagery  for
control and  eradication  of noxious weed  intrusion.  The results of which will
enable Earth Search to determine the applicability of PROBE-1 technology to this
potentially lucrative agricultural market.

         Several proposals have been developed to partner with private industry,
universities  and state and Federal  agencies  to  develop,  package and deliver
competitive  advanced technology  products and services.  This approach provides
solutions  to  critical  environmental,   agriculture,   forestry,  fisheries  &
ecological issues. Defense and national security issues are also being addressed
in this proposal phase.

Outlook

         The investment  banking community is evaluating the potential impact of
recent orders for mapping  services on the Company's  financial  outlook.  These
results  will be  reflected  in any  decision  to  fund  the  private  placement
currently in progress. There can be no assurance that the private placement will
be successful.

         The  Company's  outlook  contains  forward-looking  statements.   These
statements  are not intended to, nor should it be  interpreted  to  constitute a
prediction of future events.

<PAGE>

                                     PART II

                           OTHER INFORMATION REQUIRED



         Item 1.         Legal Proceeding                        None

         Item 2.         Changes in Securities                   None

         Item 3.         Defaults Upon Senior Securities         None

         Item 4.         Submission of Matters to a Vote
                          of Security Holder                     None

         Item 5.         Other Information                       None

         Item 6.         Exhibits and Reports on Form 8-K

                                    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: August 14, 1998                     /s/ John W. Peel
                                          John W. Peel
                                          Chief Executive Officer and Director