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                                  UNITED STATES
                       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 March 31, 2005

               |_| TRANSITION REPORT PURSUANT SECTION 13 OR 15 (d)
                       OF SECURITIES EXCHANGE ACT OF 1934

                For the Transition Period From ______to_________

                        Commission File Number 333-13287

                             EARTHSHELL CORPORATION
             (Exact name of registrant as specified in its charter)

                DELAWARE                             77-0322379
   (State or other jurisdiction of                (I.R.S. Employer
    incorporation or organization)               Identification No.)


          3916 STATE STREET, SUITE 110, SANTA BARBARA, CALIFORNIA 93105
               (Address of principal executive office) (Zip Code)

                                 (805) 563-7590
              (Registrant's telephone number, including area code)

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  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
requirements for the past 90 days. Yes |X| No |_|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes |X| No |_|

The number of shares outstanding of the Registrant's  Common Stock as of May 16,
2005 is 18,435,452.

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<PAGE>

                             EARTHSHELL CORPORATION

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2004

       INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES


   PART I. FINANCIAL INFORMATION

      Item 1. Condensed Consolidated Financial Statements                   Page

            a)    Condensed  Consolidated  Balance  Sheets as of March
                  31, 2005 (unaudited) and December 31, 2004 .................

            b)    Condensed Consolidated  Statements of Operations for
                  the three  months ended March 31, 2005 and March 31,
                  2004 (unaudited) ...........................................

            c)    Condensed Consolidated  Statements of Cash Flows for
                  the three  months ended March 31, 2005 and March 31,
                  2005 (unaudited) ...........................................

            d)    Notes to Condensed Consolidated Financial Statements
                  (unaudited) ................................................

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

      Item 3.   Quantitative and Qualitative Disclosures About Market Risk....

      Item 4.   Controls and Procedures ......................................

   PART II. OTHER INFORMATION

      Item 1.   Legal Proceedings.............................................

      Item 2.   Changes in Securities, Use of Proceeds and Issuer Purchases
                of Equity Securities..........................................

      Item 3.   Defaults Upon Senior Securities...............................

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

      Item 5.   Other Information.............................................

      Item 6    Exhibits .....................................................

   SIGNATURE..................................................................


<PAGE>

                             EARTHSHELL CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                      MARCH 31,      DECEMBER 31,
                                                        2005            2004
                                                   -------------    -------------
                                                    (UNAUDITED)
<S>                                                <C>              <C>
ASSETS
CURRENT ASSETS
      Cash and cash equivalents ................   $     327,858    $     272,371
      Prepaid expenses and other current assets          143,085          201,467
                                                   -------------    -------------
           Total current assets ................         470,943          473,838

PROPERTY AND EQUIPMENT, NET ....................           8,199            9,037
EQUIPMENT HELD FOR SALE ........................               1                1

                                                   -------------    -------------
TOTALS .........................................   $     479,143    $     482,876
                                                   =============    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
      Accounts payable and accrued expenses ....   $   3,910,552    $   3,899,526
      Short-term notes payable to related party            1,000               --
      Current portion of settlements ...........         304,888          313,743
      Current portion of deferred revenues .....         550,000          300,000
      Contingent settlement ....................       2,375,000        2,375,000
      Note payable .............................         880,573               --
      Payable to a related party ...............         875,000          875,000
                                                   -------------    -------------
                 Total current liabilities .....       8,897,013        7,763,269

LONG-TERM PORTION OF DEFERRED REVENUES .........         987,500        1,062,500
OTHER LONG-TERM LIABILITIES ....................         328,120          412,192
                                                   -------------    -------------
           Total liabilities ...................      10,212,633        9,237,961

STOCKHOLDERS' DEFICIT
Preferred Stock, $.01 par value, 10,000,000
  shares authorized; 9,170,000 Series A
  shares designated: no shares issued and
  outstanding as March 31, 2005 and
  December 31 2004

Common Stock, $.01 par value, 40,000,000
  shares authorizee: 18,391,065 and
  18,234,615 shares issued and outstanding
  as of March 31, 2005 and December 31 2004,
  respectively..................................         183,911          182,346
Additional paid-in common capital ..............     313,283,689      313,196,905
Accumulated deficit                                 (322,685,339)    (321,607,782)
Less note receivable for stock .................        (475,000)        (500,000)
Accumulated other comprehensive loss ...........         (40,751)         (26,554)
                                                   -------------    -------------
      Total stockholders' deficit ..............      (9,733,490)      (8,755,085)
                                                   -------------    -------------

TOTALS .........................................   $     479,143    $     482,876
                                                   =============    =============
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.


