UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 000-50459

EXPLORATION DRILLING INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)

NEVADA	98-0396733
State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)
Mendelstrasse 11, Technologiehof
D-48149, Muenster, Germany
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code	49-251-980-2030
Securities registered pursuant to Section 12(b) of the Act:	NONE.
Securities registered pursuant to Section 12(g) of the Act:	Common Stock, $0.001 Par Value Per Share.

Indicate by check mark if the registrant is a well-known seasoned issuer as defined by Rule 405 of the Securities Act.
Yes [   ]   No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [   ]   No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]   No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ]	Accelerated filer                      [   ]
Non-accelerated filer   [   ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $17,692,828 based on a price of $0.45, being the average bid and asked price for the registrant’s common stock as quoted on the OTC Bulletin Board on June 29, 2007.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable
date. As of April 8, 2008, the registrant had 115,952,011 shares of common stock outstanding.

EXPLORATION DRILLING INTERNATIONAL INC.

ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2007

TABLE OF CONTENTS

		PAGE
PART I		3
ITEM 1.	Business.	3
ITEM 1A.	Risk Factors.	11
ITEM 2.	Properties.	13
ITEM 3.	Legal proceedings.	13
ITEM 4.	Submission Of Matters To A Vote Of Security Holders.	13
PART II		14
ITEM 5.	Market For Registrants Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities.	14
ITEM 7.	Management’s Discussion and Analysis Of Financial Condition And Results Of Operations.	15
ITEM 8.	Financial Statements And Supplementary Data.	22
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	23
ITEM 9A(T).	Controls and Procedures.	23
ITEM 9B.	Other Information.	24
PART III		26
ITEM 10.	Directors, Executive Officers and Corporate Governance.	26
ITEM 11.	Executive Compensation.	29
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	31
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence.	33
ITEM 14.	Principal Accounting Fees and Services.	35
ITEM 15.	Exhibits, Financial Statement Schedules.	35
SIGNATURES		41

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PART I

Certain statements contained in this Annual Report on Form 10-K constitute “forward-looking statements.” These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect,” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under Item 1A. “Risk Factors” and elsewhere in this Annual Report. We advise you to carefully review the reports and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”), particularly our Quarterly Reports on Form 10-QSB and Form 10-Q and our Current Reports on Form 8-K.

As used in this Annual Report, the terms “we,” “us,” “our,” “EDI USA,” and the “Company” mean Exploration Drilling International Inc. and its subsidiaries, unless otherwise indicated. All dollar amounts in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.

ITEM 1.                BUSINESS.

CORPORATE BACKGROUND

We were incorporated in the State of Nevada on January 24, 2003. On March 22, 2006, we completed a 5-for-1 stock split of our common stock. As a result of the stock split, our authorized capital was increased from 200,000,000 shares of common stock, with par value of $0.001 per share, to 1,000,000,000 shares of common stock, with par value of $0.001 per share.

Through our wholly owned subsidiary, EDI Exploration Drilling International GmbH (“EDI Germany”), we are in the business of providing well drilling, well construction and well maintenance services using certain proprietary technologies developed by EDI Germany. Currently we are seeking to earn revenues from the provision of those services and from the leasing of equipment based on our technologies and provided in connection with those services. In the future, we may explore licensing opportunities for our technologies.

RECENT CORPORATE DEVELOPMENTS

We experienced the following significant developments since our last completed fiscal quarter ended September 30, 2007:

1.

On October 15, 2007, our Board of Directors approved a private placement offering of up to 3,250,000 units (the “Units”) at a price of EUR 0.20 per Unit to non-U.S. Persons as contemplated under Regulation S promulgated under the United States Securities Act of 1933 (the “Securities Act”). Each Unit consisted of one share of our common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of our common stock at a price of $0.35 US for a period of two years from the date of issuance. On November 12, 2007, we completed the private placement and issued 3,250,000 Units for total proceeds of EUR 650,000 to two corporate investors. Each investor represented that it was not a U.S. person as defined in Regulation S of the Securities Act, and has provided representations indicating that it was acquiring our securities for investment purposes only and not with a view towards distribution.

2.

On February 13, 2008, we entered into a consulting agreement with Mr. Jesko Beck whereby Mr. Beck has agreed to provide us with investor relations services for a one year period, ending on February 28, 2009. In consideration for Mr. Beck’s services, we issued Mr. Beck 250,000 shares of our common stock and share purchase warrants entitling Mr. Beck to purchase an additional 250,000 shares of our common stock at a price of $0.25 per share, expiring on February 28, 2009. Mr. Beck represented that he was not a U.S. person as defined in Regulation S of the Securities Act, and provided representations indicating that he is acquiring our securities for investment purposes only and not with a view towards distribution.

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3.	On February 27, 2008, we completed a private placement to one investor of 3,000,000 units at a price of $0.27 per unit for total proceeds of $810,000. Each unit is comprised of one share of our common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of our common stock at a price of $0.34 per share for a period ending February 26, 2009. This private placement was completed pursuant to the provisions of Regulation S promulgated under the Securities Act. The investor represented that he was not a U.S. person as defined in Regulation S of the Securities Act, and has provided representations indicating that he was acquiring our securities for investment purposes only and not with a view towards distribution.
4.	On March 14, 2008, we completed a private placement to one investor of 384,615 units at a price of EUR 0.13 per unit for total proceeds of EUR 50,000. Each unit is comprised of one share of our common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of our common stock at a price of EUR 0.17 per share for a period ending March 11, 2009. This private placement was completed pursuant to the provisions of Regulation S promulgated under the Securities Act. The investor represented that he was not a U.S. person as defined in Regulation S of the Securities Act, and has provided representations indicating that he was acquiring our securities for investment purposes only and not with a view towards distribution.
5.	In March, 2008, EDI Germany established a joint venture company in Turkey called EDI Sondaj Insaat Makine Sanayi Ticaret Anonim Sirketi (“EDI Turkey”). EDI Germany owns a 25% interest in EDI Turkey. Dirk Beisemann, a consultant to EDI Germany, will also own a 25% interest in EDI Turkey, with Turkish nationals Mehmet Kurtbay, Serdar Kaya and Omer Faruk each owning 25%, 13% and 12%, respectively. Mr. Kurtbay will act as CEO of EDI Turkey. EDI Turkey will be utilized by the parties to seek out business opportunities in Turkey for EDI’s proprietary technologies.
6.	On March 28, 2008, EDI Germany entered into a Technology License Agreement (the “EDI Turkey License Agreement”) with EDI Turkey whereby EDI Germany granted a license to EDI Turkey for the exclusive use of its proprietary technologies, known as the EDI Fluid Finder, EDI Medium Changer, EDI Water Save and EDI Suspension, in Turkey for a period of two years. In consideration of this license grant, EDI Turkey agreed to pay EDI Germany $50,000 within two years of entering into the EDI Turkey License Agreement, with minimum installment payments of $2,000 per month. The EDI Turkey License Agreement calls for additional payments equal to 10% of net profits, if any, from any drilling projects undertaken by EDI Turkey. If EDI Turkey fails to secure any drilling projects utilizing EDI Germany’s technologies within one year after the date the agreement was executed, its license rights will become non-exclusive.

WELL DRILLING, CONSTRUCTION, MANGEMENT AND MONITORING SERVICES

Currently, our business model revolves around the provision of exploratory drilling, well construction, water management, and groundwater monitoring services using our proprietary technologies. In addition to these services, we believe that our technologies may be adaptable for use in the areas of geothermal power and coal mining.

Our business strategy is to act as a technology and service provider by working with existing drilling companies and industry representatives located in the specific geographic markets targeted by our management through strategic alliances, joint ventures and licensing arrangements. While local service providers conduct the actual drilling, we provide our specially designed hardware, together with training, knowledge and expertise, to our strategic partner or licensees. Once a specific drilling project has been secured, we send a team of our own experts, together with our specially manufactured equipment, to the specific drilling sites to work with local service providers. Once there, our experts work with the local team in supervising and directing the overall project, including the proper use of our equipment.

Drilling Projects in Africa

In 2007 we conducted a number of drilling projects in Namibia through our wholly owned subsidiary, EDI Southern Africa (Pty.) Ltd. (“EDI Southern Africa”). The projects, originally secured through a memorandum of understanding (the “Namibian MOU”) with Pamue Investment Company (Pty.) Ltd. and August 26 Holding Company (Pty.) Ltd., was originally for the drilling of four exploratory water wells.

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In February, 2007, we successfully constructed the first water well on a farm in Namibia. In the borehole, our engineers located four successive water horizons at depths of 110, 146, 176 and 200 meters. Samples were taken at each water horizon. Whereas the first three samples yielded no useful quantities of water, the fourth and final sample produced a slightly saline resource. Although this resource was not useful for drinking water purposes, it was usable for agricultural purposes. As a result, a well was constructed at this depth. Had traditional drilling methods been used, it would have been necessary to drill four separate boreholes before the appropriate water horizon had been found, increasing the overall costs considerably. The Namibian Ministry of Agriculture, Water and Forestry, who had commissioned this project, was impressed by the cost benefits exhibited during the completion of this project. As a result, the Ministry commissioned us and a local drilling company to work together on three additional drilling projects. These projects involved exploratory boreholes, drilled for the purpose of geological analysis. Drilling on these projects was commenced in February, 2007 and completed in May 2007. As a result of the successful completion of these projects, we secured an additional six drilling projects in Namibia. After the completion of four drilling projects, our management reassigned our drilling team to the Coca Cola Pakistan project. We may send our drilling team back to Namibia in the future, however there are no assurances that we will do so. We did not earn revenue from the drilling projects conducted in Namibia as they were conducted to demonstrate our drilling technologies and processes.

Drilling Projects in Southern Asia

In 2006, we conducted two sample drilling operations in India. These drilling operations were conducted as demonstrations of our technologies and methods and were completed by us at no charge. We have not yet secured any drilling contracts in India; however, we are continuing to explore business opportunities in that country.

We have secured a drilling contract from Coca-Cola Pakistan to drill a total of four water exploration holes. The purpose of the drilling project is to obtain and analyze water samples from two locations around Karachi that will be used to assist Coca-Cola Pakistan in deciding where to locate a large-scale bottling facility. Drilling was originally scheduled to begin in the Fall of 2007, but was delayed by Coca Cola Pakistan due to their ongoing negotiations with third parties regarding land ownership issues. The first drilling project is now scheduled to begin in May, 2008, and is expected to consist of surveying existing ground water sources and evaluating their quality, quantity and sustainability for beverage production. Four test boreholes will be drilled in two different locations and analyzed locally. The project will be centrally controlled and coordinated by Coca-Cola International, based in Istanbul, Turkey. However, due to the current political instability in Pakistan, these projects could be again delayed, or be abandoned altogether if the political environment worsens.

Turkey

In March, 2008, our wholly owned subsidiary, EDI Germany established a joint venture in Turkey by forming EDI Turkey. EDI Germany owns a 25% interest in EDI Turkey. Dirk Beisemann, a consultant to EDI Germany, will also own a 25% interest in EDI Turkey, with Turkish nationals Mehmet Kurtbay, Serdar Kaya and Omer Faruk each owning 25%, 13% and 12%, respectively. Mr. Kurtbay will act as CEO of EDI Turkey. EDI Turkey will be utilized by the parties to seek out business opportunities in Turkey for EDI’s proprietary technologies.

Effective March 28, 2008, EDI Germany entered into a Technology License Agreement (the “EDI Turkey License Agreement”) with EDI Turkey whereby EDI Germany granted a license for two years to EDI Turkey for the exclusive use of its proprietary technologies, known as the EDI Fluid Finder, Medium Saver, Water Save and Suspension, in Turkey for a period of two years. In consideration of this license grant, EDI Turkey agreed to pay EDI Germany $50,000 within two years of entering into the agreement, with minimum installment payments of $2,000 per month. The EDI Turkey License Agreement calls for additional payments equal to 10% of net profits, if any, from any drilling projects undertaken by EDI Turkey. If EDI Turkey fails to secure any drilling projects using EDI Germany’s technologies within one year after the agreement was executed, its license rights will become non-exclusive.

Currently, our primary objective is to establish market acceptance and market penetration for our technologies. As a result, our primary objective in performing the projects described above is to demonstrate that our technologies are effective and cost efficient. Although we hope to earn revenue from these projects, there is a substantial possibility that these projects will operate at a loss.

In addition to the above projects, we plan to target markets in Germany, Southern Europe and the Middle East. We have already established contacts in Saudi Arabia, Bahrain and Germany and, through these contacts, we are seeking to secure drilling projects that will allow us to use and demonstrate our technologies.

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TECHNOLOGIES: THE EDI FLUID FINDER, MEDIUM CHANGER, WATER SAVE AND SUSPENSION

Our core technology is the EDI Fluid Finder, which enables us to locate and drill water wells in a more efficient, economical and ecologically sound manner than traditional methods. In addition to the EDI Fluid Finder technology, we have also developed the EDI Medium Changer, EDI Water Save and EDI Suspension technologies; however these technologies are not yet commercially usable. Due to our limited fiscal resources, we have decided to focus our business efforts around the use of our EDI Fluid Finder technology as the development of this technology is at a stage where we believe it to be immediately usable for commercial purposes, and it is the technology for which we have received the greatest amount of interest.

