As filed with the Securities and Exchange Commission on July 21, 1999.
Registration No. 333-76081
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT # 1 OF
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Earth Sciences, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-0503749
(State of incorporation) (IRS Employer Identification No.)
910 12th Street, Golden, Colorado 80401
(Address of principal executive offices, including Zip Code)
(Registrant's telephone number, including area code): (303) 279-7641
Mark H. McKinnies
910 12th Street, Golden, Colorado 80401
(303) 279-7641
(Name, address, including zip code and telephone number,
including area code, of agent for service of process)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
[ ]
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CALCULATION OF REGISTRATION FEE
________________________________________________________________________________
Proposed Proposed
Title of each class maximum maximum aggre-
of securities to be Amount to be offering gate offering Amount of
registered registered price per price registration
share fee
________________________________________________________________________________
Common Stock, $.01
par value:
Issued and
outstanding 1,360,623 Shares $ .66 (1) $ 898,011 (1) $ 249.65
Issued and
outstanding 407,400 Shares $ .43 (2) $ 175,182 (2) $ 50.28
Issuable upon
exercise of
options 100,000 Shares(1) $1.25 (3) $ 125,000 (3) $ 34.75
________________________________________________________________________________
Totals 1,868,023 Shares $1,198,193 $ 334.68
________________________________________________________________________________
(1) Based on the average price of the Common Stock on the NASDAQ's SmallCapSM
Market on April 5, 1999 and represents shares included in the original filing
dated April 12, 1999. The resulting fee is calculated pursuant to section (c)
of Rule 457 of Regulation C.
(2) Based on the average price of the Common Stock on the OTCBB Market on July
19, 1999 and represents shares added in this amendment to the original
filing. The resulting fee is calculated pursuant to section (c) of Rule 457
of Regulation C.
(3) Based on the weighted average exercise price of the options. The resulting
fee is calculated pursuant to section (g) of Rule 457 of Regulation C.
The fee was paid with the initial filing on April 12, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED July __, 1999
EARTH SCIENCES, INC.
1,868,023 SHARES OF COMMON STOCK
This Prospectus relates to shares of our Common Stock being offered for resale
by certain selling shareholders and those to be acquired upon exercise of
certain stock options as described more fully below. The shares of Common Stock
offered consist of:
* 1,768,023 shares of Common Stock currently issued and outstanding, and
* 100,000 shares of Common Stock issuable upon exercise of options.
The selling stockholders may offer their Common Stock through or to securities
brokers or dealers designated by them in the over-the-counter market or in other
transactions negotiated by the selling stockholders. The holder of the stock
options must exercise those options prior to any offer to sale. We would
receive $125,000 upon the exercise of those options.
The acquisition and ownership of our Common Stock involve a high degree of risk.
Only investors who are able to afford the risk of loss of their entire
investment should purchase our Common Stock. See "Risk Factors" beginning on
page 2 of this prospectus.
Our Common Stock is traded in the over-the-counter market and is quoted on the
OTCBB Market under the symbol "ESCI". On July 19, 1999, the last quoted sales
price of the Common Stock on the OTCBB was $.43 per share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
This prospectus is dated July __, 1999.
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You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. Neither the selling stockholders
nor we have authorized anyone else to provide you with different information.
The selling stockholders are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of those documents.
RISK FACTORS
An investment in our common shares is speculative and involves a high degree of
risk. You should carefully review the information set forth below, the
information incorporated by reference, as well as other information appearing
elsewhere in this prospectus, before making an investment in our common shares.
The following are the most significant risk factors that we believe are material
to investors who purchase or own our common shares.
SPECIFIC RISKS RELATED TO US
- ----------------------------
WE HAVE NOT PAID DIVIDENDS. We have paid no cash dividends on our Common Stock
and have no present intention of paying cash dividends in the foreseeable
future. It is the present policy of our Board of Directors to retain all
earnings to provide for our growth. Payments of cash dividends in the future
will depend, among other things, upon our future earnings, requirements for
capital improvements, our operating and financial conditions and other factors
that are considered important by the Board of Directors.
WE HAVE A HISTORY OF LOSSES. While we reported net income in fiscal 1995, our
operating history has shown losses from operations in the fiscal years ending
December 31, 1988 through 1994, in 1996 through 1998, and thus far in 1999.
While certain of our operations may be profitable during a given fiscal year,
our operations as a whole may be unprofitable due to
* the start up nature of our major activities,
* exploration and development costs on properties from which no revenue is
derived,
* continuing corporate general and administrative costs, and
* interest expense associated with long term debt.
THE ISSUANCES OF ADDITIONAL SHARES WILL DILUTE CURRENT SHAREHOLDERS AND MAY
REDUCE THE MARKET PRICE OF THE COMMON STOCK. See the discussion below under the
heading "Selling Stockholders" with regard to additional shares we may be
required to issue. The total number of additional shares that may be issued is
limited to no more than 3,551,558. The table below sets forth the additional
shares that may be issuable based on various prevailing market prices and the
percentage such additional shares would represent of the outstanding shares of
Common Stock.
Prevailing Market Additional Shares Approx. % of
Price per Share Issuable Outstanding Shares
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$.31 3,551,558 14.6%
$.40 2,444,408 10.2%
$.60 1,128,064 4.7%
$.80 515,939 2.2%
$1.00 160,627 0.7%
The issuance of any additional shares will dilute the percentage interests and
could dilute the per share book value of existing shareholders, including
persons purchasing securities in this offering. The average daily volume of
sales in May 1999, as reported by Nasdaq, was approximately 130,000 shares.