<PAGE>

                             EARTHSHELL CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     FOR THE
                                                                  THREE MONTHS
                                                                ENDED MARCH 31,
                                                        ----------------------------
                                                             2005            2004
                                                        ------------    ------------
<S>                                                     <C>             <C>
Revenues ............................................   $     75,000    $         --

Operating Expenses
    Related party research and development ..........             --         300,000
    Other research and development expenses .........        103,595         222,538
    Related party general and administrative expenses             --
                                                                                 578
    Other general and administrative expenses .......      1,032,313       1,173,855
    Depreciation and amortization ...................            837          27,341
                                                        ------------    ------------
        Total operating expenses ....................      1,137,323       1,723,734

Operating Loss ......................................      1,062,323       1,723,734

Other (Income) Expense
    Interest income .................................           (478)         (1,234)
    Related party interest expense ..................            556         134,182
    Other interest expense ..........................         21,461         209,375
    Gain on sales of property and equipment .........         (7,105)
                                                        ------------    ------------
Loss Before Income Taxes ............................      1,076,757       2,066,057

Income taxes ........................................            800             800
                                                        ------------    ------------
Net Loss ............................................   $  1,077,557    $  2,066,857
                                                        ============    ============

Basic and Diluted Loss Per Common Share .............   $       0.06    $       0.15
Weighted Average Number of Common Shares ............     18,250,260      14,128,966
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

<PAGE>

                             EARTHSHELL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED
                                                                                       MARCH 31,
                                                                             --------------------------
                                                                                 2005           2004
                                                                             -----------    -----------
<S>                                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss .................................................................   $(1,077,557)   $(2,066,857)
Adjustments to reconcile net loss to net cash used in operating activities
  Depreciation and amortization ..........................................           838         27,341
  Amortization and accretion of debenture issue costs ....................         5,922        199,034
  (Gain) Loss on sale, disposal, or impairment of property and equipment .        (7,105)            --
  Deferred revenues ......................................................       175,000
  Other non-cash expense items ...........................................       (89,354)        (7,691)
Changes in operating assets and liabilities
  Prepaid expenses and other current assets ..............................        58,382        182,608
  Accounts payable and accrued expenses ..................................        90,869         25,248
  Payables to related party ..............................................            --        408,889
  Other long-term liabilities ............................................           485        (12,500)
                                                                             -----------    -----------
     Net cash used in operating activities ...............................      (842,520)    (1,243,928)
                                                                             -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of property and equipment ............................         7,105             --
                                                                             -----------    -----------
     Net cash provided by investing activities ...........................         7,105             --
                                                                             -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock ...................................        25,000             --
Proceeds from issuance of notes payable to related party .................       251,000
Repayment of notes payable to related party ..............................      (250,000)
Principal payments on settlements ........................................       (93,412)
Proceeds from issuance of note payable ...................................     1,150,000
Note payable issuance costs ..............................................      (187,000)
                                                                             -----------    -----------
     Net cash provided by financing activities ...........................       895,588             --
                                                                             -----------    -----------

Effect of exchange rate changes on cash and cash equivalents .............        (4,686)        (3,275)
                                                                             -----------    -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .........................        55,487     (1,247,203)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ...........................       272,371      1,901,639
                                                                             -----------    -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD .................................   $   327,858    $   654,436
                                                                             ===========    ===========
</TABLE>

<PAGE>

                                                       THREEE MONTHS ENDED
                                                             MARCH 31,
                                                     -----------------------
                                                        2005         2004
                                                     ----------   ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for
    Income taxes ...............................     $      800   $       --
    Interest ...................................     $    3,657   $    1,256


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

In March of 2005, in  consideration  for a loan  guarantee,  the Company  issued
warrants to purchase 65,000 shares of common stock of the Company at an exercise
price of $3.00 per share. The warrant expires on March 23, 2008.

Also in March of 2005, in  consideration  for  consulting  services  rendered in
connection with the Company  obtaining  financing,  the Company issued a warrant
for 80,000  shares of common stock of the Company at an exercise  price of $3.00
per share. The warrant expires on March 23, 2008.




            See Notes to Condensed Consolidated Financial Statements.

<PAGE>

                             EARTHSHELL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                 MARCH 31, 2005
--------------------------------------------------------------------------------

OVERVIEW OF OPERATIONS

Organized in November  1992 as a Delaware  corporation,  EarthShell  Corporation
(the  "Company")  is  engaged in the  commercialization  of  composite  material
technology for the manufacture of foodservice disposable packaging designed with
the environment in mind. EarthShell  Packaging(R) is based on patented composite
material technology (collectively, the "EarthShell Technology"),  licensed on an
exclusive, worldwide basis from E. Khashoggi Industries LLC and its wholly owned
subsidiaries.

