SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: December 31, 1996
Commission File No. 0-19566
EARTH SEARCH SCIENCES, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Utah 87-0437723
(State or other Jurisdiction of (I.R.S. Employer Identi-
Incorporation or Organization) fication Number)
502 North 3rd Street, #8, McCall, Idaho 83638
(Address of Principal Executive Offices, Including Zip Code)
Registrant's telephone number, including area code: (208) 634-7080
Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the Registrant was required to file such
reports), and
(2) has been subject to such filing requirement for the past
90 days.
Yes X No
As of December 31, 1996, 68,067,448 shares of common stock were outstanding.
<PAGE>
EARTH SEARCH SCIENCES, INC.
FORM 10-Q
(Unaudited)
QUARTER ENDED DECEMBER 31, 1996
PART I
FINANCIAL INFORMATION
TABLE OF CONTENTS
Item 1. Financial Statements Page
Consolidated Statement of Financial Position
as of December 31, 1996 and March 31, 1996. 1
Consolidated Statement of Operations for the
Three and Nine Months Ended
December 31, 1996 and 1995. 2
Consolidated Statement of Cash Flows for the
Nine Months Ended December 31, 1996. 3
Selected Notes to Consolidated Financial
Statements. 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II
OTHER INFORMATION REQUIRED
Item 1. Legal Proceedings 6
Item 2. Changes in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters of a Vote of
Security Holders 6
Item 5. Other information 6
Item 6. Exhibits and Reports on Form 8-K 6
<PAGE>
EARTH SEARCH SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 145,909 $ 670,325
Prepaid expenses - -
---------- ----------
Total current assets 145,909 670,325
Property and equipment 1,651,338 122,276
Deposit and their assets 102,738 129,776
--------- ----------
Total assets $1,899,985 $ 922,377
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Convertible Notes Payable 199,863 444,981
Accounts payable 186,359 188,818
Accrued payroll taxes 159,301 34,000
Accrued interest 335,900 314,277
Customer deposit 2,490,125 500,000
--------- ----------
Total current liabilities 3,371,548 1,482,076
Long-term liabilities:
Shareholder loans 99,590 96,519
Deferred officers' compensation 671,989 592,560
Minority interest 93,928 47,130
--------- ----------
Total liabilities 4,237,055 2,218,285
--------- ----------
Commitments and contingencies Stockholders' deficit:
Common stock $.001 par value; 200,000,000
shares authorized; 68,067,448 and
66,551,663 respectively, issued 68,067 66,551
Additional paid-in capital 4,779,443 4,320,920
Deficit accumulated during the development stage (7,184,580) (5,683,379)
---------- ----------
(2,337,070) (1,295,908)
Total liabilities and stockholders' deficit $1,899,985 $ 922,377
========== ===========
</TABLE>
<PAGE>
EARTH SEARCH SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended December 31, Ended December 31,
1996 1995 1996 1995
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue: $ - $ 6,332 $ - $ 6,332
Expenses:
Exploration 1,749 27,972 122,914 69,933
Depreciation and
Amortization 7,000 5,200 19,000 14,800
General and
Administrative 358,158 439,548 1,298,805 1,875,151
------- -------- ----------- -----------
Loss from operations (366,907) (466,388) (1,440,719) (1,953,552)
Interest expense (19,946) (20,845) (60,482) (91,350)
-------- -------- ----------- -----------
Net Loss $(386,853) $(487,233) $(1,501,201) $(2,044,902)
========= ========= =========== ===========
Loss Per Common Share: $ (.01) $ (.01) $ (.02) $ (.04)
========= ========= =========== ===========
Weighed average shares
outstanding 68,004,720 50,909,773 67,909,224 50,300,257
========== ========== =========== ==========
</TABLE>
<PAGE>
EARTH SEARCH SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended December 30,
1996 1995
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Income $(1,501,201) $(2,044,902)
Adjustments to reconcile net loss to net cash
used in operating activities:
Common stock issued for services and
interest expense 105,724 256,530
Compensation expense related to
Stock options issued - 1,100,000
Depreciation and amortization 19,000 14,800
Change in long term other assets 27,038 (129,776)
Prepaids, deposits, etc. - 837
Change in liability accounts 2,214,019 324,052
---------- -----------
Net cash provided by (used in) operating activities 864,580 (478,459)
---------- -----------