The EDI Fluid Finder

The Traditional Well Drilling Process

Groundwater is often found at different aquifer levels beneath the surface of the earth. Often times, multiple layers of groundwater can be found at a single location, with each level separated by layers of soil or rock. Traditional well drilling procedures used to reach underground water resources involve the drilling of a hole sunk with a normal drill pipe and a mounted drill crane. The depth to which the hole is drilled (and the corresponding water horizon) is determined from the drilled dirt mixture in the flush. The flush is a mixture of water and dirt that flows to the surface as part of the drilling process. During the drilling process, a drilling mud is circulated in through the drill pipe and flushed out to the annular space of the hole. The annular space is the space between the drill pipe and the outer wall of the drill hole. This creates a mixture of mud and sample materials from inside the well hole that is “flushed” to the surface via the annular space. The drilling mud is required in order to create and maintain pressure at the bottom of the drill hole and creates a cake along the walls of the hole, providing stability to the hole during the drilling process.

In order to test the quality of the water, a sample must be taken, which requires the removal of the entire drill pipe from the drill hole. The drill hole is then used to build a fully functioning well. Traditionally, if the quality of the water found at the depth reached by that particular drill hole is not suitable, that drill hole cannot then be reused to find lower sources of groundwater. This is because water from the higher aquifer levels will seep through the drill hole and contaminate the lower levels of groundwater. As a result, the well must be abandoned and a new drill hole must be sunk in a new location in order to reach lower aquifer levels. This process must be repeated until the correct water horizon has been found.

The disadvantage of this process is that the well drilling process can be a very time consuming, difficult and expensive process as the drilling equipment must be moved and reset each time a deeper aquifer level is sought.

Our proprietary technology resolves this difficulty by allowing samples to be taken at different aquifer levels during the drilling process within the same drill hole.

The EDI Fluid Finder

The EDI Fluid Finder allows for accurate sampling of multiple water horizons using the same drill hole by preventing the test horizon from being contaminated by water horizons found above. In addition, the EDI Fluid Finder allows groundwater samples to be taken in an uncased borehole without the removal of the drilling assembly.

The EDI Fluid Finder is mounted between the drill bit and the drill pipe using the standard mud rotary drilling method. During the drilling process, the device behaves in a completely neutral manner and does not interfere with, or require any changes to, the drilling operation. Approximately 15% of the mud produced by the drilling process is used to keep the valves and filters of the EDI Fluid Finder clean during the drilling process.

Once the drill has reached the desired test horizon, the drill drive is separated from the drill pipe and an underwater pump is lowered into the drill pipe. A special filter gravel is inserted into the annular space to a level just above the top of the Fluid Finder. This separates the drill hole into two sections. The partial vacuum created by the pump has the effect of generating a barrier layer and a natural seal at the filter gravel/mud interface. The borehole is thus divided into two parts and the test horizon is precisely separated from the drill pipe and any higher water horizons that would otherwise contaminate the test.

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This allows the water at the aquifer level reached to be pumped and tested directly on-site. The filters in the Fluid Finder allow water at the test horizon to flow through the filter gravel and the drill pipe. This water is then pumped up through the drill pipe into a sample collecting vessel at the surface, where it can be tested.

If the water quality at the test horizon is not suitable, the drill drive is reattached to the drill pipe. Normal operating pressure from the drilling mud fluid is sufficient to lift the filter gravel out of the annular space and normal drilling operations can then be resumed immediately. This process can be repeated any number of times until the correct aquifer level has been reached.

The EDI Fluid Finder can be adjusted to fit a number of drill diameters (with a minimum diameter of 65 mm or 2.56 inches) and can be used to drill to depths of up to 500 meters or 547 yards.

The EDI Medium Changer

During the sampling process, the drill pipe is filled with the sample fluid and flowed to the surface for testing. Once a sample has been tested and a decision has been made to resume drilling, the sample fluid must be pumped out of the drill pipe and drilling mud must be returned to the drill pipe and the annular space so that the drilling process can be resumed. The EDI Medium Changer is a proprietary process that is designed to accomplish this task. Pumping the drilling mud directly down through the drill pipe into the annular space along with the sample fluid without a medium changing process would destroy the drill hole.

The EDI Medium Changer is designed for installation into the drill string via the EDI Fluid Finder and possesses a special filter section. In order to change the medium in the well hole, drilling mud is pumped into the annular space in measured quantities and pressure. During this process, valves on the EDI Medium Changer are opened by the pressure created and the drilling mud flows through the filter section of the EDI Medium Changer into the drill string, displacing the fluid placed there by the sampling process. Using this process, the sample fluid within the drill string is displaced by the drilling mud. Once the sample fluid has been completely displaced by the drilling mud, drilling can be resumed.

The EDI Water Save and Suspension

Traditional Well Sealing Methods

Traditional well sealing measures use a clay ring seal that forms a barrier over the extraction sample, as well as a barrier made out of a mixture of cement and clay found in the annulus collector. This seal prevents contaminated surface water from seeping down into the fresh water at the bottom of the well. Generally, this seal must be rehabilitated approximately every 5 years. However this method of sealing a well has proven to be unstable despite any well rehabilitation measures that may taken. After about 8 to 10 years, the efficiency of the well as compared to the energy and effort that needed to operate the well drops dramatically. In addition, this method does not provide a stable seal between the water horizon used by the well and higher aquifers and water horizons penetrated by the well hole during the drilling process. Tests have shown that after approximately 8 to 10 years, the quality of water produced by wells sealed using traditional methods will fall below acceptable drinking standards due to the leaching of contaminants.

The EDI Water Save

The EDI Water Save is a proprietary process for establishing water wells once the drilling process has been completed. The EDI Water Save process is designed to create a more stable water well and to extend the life of the well up to 20 years.

Once the optimum aquifer has been found in the drilling process, the well piping is installed into the well hole, with the filtering mechanism located at the lower end. The piping and filtering mechanism are each customized according the geology and hydrology of the well location. Once the piping and filter material has been inserted, the EDI Suspension, described below, is pressure injected into the annular space, filling the area between the well piping and the hole wall from above the filter to the surface.

Through this process, well restoration becomes unnecessary as a stable barrier from higher aquifers and water horizons is created, preventing contamination of lower water levels through the annular space of the well hole and preventing the deterioration of the water quality extracted by the well.

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All that would be required is regular maintenance on the well machinery in order to prevent the build up of minerals within the filter units. Without regular maintenance, the build up of these minerals can, over time, interfere with the water flow rate of the well. However, the EDI Water Save would include the installation of maintenance materials during the well construction period, meaning that well maintenance could be conducted at a later date in a quick and cost effective manner.

The EDI Suspension

The EDI Suspension consists of a mixture of natural products which individually correspond to German Industrial Standards (“DIN”) and are approved for use in the operation and drilling of water wells. The individual components of the EDI Suspension would be mixed to particular proportions and concentrations depending upon the existing geology of the location of the well hole and the depth of the well hole. The EDI Suspension would then be injected into the annular space of the drill hole, where it would infiltrate the pores, crevices, fissures and cavities of the rock mass. The EDI Suspension would thus interlock with the rock mass and, at the same time, enclose the outer wall of the well tube. The EDI Suspension is designed to be used to fill up the entire annular space in the well hole above the fluid extraction section at the bottom of the well. After approximately 24 hours has passed, the EDI Suspension would form a permanently elastic and fixed mass substance. This way the EDI Suspension would create a barrier to higher aquifer and water horizon levels that were penetrated during the drilling phase, preventing contamination of the lower water horizon that is being used by the well. Geologically and hydrologically, this would return the rock mass to its original state, potentially extending the life of the well to up to 20 years.

GLOBAL DEMAND FOR SUPPLIES OF FRESHWATER

We are currently in the development stages of our business. However, we believe that there is a strong worldwide demand for innovative, cost effective and sustainable technologies that can be used to assist in the production of a stable drinking water supply, and that such demand is likely to continue to grow in the near future.

The United Nation’s World Water Development Report, presented during the International Year of Freshwater 2003, arrived at an alarming conclusion: during the last century, the international demand for freshwater has increased six fold. There are many reasons for this explosion in demand, one of which being the dramatic increase in population growth. By 2015, access to clean freshwater will need to be secured for an additional 2 billion people. However, because the demand for freshwater is increasing twice as fast as world population growth, it is clear that population growth is not the only factor driving this increase in demand. According to the newsletter publication, Global Water Intelligence, private households are responsible for only 9% of the world’s freshwater consumption. Agriculture, at 71%, represents by far the largest source of freshwater consumption, with private industry consuming approximately 20%, although that proportion is growing.

Many experts believe that water will become a major source of global conflicts in the 21^st Century. This possibility is reinforced by the fact that, in the year 2000, 1.1 billion people did not have access to clean drinking water. Polluted drinking water is also a major carrier of disease. Diarrhea related diseases are the cause of 2.2 million deaths annually.

River and groundwater contamination by industrial waste and toxins have exacerbated the situation significantly. Waters are polluted with 330 to 550 million tons of heavy metals and other toxic substances every year. Further serious damage is being caused by global warming. According to information provided by the United Nations, 25 million acres of land are lost to desert formation each year. The growth of deserts in Africa and the Middle East has been particularly drastic.

The result of these occurrences is a constantly growing demand for freshwater supplies that is being met with a stagnant or regressive supply.

In December, 2006, we commissioned the Fraunhofer Institute for Environmental, Safety and Energy Technology UMSICHT (“Fraunhofer UMSICHT”), to conduct an independent market study on the global market potential for drilling and well construction technologies. Fraunhofer UMSICHT is a division of Fraunhofer Gesellschaft, a German research organization that provides applied research services to public institutions, governments and private industry. Fraunhofer Gesellschaft is Europe’s leading applied research organization and is funded by the German federal and state governments, as well as by private industry.

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The study predicted that that, in order to meet the world’s drinking water needs by the year 2025 through the exploitation of ground water resources, 8 million new water wells would need to be constructed worldwide. The same study also indicated that, in 2003, water technology exports from Europe to Latin America, Asia and the Middle East reached 10.3 billion Euros (approximately $13.6 billion US). Approximately 2% of these exports, totaling 228.2 million Euros (approximately $301.2 million US), were made up of drilling equipment exports.

ALTERNATIVE USES FOR OUR TECHNOLOGIES: GEOTHERMAL POWER AND MINING

Currently, our technologies are being used by us primarily in connection with locating, establishing and maintaining water wells. However, we believe that our technologies may be adaptable for use in geothermal energy production, as well as coal mining.

Geothermal Power

Geothermal power uses geothermal heat to generate electricity. In areas with high temperature groundwater at shallow depths, wells are drilled into natural fractures in basement rock or into permeable sedimentary rocks. Hot water or steam flows up through the wells either by pumping or through boiling (flashing) flow. This hot water or steam is then used to produce electricity.

As the production of geothermal electricity is still at the beginning of its development, it is expected that, in the future, considerable cost reductions can be achieved. This may be possible, for example, through more efficient drilling and simulation facilities or through improved efficiency in power generating facilities. We believe our technologies can make significant contributions to the future competitiveness of geothermal power production by reducing drilling costs and reducing the risks of finding hot groundwater.

In March 2008, we conducted a geothermal drilling project for a planned construction project in Southern Germany in which houses and apartment buildings are to be supplied with geothermal energy. No significant adaptations were required to our existing technologies for this project. The purpose of this drilling project was to obtain information and measurements of the geological subsoil and the thermal gradients of the area in order to determine whether the planned housing project could be sustained with geothermal energy. EDI Germany was responsible for the hydrology of the project and for all boring work and analysis. Since water was not acceptable to the client as a source of geothermal energy, EDI Germany recommended that geothermal probes be used instead.

Following the completion of this project, EDI Germany received numerous inquiries regarding the use of our drilling technologies to exploit near surface geothermal resources. Although no contracts have been signed, we now intend to offer one-stop services for the planning and execution of near-surface geothermal projects. This would include identification of thermal energy requirements, installation planning, measuring geothermal gradients of the subsoil, and the possible exploitation of groundwater and thermal water resources.

Coal Mining

Underground water conduits can pose an unexpected obstacle and hazard to coal mining operations. Using our technologies, boreholes can be drilled in an efficient and cost-effective manner to locate these water conduits ahead of time.

COMPETITION

We compete directly with traditional well drilling contractors. The market for well drilling contractors and equipment providers is mature and well established. The market is currently dominated by a number of different companies, some of whom are globally active with worldwide infrastructures. These companies are able to take on any drilling project at short notice regardless of where the project may be located. In addition, there are a large number of small, local contractors who are also active within the industry. We are also aware of a technology similar to our EDI Medium Changer technology that is designed for use in oil and gas drilling, which we believe to be closer to commercial feasibility.