The EarthShell  Technology  has been  developed over many years in  consultation
with  leading  material  scientists  and  environmental  experts  to reduce  the
environmental  burdens of foodservice  disposable  packaging through the careful
selection of raw materials,  processes, and suppliers.  EarthShell Packaging(R),
including hinged-lid sandwich containers,  plates, bowls, foodservice wraps, and
cups, is primarily  made from commonly  available  natural raw materials such as
natural ground limestone and potato starch.  EarthShell believes that EarthShell
Packaging(R) has comparable or superior  performance  characteristics and can be
commercially  produced and sold at prices that are  competitive  with comparable
paper and plastic foodservice disposables.

EarthShell was a development stage enterprise through the first quarter of 2004.
With the  recognition  of the Company's  first revenues in the second quarter of
2004, the Company was no longer a development stage enterprise.

BASIS OF PRESENTATION OF FINANCIAL INFORMATION

The foregoing financial information has been prepared from the books and records
of  EarthShell  Corporation.  EarthShell  Corporation's  consolidated  financial
statements  include  the  accounts  of  its  wholly-owned  subsidiary,  PolarCup
EarthShell GmbH. All significant  intercompany  balances and  transactions  have
been eliminated in  consolidation.  In the opinion of management,  the financial
information  reflects all adjustments  necessary for a fair  presentation of the
financial  condition,  results of  operations  and cash flows of the  Company in
conformity with generally accepted accounting  principles.  All such adjustments
were of a normal recurring nature for interim financial reporting.

The accompanying  unaudited financial  statements and these notes do not include
certain information and footnote disclosures  required by accounting  principles
generally  accepted in the United  States,  which were included in the Company's
consolidated  financial  statements  for the year ended  December 31, 2004.  The
information  included  in this Form  10-Q  should  be read in  conjunction  with
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations and the Company's consolidated financial statements and notes thereto
for the year ended December 31, 2004 included in the Company's  Annual Report on
form 10-K, including Form 10-K/A - Amendment No. 2.

The  accompanying  unaudited  financial  have been  prepared on a going  concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities  in  the  normal  course  of  business.  The  Company  has  incurred
significant  losses  since  inception,  has minimal  revenues  and has a working
capital  deficit of  $8,426,070  at March 31, 2005.  These  factors,  along with
others,  may  indicate  substantial  doubt  that the  Company  will be unable to
continue  as a going  concern  for a  reasonable  period of time (see  "Critical
Accounting Policies - Going Concern Basis").

The consolidated financial statements do not include any adjustments relating to
the  recoverability  and classification of recorded asset amounts or the amounts
and  classification of liabilities that might be necessary should the Company be

<PAGE>

unable to continue as a going  concern.  The Company's  continuation  as a going
concern is dependent upon its ability to generate  sufficient  cash flow to meet
its obligations on a timely basis, to obtain additional financing or refinancing
as may be required, and ultimately to attain successful operations.

Basic loss per common share is computed by dividing net loss available to common
stockholders by the weighted-average  number of common shares outstanding during
the period,  including Common stock to be issued.  Diluted loss per common share
is  computed  by  dividing  net loss  available  to common  stockholders  by the
weighted-average  number of common shares outstanding (including Common stock to
be issued) plus an assumed increase in common shares outstanding for potentially
dilutive  securities,  which  consist of options and warrants to acquire  common
stock and convertible debentures.  Potentially dilutive shares are excluded from
the  computation in loss periods,  as their effect would be  anti-dilutive.  The
dilutive  effect of options  and  warrants to acquire  common  stock is measured
using the treasury stock method.  The dilutive effect of convertible  debentures
is measured  using the  if-converted  method.  Basic and diluted loss per common
share is the same for all periods  presented  because the impact of  potentially
dilutive securities is anti-dilutive.

Since June 21, 2004, the Company's  common stock has been listed through the OTC
Bulletin Board. The Company's common stock trades under the symbol "ERTH.OB."