Cash flow used in investing activities:
Capitol expenditures (1,548,062) (8,225)
---------- -----------
Net cash used in investing activities (1,548,062) (8,225)
---------- -----------
Cash flow provided (used in) financing activities:
Proceeds from notes payable - 506,740
Repayment of notes payable - (9,062)
Proceeds from issuance of shareholder
notes payable 60,000 -
Repayment of shareholder loans (56,929) (67,500)
Proceed form issuance of shareholder notes payable
Repayment of shareholder loans - 87,500
Proceeds form issuance of common stock - (15,000)
Purchase of treasury stock
Proceeds from sale of treasury stock - 16,000
Proceeds from issuance of subsidary common stock 155,995 -
---------- -----------
Net cash provided by financing activities 159,066 518,678
---------- -----------
Net (decrease) increase in cash and cash equivalents (524,416) 31,994
Cash and cash equivalents at beginning of year 670,325 30,420
---------- -----------
Cash and cash equivalents at end of period $ 145,909 $ 62,414
=========== ===========
</TABLE>
<PAGE>
EARTH SEARCH SCIENCES, INC
A Development Stage Company
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 (unaudited)
CONDENSED FINANCIAL STATEMENTS
The consolidated statement of financial position as of December 31,
1996, and the consolidated statements of operations for the three and nine
months ended December 31, 1996 and cash flow for the nine months ended December
31, 1996, and 1995, have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) have been made that are necessary to present fairly the financial
position, results of operation, and cash flows at December 31, 1996. The
statements of loss for the three months and nine months ended December 31, 1996
and the statement of cash flows for the nine months ended December 31, 1996 have
been restated to reflect adjustments arising from the audit of the Company's
financial statements for the year ended March 31, 1996. Such adjustments
resulted in recognition for $ 505,805 in additional expense. These expenses
primarily relate to compensation expense incurred from the grant of stock
options to certain officers.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these financial
statements be read in conjunction with the audited financial statements and
notes thereto in the Company's form 10-K for March 31, 1996. The results of
operation for the nine months ended December 31, 1996 are not necessarily
indicative of the operating results to be expected for the full fiscal year.
NOTES PAYABLE
The Company obtained interim working capital by issuing promissory
notes with rights of conversion. The terms of these debts instruments are for an
initial period of ninety days but renewable every ninety days for one year, and
bear interest at 12.5% to 12.99%. Holders of the notes have the right to convert
the loan amount plus interest into restricted shares of the Companys common
stock, subject to the terms in the promissory notes.
CUSTOMER DEPOSITS
The Company has received $ 2,490,125 in deposits through its
subsidiaries for the sale of two airborne hyperspectral scanners which are
currently in production. These instruments are expected to be leased back to the
Company in "sale/leaseback" transactions. To date, the terms of the agreements
have not been formalized. As such, the deposits have been recorded as a current
liability at December 31, 1996.
LOSS PER COMMON SHARES
Loss per common share is based on the weighted average number of shares
outstanding during each period.
ADVANCE FROM SHAREHOLDERS
The Company has continued in existence through the use of advances from
shareholders, primarily an officer and director of the Company and Universal
Search Technology owned by that same officer and director.
ISSUANCE OF COMMON STOCK
During the three months ended December 31, 1996, the Company issued
125,000 shares of its authorized but unissued common stock valued at $13,800 for
services rendered.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition
During the quarter ended December 31, 1996, the Company had no
operating revenues. The Company was required to obtain working capital through
deposits obtained from sale-leaseback transactions of its instruments. Aggregate
amounts received in the third quarter 1997 were approximately $ 1,000,000. In
addition, the Company's operating payables and accrued liabilities increased
approximately $ 66,159.