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Although our management and employees have a number of years of experience in well drilling, we are a development stage company, have not earned any revenues to date, and are a new entrant to this industry. Our ability to compete within this industry is dependent upon our ability to differentiate our processes, products and technologies from those already existing in the marketplace and our ability to create public awareness of the advantages those processes, products and technologies present.

GOVERNMENT REGULATIONS

We expect that our well drilling activities will be subject to a number of government regulations, including strict safety and environmental regulations. As such, obtaining any necessary permits and/or governmental approvals may be a lengthy and costly process. We carry out our current drilling projects in co-operation with local drilling companies, and work with them to ensure that all necessary permits and/or governmental approvals have been obtained. However, we are in the early development stages of our business and are only operating a limited number of drilling projects in a limited number of locations. We intend to explore markets our services and technologies on a worldwide basis, and there are no assurances that we will be able to successfully comply with all present or future government regulations.

SUPPLIERS

We rely upon outside consultants to manufacture our products. We currently work closely with Jungblut Maschinenbau GmbH, an engineering and machining company located in Dorsten, Germany. This company assists us in machining our drilling equipment and installations and works closely with our own experts to make improvements to our technologies.

INTELLECTUAL PROPERTY RIGHTS

During 2007, we filed two patent applications under the Patent Cooperation Treaty for our EDI Fluid Finder Technology. In March and April of 2008, we received notice that these inventions were patentable.

In 2005 and 2006, we filed for patent protection for our EDI Medium Changer and EDI Water Save technologies with various regional and national patent organizations. In some of these regions, patents or other similar rights were granted, while in others they are still in the application process. However, our management has made a business decision to focus our available financial and other resources on the development and marketing of the EDI Fluid Finder technology. As a result, we have elected not to pay the required maintenance or other fees associated with maintaining these patents and/or patent applications. As a result, we expect these patents and/or patent applications to expire when the applicable fees become due. Once these patents and/or patent applications expire, competitors could use the information contained in those patents or patent applications to copy those technologies. However, we feel that there is little commercial value to be gained from copying those technologies. A determination has not been made at this time with respect to the patents and patent applications related to our EDI Suspension technology.

The granting of patent and/or utility model rights by the applicable patent offices enables us to prevent competitors from making, using, selling, offering for sale, or importing products incorporating the patented technologies for a limited period of time within that country or within the member states of the applicable patent treaty. Generally speaking, the granting of a patent by the applicable patent authorities will extend these protections for a period of 20 years from the date the application was filed. Austrian utility models, which provide protections essentially identical to those given under a patent, only with less rigorous application procedures, have a duration of 10 years from the date the application is filed.

There are no assurances that our pending patent applications will be successful. If we are not able to obtain patent protection for any of our technologies, we will need to protect those technologies by maintaining the secrecy of our technologies, products and processes.

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We have also registered, and applied to register, trademarks in the U.S., Germany and a number of other countries for “EDI,” and “EDIPower.”

RESEARCH AND DEVELOPMENT EXPENDITURES

In fiscal 2007, we did not make any significant research and development expenditures in fiscal 2006. We had no revenues and no customers during this period. As such, the costs of such research and development were not directly borne by any customers.

EMPLOYEES

Other than our executive officers, we do not have any employees as of the date of this Annual Report. EDI Germany currently has four full-time employees. In addition, EDI Germany has retained the services of four additional persons as independent consultants who provide their services on a part-time basis. We conduct business largely through consultants and by cooperating with local service providers.

ITEM 1A.              RISK FACTORS.

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

Need For Financing

We do not currently have the financial resources to complete our plan of operation for the next twelve months. We anticipate that we will require financing in the amount of EUR 1,000,000 (approximately $1,471,887) in order to fund our plan of operation over the next twelve months. We presently do not have any financing arrangements in place and there is no assurance that we will be able to obtain sufficient financing on terms acceptable to us or at all. If further financing is not available or obtainable, our ability to meet our financial obligations and pursue our plan of operation will be substantially limited and investors may lose a substantial portion or all of their investment.

Limited Operating History, Risks Of A New Business Venture

EDI Germany was formed on December 7, 2004 and, as such, has a very short operating history upon which future performance may be assessed. EDI Germany has not earned any revenues to date.

Potential investors should be aware of the difficulties normally encountered by a new enterprise and the high rate of failure of such enterprises. The potential for future success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the development of a business in the area in which we intend to operate and in connection with the formation and commencement of operations of a new business in general. These include, but are not limited to, unanticipated problems relating to research and development programs, marketing, approvals by government agencies, competition and additional costs and expenses that may exceed current estimates. There is no history upon which to base any assumption as to the likelihood that our business will prove successful, and there can be no assurance that we will generate any operating revenues or ever achieve profitable operations.

Our Operations May Be Subject To Extensive Government Regulations

Well drilling is an inherently dangerous activity. As such, we expect that any well projects that we participate in will be subject to a number of government safety and environmental regulations. Obtaining any necessary permits and/or governmental approvals may be a lengthy and costly process. As we currently do not have any drilling contracts in place and are seeking to market our products and services in a number of countries, the full extent of these regulations is not yet fully known. There are no assurances that we will be able to obtain the necessary government approvals or that the costs associated with obtaining those approvals will be affordable to us.

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Competition Is Intense And We May Be Unable To Achieve Market Acceptance

EDI Germany competes directly with traditional well drilling contractors. The market for well drilling contractors and equipment providers is mature and well established. As such, the business environment in which we intend to operate is highly competitive. Currently, there exist a number of established methods, products and technologies used in the well drilling process and we expect to experience competition from a number of established companies involved this industry. Many of our potential competitors will have greater technical, financial, marketing, sales and other resources than we will.

Our ability to compete within this industry is dependent upon our ability to differentiate our processes, products and technologies from those already existing in the marketplace and our ability to create public awareness of the advantages those processes, products and technologies present. Although our management has experience in the well drilling industry, as an entity, we are new entrants to that industry and our technologies have not yet gained marketplace acceptance. We are unable to provide assurances that our target customers and markets will accept our technologies or will purchase our products and services in sufficient quantities to achieve profitability. If a significant market fails to develop or develops more slowly than we anticipate, we may be unable to meet our operational expenses. Acceptance of our products will depend upon a number of factors, including the cost competitiveness of our products, customer reluctance to try new products or services, regulatory requirements or the emergence of more competitive or effective products.

Rapid Technological Changes In Our Industry Could Make Our Products Obsolete

If new technologies, products and industry standards develop at a rapid pace, they could make our products obsolete. Our future success will depend upon our ability to develop and introduce product enhancements to address the needs of customers. Material delays in introducing product enhancements may cause customers to forego purchases of our product and purchase those of competitors.

Asserting And Defending Intellectual Property Rights May Impact Results Of Operations

The success of our business may depend on our ability to protect our proprietary processes and technology from competitors. A number of international patent applications have been filed with respect to our technologies. We were granted patents or similar rights with respect to our EDI Medium Changer, EDI Water Save and EDI Suspension technologies in some of the jurisdictions in which we filed applications, while applications in other jurisdictions were still pending. In early 2008, in order to focus our business resources, our management decided to abandon our patents and/or patent applications for the EDI Medium Changer and EDI Water Save technologies. As a result, interested competitors could copy those technologies. Our management has not yet made a determination with respect to the patents and/or patent applications filed for our EDI Suspension technology; however our management could decide to abandon those patents and/or applications as well.

Patent applications have been filed with respect to our EDI Fluid Finder Technology. However, if we are not able to obtain patents for this technology, we will only be able to protect our products and technological processes by maintaining the secrecy of those products and processes.

Even if we are able to obtain patents for our technologies, we may be required to defend our intellectual property rights through litigation. The financial cost of such litigation could have a material impact on our financial condition even if we are successful in developing and marketing products and in defending any of our intellectual property rights, of which there is no assurance. Furthermore, an adverse outcome in any litigation or interference proceeding could subject us to significant liabilities to third parties and require us to cease using the technology that is at issue or to license the technology from third parties. In addition, a finding that any of our intellectual property rights are invalid could allow competitors to more easily and cost-effectively compete. Thus, an unfavorable outcome in any patent litigation or interference proceeding could have a material adverse effect on our business, financial condition and results of operations.

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Dependence On Key Personnel

Our success will largely depend on the performance of our directors and officers and the managers of EDI Germany. Our success will also depend on our ability to attract and retain highly skilled technical, research, management, regulatory compliance, sales and marketing personnel. Competition for such personnel is intense. The loss of the services of such personnel or the inability to attract and retain other key personnel could impair the development of our business, operating results and financial condition.

Dependence On Key Suppliers

The majority of our drilling equipment is machined by a single supplier located in Dorsten, Germany, close to our offices in Muenster, Germany. This supplier assists us in machining our drilling equipment and installations and works closely with our own experts to make improvements to our technologies. The loss of this supplier could be damaging to our business. Although we believe that we would be able to use the services of other machining companies, switching machining companies could cause delays as we would be required to educate the new supplier on our needs and requirements. In addition a new supplier may be less conveniently located than our current supplier, which could increase travel time and shipping costs.

Political Instability

We are seeking to develop a market for our drilling products and processes in a number of developing countries in the Middle East, Africa and Southern Asia. The political environment in many of these countries is unstable. This instability could cause delays to our drilling projects and could make the development of our business more difficult. In particular, our drilling projects scheduled for Pakistan could be significantly delayed because of the current political instability in that country. Furthermore, if political situation in Pakistan worsens, those projects could be abandoned altogether.

ITEM 2.                PROPERTIES.

We do not own any real property or any rights to acquire any real property.

We rent office space at Mendelstrasse 11, Technologiehof, D-48149, Muenster, Germany. This office space has an area of approximately 450 square feet, and is rented at a cost of EUR 862 ($1,269) per month, on a month to month basis.

ITEM 3.                LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings and, to our knowledge, no such proceedings are pending.

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

No matters were submitted to our security holders during the fourth quarter of our fiscal year ended December 31, 2007.

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our shares of common stock are quoted on the OTC Bulletin Board under the symbol “EXDL.” Our shares were first traded on the OTC Bulletin Board on October 19, 2005 under the stock symbol “IVCL.” Our symbol was changed to “IVCA” on March 27, 2006 upon completion of our 5-for-1 stock split and was subsequently changed to “EXDL” on October 16, 2006 upon completion of our name change to Exploration Drilling International Inc. The following table indicates the high and low bid prices of the common shares obtained during the periods indicated:

	2007		2006
	High	Low	High	Low
First Quarter ended March 31	$ 0.73	$ 0.30	$ 0.30	$ 0.05
Second Quarter ended June 30	$ 0.42	$ 0.30	$ 1.55	$ 0.50
Third Quarter ended September 30	$ 0.68	$ 0.20	$ 1.35	$ 0.64
Fourth Quarter ended December 31	$ 0.51	$ 0.25	$ 1.11	$ 0.55

The above quotations have been adjusted to reflect our 5-for-1 stock split, effective March 22, 2006. The range of high and low price quotes of our common stock as set out in the table above is as quoted on the OTC Bulletin Board. The market quotations provided reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Holders Of Our Common Stock

Our authorized capital consists of 1,000,000,000 shares of common stock, with a par value of $0.001 per share. As of April 8, 2008, there were 115,952,011 shares of our common stock issued and outstanding to 35 registered holders of record. We believe that a large number of stockholders hold stock on deposit with their brokers or investment bankers registered in the name of stock depositories.

Dividends

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

There are no dividend restrictions that limit our ability to pay dividends on our common stock in our Articles of Incorporation or Bylaws. Chapter 78 of the NRS does provide certain limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

(a)

we would not be able to pay our debts as they become due in the usual course of business; or

(b)

except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution.

Recent Sales Of Unregistered Securities

All unregistered sales of our equity securities made during the fiscal year ended December 31, 2007 have been previously reported in our Quarterly Reports on Form 10-QSB and our Current Reports on Form 8-K filed during the year.

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ITEM 7.                MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

PLAN OF OPERATION

During the next twelve months, we will continue to seek to gain market penetration for our products and processes within the drilling industry. In order to do so, we will seek to use our business contacts and will obtain the assistance of business consultants with local and international connections. Over the next year, we will focus on developing relationships and contacts in Germany, the Middle East and Southeastern Europe, Asia and Southern Africa.