PROPERTY AND EQUIPMENT AND EQUIPMENT HELD FOR SALE

The cost and  accumulated  depreciation  of property and equipment and equipment
held for sale at March 31, 2005 were as follows:

                                                     MARCH 31,     DECEMBER 31,
                                                       2005            2004
                                                   -----------     -----------
Total office furniture and equipment ...........       245,274         245,274
Less:  Accumulated depreciation and amortization      (237,035)       (236,237)
Property and equipment - net ...................   $     8,199     $     9,037
                                                   ===========     ===========
Equipment held for sale ........................   $         1     $         1
                                                   ===========     ===========

STOCK OPTIONS

The Company  accounts for stock  options in  accordance  with the  provisions of
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to  Employees,"  and complies  with the  disclosure  provisions  of Statement of
Financial  Accounting  Standards  ("SFAS") No. 123,  "Accounting for Stock-Based
Compensation."  Under APB Opinion No. 25,  compensation  expense is based on the
difference,  if any,  on the  date of  grant,  between  the  fair  value  of the
Company's  common stock and the  exercise  price of the option.  For  disclosure
purposes,  to measure stock-based  compensation in accordance with SFAS No. 123,
the fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  option-pricing model. The fair value of each option grant is then
amortized  as pro forma  compensation  expense  over the  vesting  period of the
options.  The  following  table  sets  forth the pro forma net loss and loss per
share resulting from applying SFAS No. 123.

<PAGE>

                                                         THREE MONTHS
                                                        ENDED MARCH 31,
                                                  -------------------------
                                                      2005         2004
                                                  -----------   -----------
Net Loss as reported ..........................   $ 1,077,557   $ 2,066,857
Deduct: Stock-based employee compensation
   expense included in reported net loss, net
   of tax .....................................            --            --
Add: Total stock-based employee compensation
   determined under fair value based method
   for all awards, net of tax
                                                  $     5,275   $    13,015
                                                  -----------   -----------

Pro forma net loss ............................   $ 1,082,832   $ 2,079,872

Basic diluted loss per common share
   As reported ................................   $      0.06   $      0.15
   Pro forma ..................................   $      0.06   $      0.15


FINANCING

In March 2005, the Company entered into a promissory note and Security Agreement
with Cornell Capital Partners, LP ("Cornell Capital Partners").  Pursuant to the
Security Agreement,  the Company shall issue promissory notes to Cornell Capital
Partners in the original principal amount of $2,500,000.  The $2,500,000 will be
disbursed as follows:  $1,150,000 was disbursed on March 28, 2005. The remaining
$1,350,000 will be issued in a second closing,  expected to occur during the 2nd
quarter of 2005,  after the filing of a  registration  statement  related to the
Standby Equity Distribution Agreement, described below. The promissory notes are
secured by the  assets of the  Company  and  shares of stock of  another  entity
pledged by an  affiliate of that entity.  The  promissory  notes have a one-year
term and accrue  interest at 12% per year. As of March 31, 2005, the Company had
executed on the first phase of the  transaction  and  received  net  proceeds of
approximately $1,000,000.

In  connection  with the first  disbursement,  the Company  recorded an original
issue discount of $275,348. The discount includes cash fees and expenses related
to the origination of the loan, issuance of 6,450 shares of the Company's common
stock  to a  broker,  valued  at the  market  value on the  closing  date of the
transaction,  and  issuance  of  warrants  to  purchase  145,000  shares  of the
Company's  stock at $3 per share  valued  at  $78,028  using  the Black  Sholles
valuation  model,  all of which will be amortized  over the 12 month life of the
note at a rate of $39,389 per month.

In March 2005,  EarthShell entered into a Standby Equity Distribution  Agreement
with  Cornell  Capital  Partners.  Pursuant to the Standby  Equity  Distribution
Agreement,  the Company  may, at its  discretion,  periodically  sell to Cornell
Capital  Partners  shares of common  stock for a total  purchase  price of up to
$10.0 million. For each share of common stock purchased under the Standby Equity
Distribution Agreement, Cornell Capital Partners will pay the Company 98% of the
lowest volume weighted  average price of the Company's common stock as quoted by
Bloomberg,  LP on the Over-the-Counter  Bulletin Board or other principal market
on which  the  Company's  common  stock  is  traded  for the 5 days  immediately
following the notice date.  The price paid by Cornell  Capital  Partners for the
Company's  stock shall be determined as of the date of each  individual  request
for an advance under the Standby Equity Distribution Agreement.  Cornell Capital
Partners  will  also  retain  5%  of  each  advance  under  the  Standby  Equity
Distribution Agreement.  Cornell Capital Partners' obligation to purchase shares
of the Company's common stock under the Standby Equity Distribution Agreement is
subject to certain conditions,  including the Company's  registration  statement
for shares of common stock sold under the Standby Equity Distribution  Agreement
being  declared  effective  by the  Securities  and Exchange  Commission  and is
limited to $500,000 per weekly advance.