If the Company cannot continue to raise working capital from the
issuance of common stock and/or notes the Company will experience a substantial
hardship in reducing its operating payables and accrued liabilities. Management
continues to find difficulty in raising required working capital.
During much of the last half of 1996, the Company Officers had their
attentions diverted by an Idaho Department of Finance investigation of the
Company's securities transactions. Although the Company worked diligently to
convenience the Idaho Department of Finance that the allegations being made were
groundless, the Company and the State ultimately reached an impasse.
In January, 1997, the Company filed suite against the State asking for
a declaratory judgement that the Company had not violated certain provisions of
the Idaho Security Act, and the State filed suit against the Company alleging
such violations. See Item 1. Legal Proceeding.
The State's investigators have contacted many shareholders and others
who do business with the Company in an effort that appears, in the Company's
opinion, aimed at damaging or destoring the Company. Fortunately for the
Company, most of the people contacted by the State have reported these contacts
to the Company and have reaffirmed their support for the Company.
The State's investigation and the subsequent law suit have, however,
delayed finalization of the definitive Sale/Lease back agreement with the
customer who is funding the manufacturing of the two (2) Probe1's. That customer
presently owes the Company for past due progress payments. The Company continues
to carry on discussions with the customer and believes that the customer will
make the past due payments. The Company has received notice from the manufacture
of the Probe1's that the Company will be in default of its obligations if it
does not make a progress payment by March 24, 1997. If the customer fails to pay
the past due amount, the Company will be forced to turn to other sources for
that paymentor default in its obligation to the manufacture. Such a default
could result in cancellation of the Probe1 delivery contracts, which could
materially adversely affect the ability of the Company to survive.
Results of Operations
The Company to better focus on commercial plans, formed a wholly owned
subsidiary, Earth Search Resources, Inc. ("ESR") and on June 1, 1996 hired Brian
C. Savage, formerly director of the investment banking mining group of Nesbitt
Burns Securities, Inc. in New York, as president of ESR and Vice
President-Resource Development of the Company. Mr. Savage's experience in the
mining industry and his investment banking background should provide the Company
with significant assistance in developing the commercial side of the business.
<PAGE>
The Company calls special attention to the attributes of its long term
working relationship with NASA/JPL as it pertains to hyperspectral imaging
technology development. NASA/JPL has provided significant guidance to Earth
Search Sciences as the Company has proceeded with the design and development of
its own proprietary instrument for commercial applications, the Probe 1. Through
a Space Act Agreement, Earth Search was able to participate in NASA missions
which utilized the NASA Airborne Visible and Infrared Imaging Spectrometer
(AVIRIS). It was through this involvement that Earth Search was able to gain an
appreciation of the applications of this technology for natural resources
development and environmental assessment. Subject to the availability of
funding, the Company expects to continue NASA research and development
initiatives in 1997. The Company is looking to acquire revenue producing
companies compatible with our systems approach to remote sensing solutions. The
near term focus will include careful screening of acquisition candidates through
strategic alliances. Subject to the availability of funding and the strength of
the Company's financial position, those alliances could become acquisitions.
The Company continues to focus on Kazakstan as a potential mineral
active site and is moving forward with its plans to conclude a joint remote
sensing mission with the Department of Energy, several national laboratories,
several large industrial partners and the Naval Research Laboratory. The mission
was originally planned for August of 1996 was delayed at the request of the
Government of Kazakstan. It has since been rescheduled for June/July 1997.
During the fiscal year ended March 31, 1996, the Company negotiated a
concession license to develop hydrocarbons and minerals in Kazakstan and formed
a team. The team includes the Company and contractors: Battelle/PNNL and the
Department of Energy's AMPS program. In addition to the concession, the Company
acquired a twenty percent (20%) ownership from Scientech in a Kazakstan Joint
Stock Company, SEMTECH, and commenced the acquisition of a complex mining
license.