(a)	Germany: The water supply market, and the corresponding market for well drilling projects, is fragmented by nature and will require us to establish contacts with a number of regional water suppliers, and, in certain cases, with private utility companies. Through the business contacts of our management, we have begun to establish open dialogues with private and public water supply companies in an effort to promote our products. We are currently participating in two public invitations to submit tender offers for water supply contracts. We will also continue our attempts to develop a market for technologies for use in geothermal energy projects. If necessary, we may seek to enter into cooperation agreements with academic institutions to adapt and develop our technologies to geothermal energy processes.
	In March 2008, we conducted a geothermal drilling project for a planned construction project in Southern German. No significant adaptations were required to our existing technologies for this project. Following the completion of this project, EDI Germany received numerous inquiries regarding the use of our drilling technologies to exploit near surface geothermal resources. Although no contracts have been signed, we now intend to offer one-stop services for the planning and execution of near-surface geothermal projects. This would include identification of thermal energy requirements, installation planning, measuring geothermal gradients of the subsoil, and the possible exploitation of groundwater and thermal water resources.
(b)	The Middle East: The Middle East contains some of the most arid environments in the world. For example, 97% of Egypt is covered by desert. As a result, there is a distinct market for groundwater pumping and irrigation projects. Within these markets, we will attempt to offer our services as a general contractor and sub-contractor for well drilling projects. We have formed relationships with drilling companies in Saudi Arabia and Bahrain and will seek to parlay these contacts into well drilling contracts within those countries. We are also seeking to gain access to well drilling projects in the United Arab Emirates, Egypt, Tunisia, Algeria and Morocco.
(c)	Southeast Europe: We are seeking to enter into negotiations with government authorities in Southeastern Europe. With the help of these government authorities, we hope to explore licensing opportunities with local industry representatives and consultants within the market.
(d)	Africa: The West African Country of Namibia has one of the most arid climates in the world. 83% of the rainfall experienced in Namibia evaporates soon after it falls. In Namibia, there are currently 150,000 water wells in operation; however, 75% of these do not pump drinking quality water. Supplying drinking water for household consumption has become an important goal for the Government of Namibia. As a result of the drilling project we completed in February, 2007, the Namibian Ministry of Agriculture, Water and Forestry commissioned us and a local drilling company to work together on three additional drilling projects. These projects involved exploratory boreholes, drilled for the purpose of geological analysis. Drilling on these projects was commenced at the end of February, 2007 and completed in May, 2007. As a result of the successful completion of these projects, we secured an additional six drilling projects in Namibia. After the completion of four drilling projects, our management reassigned our drilling team to the Coca Cola Pakistan project. We may send our drilling team back to Namibia in 2008; however, there are no assurances that we will do so.
(e)	Southern Asia: India is one of the most populous countries in the world and is an emerging industrial giant. With the increase in development, India’s demands for water supplies continue to grow. In 2006, we conducted two sample drilling operations in India. These drilling operations were conducted as demonstrations of our technologies and methods and were completed by us at no charge. We have not yet secured any drilling contracts in India; however, we are continuing to explore business opportunities in that country.

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We have secured a drilling contract from Coca-Cola Pakistan to drill a total of four water exploration holes. The purpose of the drilling project is to obtain and analyze water samples from two locations around Karachi that will be used to assist Coca-Cola Pakistan in deciding where to locate a large-scale bottling facility. Drilling was originally scheduled to begin in the Fall of 2007, but was delayed by Coca Cola Pakistan due to their ongoing negotiations with third parties regarding land ownership issues. The first drilling project is now scheduled to begin in May, 2008, and is expected to consist of surveying existing ground water sources and evaluating their quality, quantity and sustainability for beverage production. Four test boreholes will be drilled in two different locations and analyzed locally. The project will be centrally controlled and coordinated by Coca-Cola International, based in Istanbul, Turkey. However, due to the current political instability in Pakistan, these projects could be again delayed, or be abandoned altogether if the political environment worsens.

(f)

Turkey: In Turkey’s largest city, the water supply infrastructure is currently inadequate to sustain the growth of its population. In March, 2008, our wholly owned subsidiary, EDI Germany formed EDI Turkey, a joint venture company, with influential members of Turkey’s drilling and water supply industries. EDI Germany owns a 25% interest in EDI Turkey. EDI Turkey will seek out business opportunities in Turkey for EDI’s proprietary technologies.

In addition, we will also explore opportunities for our products and services in other international markets, focusing primarily on countries where there is an established need for water well drilling technologies and services.

We anticipate that we will require approximately EUR 1,000,000 (approximately $1,471,887) to complete our plan of operation over the next twelve months. The majority of this amount will be spent on financing our business operations, marketing presentations, product demonstrations, and legal and other consulting fees associated with establishing our presence in international markets. In addition, we anticipate that we will require an additional $50,000 for general administrative purposes and to pay for the legal and accounting fees we expect to incur in meeting ongoing reporting obligations under United States securities laws.

RESULTS OF OPERATIONS

Under generally accepted accounting principles, the acquisition of EDI Germany in April, 2006, was accounted for as a reverse acquisition and EDI Germany was treated as the acquiring entity for accounting and financial reporting purposes. As such, our consolidated financial statements will be presented as a continuation of the operations of EDI Germany and not EDI USA (formerly, Invision Capital, Inc.). The operations of EDI USA are included in the consolidated statement of operations from the effective date of the acquisition, April 26, 2006.

Summary of Year End Results
	Year Ended December 31
	2007	2006	Percentage
			Increase / (Decrease)
Revenue	$ Nil	$ Nil	N/A
Expenses	(4,651,696)	(4,055,801)	14.7%
Net Loss Before Other Items	$(4,651,696)	$(4,055,801)	14.7%

Revenues

We did not earn any revenues during the fiscal year ended December 31, 2007. We are scheduled to begin working on drilling projects in Pakistan, and hope to earn revenue from the work performed on those projects. However, our objectives in performing these contracts are demonstrating the efficacy of our technologies and processes and obtaining market penetration. As a result, there is a substantial possibility that these projects will be operated at a loss.

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As we are still in the process of establishing ourselves in the marketplace, even if we are successful in earning revenues, those revenues are likely to be subject to significant fluctuations and will be difficult to reliably predict.

Expenses

The major components of our expenses for the year are outlined in the table below:

	Year Ended December 31
	2007	2006	Percentage
			Increase / (Decrease)
Amortization	$67,596	$64,381	5.0%
Management Fees	411,649	493,834	(16.6)%
Professional Fees	1,062,409	717,139	48.1%
Selling, General and Administrative	991,380	1,207,386	(17.9)%
Stock Compensation Expense	2,110,772	1,570,472	34.4%
Foreign Currency Loss	7,890	2,589	204.8%
Total	$4,651,696	$4,055,801	14.7%

Management Fees

Management fees paid during the period are comprised of amounts paid or earned by our officers and directors and the executive officers of EDI Germany during the year ended December 31, 2007. See Part III, Item 11. “Executive Compensation” for a summary of the compensation paid to our officers and directors during fiscal 2007. Management fees paid during fiscal 2007 decreased from amounts paid during fiscal 2006. This is primarily due to the fact that Mr. Rotthauser and Mr. Thiemann agreed to reduce their management fees to EUR 10,000 per month from October, 2006 through to December 31, 2007.

Professional Fees

Professional fees for the years ended December 31, 2007 and 2006 consisted of the following:

	Year Ended December 31
	2007	2006	Percentage
			Increase / (Decrease)
Accounting and Tax Fees	$100,520	$118,263	15.0%
Consulting Fees	824,677	281,295	193.2%
Legal Fees	137,212	317,581	(56.8)%
Total	$1,062,409	$717,139	48.1%

Accounting and tax fees are comprised of amounts paid to independent auditors, accountants and tax consultants for the preparation and audit of our financial statements and for general tax advice.

Legal fees include amounts paid in connection with filing and prosecuting patent applications for our technologies, completing the acquisition of EDI Germany, meeting our reporting obligations under the Exchange Act and for general legal services related to the operation of our business. The legal fees we incurred during 2007 were significantly less than the legal fees we incurred during 2006. Additional legal fees incurred during 2006 were primarily related to legal services provided in connection with the completion of our acquisition of EDI Germany and with the filing and prosecution of several patent applications in 2006.

Consulting fees include amounts paid to outside consultants for services provided in connection with preparing marketing and promotional materials, developing international business contacts and business opportunities and improving our technologies. During 2007, we recorded professional fees of $720,000 for certain market development services provided by Mr. Dirk Beisemann. As payment for the services provided by Mr. Beisemann, we issued to him 3,000,000 units at a price per share of $0.24 per unit. The units consisted of one share of our common stock and one share purchase warrant entitling him to purchase one additional share of our common stock at a price of $0.30 per share, for a period of one year from the date of issuance.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for the years ended December 31, 2007 and 2006 consisted of the following major components:

	Year Ended December 31
	2007	2006	Percentage
			Increase / (Decrease)
Marketing and Promotion	$103,647	$378,320	(72.6)%
Travel	97,426	199,848	(51.2)%
Wages and Benefits	331,611	246,654	34.4%
Miscellaneous	458,696	382,564	19.9%
Total	$991,380	$1,207,386	(17.9)%

Included in the additional marketing and promotion expenses for 2006 were amounts spent by us in conducting drilling projects in India and Namibia at no charge in an effort to demonstrate the efficacy of our technologies and processes. We did not conduct as many demonstration drilling projects during fiscal 2007. However, as our business development efforts proceed, we may conduct additional drilling projects free of charge in an effort to demonstrate our proprietary technologies. As a result, marketing and promotional expenses may increase significantly. In addition, travel expenses are expected to continue to be high as we have chosen to focus on developing an international market for our products and services, which often requires us to send personnel to various locations around the world. The international nature of our business development efforts could cause significant fluctuations in the amounts that we spend on travel. The amounts that we spend on selling, general and administrative expenses may continue to increase as we seek to further develop our business.

Stock Compensation Expenses

Stock compensation expenses recorded for the year ended December 31, 2007 represent the value of options vested and exercisable during the 2007 year under our 2006 Stock Option Plan. See Note 9 to the consolidated financial statements included with this Annual Report.

Other Items
	Year Ended December 31
	2007	2006	Percentage
			Increase / (Decrease)
Interest Income	$9,368	$12,119	(22.7)%
Interest Expense	(107,074)	(63,125)	69.6%
Loss on Disposal of Capital Asset	(2,963)	(2,414)	22.7%
Writedown of Patents	(237,953)	--	N/A
Writedown of Loans Receivable	(103,556)	--	N/A
	$(442,178)	$(53,420)	927.7%

Interest income during our 2007 and 2006 fiscal years is primarily made up of interest accrued from loans made by EDI Germany to certain of its former shareholders, to certain of its officers and directors, and to persons related to officers and directors of EDI Germany prior to our acquisition of that company. See Part III, Item 13. “Certain Relationships and Related Transactions, and Director Independence.”

Included in interest expenses for 2007 and 2006 are approximately $30,561 and $12,074, respectively, in interest accrued in respect of loans received from our officers and directors, our majority shareholder, EDI Exploration Drilling International Holding GmbH (“EDI Holding”), and from persons related to our officers, directors and majority shareholder. See Part III, Item 13. “Certain Relationships and Related Transactions, patents for the year ended December 31, 2007 as a decision was made by our management to abandon a number of our patent and patent applications due to the high cost associated with ma and Director Independence.”

We wrote down $237,953 relating to ourintaining those patents and patent applications, and due to the fact that our management has decided to focus our resources on the development and marketing of our EDI Fluid Finder technology.

We wrote down $103,556 relating to amounts advanced by EDI Germany to Magdalena Rotthaeuser, the wife of our CEO and President, prior to our acquisition of EDI Germany, as the loans are in default. We are, however, still in the process of trying to collect the amounts owed by Ms. Rotthaeuser. See Item 13 “Certain Relationships and Related Transactions, and Director Independence.”

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows
	Year Ended December 31
	2007	2006
Net Cash used in Operating Activities	$(1,671,882)	$(2,073,128)
Net Cash from (used in) Investing Activities	11,205	(434,600)
Net Cash from Financing Activities	1,711,556	2,412,103
Effect of Foreign Currency Translation	(74,756)	(9,392)
Net Increase (Decrease) in Cash During Period	$(23,877)	$(105,017)

Working Capital
			Percentage
	At December 31, 2007	At December 31, 2006	Increase / (Decrease)
Current Assets	$55,226	$292,050	(81.1)%
Current Liabilities	(2,012,493)	(925,299)	117.5%
Working Capital Surplus (Deficit)	$(1,957,267)	$(633,249)	409.1%

The increase in our working capital deficit is primarily a result of the fact that we had no sources of revenue during the year, and that a substantial portion of our long term loans became short term loans as they are now due and payable within the next fiscal year.

Financing during the period was provided by private placements of our equity securities and from loans obtained from our officers and directors, our majority shareholder and from third parties. During the year ended December 31, 2007, we completed the following private placements:

(a)	The sale of 1,736,111 units at a price of EUR 0.288 per unit, for total proceeds, less commissions, of EUR 450,000 (approximately $600,721). Each unit consists of one share of our common stock and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase an additional share of our common stock at a price of EUR 0.288 for a period of one year from the date of issuance of the Units.
(b)	The sale of 1,875,000 units at a price of $0.32 per unit, for total proceeds, less commissions, of $540,000. Each unit consists of one share of our common stock and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase an additional share of our common stock at a price of $0.32 US for a period of one year from the date of issuance of the Units.
(c)	The sale of 3,250,000 units at a price of EUR 0.20 per unit to two corporate investors, for total proceeds of EUR 650,000. Each unit consists of one share of our common stock and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase an additional share of our common stock at a price of $0.35 US for a period of two years from the date of issuance of the Units.