Subsequent Events

In February  of 2005,  an option of 1 million  shares with an exercise  price of
$2.30 per share was issued to a board  member in  connection  with  considerable
financial support of the Company.  The option was subsequently  rescinded by the
company in May of 2005.

<PAGE>

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

FORWARD LOOKING STATEMENTS

Information  contained in this Quarterly Report on Form 10-Q,  including but not
limited to  "Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations," contains  forward-looking  statements within the meaning
of the Private  Securities  Litigation  Reform Act of 1995,  as  amended.  These
statements may be identified by the use of  forward-looking  terminology such as
"may,"  "expect,"  "anticipate,"  "estimate,"  or  "continue,"  or the  negative
thereof  or other  comparable  terminology.  Any one  factor or  combination  of
factors  could cause the Company's  actual  operating  performance  or financial
results to differ  substantially  from those  anticipated by management that are
described  herein.  Investors should carefully review the risk factors set forth
in other Company  reports or documents  filed with the  Securities  and Exchange
Commission,  including  Forms  10-Q,  10-K,  and 8-K.  Factors  influencing  the
Company's  operating  performance  and financial  results  include,  but are not
limited to, the performance of licensees,  changes in the general  economy,  the
availability of financing,  governmental regulations concerning, but not limited
to, environmental issues, and other risks and unforeseen circumstances affecting
the Company's  business.  This  Quarterly  Report on Form 10-Q should be read in
conjunction with the Company's Annual Report on Form 10-K, including Form 10-K/A
- Amendment No. 2 for the fiscal year ended December 31, 2004.

CRITICAL ACCOUNTING POLICIES

The  preparation of financial  statements and related  disclosures in conformity
with  generally  accepted  accounting  principles  requires  management  to make
judgments,  assumptions  and estimates  that affect the amounts  reported in the
Company's financial statements and the accompanying notes. The amounts of assets
and  liabilities  reported  in the  Company's  balance  sheet and the amounts of
expenses  reported  for  each  fiscal  period  are  affected  by  estimates  and
assumptions  which are used for,  but not limited to, the  accounting  for asset
impairments.  Actual  results could differ from these  estimates.  The following
critical   accounting   policies  are   significantly   affected  by  judgments,
assumptions and estimates used in the preparation of the consolidated  financial
statements.

Going Concern Basis. The condensed  consolidated  financial statements have been
prepared on a going concern basis,  which contemplates the realization of assets
and the  satisfaction  of  liabilities  in the normal  course of  business.  The
Company has incurred  significant  losses since inception,  has minimal revenues
and has a  working  capital  deficit  of  $8,426,070  at March 31,  2005.  These
factors,  along with  others,  may  indicate  that the Company will be unable to
continue as a going  concern for a reasonable  period of time.  The Company will
have to raise  additional  funds to meet its  current  obligations  and to cover
operating  expenses through the year ending December 31, 2005. If the Company is
not successful in raising additional capital it may not be able to continue as a
going concern for a reasonable period of time.  Management plans to address this
need by raising cash through  either the issuance of debt or equity  securities.
In March 2005, the Company  secured a $1.15 million loan and also entered into a
Standby  Equity  Distribution  Agreement  where the Company has the right,  upon
registration of shares of its common stock, to require an institutional investor
to  purchase  shares  of the  Company's  common  stock  from time to time at the
Company's  sole  discretion.   In  addition,  the  Company  expects  to  receive
additional  technology fee payments in 2005 in connection with both existing and
new sublicense  agreements for its technology in various  territories and fields
of use.  However,  the Company cannot assure that  additional  financing will be
available to it, or, if available, that the terms will be satisfactory,  that it
will  receive  any  further  technology  fee  payments  in 2005  pursuant to the
Sublicense  Agreement.  Management  also  plans to  continue  in its  efforts to
minimize  expenses,  but cannot  assure that it will be able to reduce  expenses
below current levels.  The condensed  consolidated  financial  statements do not
include any adjustments  relating to the  recoverability  and  classification of
recorded asset amounts or the amounts and  classification  of  liabilities  that
might be necessary should the Company be unable to continue as a going concern.

<PAGE>

The key accounting  estimates and policies are reviewed with the Audit Committee
of the Board of Directors.

THREE MONTHS ENDED MARCH 31, 2005 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
2004.

The Company's net loss decreased by approximately  $1.0 million to approximately
$1.1  million from  approximately  $2.1 million for the three months ended March
31, 2005 compared to the three months ended March 31, 2004, respectively.