Assuming that the selling stockholders receive the maximum additional shares and
also sell all their shares of Common Stock into the market, such sales would
represent approximately of 20% of the then outstanding shares. Such sales would
represent approximately 40 days of trading volume. The selling stockholders may
also receive shares in payment of amounts due for delays in the effective date
of this registration statement. In June 1999, 227,400 shares were issued in
payment of amounts due through the end of June. We expect the impact of that
volume of shares being sold in the market, absent any significant news
announcements, would have a depressive impact on the market price of the Common
Stock.
FUTURE ISSUANCES OF COMMON STOCK WILL DILUTE CURRENT SHAREHOLDERS AND MAY REDUCE
THE MARKET PRICE OF THE COMMON STOCK. The Board of Directors has the authority
to authorize the offer and sale of additional securities without the vote of or
notice to existing shareholders. Based on the current working capital deficit
and the need for additional working capital to fund expected growth, it is
likely that we may issue additional securities to provide such capital, and that
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such additional issuances may involve a significant number of shares. The
issuance of additional securities will dilute the percentage interests and may
dilute the per share book value of existing shareholders, including persons
purchasing securities in this offering, and may also reduce the market price of
the Common Stock.
THE PRICE OF OUR COMMON STOCK HAS BEEN AND MAY BE VOLATILE. The market price
for shares of our Common Stock has been and may be volatile depending on news
announcements or changes in general market conditions. In recent years the
stock market has experienced extreme price and volume fluctuations. Our stock
over the last 52 weeks has traded in the range from a high of $1.938 to a low of
$.344, which range as a percentage of the price is greater than the Smallcap
market in general. The start-up nature of our activities and uncertainties
about future performance, as discussed in these risk factors, may create more
volatility and greater risk to an investor in our company than to an investor in
the market in general.
WE WERE RECENTLY DELISTED FROM THE Nasdaq SmallCap MARKET. Our Common Stock
was listed on the Nasdaq SmallCap Market under an exemption from the minimum bid
price requirement, which is $1.00. The exemption was granted by Nasdaq until
June 30, 1999. On July 14, 1999 Nasdaq removed our stock from the SmallCap
Market. The Common Stock now trades on the OTC Bulletin Board. The OTCBB does
not impose listing standards or maintain relationships with quoted issuers but
does require sponsorship by a participating Market Maker and periodic filing of
financial information with the SEC.
RISKS RELATED TO OUR MINERAL EXPLORATION AND DEVELOPMENT ACTIVITIES
- -------------------------------------------------------------------
THE NATURE OF MINERAL EXPLORATION AND DEVELOPMENT IS RISKY; WE HAVE NOT YET
DISCOVERED ANY PROVEN COMMERCIALLY VIABLE RESERVES ON OUR MINERAL PROPERTIES; WE
COULD INCUR A WRITEDOWN ON OUR INVESTMENT IN ANY SUCH PROPERTY. Exploration for
minerals is highly speculative and may involve greater risks than many other
businesses. Many exploration programs, including those, which we have
conducted, do not result and have not resulted in the discovery of
mineralization. Any mineralization discovered, may not be of sufficient quantity
or quality to be profitably mined. Our mineral exploration and development
activities are subject to all of the operating hazards and risks normally
incident to such activities. These hazards and risks include encountering
unusual or unexpected formations, environmental pollution, personal injury and
flooding. All of these factors may result in losses in relation to the amounts
spent, which are not recoverable. No commercially viable reserves are presently
known to exist on our mineral properties. If management determines that
capitalized costs associated with any of our mineral interests are not likely to
be recovered, we would incur a writedown on our investment in such property
interest.
WE HAVE A COMPETITIVE DISADVANTAGE DUE TO OUR LIMITED FINANCIAL RESOURCES AND
MINERAL LANDS OF INTEREST TO US MAY BE ACQUIRED BY OTHERS. Many companies and
individuals are engaged in mineral exploration and development, including large,
established mining companies with substantial capabilities and long earnings
records. There is a limited amount of desirable mineral lands available for
claim staking, lease or other acquisition in the US, Venezuela and other areas
where we contemplate conducting exploration activities. In general, we are at a
competitive disadvantage in acquiring mineral properties since we must compete
with other individuals and companies, most of which have greater financial
resources and larger technical staffs than ours. From time to time, specific
properties or areas, which would otherwise be attractive to us for exploration
or acquisition, are unavailable due to their previous acquisition by other
companies. Our limited financial resources restrict our ability to act quickly
and deter our ability to mount the extensive exploration efforts often needed to
find and acquire attractive mineral properties.
THE PRICE OF MINERALS FLUCUATES. The market price of minerals is extremely
volatile and beyond our control. Mineral prices are generally influenced by
basic supply/demand fundamentals. The market dynamics of supply/demand can be
heavily influenced by economic policy, i.e., central banks sales/purchases,
political unrest, conflicts between nations, and general perceptions about
inflation. Fluctuating metal prices may have a significant impact on our
results of operations and operating cash flow. Furthermore, if the price of a
mineral should drop dramatically, the value of our properties which are being
explored or developed for that mineral could also drop dramatically, and we
might not be able to recover our investment in those properties. The decision
to put a mine into production, and the commitment of the funds necessary for
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that purpose, must be made long before the first revenues from production will
be received. During the last five years, the average annual market price of
gold has fluctuated between $285 per ounce and $384 per ounce. The current
price of gold is approximately $256 per ounce. Price fluctuations between the
time that such a decision is made and the commencement of production can change
completely the economics of the mine. Although it is possible to protect
against price fluctuations by hedging in certain circumstances, the volatility
of mineral prices represents a substantial risk in the mining industry generally
which no amount of planning or technical expertise can eliminate. We are not
involved in, nor do we expect to enter into any hedging activities
ENVIRONMENTAL CONTROLS ARE INCREASING AND COSTLY. Compliance with environmental
quality requirements and reclamation laws imposed by federal, state, provincial,
and local governmental authorities may require significant capital outlays, may
materially affect the economics of a given property, or may cause material
changes or delays in our intended activities. The Secretary of the Interior has
directed the Bureau of Land Management to propose amendments to surface
management regulations that impose more stringent reclamation and environmental
protection requirements on mining operations. The extent of the changes, if
any, which may be made by the BLM is not presently known, and the potential
impact on us as a result of future regulatory action is difficult to predict.