Falconbridge, Limited (approximately $2.5 billion Canadian annual
revenue mining company) has signed a memorandum of agreement to explore and
develop the base metals on the Polygon (Kazakstan). Falconbridge has provided
assistance to Earth Search in meeting the terms and conditions of the new
Kazakstan mining laws that require that a major mining company be part of any
team that seeks to develop Kazakstan's mineral resources. The mission has been
reschedule for the June/July 1997 time frame.
In September Earth Search, Falconbridge, Behre Dolbear and ASIT
Corporation spent 7 days on the concession in Kazakstan acquiring data and
samples that will allow Earth Search, Falconbridge and Behre Dolbear to
formulate a exploration policy for the next 5 years. The Behre Dolbear report
evaluating the collected data suggests the presence of very significant
potentially viable properties within the Polygon.
The Company continues to build relationships with the Kazakstani Joint
Stock Company SEMTECH. We have just completed the new shareholder agreement that
spells out new distribution of equity and revenue from the mineral concession on
the Polygon. The Company also has submitted a complex license application on the
Polygon resource concession to the Kazakstan Ministry of Geology. Earth Search
is awaiting the results of the Ministry of Geology's evaluation of the
application. Management will keep shareholders informed as these events
progress. The current size of the Polygon concession is substantial and Earth
Search continues to negotiate with other license holders for additional
territory on and adjacent to the Polygon.
Earth Search recognizes that while Central Asia holds promise of
mineral rich deposits, there are risks associated with operating in the former
Soviet Union. Accordingly management has taken steps to diversify its
exploration activities to other locations worldwide.
<PAGE>
On July 31, 1996, the Company signed a contract with Applied Signal and
Imaging Technology, Inc ("ASIT"), to jointly develop software packages that will
enable the Company to process the data it collects in near real time. The
Company contracted ASIT to develop a proprietary software package that will
deliver in the same time frame of our instrument Probe 1.
During the first quarter, the Company signed a Creative Research and
Development Agreement (CRADA) with the U.S. Army Cold Weather Laboratories and
the U.S. Navel Research Laboratories to fly the Navy's HYDICE Hyperspectral
instrument over a site in Idaho that because of its robust vegetation mineral
history, and water resources, ESSI selected the site utilization as an outdoor
laboratory collecting one (1) meter data over mineral, forestry, and water
targets that will be used by the Company to develop advancements on our next
generation of commercial instruments.
Dr. Larry Lass, University of Idaho teamed with Earth Search Sciences
on a joint proposal to the Farm Bureau and won a contract to overfly the Snake
River Basin (Hell's Canyon) to prove the use of hyperspectral imagery for
control and eradication of Noxious weed intrusion. The results of which will
enable Earth Search to determine the Applicability of Probe 1 technology to this
potentially lucrative agricultural market
<PAGE>
PART II
OTHER INFORMATION REQUIRED
Item 1. Legal Proceeding: On January 10, 1997, the Company filed
a declaratory relief action against the Idaho Department of Finance in the
District court of the Fourth Judicial District of the State of Idaho, in and
for the County of Valley, Civil No.CV-97-000C. The Company's declaratory
relief action seeks a declaration from the court that the Company did not
violate the Idaho Securities Act with regard to certain transactions taking
place subsequent to April 1, 1994. The Company's declaratory relief action was
filed in response to repeated threats by the Department that it would file
suit against the Company.
On January 10, 1997, the Department of Finance filed suit against the
Company and its Chairman, Larry Vance, in the District Court of the Fourth
Judicial District of the State of Idaho, in and for the County of Ada, Civil No.
CV OC 9700155D. The Department's complaint set forth five counts, alleging that
the Company and Mr. Vance (1) sold unregistered securities to Idaho and
non-Idaho residents in violation of Idaho law, (2) acted as broker-dealer or
securities salesmen without having registered as such, (3) made untrue
statements of material facts in violation of the Idaho antifraud law, (4) by
making said untrue statements of material facts, engaged in a practice which
operates as a deceit upon persons, and (5) distributed press releases and other
written literature without filing same with the Director of the Idaho Department
of Finance in violation of the Department's rules.