Subsequent to our fiscal year ended December 31, 2007, we completed two additional private placements. The first private placement was completed for 384,615 units at a price of EUR 0.13 per unit for total proceeds of EUR 50,000. Under the first private placement, each unit consists of one share of our common stock and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase an additional share of our common stock at a price of EUR 0.17 per share for a period ending March 11, 2009. The second private placement was completed for 3,000,000 units at a price of $0.27 per unit for total proceeds of $810,000. Under the second private placement, Each unit is comprised of one share of our common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of our common stock at a price of $0.34 per share for a period ending February 26, 2009.

During our year ended December 31, 2007, we received EUR 375,244 (approximately $552,346) in loans from the following related parties:

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(a) Loans totaling EUR 290,744 (approximately $427,942) from EDI Exploration Drilling International Holding GmbH, our majority stockholder:

Principal	Interest Rate	Grant Date	Due Date
EUR 21,000 ($30,910)	5%	January 19, 2007	December 31, 2008
EUR 40,960 ($60,288)	5%	February 23, 2007	December 31, 2008
EUR 40,000 ($58,876)	5%	August 9, 2007	August 10, 2008
EUR 10,000 ($14,719)	5%	August 12, 2007	August 14, 2008
EUR 15,000 ($22,078)	5%	August 20, 2007	August 22, 2008
EUR 35,000 ($51,516)	5%	August 30, 2007	August 31, 2008
EUR 33,000 ($48,572)	5%	September 11, 2007	September 13, 2008
EUR 24,000 ($35,325)	5%	September 19, 2007	September 21, 2008
EUR 12,000 ($17,663)	5%	September 26, 2007	September 28, 2008
EUR 9,400 ($13,836)	5%	October 12, 2007	December 31, 2008
EUR 15,000 ($22,078)	5%	November 16, 2007	December 31, 2008
EUR 6,000 ($8,831)	5%	November 23, 2007	December 31, 2008
EUR 29,384 ($43,250)	5%	December 30, 2007	December 31, 2008

(b)	A loan of EUR 57,500 (approximately $84,663) from DTB Patente GmbH, a company of which the wife of one of our executive officers and directors is a significant shareholder, bearing interest at a rate of 5% per annum, payable on or before February 5, 2008. Subsequent to the year ended December 31, 2007, the loan was extended to January 28, 2009.
(c)	A loan for EUR 10,000 (approximately $14,719) from Dieter Thiemann, the brother of one of our executive officers and directors, bearing interest at a rate of 6% per annum, payable on or before June 30, 2007. On December 28, 2007, the loan was extended to July 31, 2008.
(d)	Two additional loans totaling EUR 17,000 (approximately $25,022) from Dieter Thiemann due on December 31, 2008, and both bearing interest at a rate of 6% per annum.

In January, 2008, we received an additional loan of EUR 6,500 (approximately $9,567) from Dieter Thiemann due on January 22, 2008, with interest payable at a rate of 6% per annum.

We received an additional EUR 138,000 (approximately $203,121) and $45,000 in loans from unrelated third parties as follows:

(a)	Loans totaling EUR 83,000 (approximately $122,167), bearing interest at a rate of 6% per annum and payable as follows:
	(i)	EUR 33,000 (approximately $48,572) on or before February 19, 2008. Subsequent to the year ended December 31, 2007, the loan was extended to July 31, 2008.
	(ii)	EUR 50,000 (approximately $73,595) on or before March 14, 2008. Subsequent to the year ended December 31, 2007, the loan was extended to August 14, 2008.
(b)	Loans totaling EUR 55,000 (approximately $80,954) as follows:
	(i)	A loan for EUR 40,000 (approximately $58,876), bearing interest at a rate of 5% per annum and payable on or before September 28, 2007. During the year ended December 31, 2007, the loan was extended to April 30, 2008.
	(ii)	A loan for EUR 15,000 (approximately $22,078), bearing interest at a rate of 6% per annum and payable on or before December 31, 2007. During the year ended December 31, 2007, the loan was extended to April 30, 2008.
(c)	Loans totaling $45,000, bearing interest at a rate of 8% per annum, and payable on demand.

20

Financing Requirements

Currently, we do not have sufficient financial resources to complete our plan of operation for the next twelve months or to pay our current debt obligations when they come due. We have not earned any revenues to date, and there are no assurances that we will be able to generate revenues in the future. As such, our ability to complete our plan of operation and to meet our short-term debt obligations is expected to be dependent upon our ability to obtain substantial financing in the near term.

Although we have, from time to time, obtained short-term loans in order to meet our short-term capital needs, we do not expect to be able to satisfy our long-term capital needs through debt financing. In addition, there are no assurances that we will be able to obtain additional short-term debt financing when needed. Continuing to rely on short-term debt financing may decrease our ability to obtain additional financing in the future. Any long-term financing that we obtain is expected to come from sales of our equity securities. There is no assurance that we will be able to obtain equity financing in amounts sufficient to meet our short-term or long-term capital needs. In addition, because of our limited financial resources, we have, on occasion used the issuance of our equity securities to pay for services provided to us, and we may do so again in the future. If we are successful in completing any equity financings, of which there is no assurance, or if we issue equity securities in payment for the goods or services provided to us, our existing shareholders will experience a dilution of their interest in our company.

If we are not successful in raising sufficient financing, we will not be able to complete our current plan of operation and we may not be able to continue as a going concern. We do not have any specific alternatives to our current plan of operation and have not planned for any such contingency. If we are not able to raise sufficient financing, our business may fail and our shareholders may lose all or part of their investment.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

Our significant accounting policies are described at Note 3 to our consolidated financial statements for the year ended December 31, 2007.

21

ITEM 8.                FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Consolidated Financial Statements:

Audited consolidated financial statements as of December 31, 2007 and 2006, including:

1.	Report of Independent Registered Public Accounting Firm;
2.	Consolidated Balance Sheets as at December 31, 2007 and December 31, 2006;
3.	Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2007, the year ended December 31, 2006, and the cumulative period from inception on December 7, 2004 to December 31, 2007;
4.	Consolidated Statements of Cash Flows for the year ended December 31, 2007, the year ended December 31, 2006 and the cumulative period from inception on December 7, 2004 to December 31, 2007;
5.	Consolidated Statement of Stockholders’ Equity (Deficiency) for the period from inception on December 7, 2004 through December 31, 2007; and
6.	Notes to the Consolidated Financial Statements.

22

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007 and 2006

DAVIDSON & COMPANY LLP		A Partnership of Incorporated Professionals
	Chartered Accountants

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of
Exploration Drilling International Inc.

We have audited the accompanying consolidated balance sheets of Exploration Drilling International Inc. as at December 31, 2007 and 2006 and the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficiency) and cash flows for the years then ended and for the period from inception (December 7, 2004) to December 31, 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2007 and 2006 and the results of its operations and its cash flows for the years then ended and for the period from inception (December 7, 2004) to December 31, 2007 in conformity with generally accepted accounting principles in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company is dependent upon financing to continue operations. This matter raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regards to this matter are discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

	"DAVIDSON  & COMPANY LLP"
Vancouver, Canada	Chartered Accountants
April 9, 2008

 
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172

F-2

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

		December 31,			December 31,
		2007			2006
ASSETS
Current Assets
Cash	$	-		$	23,877
Other receivables		20,674			44,328
Loans receivable -related parties (Note 7)		9,610			197,073
Prepaids		24,942			26,772
Deferred tax asset, less valuation allowance of $2,515,492 (2006 -$1,396,079) (Note 5)		-			-
Total Current Assets		55,226			292,050
Equipment (Note 4)		210,587			200,207
Patents (Note 4)		204,770			335,247
Total Assets	$	470,583		$	827,504
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current Liabilities
Bank indebtedness	$	53,182		$	-
Accounts payable and accrued liabilities		463,879			384,236
Accounts payable and accrued liabilities –related parties (Note 7)		117,501			55,448
Loans payable -current (Notes 6 and 7)		1,377,931			485,615
Total Current Liabilities		2,012,493			925,299
Loans payable (Notes 6)		129,920			1,266,280
Total Liabilities		2,142,413			2,191,579
Commitments (Note 11)
Stockholders’ Deficiency
Common stock (Note 8)
Authorized
1,000,000,000 common shares, par value $0.001
Issued and outstanding
December 31, 2007 -112,567,396
December 31, 2006 -102,706,285		112,567			102,706
Additional paid-in capital		8,438,228			3,522,818
Accumulated other comprehensive loss:
Foreign currency translation adjustment		(162,044	)		(22,892	)
Deficit accumulated during the development stage		(10,060,581	)		(4,966,707	)
Total Stockholders’ Deficiency		(1,671,830	)		(1,364,075	)
Total Liabilities and Stockholders’ Deficiency	$	470,583		$	827,504
Subsequent Events (Note 13)

The accompanying notes are an integral part of these consolidated financial statements

F-3

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in U.S. Dollars)

		Cumulative
		Amounts
		From Inception			Year			Year
		(December 7, 2004)			Ended			Ended
		to December 31,			December 31,			December 31,
		2007			2007			2006
EXPENSES
Amortization	$	145,534		$	67,596		$	64,381
Management fees		1,054,475			411,649			493,834
Professional fees		1,968,389			1,062,409			717,139
Selling, general and administrative		2,704,192			991,380			1,207,386
Stock compensation expense		3,681,244			2,110,772			1,570,472
Foreign currency loss		10,479			7,890			2,589
LOSS BEFORE OTHER ITEMS AND INCOME TAXES		9,564,313			4,651,696			4,055,801
OTHER ITEMS
Interest income		(21,821	)		(9,368	)		(12,119	)
Interest expense		171,203			107,074			63,125
Loss on disposal of capital assets		5,377			2,963			2,414
Write down of patents		237,953			237,953			-
Write down of loans receivable –related parties (Note 7)		103,556			103,556			-
LOSS BEFORE INCOME TAXES		10,060,581			5,093,874			4,109,221
Provision for income taxes		-			-			-
NET LOSS		10,060,581			5,093,874			4,109,221
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment		162,044			139,152			34,260
COMPREHENSIVE LOSS	$	10,222,625		$	5,233,026		$	4,143,481
BASIC AND DILUTED NET LOSS PER SHARE				$	(0.05	)	$	(0.05	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING					107,207,883			86,285,542

The accompanying notes are an integral part of these consolidated financial statements.

F-4

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

		Cumulative
		Amounts
		From Inception			Year			Year
		(December 7, 2004)			Ended			Ended
		to December 31,			December 31,			December 31,
		2007			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period	$	(10,060,581	)	$	(5,093,874	)	$	(4,109,221	)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization		145,534			67,596			64,381
Stock compensation expense		3,681,244			2,110,772			1,570,472
Loss on disposal of capital asset		5,377			2,963			2,414
Write down of patents		237,953			237,953			-
Write down of loans receivable –related parties		103,556			103,556			-
Issuance of capital stock for services		720,000			720,000			-
Change in operating assets and liabilities:
Decrease in other receivables		47,151			26,756			113,757
Increase in accrued interest receivable		(20,638	)		(8,095	)		(12,322	)
Decrease (increase) in prepaid expenses		(21,381	)		4,583			(25,964	)
Increase in accounts payable and accrued liabilities		362,041			48,002			205,082
Increase in accounts payable and accrued liabilities –related parties		107,171			51,723			55,448
Increase in accrued interest payable		119,801			56,183			62,825
Net cash used in operating activities		(4,572,772	)		(1,671,882	)		(2,073,128	)
CASH FLOWS FROM INVESTING ACTIVITIES
Loans receivable		(166,095	)		98,519			(35,161	)
Acquisition of equipment, net of disposal proceeds		(318,783	)		(38,224	)		(114,494	)
Acquisition of patents		(384,337	)		(49,090	)		(284,945	)
Net cash provided by (used) in investing activities		(869,215	)		11,205			(434,600	)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank indebtedness		53,182			53,182			-
Cash acquired from Invision Capital, Inc.		81,587			-			81,587
Issuance of capital stock for cash, net of issuance costs		2,641,332			2,094,499			500,000
Contributed capital		1,475,540			-			190,732
Loans payable		1,263,126			(436,125	)		1,639,784
Net cash provided by financing activities		5,514,767			1,711,556			2,412,103
EFFECT OF FOREIGN CURRENCY TRANSLATION ON
CASH DURING THE PERIOD		(72,780	)		(74,756	)		(9,392	)
NET INCREASE (DECREASE) IN CASH		-			(23,877	)		(105,017	)
CASH, BEGINNING OF PERIOD		-			23,877			128,894
CASH, END OF PERIOD	$	-		$	-		$	23,877
Supplemental Disclosure with Respect to Cash Flows (Note 12)

The accompanying notes are an integral part of these consolidated financial statements