REVENUES.  The Company recorded revenues of approximately  $0.08 million for the
three  months  ended March 31, 2005 as compared to $0 for the three months ended
March  31,  2004.  These  revenues  reflect  amortization  of the  $2.0  million
technology fee payable under the  sublicense  agreement that was entered into in
the second  quarter of 2004 and the $1 million  technology fee payable under the
sublicense agreement entered into in December of 2004. The amortization of these
technology  fees will result in the  recognition of $0.3 million in revenues per
year during the life of the agreements.

RESEARCH AND DEVELOPMENT  EXPENSES.  Total research and development expenses are
comprised of related party license fee and research and development expenses and
other research and development expenses. Total research and development expenses
for the  development of EarthShell  Packaging(R)  decreased  approximately  $0.4
million to approximately  $0.1 million from  approximately  $0.5 million for the
three months  ended March 31, 2005  compared to the three months ended March 31,
2004, respectively.

      o     Related party license fee and research and development expenses were
            comprised in 2004 of the $100,000 monthly  licensing fee for the use
            of the EarthShell  Technology and technical services,  both of which
            were  payable to EKI, a  stockholder  of the Company,  or Biotec,  a
            wholly owned  subsidiary  of EKI. It should be noted that payment of
            these  related  party  expenses  has been  deferred  pursuant  to an
            agreement  entered into by the EKI entities in connection  with debt
            restructuring and settlement of the convertible  debenture financing
            concluded in October of 2004. Related party license fee and research
            and development expenses decreased  approximately $0.3 million to $0
            from approximately $0.3 million for the three months ended March 31,
            2005,   compared  to  the  three   months   ended  March  31,  2004,
            respectively.  The decrease was due primarily to the  elimination of
            the monthly licensing fee in September 2004, as noted above.

      o     Other research and  development  expenses are comprised of personnel
            costs,  travel and direct overhead for development and demonstration
            production.   Other  research  and  development  expenses  decreased
            approximately  $0.1  million to  approximately  $0.01  million  from
            approximately  $0.2  million  for the three  months  ended March 31,
            2005,   compared  to  the  three   months   ended  March  31,  2004,
            respectively.  The reduction was due to the outsourcing of technical
            personnel and the outsourcing of technical support activities during
            2004.

OTHER GENERAL AND  ADMINISTRATIVE  EXPENSES.  Other  general and  administrative
expenses  are  comprised  of  personnel  costs,  travel and direct  overhead for
marketing, finance and administration. Total general and administrative expenses
decreased by  approximately  $0.14 million to  approximately  $1.13 million from
approximately  $1.17 million for the three months ended March 31, 2005, compared
to the three months ended March 31, 2004,  respectively.  The largest reductions
were in legal,  business insurance,  currency  translation losses, and personnel
costs (approximately $0.3 million). These reductions were partially offset by an
accrual for potential damages related to a legal settlement.

INTEREST  EXPENSE.  Interest  expense is  comprised  of related  party  interest
expense and other interest expense.

      o     Related party  interest  expense  decreased by  approximately  $0.13
            million to $0 from approximately  $0.13 million for the three months
            ended March 31,  2005,  compared to the three months ended March 31,
            2004. In 2004,  related party  interest  expense  included  interest
            accrued on  outstanding  loans made to the  Company by EKI under the
            Loan Agreement (see "Related Party Transactions"),  accretion of the
            discount  related to the warrants issued to EKI in conjunction  with
            the March 2003 financing transactions, plus accrued interest payable

<PAGE>

            on amounts owed to EKI for monthly licensing fees that were not paid
            in accordance with the terms of the subordination agreements entered
            into in  connection  with the 2006  Debentures  ("see  Related Party
            Transactions").

            In the fourth  quarter of 2004, all of the EKI loans and accrued but
            unpaid interest were converted into common stock of the Company,  as
            were the unpaid  licensing fees under the Biotec License  Agreement.
            Also in the fourth quarter of 2004, the March 2006  debentures  were
            retired,  so the  accretion of the discount  related to the warrants
            issued to EKI have been written off. Therefore, there was no related
            party interest expense for these items in the first quarter of 2005.

      o     Other interest expense  decreased by approximately  $0.19 million to
            approximately $0.02 million from approximately $0.21 million for the
            three  months  ended March 31,  2005,  compared to the three  months
            ended March 31, 2004,  respectively.  Other interest expense in 2004
            was  primarily  composed of  accretion  of the discount and interest
            accrued on the 2006  Debentures.  However,  in the fourth quarter of
            2004 the Company  settled  with the  remaining  holders of the March
            2006  Debentures  and the  all of the  outstanding  debentures  were
            retired.  Therefore, there will be no other interest expense for the
            2006 Debentures subsequent to December 31, 2004.