The Department's complaint seeks the following relief: (A) a
declaration that the Company and Mr. Vance have violated Idaho law, (B) entry of
a permanent injunction enjoining the Company and Mr. Vance from violating Idaho
law, (C) entry of a permanent injunction prohibiting the Company and Mr. Vance
from claiming the availability of, using or offering or selling securities,
under any exemptions under Idaho law without seeking the prior written consent
of the Director of the Department, (D) an order requiring the Company and Mr.
Vance to make an offer of rescission to all persons who purchased or received
securities sold by the Company or Mr. Vance in violation of Idaho law, (E) an
order requiring the Company and Mr. Vance to pay a penalty of $10,000 for each
violation of Idaho law, and (F) an award to the State of its attorneys fees and
costs.
With respect to sales of securities violation of the registration
requirements of Idaho law, the Company believes it may have misunderstood
certain state regulations in completing transactions with a limited number of
Idaho-based investors. The Company is preparing to offer approximately 19 Idaho
residents offers of rescission which, if accepted by all offerees, would costs
the Company an aggregate of $143,540. The Company does not believe it violated
the laws of any other state or any federal laws and regulations, and vehemently
denies all other allegations made in the Department's complaint.
The Company in particular intends to vigorously oppose the Department
on the issue of whether the Company has made any untrue statements of material
facts. The Department included seven specific allegations of untrue statements
in its complaint. The Department's allegation and the Company's response are set
forth below:
<TABLE>
<CAPTION>
DEPARTMENT ALLEGATION COMPANY RESPONSE
<S> <C>
A. Defendants represented to offeree The Company has never denied that it pays
and/or investors that principal corporate compensation to Dr. Peel and it has accrued
officers did not receive compensation for compensation for Mr. Vance that will be
services rendered, when it fact, paid only when the Company generates
compensation was received by principal revenues. All information regarding officer
corporate officers. compensation has been properly disclosed
in the Company's SEC filings and in the
Company's audited financial statements.
<PAGE>
B. Defendants represented to certain The Company's 10-K's, 10-Q's,
offeree and/or investors that ESSI owned shareholder letters and press releases
certain remote sensing equipment, when in accurately reflect that state of development
fact, ESSI owned no such equipment. and the Company's ownership interest in
the ESSI Probe 1 instrument. In fact, the
Company has filed a copy of its contract
with Integrated Spectronics for the
manufacture and acquisition of ESSI Probe
as an exhibit to its Form 10-K for the
year ended March 31, 1996.
C. Defendants represented to offeree The Company has properly disclosed the
and/or investors that they had contracts existence and nature of all of its material
with major well-known corporations and contracts, and has never misrepresented the
suggested that such contracts would be revenue potential of these contracts. The
revenue producing, when in fact, such Company's financial statements and filings
contracts were not revenue producing. with the SEC accurately reflect the only
revenues received by the Company to date
(from one of such contracts).
D. Defendants represented to offeree In response to their allegation, the Company
and/or investors that they would have the only converted promissory notes with the
right to convert promissory notes into prior consent or knowledge of investor. In
stock, when in fact, promissory notes were fact, the Company has signed authorization
automatically converted to stock without the for all conversions. Earth Search has asked
prior consent or knowledge of investors. the Department of Finance to justify the
basis of this allegation. The Department
of Finance has failed to provide any evidence
which supports its allegation.
E. Defendants represented to offeree The Company does not understand the
and/or investors that ESSI owned subsidiary Department's allegation regarding
companies, however, no disclosures subsidiaries. The Company's financial
regarding said companies were in financial statements and SEC filings properly disclose
documents or SEC filings. all material subsidiaries and their respective
business activities, if any.