New or different environmental standards imposed by any governmental authority
in the future may adversely affect our activities.
We are not currently conducting any activities which are adversely affected by
environmental standards, nor are we currently subject to any reclamation costs.
However, US Federal and state environmental laws and regulations potentially
applicable to our exploration activities include:
(a) the assessment of environmental impacts pursuant to the National
Environmental Policy Act and its state counterparts;
(b) the Endangered Species Act and any comparable state laws;
(c) water quality laws and regulations which address impacts on waters of
the United States or a state;
(d) solid, and possibly hazardous, waste laws and regulations to the
extent that waste is generated as a result of activities on the property;
(e) air quality laws and regulations if air emissions result from site
operations; and
(f) mined land operational and reclamation requirements.
All of the items in the list above have the potential to substantially increase
the cost and significantly lengthen the timeframe of activities we might carry
out. In addition to the imposition of requirements which may impact
operations, a number of these environmental laws and regulations impose
permitting requirements related both to the initiation of certain mining
activities as well as to the ongoing operation once mining commences. Local
regulations in the U.S. typically are land use related rather than
environmental. Although environmental regulatory costs to date and those
expected in 1999 are not significant, they may become substantial in the future.
Such costs are considered a part of the ordinary costs of our business.
THE TITLE TO MINERAL PROPERTIES CAN BE UNCERTAIN. Two of our mineral
properties which are in the US include a total of 17 unpatented mining claims to
which we have only possessory title. These claims cover a total of
approximately 870 acres in Montana and Nevada. We also hold mineral interests on
4 other properties covering approximately 5,600 acres that do not include any
unpatented mining claims. Because title to unpatented mining claims is subject
to inherent uncertainties, it is difficult to determine conclusively ownership
of such claims. Since a substantial portion of all mineral exploration,
development and mining in the US now occurs on unpatented mining claims, this
uncertainty is inherent in the mining industry. In addition, in order to retain
title to an unpatented mining claim, a claim holder must have met annual
assessment work requirements ($100 per claim) through September 1, 1992 and must
have complied with stringent state and federal regulations pertaining to the
filing of assessment work affidavits. Moreover, after September 1, 1992, the
right to locate or maintain a claim generally is conditional upon payment to the
US government of a rental fee of $100 per claim per year for each assessment
year instead of performing assessment work. Neither Montana nor Nevada
currently have State laws that require performance of assessment work.
The present status of our properties as unpatented mining claims located on
public lands of the US allows the claimant the exclusive right to mine and
remove valuable minerals, such as precious and base metals and industrial
minerals, found on those claims. Also, those claims allow us to use the surface
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of the land solely for purposes related to mining and processing the mineral-
bearing ores. However, legal ownership of the land remains with the US
government. Accordingly, with an unpatented claim, the US government retains
many of the incidents of ownership of land. The US government regulates use of
the surface, and we remain at risk that the claims may be forfeited either to
them or to rival private claimants due to failure to comply with statutory
requirements as to locations and maintenance of the claims. If there exists a
valuable deposit of locatable minerals (which is the requirement for the
unpatented claim to be valid in the first place), and provided certain levels of
work and improvements have been performed on an unpatented mining claim, the
Mining Law of 1872 authorizes claimants to then seek to purchase the full title
to the claim, thereby causing the claim to become the private property of the
claimant. Such full ownership expands the claimant's permissible uses of the
property (to any use authorized for private property) and eliminates the need to
comply with maintenance and reporting requirements necessary to protect rights
in an unpatented claim. At present there is a statutory moratorium in effect
prohibiting the Department of Interior from accepting and processing new
applications for purchase of fee title to mining claims. The moratorium is
likely to continue indefinitely but does not affect the ability to hold and
develop valuable deposits by means of unpatented mining claims.
LEGISLATION HAS BEEN PROPOSED THAT WOULD SIGNIFICANTLY AFFECT THE MINING
INDUSTRY. For the last several Congressional sessions, bills have been
repeatedly introduced in the U.S. Congress, which would supplant or radically
alter the provisions of the Mining Law of 1872. As of December 31, 1998, no
such bills have passed, although a number of differing and sometimes conflicting
bills are now pending. If enacted, such legislation could substantially
increase the cost of holding unpatented mining claims and could impair the
ability of companies to develop mineral resources on unpatented mining claims.
Under the terms of certain proposed legislation, the ability of companies to
obtain a patent on unpatented mining claims would be nullified or substantially
impaired. Moreover, certain forms of such proposed legislation contain
provisions for the payment of royalties to the federal government in respect of
production from unpatented mining claims, which could adversely affect the
potential for development of such claims and the economics of operating existing
mines on federal unpatented mining claims. Our financial performance could
therefore be affected adversely by passage of such legislation. It is
impossible to predict at this point what any legislated royalties might be, but
a potential three to four percent gross royalty, assuming a gold price of $300
per ounce, would have an approximated $9 to $12 per ounce impact on our costs of
any production from unpatented mining claims.
OUR FUNDING FOR EXPLORATION IS UNCERTAIN. We have funded much of our
exploration and acquisition activities through joint venture arrangements, which
minimize the cost of such activities to us and allow us to explore and acquire a
greater number of properties than we would otherwise be able to explore or
acquire on our own. We have also funded a portion of our exploration activities
without joint venture participation, resulting in increased costs to us. We
have been successful in raising such funds for our exploration activities.