OTHER INCOME. Other income increased by approximately seven thousand dollars for
the three months ended March 31, 2005, compared to $0 for the three months ended
March  31,  2004.  This  other  income  was the  result of a gain on the sale of
certain  minor  pieces of  equipment  which had  previously  been  scrapped  and
consigned to an equipment dealer.

LIQUIDITY AND CAPITAL RESOURCES AT MARCH 31, 2005

Cash Flow. The Company's  principal use of cash for the three months ended March
31, 2005 was to fund operations.  Net cash used in operations was  approximately
$0.8 million for the three months ended March 31, 2005, compared to $1.2 million
for the three months ended March 31, 2004.  As of March 31, 2005 the Company had
cash and cash  equivalents  totaling  approximately  $0.3  million and a working
capital deficit of approximately $8.4 million. These factors, along with others,
may indicate  that the Company will be unable to continue as a going concern for
a reasonable period of time.

Capital Requirements.  The Company made no capital expenditures during the three
months ended March 31, 2005, and the Company does not expect to make significant
capital expenditures in the year 2004.

Sources of Capital.  In March 2005, the Company  entered into a promissory  note
and Security  Agreement  with Cornell  Capital  Partners,  LP ("Cornell  Capital
Partners").  Pursuant  to  the  Security  Agreement,  the  Company  shall  issue
promissory notes to Cornell Capital Partners in the original principal amount of
$2.5  million.  The $2.5 million will be  disbursed as follows:  $1,150,000  was
disbursed on March 28, 2005. The remaining $1,350,000 will be issued in a second
closing, expected to occur during the 2nd quarter of 2005, after the filing of a
registration  statement  related to the Standby Equity  Distribution  Agreement,
described  below.  The promissory notes are secured by the assets of the Company
and shares of stock of another  entity  pledged by an  affiliate of that entity.
The promissory notes have a one-year term and accrue interest at 12% per year.

Also in March  2005,  EarthShell  entered  into a  Standby  Equity  Distribution
Agreement  with  Cornell  Capital  Partners.  Pursuant  to  the  Standby  Equity
Distribution Agreement, the Company may, at its discretion, periodically sell to
Cornell Capital Partners shares of common stock for a total purchase price of up
to $10.0  million.  For each share of common stock  purchased  under the Standby
Equity Distribution Agreement, Cornell Capital Partners will pay the Company 98%
of the lowest volume  weighted  average  price of the Company's  common stock as
quoted  by  Bloomberg,  LP on  the  Over-the-Counter  Bulletin  Board  or  other
principal  market on which the  Company's  common stock is traded for the 5 days
immediately  following  the  notice  date.  The price  paid by  Cornell  Capital
Partners  for the  Company's  stock shall be  determined  as of the date of each
individual  request  for  an  advance  under  the  Standby  Equity  Distribution
Agreement.  Cornell  Capital  Partners will also retain 5% of each advance under
the Standby Equity Distribution Agreement.  Cornell Capital Partners' obligation

<PAGE>

to purchase  shares of the  Company's  common  stock  under the  Standby  Equity
Distribution Agreement is subject to certain conditions, including the Company's
registration  statement for shares of common stock sold under the Standby Equity
Distribution  Agreement being declared  effective by the Securities and Exchange
Commission and is limited to $500,000 per weekly advance.

The Company also expects to generate cash in the remaining  part of 2005 through
technology fees and royalty  payments from licensees and through the issuance of
debt or equity  securities.  During  2004,  the  Company  entered  into  license
agreements  for which it  received a total of $1.5  million  cash in  technology
fees. The Company  expects to receive  additional  technology fees in connection
with the granting of additional new licenses  during the year. In addition,  the
Company expects to begin generating royalty revenues later in the year.

The Company believes that the cash from licensing activities,  combined with the
above described  borrowing will be sufficient to fund its operations through the
year ending  December 31, 2005.  If the Company is not  successful at generating
technology  fees or royalty  revenues  during the year,  the Company may have to
raise  additional  funds to meet its current  obligations and to cover operating
expenses.  If the Company is not successful in raising additional capital it may
not be able to continue  as a going  concern  for a  reasonable  period of time.
Management  plans to  address  this need by  raising  cash  through  either  the
issuance of debt or equity  securities,  including  the issuance of common stock
pursuant to the Standby  Equity  Distribution  Agreement.  However,  the Company
cannot assure that it will receive any royalty payments in 2005, that additional
financing  will be  available  to it, or, if  available,  that the terms will be
satisfactory.  Management will also continue in its efforts to reduce  expenses,
but can not assure that it will be able to reduce expenses below current levels.