F. Defendants represented to offeree The Company has properly disclosed its
and/or investors that ESSI "holds a majority interest in the Kazakstan joint stock
equity interest in the mineral concession in company SEMTECH and SEMTECH's possession
a region of Kazakstan" where Defendants of a mineral concession for the Polygon
claim there is a "remarkable concentration region of Kazakstan. The Company quoted
of potentially viable precious and base from a report prepared by Behre Dolbear &
metals properties," when in fact, ESSI does Company, independent consultants, regarding
not have any binding agreement giving it a the potential quality of the mineral
majority equity interest in a mineral deposits in the Polygon region, and has
concession in Kazakstan. made no representation to anyone concerning
the presence or nature of mineral reserves
in the Polygon region. The Company recognizes
that doing business in Kazakstan entails a
higher degree of unpredictability and risk
than doing business in the United States or
other, more developed nations. The Company
has disclosed its concerns about the risk
profile most recently in its Form 10-Q for
the quarter ended September 30, 1996.
G. Defendants represented to offeree The Company never represented in any of
and/or investors that ESSI acquired Lamb its SEC filings that it closed the acquisition
Associates, Inc., an engineering and of Lamb Associates, Inc. The Company had a
technical services firm, when in fact, binding agreement to purchase Lamb Associates,
ESSI did not acquire Lamb Associates, Inc. Inc., but never obtained the financing
necessary to close the transaction. All of
this was fully disclosed in the Company's
SEC filings, including most recently in
the Company's Form 10-K for the year ended
March 31, 1996. In January 1996, the Company
and William Lamb renegotiated the transaction
documents to accommodate a closing without
financing. Mr. Lamb issued a press release
at the time of the renegotiation indicating
that the transaction would be closing. The
Company withdrew its offer to close the
transaction when it learned that Lamb
Associates' revenues and earnings were less
that had been projected by Lamb Associates.
The Company never misrepresented the nature
of the Lamb Associates transaction.
</TABLE>
<PAGE>
The Company is very disappointed that the Department has chosen to file
its complaint. The Company requires financing to complete the development and
implementation of its business plan. There can be no assurance given the
existence of the complaint that the Company will obtain the required financing.
The Department had offered to settle the complaint on terms that would
have required the Company to admit that it had unmade untrue statements of
material facts. The Board of Directors of the Company considered the offer of
settlement but rejected it because the admission would have potentially
undermined the Company's credibility. During the pendency of the Department's
lawsuit, the Company intends to defend its credibility vigorously, and to try
its hardest to conduct business as though the complaint does not exist.
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote
of Security Holder None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K:
Filed a Form 8-K on July 11, 1996
Filed a Form 8-K on December 6, 1996
Filed a Form 8-K on January 15, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned.
EARTH SEARCH SCIENCES, INC.
Date: February 14, 1997 /s/ Larry F. Vance
---------------------------- ------------------
Larry Vance
Chairman and Director
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT METHOD OF FILING
- ---------- ----------------------
<S> <C> <C>
27. Financial Data Schedule . . . . . . Filed herewith electronically
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIATED BALANCE SHEET AND CONSOLIATED STATEMENTS OF OPERATIONS OF THE
COMPANY'S UNAUDITED FORM 10-Q, WHICH IS ATTACHED, AND IS QUALIFIED IN
ENTIRETY BY THE REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000752634
<NAME> Earth Search Sciences, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Mar-30-1997
<PERIOD-START> Oct-31-1997
<PERIOD-END> Dec-31-1997
<CASH> 145,909
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 145,909
<PP&E> 1,651,338
<DEPRECIATION> 19,000
<TOTAL-ASSETS> 1,899,985
<CURRENT-LIABILITIES> 3,371,548
<BONDS> 0
0
0
<COMMON> 68,067,448
<OTHER-SE> 2,405,137
<TOTAL-LIABILITY-AND-EQUITY> 1,899,985
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,298,805
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,482
<INCOME-PRETAX> 1,501,201
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,501,201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,501,201
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