Additional funding from existing partners or third parties, however, may be
necessary to conduct detailed and thorough evaluations of, and to develop
certain properties. Our ability to obtain this financing will depend upon,
among other things, mineral prices and the industry's perception of their future
prices. Therefore, availability of funding is dependent largely upon factors
outside of our control, and cannot be accurately predicted. We do not know from
what sources we will derive any required funding. If we are not able to raise
additional funds (as to which there can be no assurance), we will not be able to
fund certain exploration activities on our own.
THE UNCERTAINTY OF DEVELOPMENT AND OPERATING PROPERTY ECONOMICS AND ORE GRADES
AT FUTURE DEVELOPMENT PROPERTIES. Decisions as to whether any of the mineral
development properties which we now hold or which we may acquire in the future
contain commercially minable deposits, and whether such properties should
therefore be sold or brought into production, will depend upon the results of
exploration programs and/or feasibility analyses and the recommendations of duly
qualified engineers or geologists. Such decisions will involve consideration
and evaluation of several significant factors, including, but not limited to,
the
(a) costs of bringing a property into production, including exploration
and development work, preparation of production feasibility studies and
construction of production facilities,
(b) availability and costs of financing,
(c) ongoing costs of production,
(d) market prices for the mineral to be produced, and
(e) the amount and grades of reserves or mineralized material.
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There can be no assurance that any of the development properties we now hold, or
which we may acquire, will contain a commercially minable mineral deposit, and
therefore no assurance that we will ever generate a positive cash flow from the
sale of or production operations on such properties. In addition, once a
property is sold with a retained royalty or placed into production, risks still
exist that the amount and grade of its reserves will not actually be as
predicted. To the extent that lower amounts and/or grades of reserves are
experienced, costs per unit produced and profitability can be adversely
affected. Depending upon the extent of such an effect in any of our properties,
we could incur a writedown on our investment in any such property.
RISKS RELATED TO THE PRODUCTION AND SAL OF PURIFIED PHOSPHATE PRODUCTS AND ADA
- -------------------------------------------------------------------------------
OUR SOLVENT EXTRACTION PROCESS HAS NOT BEEN PROVEN COMMERCIALLY VIABLE. The
solvent extraction process we developed for the production of purified
phosphoric acid ("PPA") has not been proven on a continuing commercial basis at
the Calgary plant. Although we have performed numerous bench-scale and pilot
plant tests of the process, there can be no assurances that the process will
yield satisfactory results when employed on a continuing commercial scale.
WE HAVE LIMITED EXPERIENCE IN MARKETING INDUSTRIAL CHEMICALS AND LACK LONG-TERM
SALES CONTRACTS. The growth and profitability of operations at the ESEC facility
in Calgary are dependent upon, among other things, the sale of purified
phosphate products to chemical distributors and customers. ESEC signed a letter
of intent with Chemical Interchange Company to sell 6,000-8,000 tons per year of
PPA for distribution in the US primarily east of the Rocky Mountains and is
presently negotiating a similar contract with another group. The tonnage sales
expected under the CIC contract represent approximately one third of the
anticipated production in 1999. We have limited experience in marketing
industrial chemicals and we are relying on consultants and others to initiate
and maintain other sales contacts. PPA is not typically sold under long-term
contracts, and we do not have any other significant long-term commitments to
purchase our products. There can be no assurances that we will be successful in
our future sales efforts.
THE SUPPLY OF RAW MATERIALS IS CRITICAL AND WE LACK LONG-TERM PURCHASE
CONTRACTS. The growth and profitability of operations at the our solvent
extraction facility in Calgary is dependent upon, among other things, the
availability of sufficient raw materials at reasonable prices. We modified the
facility to purify superphosphoric acid ("SPA") to produce a technical grade PPA
and by-products. We purchase SPA from three US suppliers. We generally receive a
discount from listed market price from two of those suppliers, while we have
been purchasing at an annual fixed price from the third which approximates
market price. We have been able to acquire sufficient quantities to supply our
estimated requirements of SPA, but we have no long-term contracts for supply and
other suppliers of SPA may not be available. There can be no assurances that we
will be able to obtain sufficient quantities of SPA at reasonable prices in the
future.
OUR FUTURE PROFITABILITY IS DEPENDENT UPON OUR ABILITY TO EXPAND GEOGRAPHICALLY.
The growth and profitability of operations at our solvent extraction facility in
Calgary will be dependent upon, among other things, our ability to become the
predominate supplier of PPA in the geographic region surrounding Calgary and on
the US West Coast, and to sell on an increasing basis to the Minneapolis/Chicago
area. Although the contract with CIC will move products into the Midwest, there
can be no assurance that our efforts to expand sales can be accomplished on a
profitable basis.
PRODUCT QUALITY, PRICE AND DISTRIBUTION CAPABILITIES DEFINE COMPETITION FOR
PURIFIED PHOSPHATE PRODUCTS. Our purified phosphate products are being sold in
markets that are highly competitive. The principal competitive factors include
product quality, price and distribution capabilities. There can be no
assurances that we will be able to compete successfully against current and
future competitors based on these factors. We compete with several domestic and
international producers, most, if not all, of whom have substantially greater
financial, production, distribution and marketing resources than ours.
Increased competition could result in price reductions, reduced margins and loss
of market share, all of which could have a material adverse affect on our
business, financial condition and results of operations.