Off-Balance Sheet Arrangements.  The Company does not have any off-balance sheet
arrangements  as of June 30,  2004  and has not  entered  into any  transactions
involving unconsolidated, limited purpose entities.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's treasury function controls all decisions and commitments regarding
cash management and financing  arrangements.  Treasury  operations are conducted
within a framework that has been authorized by the board of directors.

The Company is exposed to interest rate risk on its fixed rate long-term working
capital  loans.  As of March 31, 2005, the principal  amount of these  long-term
fixed rate debt obligations  totaled  approximately  $1.15 million.  The working
capital loans bear interest at a fixed rate of 12% per annum. While generally an
increase in market  interest  rates will  decrease  the value of this debt,  and
decreases in rates will have the opposite effect,  we are unable to estimate the
impact that  interest  rate  changes  will have on the value of the  substantial
majority of this debt as there is no active public market for this debt.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.  The Company's Chief Executive
Officer and Chief  Financial  Officer have  evaluated the  effectiveness  of the
Company's  disclosure  controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e)  under the  Securities  Exchange Act of 1934, as amended
(the  "Exchange  Act")) as of the end of the period  covered  by this  quarterly
report on Form 10-Q (the  "Evaluation  Date").  Based on such  evaluation,  such
officers  have  concluded  that,  as  of  the  Evaluation  Date,  the  Company's
disclosure  controls  and  procedures  are not  effective  in ensuring  that (i)
information required to be disclosed by the Company in the reports that it files
or  submits  under the  Exchange  Act is  recorded,  processed,  summarized  and
reported,  within the time  periods  specified  in the SEC's rules and forms and
(ii) information  required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is accumulated  and  communicated to the
Company's management,  including its principal executive and principal financial
officers,  or persons  performing  similar  functions,  as  appropriate to allow
timely   decisions   regarding   required   disclosure.   In  arriving  at  this
determination, the Company's Chief Executive Officer and Chief Financial Officer
noted,  in  particular,  that during the fourth  quarter of 2004,  the Company's
Controller  resigned  (and has not been  replaced  to date)  leaving the Company
without a sufficient number of accounting  personnel.  As a result,  the Company
has had some difficulty  accumulating  and processing  material  information and
disclosing  that  information to the public in the time periods  required by the
SEC's rules.  The Company has been addressing this issue by conducting an active
and ongoing search for additional accounting  personnel,  including a Controller
to replace the Company's former Controller.

Changes  in  internal  control  over  financial  reporting.  No  changes  in the
Company's  internal  control over financial  reporting have come to management's
attention  during  the  Company's  last  fiscal  quarter  that  have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial  reporting.  However,  as disclosed in Amendment No. 2 to
the Company's  Annual Report on Form 10-K filed with the SEC on May 3, 2005, the
Company's assessment of its internal control over financial reporting identified
three material  weaknesses.  The Company has been addressing two of the material
weaknesses  identified  and disclosed in the Company's Form 10-K/A by conducting
an active and ongoing search for additional  accounting  personnel,  including a
Controller to replace the Company's former Controller. The Company believes that
this  correction did not amount to a material  change in the Company's  internal
control over financial reporting.




<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Not applicable

ITEM 2. CHANGES IN  SECURITIES,  USE OF PROCEEDS AND ISSUER  PURCHASES OF EQUITY
SECURITIES

Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5.  OTHER INFORMATION

Not applicable

ITEM 6.  EXHIBITS

The following documents are filed as a part of this report:

 Exhibit
 Number     Description
 -------    -----------

   31.1     Certification  of the CEO  pursuant to Rules 13a-14 and 15d-14 under
            the  Exchange  Act,  as  Adopted  Pursuant  to  Section  302  of the
            Sarbanes-Oxley Act of 2002.

   31.2     Certification  of the CFO  pursuant to Rules 13a-14 and 15d-14 under
            the  Exchange  Act,  as  Adopted  Pursuant  to  Section  302  of the
            Sarbanes-Oxley Act of 2002.

   32.1     Certification  pursuant  to  18  U.S.C.  Section  1350,  as  adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized May 16, 2005.


May 16, 2005                                   EARTHSHELL CORPORATION


                                               By: /s/ D. Scott Houston
                                                   ---------------------------
                                               Name:   D. Scott Houston,
                                               Title:  Chief Financial Officer