F-5

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

(Expressed in U.S. Dollars

	Common Stock										Deficit
								Accumulated			Accumulated
					Additional			Other			During the
	Number				Paid-			Comprehensive			Development
	of Shares		Par Value		in Capital			Income (Loss)			Stage			Total
Sale of common stock for cash, December 7, 2004 (inception)	36,408,088	$	34,102	$	-		$	-		$	-		$	34,102
Foreign currency translation adjustment								(229	)					(229	)
Net loss											(6,816	)		(6,816	)
Balance, December 31, 2004	36,408,088		34,102		-			(229	)		(6,816	)		27,057
Increase in subscribed capital	13,591,912		12,731		1,284,808									1,297,539
Foreign currency translation adjustment								11,597						11,597
Net loss											(850,670	)		(850,670	)
Balance, December 31, 2005	50,000,000		46,833		1,284,808			11,368			(857,486	)		485,523
Increase in subscribed capital					190,732									190,732
Recapitalization, April 26, 2006	51,992,000		55,159		(22,480	)								32,679
Stock compensation expense					1,570,472									1,570,472
Sale of common stock for cash at $0.70 per unit, September 28, 2006	714,285		714		499,286									500,000
Foreign currency translation adjustment								(34,260	)					(34,260	)
Net loss											(4,109,221	)		(4,109,221	)
Balance, December 31, 2006	102,706,285		102,706		3,522,818			(22,892	)		(4,966,707	)		(1,364,075	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

(Expressed in U.S. Dollars

	Common Stock									Deficit
							Accumulated			Accumulated
					Additional		Other			During the
	Number				Paid-		Comprehensive			Development
	of Shares		Par Value		in Capital		Income (Loss)			Stage			Total
Sale of common stock for cash at $0.384 per unit, April 2, 2007,
net of finders fee	1,736,111		1,736		598,985								600,721
Sale of common stock for cash at $0.32 per unit, May 4, 2007,
net of finders fee	1,875,000		1,875		538,125								540,000
Units issued for services at $0.24 per unit, June 28, 2007	3,000,000		3,000		717,000								720,000
Stock compensation expense					2,110,772								2,110,772
Sale of common stock for cash at $0.29 per unit, November 12, 2007	3,250,000		3,250		950,528								953,778
Foreign currency translation adjustment							(139,152	)					(139,152	)
Net loss										(5,093,874	)		(5,093,874	)
Balance, December 31, 2007	112,567,396	$	112,567	$	8,438,228	$	(162,044	)	$	(10,060,581	)	$	(1,671,830	)

The accompanying notes are an integral part of these consolidated financial statements.

F-7

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

1.	HISTORY AND ORGANIZATION OF THE COMPANY
	Exploration Drilling International Inc. (the “Company”) was incorporated on January 24, 2003, under the Laws of the State of Nevada and was in the business of acquiring, exploring and developing mineral properties. Effective April 26, 2006, the Company acquired 100% of the issued and outstanding shares of EDI Exploration Drilling International GmbH (“EDI”), a company engaged in the distribution and maintenance of water exploration machinery and equipment and the provision of related services. The Company has abandoned its mineral property acquisition and exploration activities in order to focus its resources on the development and marketing of EDI’s proprietary technology. The Company is considered to be a development stage company, as it has not generated revenues from operations.
	Effective April 26, 2006, the Company acquired 100% of the issued and outstanding shares of EDI from EDI Exploration International Drilling Holding GmbH (“EDI Holding”) in exchange for an aggregate of 50,000,000 shares of the Company’s common stock. In addition, Frank Rigney, a shareholder of the Company, transferred 20,000,000 shares of the Company’s common stock already issued and outstanding prior to the transaction to EDI Holding in exchange for $10,000. Completion of the acquisition resulted in the former sole shareholder of EDI holding the majority of the Company’s issued and outstanding common stock. As a result, the transaction was accounted for as a recapitalization of EDI.
	The consolidated financial statements of the Company prior to April 26, 2006 are those of EDI. The Company’s date of incorporation is considered to be December 7, 2004, the date of inception of EDI. All significant inter-company balances have been eliminated on consolidation.
	Effective October 16, 2006, the Company changed its name from Invision Capital, Inc. to Exploration Drilling International Inc.
2.	GOING CONCERN
	These consolidated financial statements have been prepared with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
	The operations of the Company have primarily been funded by the sale of common stock and loans received. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms to the Company.

F-8

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

3.	SIGNIFICANT ACCOUNTING POLICIES
	The consolidated financial statements of the Company have been prepared in conformity with generally accepted accounting principles in the United States of America and are stated in U.S. dollars. The significant accounting policies adopted by the Company are as follows:
	(a) Use of estimates
	The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
	(b) Foreign currency translation
	The functional currency of the Company is the U.S. dollar. The Company’s subsidiary, EDI, uses the Euro as its functional currency. Accordingly, monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date while non-monetary assets and liabilities are translated at historical rates. Revenue and expense items denominated in a foreign currency are translated at exchange rates prevailing when such items are recognized in the statement of operations. Exchange gains and losses arising on translation of foreign currency items are included in the statement of operations.
	The Company follows the current rate method of translation with respect to its subsidiary, EDI. Accordingly, assets and liabilities are translated into U.S. dollars at the period-end exchange rates while revenue and expenses are translated at the average exchange rates during the period. Related exchange gains and losses are included in a separate component of stockholders’ equity as accumulated other comprehensive income (loss).
	(c) Cash
	The Company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.
	(d) Prepaid expenses
	Prepaid expenses consist primarily of prepaid vehicle lease and travel expenses and a refundable vehicle lease deposit.
	(e) Other receivables
	Other receivables consist primarily of Value Added Tax in Germany.

F-9

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)
	(f) Equipment
	Equipment is recorded at cost and consists of a well system, technical equipment and machinery and office and other equipment. Depreciation is calculated using the straight-line method over the useful lives of the assets. Maintenance and repairs are expensed as incurred while betterments or renewals are capitalized.
	The Company provides for depreciation over the estimated life of each asset on a straight-line basis over the following periods:

Well system	20 years
Technical equipment and machinery	3-8 years
Office and other equipment	3-10 years
Software	20 years

(g) Patents and trademarks

Patents and trademarks are recorded at cost. Capitalized amounts relate solely to legal and advisory costs incurred in registration of the patents and trademarks. Depreciation is calculated using the straight-line method over the useful lives of the patents granted ranging from 8-20 years. No depreciation is provided for patents that have not yet been awarded and/or begun to generate revenues. No depreciation is provided for trademarks as they have indefinite lives.

(h) Goodwill and intangible assets

The Company has adopted Statement of Financial Accounting Standards (“SFAS”) 142, “Goodwill and Intangible Assets,” which requires that costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as a whole, be recognized as an expense when incurred. Intangible assets acquired for fair value having definite lives are amortized over their useful life.

(i) Accounting for the impairment of long-lived assets and long-lived assets to be disposed of

The Company reviews all long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

F-10

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)
	(j) Income taxes
	A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expenses (benefits) result from the net change during the period of deferred tax assets and liabilities.
	Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
	(k) Fair value of financial instruments
	The Company's financial instruments consist of cash, loans receivable –related parties, other receivables, bank indebtedness, accounts payable and accrued liabilities, accounts payable and accrued liabilities –related parties loans payable –current and loans payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.
	(l) Stock-based compensation
	The Company accounts for stock-based compensation issued to employees under the fair value method in accordance with the provisions of SFAS 123R, “Share-Based Payment.”
	The Company accounts for stock-based compensation issued to non-employees in accordance with the provisions of SFAS 123, “Accounting for Stock-Based Compensation,” and the consensus in Emerging Issues Task Force (“EITF”) No. 96-18, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services.”
	(m) Net loss per share
	Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share takes into consideration shares of common stock outstanding (computed under basic earnings per share) and potentially dilutive shares of common stock. As of December 31, 2007 and 2006, the Company’s potentially dilutive securities, stock options and warrants, have been excluded from the weighted average number of shares outstanding as they were anti-dilutive.
	(n) Comprehensive income (loss)
	The Company has adopted SFAS 130, “Reporting of Comprehensive Income,” which establishes guidelines for the reporting and display of comprehensive income (loss) and its components in financial statements. Comprehensive income (loss) includes foreign currency translation adjustments.

F-11

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

3.	SIGNIFICANT ACCOUNTING POLICIES (continued)
	(o) Development stage
	The Company is a development stage company as defined in SFAS 7, “Accounting and Reporting by Development Stage Enterprises,” as it is devoting substantially all of its efforts to establish a new business and planned principal operations have not yet commenced.
	(p) Concentration of credit risk
	Cash is the only financial instrument that potentially subjects the Company to concentration of credit risk. The Company maintains cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
	(q) Recent accounting pronouncements
	In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards which permit, or in some cases require, estimates of fair market value. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year.
	In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS 159 apply only to entities that elect the fair value option. However, the amendment to SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS 157, “Fair Value Measurements”.
	The Company does not expect that the adoption of these new accounting pronouncements will have a significant effect on its financial statements.
	(r) Reclassifications
	Certain amounts reported in the prior periods have been reclassified to conform to the current period’s presentation.

F-12

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

4.	EQUIPMENT AND PATENTS
	Equipment
			December 31,			December 31,
			2007			2006
	Well system	$	2,105		$	1,777
	Technical equipment and machinery		302,900			243,758
	Vehicle		-			12,251
	Office and other equipment		29,058			19,723
	Software		14,094			-
			348,157			277,509
	Accumulated amortization		(137,570	)		(77,302	)
	Net book value	$	210,587		$	200,207
	Patents and trademarks
			December 31,			December 31,
			2007			2006
	Trademarks	$	92,898		$	65,354
	Patents		113,783			269,893
			206,681		$	335,247
	Accumulated amortization		1,911			-
	Net book value	$	204,770		$	335,247

During the year ended December 31, 2007, the Company wrote down patents totaling $237,953 as the recoverability of the carrying amount of the assets is uncertain. During the years ended December 31, 2007 and 2006, the Company did not amortize $184,093 and $335,247 its patents and trademarks as the patents have not yet been awarded and/or they have not begun to generate revenues and the trademarks have indefinite lives. Capitalized amounts relate solely to legal and advisory costs incurred in registration of the patents and trademarks.

F-13

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

5. DEFERRED INCOME TAXES

Income tax benefits attributable to losses from United States of America operations was $Nil for the year ended December 31, 2007 and 2006 and differed from the amounts computed by applying the United States of America federal income tax rate of 34 percent to pretax losses from development stage activities as a result of the following:

		Year Ended			Year Ended
		December 31,			December 31,
		2007			2006
Loss for the year	$	(5,093,874	)	$	(4,109,221	)
Computed “expected” tax benefit		(1,731,917	)		(1,397,135	)
Non deductible expenses		752,871			533,960
Foreign tax rate differentials		(140,367	)		(169,949	)
Change in valuation allowance		1,119,413			1,033,124
Income tax recovery	$	-		$	-

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2007 and 2006, is presented below:

		2007			2006
Deferred tax assets:
Net operating loss carry forwards – US	$	392,989		$	86,125
Net operating loss carry forwards – Germany		2,122,503			1,309,954
Valuation allowance		(2,515,492	)		(1,396,079	)
Total deferred tax assets	$	-		$	-

The valuation allowance for deferred tax assets as of December, 2007 and 2006 was $2,515,492 and $1,396,079, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The losses in Germany may be carried forward indefinitely and the losses in the United States expire through to 2022.

F-14

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

6.	LOANS PAYABLE -CURRENT
	During the year ended December 31, 2007, two loans were granted from a third party individual for Euro 33,000 (US $48,572) and Euro 50,000 (US $73,595). The loans bear interest at 6% per annum and were due February 19, 2008 and March 14, 2008, respectively. Subsequent to December 31, 2007, the loans were extended to July 31, 2008 and August 14, 2008, respectively. Interest expense included in the statement of operations for the year ended December 31, 2007 totaled Euro 4,094 (US $5,669).
	During the year ended December 31 2006, several loans were granted from a third party individual totaling Euro 400,000 (US $588,756). The loans earned interest at 6% per annum. During the year ended December 31, 2007, the total loans of Euro 400,000 (US $588,756) and interest of Euro 10,000 (US $14,719) was repaid. At December 31, 2007, Euro 31,273 (US $46,030) of interest was still outstanding. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 25,512 (US $34,967) and Euro 15,760 (US $19,940), respectively.
	During the year ended December 31, 2006, a loan was granted from a third party individual for Euro 23,000 (US $33,853). The loan bears interest at 7% per annum and was due July 7, 2007. On July 3, 2007, the loan was extended to June 30, 2008. The Company has the option of repaying the principal and interest by issuing 12,305 shares of the Company’s common stock if the lender is notified in writing one month before the due date. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 1,703 (US $2,334) and Euro 695 (US $892), respectively.
	During the year ended December 31, 2006, several loans were granted from a third party individual totaling Euro 53,000 (US $78,010). During the year ended December 31, 2007, Euro 6,600 (US $9,715) of the first loan granted was repaid. The loans bear interest at 5% per annum and were due December 31, 2006. During the year ended December 31, 2007, the loans were extended. The loans are due as follows.