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ILL EFFECTS OF POTENTIAL LACK OF DEMAND FOR ADA's SERVICES. If there is no
demand, or the demand is less than projected, for ADA's services for flue gas
conditioning, we will not recognize the synergies expected from its acquisition,
because ADA will not be able to utilize our purified phosphate products.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, and, therefore, file reports, proxy statements and other
information with the SEC. You can inspect and copy all of this information at
the Public Reference Room maintained by the SEC at 450 Fifth Street, NW,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC
maintains a web site that contains reports, proxy statements and information
statements and other information regarding issuers, such as us, that file
electronically with the SEC. The address of this web site is http:\\www.sec.gov.
This prospectus, which constitutes a part of a registration statement on Form S-
3 filed by us with the SEC under the Securities Act of 1933, omits certain of
the information set forth in the registration statement. Accordingly, you should
reference the registration statement and its exhibits for further information
with respect to our common stock and us. Copies of the registration statement
and its exhibits are on file at the offices of the SEC. Furthermore, statements
contained in this prospectus concerning any document filed as an exhibit are not
necessarily complete and, in each instance, we refer you to the copy of such
document filed as an exhibit to the registration statement. You should rely only
on the information or representations provided in this prospectus and the
registration statement. We have not authorized anyone to provide you with
different information.
The Common Stock of the Company is currently traded in the over-the-counter
market and is quoted on OTCBB Market. Reports, proxy statements and
other information filed by the Company therewith can be inspected at the
National Association of Securities Dealers, Inc. 1735 K Street NW, Washington ,
D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with them,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to
be part of this prospectus, and information that we file later with the SEC will
automatically update and supersede the information in this prospectus.
Accordingly, we incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act:
1. Our annual report on Form 10-KSB, as amended, for the year ended
December 31, 1998.
2. Our quarterly report on Form 10-QSB for the three months ended March 31,
1999.
3. A description of our Common Stock contained in the Registration
Statement on Form 8-A as declared effective by the Securities and
Exchange Commission.
All reports and other documents we subsequently file pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and
before the filing of a post-effective amendment which indicates that all
securities offered under this prospectus have been sold or which deregisters all
securities remaining unsold, should also be considered to be part of this
prospectus from the date of the filing of those reports and documents.
We will provide without charge to each person, including any beneficial owner,
to whom a prospectus is delivered, upon written or oral request a copy of our
annual and quarterly reports as filed with the Commission, and/or a copy of any
or all of the documents which are incorporated by reference in this document
The annual reports on Form 10-KSB include our audited financial statements.
Requests should be directed to Earth Sciences, Inc., 910 12th Street, Golden,
Colorado 80401, Attention: Investor Relations (telephone 303-279-7641).
_________________________________
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FORWARD LOOKING STATEMENTS
Except for historical information contained in this prospectus, the matters
discussed in this prospectus may contain or incorporate certain forward-looking
information. Statements containing terms such as "believes," "does not believe,"
"no reason to believe," "expects," "plans," "intends," "estimates,"
"anticipates" are considered to contain uncertainty and are forward-looking
statements. Forward looking statements involve risks and uncertainties that
could cause results to differ materially, including changing market conditions
and other risks detailed in this prospectus and other documents filed by us with
the Securities and Exchange Commission from time to time. Factors that might
cause such a difference include, but are not limited to, those discussed in the
section entitled "RISK FACTORS" above. You are cautioned that no forward-looking
statement is a guarantee of future performance and you should not place undue
reliance on any forward-looking statement, which reflect management's analysis
only as of the date of such statements.. These securities are speculative and
involve a high degree of risk. You should only purchase these securities if you
can afford to lose your entire investment. You should carefully consider the
risks set forth above under the title "RISK FACTORS" prior to purchasing our
common stock. We are not taking on the obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date of this prospectus.
EARTH SCIENCES, INC.
We are a chemical processing, air pollution control and mineral exploration
company. We commenced production of purified phosphate products in Calgary in
June 1997. We were originally incorporated under the name of Colorado Central
Mines, Inc. in Colorado in 1957. Our major activities include the operation of
our solvent extraction facility in Calgary, Alberta for production of purified
phosphate products; flue gas conditioning technology for coal-fired boilers and
other applications provided through ADA Environmental Solutions LLC, a wholly-
owned subsidiary; and continued exploration activities for diamond and gold
resources in Venezuela.
Our principal executive offices are located at 910 12th Street, Golden,
Colorado, 80401, and our telephone number is (303) 279-7641.
Our solvent extraction facility in Calgary, Alberta, recovered uranium from
phosphoric acid during the period from 1983 through 1987. Uranium oxide
production was suspended in the fall of 1987 when the adjacent fertilizer plant
from which the facility received its feed stock suspended operations. The
contract under which the uranium was sold was with Yankee Atomic Electric Co.
and Vermont Yankee Nuclear Power Corp. and restricted the use of the facility
solely to uranium extraction. We modified the contract with the Yankee companies
in 1990 to allow us to use the facility for any other lawful activity. Revamp of
the facility to allow production of purified phosphate products was completed in
1997. The Calgary facility is routinely producing technical grade phosphoric
acid and steps are being evaluated for production of food grade product later
in 1999.
In May 1998, we acquired the remaining 49% interest in ADA through the issuance
of approximately 1,715,000 of its common stock. Our initial 51% interest was
purchased in 1997 by payments to ADA totaling $2,500,000. At that time we
obtained the option to acquire the remaining 49%. We believe ADA can capture a
significant portion of the utility and industrial flue gas conditioning market
with its nontoxic conditioner, which offers both technical and economical
advantages over the hazardous chemicals currently being used. Our Calgary plant
will provide ADA with purified phosphoric acid (PPA), the main chemical
ingredient in many of the blends used in our flue gas conditioners.
RECENT DEVELOPMENTS
Private Placements of Common Stock
From December 1998 through February 1999, we sold a total of 1,360,623 shares of
Common Stock and received net proceeds of $1,237,000. The shares were sold at
closing bid prices which ranged from $.55 to $.91 per share. The shares we sold
are restricted from resale until after a registration statement becomes
effective covering their subsequent sale or 90 days after the sale which ever
occurs later. We have the obligation to issue additional shares as described
below in Selling Stockholders. We also have an obligation to pay amounts to the
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purchasers if the registration statement covering the shares is not effective by
May 26, 1999. In June 1999 we issued 227,400 shares to cover the payment of
such obligation that had accrued through the end of June. The registration for
resale of all such shares of Common Stock issued and outstanding discussed in
this paragraph are included in this Prospectus. The private placements of Common
Stock were made to provide working capital for the Calgary facility for
production of purified phosphate products and our general working capital needs.
News Releases and Current Announcements
Since April 1999 we have made the following news releases and announcements (the
full text of these announcements is available on our web site at www.earth-
sciences.com):
1) April 29, 1999 - ADA announced signing of air pollution control contract with
CLECO Corp., a Louisiana electric power provider.
2) May 13, 1999 - We appointed Ronald B. Johnson to fill a vacancy on our
Board of Directors.
3) May 18, 1999 - We announced our results for the first quarter of 1999.
4) June 10, 1999 - ADA announced the signing of an agreement with Wells Fargo &
Co. to finance its receivables.
5) June 10, 1999 - We announced the reopening of the Calgary facility after an
approximately one month maintenance shut down, the drop of 17% in feed stock
prices and finalization of our financing agreement with the Hongkong Bank of
Canada.
6) June 11, 1999 - ADA announced signing of air pollution control contract with
MidAmerica Energy.
USE OF PROCEEDS
We will not receive any proceeds from the sale of Common Stock by the Selling
Stockholders, however we will receive $125,000 upon the exercise of the stock
options, which amount is expected to be used for general working capital
purposes. In connection with this offering, we estimate that we will incur costs
of approximately $4,000 for legal, accounting, printing, and other costs. Any
separate costs of selling stockholders will be borne by them.
______________________________________________________________________________
Price Offering Proceeds to Proceeds to
to Public(1) Commissions(2) Selling Stockholders Company (3)
- ------------------------------------------------------------------------------
By Selling
Stockholders
Per Share ..$ .43 $ -- $ .43 $ --
TOTAL.......$ 803,250 $ -- $ 803,250 $ --
____________________________________________________________________________
(1) The price per share for the securities offered by the selling stockholders
is estimated at the last sales price quoted on the OTCBB for the Common Stock on
July 19, 1999. The Common Stock may be offered at the current market price,
which may vary through the period during which the securities may be offered, or
at such other prices as may be negotiated by the selling stockholder and the
purchaser at the time of sale. The amount shown includes the sale of shares that
may be acquired upon exercise of the stock options discussed above.
(2) The securities to be sold by selling stockholders may be sold by them or
through or to securities brokers or dealers, which sales may involve the payment
of commissions by the selling stockholders.
(3) Does not reflect expenses of this offering payable by the Company estimated
at $4,000.
SELLING STOCKHOLDERS
The following table provides certain information, as of the date of this
prospectus, respecting the selling stockholders, the shares of Common Stock held
by them or to be held, to be sold, and to be held following the offering,
assuming the sale by such selling stockholders of all Shares of Common Stock
offered. The listed selling stockholders, with the exception of World Capital
Funding as noted below, purchased shares of Common Stock from us at various
dates at the then current market price. As an inducement to the sale, we agreed
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to issue a limited number of additional shares to such selling stockholders in
the event that the average bid price on the five trading days prior to the sale
of the original shares is less than 125% of their purchase price. Additional
shares, if necessary, will be issued so that the total shares held (not
including prior or subsequent acquisitions and assuming no sales) by each such
selling stockholder times the 5-day average bid price equals 125% of the amount
paid for the Common Stock. The number of additional shares that may be issued
is limited to approximately two and one half time the number of shares
originally purchased. The Common Stock purchased from us cannot be sold until
the later of 90 days from the purchase date or the date that the registration
statement covering their sale is declared effective. Also included below for
certain selling stockholders are a total of 227,400 shares issued in June 1999
in payment of amounts due for delays in the effective date of this registration
statement. To the best of our knowledge, none of the selling stockholders are
broker dealers or affiliated with any broker dealers.
Shares Owned
Securities Owned Prior to the Offering After Offering
Common Stock Shares to
Selling Stockholders Stock Options be Offered Number %
_______________________________________________________________________________
Augustine Fund, LP(1) 651,876 - 651,876 0 -
Daniel R. Bisque (2) 170,385 - 130,375 40,010 *
Michael J. DeBoer (3) 71,538 - 71,538 0 -
Pegasus Holdings,
Ltd. (4) 260,751 - 260,751 0 -
Barry Seidman 260,751 - 260,751 0 -
Franklin J. Stermole 160,000 - 100,000 60,000 *
R. Scott Tracey (5) 112,732 - 112,732 0 -
World Capital
Funding, LLC (6) 180,000 100,000 280,000 0 -
________________________________________________________________________________
Totals 1,868,033 100,000 1,868,023 100,010 *
==============================================================================
* Less than one percent
(1) The Augustine Fund, LP is controlled by its general partner, Augustine
Capital Management, Inc., whose investment decisions are made by John Porter,
Brian Porter and Thomas Duszynski.
(2) Daniel R. Bisque is the son of an officer and director of the Company.
Such officer and director disclaims any beneficial ownership in the Common
Stock held.
(3) Michael J. DeBoer is the son-in-law of an officer and director of the
Company. Such officer and director disclaims any beneficial ownership in the
Common Stock held.
(4) Pegasus Holdings Ltd. non-US entity beneficially owned by the Pegasus Trust
whose beneficiaries are the World Wildlife Fund, the World Health Organization
and the International Red Cross.