Principal	Due Date
Euro 13,400 (US $19,723)	July 31, 2008
Euro 15,000 (US $22,078)	July 31, 2008
Euro 18,000 (US $26,494)	July 31, 2008

Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totalled Euro 2,566 (US $3,511) and Euro 535 (US $688), respectively.

During the year ended December 31, 2007, two loans were granted from a third party company for Euro 40,000 (US $58,876) and Euro 15,000 (US $22,078). The first loan bears interest at 5% per annum and was due September 28, 2007. The second loan bears interest at 6% per annum and was due December 31, 2007. During the year ended December 31, 2007, both loans were extended to April 30, 2008. Interest expense included in the statement of operations for the year ended December 31, 2007 totaled Euro 2,241 (US $2,997).

F-15

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

6.	LOANS PAYABLE –CURRENT (continued)
	During the year ended December 31, 2006, two loans were granted from a third party company for Euro 30,000 (US $44,157) and Euro 25,000 (US $36,797). The loans bear interest at 5% per annum and were due November 2, 2007 and November 23, 2007, respectively. During the year ended December 31, 2007, both loans were extended to April 30, 2008. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 3,199 (US $4,165) and Euro 354 (US $456), respectively.
	During the year ended December 31, 2007, two loans were granted from a third party company for $20,000 and $25,000. The loans bear interest at 8% per annum, compounded annually and are due on demand. Interest expense included in the statement of operations for the year ended December 31, 2007 totaled $1,244.
	During the year ended December 31, 2006, a loan was granted from a third party company for $100,000. During the year ended December 31, 2007, $16,700 was repaid. The loan bears interest at 8% per annum, compounded annually, and is due March 20, 2008. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled $7,600 and $5,458, respectively.
	During the year ended December 31, 2006, several loans were granted from a third party company totaling $550,000. The loans earned interest at 8% per annum, compounded annually. During the year ended December 31, 2007, the loans including principal and interest were repaid in full. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled $10,849 and $23,101, respectively.

F-16

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

7.	RELATED PARTY TRANSACTIONS
	Loans Receivable
	During the year ended December 31, 2006, a loan was granted to a former shareholder of EDI totaling Euro 990 (US $1,457). The loan bears interest at 3% per annum and was due January 5, 2008. On December 28, 2007, the loan was extended to July 31, 2008. Interest income included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 31 (US $42) and Euro 30 (US $37), respectively.
	During the year ended December 31, 2006, a loan was granted to a former shareholder of EDI totaling Euro 8,250 (US $10,884). The loan earned interest at 3% per annum and was due January 5, 2008. On December 31, 2006, the loan including principal and interest, totaling Euro 8,497 (US $11,210) was forgiven and posted to additional paid-in-capital. Interest income included in the statement of operations for the year ended December 31, 2006 totaled Euro 247 (US $311).
	During the year ended December 31, 2006, a loan was granted to an individual related to an officer and director of the Company and a managing director of EDI for Euro 15,400 (US $22,667). On December 31, 2007, Euro 641 (US $944) of accounts payable was offset against the principal of the loan receivable. The loan bears interest at 3% per annum and was due January 5, 2008. On April 17, 2007, the Company made an immediate demand for repayment and the loan is currently in default. Interest income included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 481 (US $659) and Euro 462 (US $580), respectively. On December 31, 2007, the Company wrote down the loan and interest receivable totaling Euro 15,702 (US $23,111) to the statement of operations.
	During the year ended December 31, 2005, a loan was granted to a former shareholder of EDI for Euro 10,000 (US $14,719). On December 31, 2007, Euro 5,772 (US $8,496) of accounts payable was offset against the principal of the loan receivable. The loan bears interest at 6% per annum and was due on December 31, 2006. During the year ended December 31, 2006, the loan was extended to June 30, 2007. During the year ended December 31, 2007, the loan was extended to August 31, 2008. Interest income included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 650 (US $892) and Euro 588 (US $748), respectively.
	During the year ended December 31, 2005, a loan was granted to an individual related to an officer and director of the Company and a managing director of EDI, for Euro 115,000 (US $169,267). During the year ended December 31, 2007, Euro 72,000 (US $105,976) was repaid. The loan bears interest at 6% per annum and was due on December 31, 2006. On December 28, 2006, the loan was extended to June 30, 2007. On April 17, 2007, the Company made an immediate demand for repayment and the balance of the loan is currently in default. Interest income included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 4,754 (US $6,439) and Euro 6,766 (US $8,604), respectively. On December 31, 2007, the Company wrote down the remaining balance of loan and interest receivable totaling Euro 54,654 (US $80,445) to the statement of operations.

F-17

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

7.	RELATED PARTY TRANSACTIONS
	Loans Payable –Current
	During the year ended December 31, 2007, several loans were granted from EDI Holding totaling Euro 290,744 (US $427,942). The loans bear interest at 5% per annum. Subsequent to December 31, 2007, the first three loans were extended. The loans are due as follows:

Principal	Due Date
Euro 21,000 (US $30,910)	December 31, 2008
Euro 39,160 (US $57,639)	December 31, 2008
Euro 1,800 (US $2,649)	December 31, 2008
Euro 40,000 (US $58,876)	August 10, 2008
Euro 10,000 (US $14,719)	August 14, 2008
Euro 15,000 (US $22,078)	August 22, 2008
Euro 35,000 (US $51,516)	August 31, 2008
Euro 33,000 (US $48,572)	September 13, 2008
Euro 24,000 (US $35,325)	September 21, 2008
Euro 12,000 (US $17,663)	September 28, 2008
Euro 9,400 (US $13,836)	December 31, 2008
Euro 15,000 (US $22,078)	December 31, 2008
Euro 6,000 (US $8,831)	December 31, 2008
Euro 29,384 (US $43,250)	December 31, 2008

Interest expense included in the statement of operations for the year ended December 31, 2007 totaled Euro 5,594 (US $7,878).

During the year ended December 31, 2006, several loans were granted from EDI Holding totaling Euro 26,400 (US $38,858). During the year ended December 31, 2007, Euro 4,856 (US $7,147) of the first loan granted was repaid. During the year ended December 31, 2007, all of the loans were extended. The loans bear interest and are due as follows:

Principal	Interest	Due Date
Euro 15,144 (US $22,291)	5%	July 31, 2008
Euro 3,400 (US $5,004)	6%	June 30, 2008
Euro 2,000 (US $2,944)	5%	July 31, 2008
Euro 1,000 (US $1,472)	6%	July 31, 2008

Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 1,185 (US $1,620) and Euro 487 (US $628), respectively.

F-18

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

7.	RELATED PARTY TRANSACTIONS (continued)
	Loans Payable –Current (continued)
	During the year ended December 31, 2005, a loan was granted from an officer and director of the Company and a managing director of EDI, for Euro 36,000 (US $52,988). During the year ended December 31, 2006, an additional loan for Euro 50,000 (US $73,594) was granted. On December 31, 2006, two loans receivable, including principal and interest, totaling Euro 29,446 (US $43,341) were posted as a payment against the second loan payable. The first loan bears interest at 6% per annum and was due December 31, 2007. During the year ended December 31, 2007, the loan was extended to July 31, 2008. The second loan bears interest at 6% and is due May 4, 2008. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 3,728 (US $5,110) and Euro 4,204 (US $5,376), respectively.
	During the year ended December 31, 2007, a loan was granted from a company with a shareholder related to an officer and director of the Company and a managing director of EDI for Euro 57,500 (US $84,633). The loan bears interest at 5% per annum and was due February 5, 2008. Subsequent to December 31, 2007, the loan was extended to January 28, 2009. Interest expense included in the statement of operations for the year ended December 31, 2007 totaled Euro 2,681 (US $3,688).
	During the year ended December 31, 2006, two loans were granted from a company with a shareholder related to an officer and director of the Company and a managing director of EDI, for Euro 90,000 (US $132,470) and Euro 11,600 (US $17,074). On October 4, 2006 and during the year ended December 31, 2007, Euro 30,000 (US $44,157) and Euro 36,247 (US $53,352) of the first loan granted, respectively, were repaid. The first loan bears interest at 6% and was due March 31, 2007. During the year ended December 31, 2007, the first loan was extended to March 31, 2008. The second loan bears interest at 5% per annum and was due November 30, 2007. During the year ended December 31, 2007, the second loan was extended to November 30, 2008. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 3,119 (US $4,236) and Euro 3,757 (US $4,778), respectively.
	During the year ended December 31, 2007, several loans were granted from an individual related to an officer and director of the Company and a managing director of EDI, totaling Euro 27,000 (US $39,741). The loans bear interest at 6%. The loans have been extended are due as follows:

Principal	Due Date
Euro 10,000 (US $14,719)	July 31, 2008
Euro 12,000 (US $17,663)	December 31, 2008
Euro 5,000 (US $7,359)	December 31, 2008

Interest expense included in the statement of operations for the year ended December 31, 2007 totaled Euro 636 (US $881).

F-19

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

7.	RELATED PARTY TRANSACTIONS (continued)
	Loans Payable –Current (continued)
	During the year ended December 31, 2006, a second loan was granted by the same individual for Euro 12,000 (US $17,663). The loan bears interest at 6% per annum and was due December 31, 2006. During the year ended December 31, 2006, the loan was extended to December 31, 2007. During the year ended December 31, 2007, the loan was extended to July 31, 2008. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 747 (US $1,024) and Euro 180 (US $232), respectively.
	During the year ended December 31, 2005, a loan was granted from an individual related to an officer and director of the Company and a managing director of EDI, for Euro 5,000 (US $7,359). During the year ended December 31, 2007, Euro 3,000 (US $4,416) of the loan was repaid. The loan bears interest at 6% per annum. During the year ended December 31, 2006, the loan was extended to March 22, 2007. During the year ended December 31, 2007, the loan was extended to December 31, 2008. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 220 (US $298) and Euro 314 (US $402), respectively.
	Loans Payable
	During the year ended December 31, 2006, a loan was granted from EDI Holding for Euro 75,000 (US $110,392). The loan bears interest at 5% per annum and is due on December 21, 2009. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 3,821 (US $5,236) and Euro Nil (US $Nil), respectively.
	During the year ended December 31, 2004, a loan was granted from an individual related to an officer and director of the Company and a managing director of EDI, for Euro 8,000 (US $11,775). The loan bears interest at 6% per annum and is due on December 31, 2009. Interest expense included in the statement of operations for the year ended December 31, 2007 and 2006 totaled Euro 433 (US $588) and 516 (US $658), respectively.

F-20

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

7.	RELATED PARTY TRANSACTIONS (continued)
	Other
	At December 31, 2007 and 2006, included in accounts payable and accrued liabilities –related parties is Euro 69,741 (US $102,651) and Euro 35,532 (US $46,876), respectively, owed to managing directors of EDI for management fees and reimbursement of expenses. Amounts due to officers and directors are unsecured, non-interest bearing and due on demand.
	At December 31, 2007 and 2006, included in accounts payable and accrued liabilities –related parties is Euro 10,089 (US $14,850) and Euro 6,498 (US $8,572), respectively, owed to a managing director of EDI for the company use of his private vehicle and reimbursement of expenses. Amounts due to officers and directors are unsecured, non-interest bearing and due on demand.
	Consulting fees paid to an officer of the Company for the year ended December 31, 2007 and 2006 totaled $12,000 and $8,000, respectively. Management fees paid to the managing directors of EDI for the year ended December 31, 2007 totaled Euro 290,000 (US $399,649) and Euro 268,000 (US $337,181), respectively.

F-21

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

8.	COMMON STOCK
	The Company’s articles of incorporation allow it to issue up to 1,000,000,000 shares of common stock, par value $0.001. Effective March 9, 2006, the Company effected a stock split of its common stock by issuing five new shares for every one old share. Except as otherwise stated to the contrary in these financial statements, all references to shares and prices per shares have been adjusted to give retroactive effect to the stock split.
	On April 26, 2006, the Company acquired all the issued and outstanding stock of EDI, which was accounted for as a recapitalization of the Company (Note 1) in exchange for 50,000,000 shares of common stock. The issued number of shares of common stock is that of the Company with adjustments made for differences in par value between the Company and EDI. The pro-rata portion of the 50,000,000 shares has been calculated and applied to the equity contributions to EDI prior to the reverse merger to retroactively restate the exchange ratio.
	On September 28, 2006, the Company issued 714,285 units at a price of $0.70 per unit in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant for total proceeds of $500,000. Each warrant entitles the holder to purchase an additional share of the Company’s common stock at a price of $0.70 per share for a period of one year from the date of closing.
	On April 2, 2007, the Company issued 1,736,111 units at a price of Euro 0.288 (US -$0.383) per unit, for total proceeds of Euro 500,000 ($667,468) in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of Euro 0.288 (US -$0.383) per share for a period of one year from the date of closing. A finder’s fee of 10% of the proceeds in cash was paid on closing of the private placement.
	On May 4, 2007, the Company issued 1,875,000 units at a price of $0.32 per unit, for total proceeds of $600,000 in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of US $0.32 per share for a period of one year from the date of closing. A finder’s fee of 10% of the proceeds in cash was paid on closing of the private placement.
	On June 28, 2007, the Company issued 3,000,000 units at a price of $0.24 per unit, for consulting services with an aggregate value totaling $720,000. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of US $0.30 per share for a period of one year from the date of closing.
	On November 12, 2007, the Company issued 3,250,000 units at a price of Euro 0.20 (US $0.29) per unit, for total proceeds of Euro 650,000 (US $953,778) in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of US $0.35 per share for a period of two years from the date of closing.