(5) R. Scott Tracey is the son-in-law of an officer and director of the
Company. Such officer and director disclaims any beneficial ownership in the
Common Stock held.
(6) World Capital Funding, Inc. is a private corporation controlled by Kieth A.
Mazer and received its shares and options in payment of fees for arranging a
portion of the sales of our shares in February 1999. The stock options are
exercisable over a five year period commencing in May 1999 with 50,000 shares
at $1.00 per share and 50,000 shares at $1.50 per share.
PLAN OF DISTRIBUTION
This Prospectus relates to the public offer and sale by certain selling
shareholders of 1,768,023 shares of Common Stock currently held by selling
stockholders and 100,000 shares of our Common Stock issuable on exercise of
stock options by a certain selling stockholder .
The Common Stock to be sold by the selling stockholders may be sold by them from
time to time directly to purchasers. Alternatively, the selling stockholders
may, from time to time, offer the Common Stock through dealers or brokers, who
receive compensation in the form of commissions from the Selling stockholders
and/or the purchasers of the Common Stock for whom they act as agents. As of
the date hereof, no selling stockholder has advised us that it has entered into
any agreement or understanding with any dealer or broker for the offer or sale
of the Common Stock. The selling stockholders may enter into such agreements or
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understandings in the future. The selling stockholders may also offer some or
all of the Common Stock through market transactions on Nasdaq, on which our
Common Stock is traded. Sales of the Common Stock through brokers may be made
by any method of trading authorized by Nasdaq, including block trading in
negotiated transactions. Any such sale of Common Stock by selling stockholders
must be accompanied by, or follow the delivery of, a prospectus filed with a
current registration statement relating to the Common Stock being offered,
unless a selling stockholder elects to rely on Rule 144 or another exemption
from the registration requirements in connection with a particular transaction.
Without limiting the foregoing, such brokers may act as dealers purchasing any
or all of the Common Stock covered by this Prospectus. Sales of Common Stock
are, in general, expected to be made at the market price prevailing at the time
of each such sale; however, prices in negotiated transactions may differ
considerably. No selling stockholder has advised us that it anticipates paying
any consideration, other than usual and customary broker's commissions, in
connection with sales of the Common Stock. The selling stockholders are acting
independently of us in making decisions with respect to the timing, manner and
size of each sale. We have advised each of the selling stockholders that in
connection with the sale of the Common Stock they will be subject to the market
manipulation rules of Regulation M promulgated by the Securities and Exchange
Commission.
We have agreed to indemnify and hold harmless the selling stockholders (other
than selling stockholder Franklin J. Stermole) and each of their respective
officers, directors or persons controlling the selling stockholders from and
against any claim or liability under the Securities Act of 1933, as amended, or
otherwise if such liability or claim arises out of a material untrue statement
or a material omission in the registration statement of which this prospectus is
a part. We also have agreed to reimburse the selling stockholders for all legal
and other expenses incurred by them in connection with investigating or
defending any such claim as and when such expenses are incurred. This
obligation to indemnify does not apply, however, if the liability arises from a
material untrue statement or a material omission in reliance upon or in
conformity with written information furnished to us by the selling stockholder.
The selling stockholders (other than selling stockholder Franklin J. Stermole)
have agreed to indemnify and hold us, our directors, our officers who sign the
registration statement and each person who controls us, harmless from and
against any claim or liability under the Act or otherwise if such claim or
liability arises our of a material untrue statement or a material omission was
made in reliance upon or in conformity with written information furnished to us
by the selling stockholder expressly for use in the registration statement.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is therefore unenforceable.
DESCRIPTION OF COMMON STOCK
Our authorized capital stock consists of 50,000,000 shares of Common Stock,
$0.01 par value per share. All of our issued and outstanding stock is fully
paid and nonassessable. Holders of Common Stock are entitled to receive
dividends, when and if declared by the Board of Directors, out of funds legally
available therefore and to share ratably in our net assets upon liquidation.
Holders of Common Stock do not have preemptive rights to subscribe for
additional shares, nor are there any redemption or sinking fund provisions
associated with the Common Stock. There are currently 24,266,921 shares of
Common Stock outstanding owned by approximately 9,000 persons and/or entities.
Holders of Common Stock are entitled to one vote per share on all matters
requiring a vote of the shareholders. Since the Common Stock does not have
cumulative voting rights in electing directors, the holders of more than a
majority of the outstanding shares of Common Stock voting for the election of
directors can elect all of the directors whose terms expire that year, if they
so choose.
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LEGAL MATTERS
Certain legal matters with respect to the legality of the securities offered
and the organization and existence of our company have been passed upon for us
by the Law Offices of Reed & Reed P.C., Suite 330, 1919 14th Street, Boulder,
Colorado 80302.
EXPERTS
The consolidated financial statements which are incorporated by reference in
this prospectus by reference from our Annual Report on Form 10-KSB as of and for
the year ended December 31, 1998, have been audited by Hein + Associates LLP,
certified public accountants, as stated in their report, which are incorporated
herein by reference, and have been so incorporated in reliance upon such report
given the authority of that firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered. All of the amounts shown are estimated except for the Securities
and Exchange Commission registration fee. The Selling Stockholders will not be
paying any of these expenses.
SEC registration fee $ 334.68
Printing and mailing expenses $ 500.00
Legal fees and expenses $ 1,500.00
Accounting fees and expenses $ 1,500.00
------------
Total $ 3,834.68
=================================
Item 15. Indemnification of Directors and Officers.
Article 7-109 of the Colorado Business Corporation Act authorizes the
indemnification of directors and officers against liability incurred by reason
of being a director or officer and against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement and reasonably incurred in
connection with any action seeking to establish such liability, in the case of
third-party claims, if the officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and in the case of actions by or in the right of the
corporation, if the officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and if such officer or director shall not have been adjudged liable
to the corporation, unless a court otherwise determines. Indemnification is
also authorized with respect to any criminal action or proceeding where the
officer or director also had no reasonable cause to believe his conduct was
unlawful.
The above discussion of the Colorado Business Corporation Act is only a
summary and is qualified in its entirety by the full text of the foregoing.
Article VIII of the Registrant's Bylaws provides as follows:
Each past, present and future director and officer of the corporation shall
be indemnified by the corporation against all expenses, penalties, and
liabilities, including attorneys' fees, reasonably incurred by or imposed upon
him in connection with any actual or threatened claim, demand, action or
proceeding, whether civil or criminal, or in connection with any settlement
thereof, to which he may be made a party, or in which he may become involved, by
reason of his being or having been a director or officer of the corporation,
whether or not he is a director or officer at the time such expenses, penalties
or liabilities are incurred, except in cases where he shall be finally adjudged
in such action or proceeding to be liable for willful misconduct in the
performance of his duties as such director or officer. The right of
indemnification herein provided shall be in addition to, and not exclusive of,
all other rights to which such director or officer may be entitled and the right
of indemnification herein provided shall inure to the benefit of the personal
representatives of deceased directors and officers.
15
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Item 16. Exhibits.
Exhibit
Number Description
3.1 Amended and Restated Certificate of Incorporation of the Company (1)
3.2 Bylaws of the Company, as amended (2)
4.1 Specimen Common Stock Certificate (3)
5.1* Opinion of Law Office of Reed & Reed, P.C. as to legality of the
shares
10.15 Securities Purchase Agreement dated February (1)
23.1* Consent of Hein + Associates LLP
23.2* Consent of Law Office of Reed & Reed, P.C. (contained in
Exhibit 5.1)
* Filed herewith.
- --------------------------------------------------------------------------------
(1) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1998.
(2) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1993.
(3) Incorporated by reference from the Company's Form S-3 Registration
Statement, Registration No. 333-25465 declared effective July 23, 1997.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933 (the "Act", each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining liability under the Act, each filing
of the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) That, insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement and any amendment thereto to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Golden, State of
Colorado on July 21, 1999
EARTH SCIENCES, INC.
Date: July 21, 1999 /s/ Ramon E. Bisque
---------------------------
Ramon E. Bisque, Member of Executive Committee
Date: July 21, 1999 /s/ Duane N. Bloom
---------------------------
Duane N. Bloom, Member of Executive Committee
Date: July 21, 1999 /s/ Mark H. McKinnies
-----------------------------------------------
Mark H. McKinnies, Member of Executive Committee,
President, Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1933, as
amended, this Registration Statement and any amendment thereto has been signed
below by the following persons in the capacities and on the dates indicated.
Date: July 21, 1999 /s/ Ramon E. Bisque
-----------------------------------------------
Ramon E. Bisque, Director
Date: July 21, 1999 /s/ Duane N. Bloom
-----------------------------------------------
Duane N. Bloom, Director
Date: July 21, 1999 /s/ Michael D. Durham
-----------------------------------------------
Michael D. Durham, Director
Date: July 21, 1999 /s/ Robert H. Lowdermilk
-----------------------------------------------
Robert H. Lowdermilk, Director
Date: July 21, 1999 /s/ Mark H. McKinnies
-----------------------------------------------
Mark H. McKinnies, Director
17
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Exhibit 5.1
Law Office of Reed & Reed, P.C.
Attorneys at Law
Suite 330
1919 14th Street
Boulder, Colorado 80302
Telephone (303) 413-0691
Telecopier (303) 413-0645
July 21, 1999
Earth Sciences, Inc.
910 12th Street
Golden, Colorado 80401
Re: Amendment #1 of Registration Statement on Form S-3
Covering the Registration of 1,868,023
Common Shares of Earth Sciences, Inc.
Gentlemen and Ladies:
We have acted as counsel for Earth Sciences, Inc., a Colorado corporation
(the "Company"), in connection with the registration for sale of 1,868,023
shares of the Company's Common Stock (the "Securities") in accordance with the
registration provisions of the Securities Act of 1933, as amended.
In such capacity we have examined, among other documents, the Articles of
Incorporation and By Laws of the Company, records of corporate proceedings,
Amendment #1 of the Registration Statement on Form S-3 filed by the Company with
the Securities and Exchange Commission on or about July 21, 1999, (as may be
further amended from time to time, the "Registration Statement"), covering the
registration of the Securities. We have also made such other investigations and
reviewed such other documents as we have deemed necessary in order to express
the opinions set forth below.
Based upon the foregoing and upon such further examinations as we have
deemed relevant and necessary, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing under
the laws of the State of Colorado.
2. The Securities have been legally and validly authorized under the
Company's Articles of Incorporation, as amended, and constitute (or upon due
exercise of stock options will constitute) duly and validly issued and
outstanding and fully paid and nonassessable shares of the Company under the
Colorado Business Corporation Act.
We hereby consent to the use of our name beneath the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement and to
the filing of a copy of this opinion as Exhibit 5.1 thereto.
Very truly yours,
/s/ Scott Reed
Law Office of Reed & Reed, P.C.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our report dated March 19, 1999
accompanying the financial statements of Earth Sciences, Inc., which report
appears in the December 31, 1998 Annual Report on Form 10-KSB of Earth Sciences,
Inc., to Form S-3 Registration Statement of Earth Sciences, Inc. and to the use
of our name and the statements with respect to us, as appearing under the
heading "Experts" in the Registration Statement.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES
Denver, Colorado
July 21, 1999
<PAGE>