F-22

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

9.	STOCK OPTIONS AND WARRANTS
	Stock Options
	On May 5, 2006, the Company adopted a stock incentive plan (the “2006 Stock Option Plan”) to provide incentives to employees, directors and consultants. The Stock Plan provides for the issuance of up to 11,000,000 options with a maximum term of five years. The maximum aggregate number of shares that may be optioned and sold under the 2006 Stock Option Plan will be increased effective the first day of each of the Company’s fiscal quarters, beginning with the fiscal quarter commencing May 1, 2006, by an amount equal to the lesser of 10% of the total increase in the number of outstanding shares during the previous fiscal quarter and a lesser number of shares as may be determined by the Board of Directors of the Company. Vesting periods are determined at the discretion of the Board of Directors.

				Weighted
	Number			Average
				Exercise Price
Options outstanding, December 31, 2006	11,000,000		$	1.00
Granted	1,300,000		$	0.45
Exercised	-			-
Expired	(2,000,000	)	$	1.00
Options outstanding, December 31, 2007	10,300,000		$	0.94
Options exercisable, December 31, 2007	4,310,000		$	1.00
Weighted average fair value of options granted during the year ended
December 31, 2007 (2006 -$0.72)			$	0.49

On May 5, 2006, the Company granted stock options to officers, directors and consultants under the 2006 Stock Option Plan, to acquire a total of 11,000,000 shares of common stock exercisable at a price of $1.00 per share for a term expiring on the date that is five years after the date such options become vested and exercisable.

On September 11, 2007, the Company granted stock options to an employee and a consultant under the 2006 Stock Option Plan, to acquire a total of 1,250,000 shares of common stock exercisable at a price of $0.45 per share for a term expiring on the date that is five years after the date such options become vested and exercisable.

On September 12, 2007, the Company granted stock options to an employee under the 2006 Stock Option Plan, to acquire a total of 50,000 shares of common stock exercisable at a price of $0.45 per share for a term expiring on the date that is five years after the date such options become vested and exercisable.

F-23

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

9.	STOCK OPTIONS AND WARRANTS (continued) Stock Options (continued)
	A summary of stock options outstanding at December 31, 2007 is as follows:

	Outstanding Options			Exercisable Options
		Weighted			Weighted
		Average	Weighted		Average	Weighted
		Remaining	Average		Remaining	Average
Exercise		Contractual	Exercise		Contractual	Exercise
Price	Number	Life	Price	Number	Life	Price
$ 1.00	200,000	8.33	$ 1.00	100,000	8.33	$ 1.00
$ 1.00	8,390,000	7.33	$ 1.00	2,560,000	7.33	$ 1.00
$ 1.00	1,380,000	6.33	$ 1.00	620,000	6.33	$ 1.00
$ 1.00	1,030,000	4.33	$ 1.00	1,030,000	4.33	$ 1.00
$ 0.45	1,000,000	6.00	$ 0.45	-	-	$ 0.00
$ 0.45	250,000	7.00	$ 0.45	-	-	$ 0.00
$ 0.45	50,000	7.00	$ 0.45	-	-	$ 0.00

The aggregate intrinsic value for options vested and unvested as of December 31, 2007 is $Nil (2006 -$Nil).

On May 5, 2006, the Company used the Black-Scholes option pricing model to compute estimated fair value, based on the following assumptions:

Risk-free interest rate	5.03%
Dividend yield rate	0.00%
Price volatility	89.35%
Weighted average expected life of options	5 years
On September 11, 2007, the Company used the Black-Scholes option pricing model to compute estimated fair value, based on the following assumptions:
Risk-free interest rate	4.07%
Dividend yield rate	0.00%
Price volatility	155.55%
Weighted average expected life of options	5 years
On September 12, 2007, the Company used the Black-Scholes option pricing model to compute estimated fair value, based on the following assumptions:
Risk-free interest rate	4.11%
Dividend yield rate	0.00%
Price volatility	155.59%
Weighted average expected life of options	5 years

F-24

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

9.	STOCK OPTIONS AND WARRANTS (continued)
	Stock Options (continued)
	The Company recognized stock-based compensation of $2,110,772 and $1,570,472 being the fair value of the options vested and exercisable in the year ended December 31, 2007 and 2006, respectively. There remains a total of $3,378,676 compensation costs for unvested options which will be expensed in future periods.
	Warrants

			Weighted
			Average
	Number		Exercise Price
Warrants outstanding, December 31, 2006	714,285	$	0.70
Granted	9,861,111		0.34
Exercised	-		-
Expired	714,285		0.70
Warrants outstanding, December 31, 2007	9,861,111	$	0.34
Warrants exercisable, December 31, 2007	9,861,111	$	0.34

A summary of warrants outstanding at December 31, 2007, is as follows:

Date	Issued	Outstanding		Exercise Price	Expiry Date
April 2, 2007	1,736,111	1,736,111		Euro 0.288 (US $0.424)	April 2, 2008
May 4, 2007	1,875,000	1,875,000	$	0.32	May 4, 2008
June 28, 2007	3,000,000	3,000,000	$	0.30	June 28, 2008
November 12, 2007	3,250,000	3,250,000	$	0.35	November 12, 2008

10.	SEGMENT INFORMATION
	The Company’s operations following the acquisition of EDI are conducted in one reportable segment, being the distribution and maintenance of water exploration machinery and equipment and the provision of related services in Germany. All the Company’s equipment, patents and trademarks are in Germany.

F-25

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

11.	COMMITMENTS
	On October 1, 2007, EDI entered into a lease agreement for office space that requires monthly lease payments of Euro 862 (US $1,260). On August 1, 2007, EDI entered into a managing service contract with a managing director of EDI effective August 1, 2007 to pay monthly management fees of Euro 10,000 (US $14,719). The contract may be terminated by giving written notice of twelve months and ends without notice at the end of the month in which the managing director turns 65 years of age.
	On August 1, 2006, EDI entered into a lease agreement for office space on a month-to-month basis that requires monthly lease payments of Euro 1,260 (US $1,855). The lease agreement was cancelled effective November 1, 2007.
	On July 1, 2005, EDI entered into a consulting agreement with an individual effective July 1, 2005 to pay monthly consulting fees at Euro 100 (US $147) per hour. The contract terminated on December 31, 2007.
	On July 1, 2005, EDI entered into a consulting agreement with an individual effective July 1, 2005 to pay monthly consulting fees at Euro 100 (US $147) per hour. The contract terminated on December 31, 2007.
	On July 1, 2005, EDI entered into a lease agreement for tenancy of office space that may be terminated with written notice of three months. The lease agreement requires monthly lease payments of Euro 600 (US $883) plus taxes. The lease agreement was cancelled in August 2007 and the written notice of three months was waived.
	On July 1, 2005, EDI entered into a freelance agreement with an individual effective July 1, 2005, to pay monthly consulting fees of Euro 8,000 (US $11,775). The contract may be terminated at the end of each calendar quarter by giving written notice of six months. The agreement has been terminated by a settlement agreement dated July 2, 2007. EDI is required to pay a total of Euro 6,000 (US $8,831) per month under the terms of two settlement agreements for a period of two years beginning August 1, 2007.
	On January 1, 2005, EDI entered into a managing service contract with a managing director of EDI effective July 1, 2005, to pay monthly management fees of Euro 10,000 (US $14,719) and a management bonus of 5% of the annual net income of EDI under German law, due one month following the approval of the annual financial statements by a meeting of the shareholders. The contract may be terminated at the end of each calendar quarter by giving written notice of six months and ends without notice at the end of the month in which the managing director turns 65 years of age. On March 20, 2006, the contract was amended to increase the monthly management fee to Euro 19,000 (US $27,966) for the months, April 2006 to September 2006. Effective October 1, 2006, the managing director agreed to decrease the monthly management fee back to Euro 10,000 (US $14,719) per month.

F-26

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

11. COMMITMENTS (continued) On January 1, 2005, EDI entered into a managing service contract with a managing director of EDI effective July 1, 2005, to pay monthly management fees of Euro 10,000 (US $14,719) and a management bonus of 5% of the annual net income of EDI under German law, due one month following the approval of the annual financial statements by a meeting of the shareholders. The contract may be terminated at the end of each calendar quarter by giving written notice of six months and ends without notice at the end of the month in which the managing director turns 65 years of age. On March 20, 2006, the contract was amended to increase the monthly management fee to Euro 16,000 (US $23,550) for the months, April 2006 to September 2006. Effective October 1, 2006, the managing director agreed to decrease the monthly management fee back to Euro 10,000 (US $14,719) per month. On March 11, 2008, the contract was terminated effective immediately.

12. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

		Cumulative
		Amounts from
		Inception		Year		Year
		(December 7, 2004)		Ended		Ended
		to December 31,		December 31,		December 31,
		2007		2007		2006
Cash paid for:
Interest	$	51,198	$	51,198	$	-
Income taxes	$	-	$	-	$	-

Non-cash Transactions

Investing and financing activities that do not have an impact on current cash flows are excluded from the statement of cash flows.

During the period from inception (December 7, 2004) December 31, 2007, the Company issued 50,000,000 common shares for the acquisition of EDI.

During the year ended December 31, 2007, 3,000,000 units were issued for consulting services with an aggregate value totaling $720,000. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of US $0.30 per share for a period of one year from the date of closing.

During the year ended December 31, 2007, the Company wrote down loans and interest receivables from a related party totaling Euro 70,356 (US $103,556) to the statement of operations.

F-27

EXPLORATION DRILLING INTERNATIONAL INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

December 31, 2007

13.	SUBSEQUENT EVENTS
	On January 18, 2008, a loan was granted from an individual related to an officer and director of the Company and a managing director of EDI, for Euro 6,500 (US $9,567). The loan bears interest at 6% annum and is due on December 31, 2008.
	On February 27, 2008, the Company issued 3,000,000 units at a price of $0.27 per unit, for consulting services with an aggregate value of $810,000. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of US $0.34 per share for a period of one year from the date of closing.
	On February 27, 2008, the Company issued 250,000 units at a price of $0.20 per unit for an individual’s agreement to provide consulting services for a period of one year. The units have an aggregate value of $50,000. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of US $0.25 per share for a period of one year from the date of closing.
	On March 14, 2008, the Company issued 384,615 units at a price of Euro 0.13 (US $0.19) per unit, for total proceeds of Euro 50,000 (US $77,833) in a private placement transaction. Each unit consists of one share of the Company’s common stock and one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock at a price of Euro 0.17 (US $0.25) per share for a period of one year from the date of closing.

F-28

ITEM 9.               CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

On June 5, 2006, we dismissed Cordovano Honeck, LLP as our principal independent accountants and engaged Davidson & Company, Chartered Accountants (“Davidson”), as our new principal independent accountants. The information required by Item 304 of Regulation S-K with respect to the change in our independent accountants was provided in our Current Report on Form 8-K, filed with the SEC on June 7, 2006.

ITEM 9A(T).       CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2007 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2007 fairly present our financial condition, results of operations and cash flows in all material respects.

Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.

23

Management assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:

Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

Insufficient Written Policies & Procedures: We have insufficient written policies and procedures for accounting and financial reporting.

Inadequate Financial Statement Closing Process: We have an inadequate financial statement closing process.

Lack of Audit Committee & Outside Directors on the Company’s Board of Directors: We do not have a functioning audit committee and outside directors on the Company’s Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) prepare and implement sufficient written policies and checklists for financial reporting and closing processes and (4) may consider appointing outside directors and audit committee members in the future.

Management, including our Chief Executive Officer and the Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Changes in internal control over financial reporting

As of the Evaluation Date, there were no changes in our internal control over financial reporting that occurred during the fiscal year ended December 31, 2007 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the effectiveness of controls and procedures

Our management, including our Chief Executive Officer and the Chief Financial Officer, do not expect that the our controls and procedures will prevent all potential errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

ITEM 9B.             OTHER INFORMATION.

On March 28, 2008, EDI Germany entered into a Technology License Agreement (the “EDI Turkey License Agreement”) with EDI Turkey whereby EDI Germany granted a license to EDI Turkey for the exclusive use of its proprietary technologies, known as the EDI Fluid Finder, EDI Medium Changer, EDI Water Save and EDI Suspension, in Turkey for a period of two years. In consideration of this license grant, EDI Turkey agreed to pay

24

EDI Germany $50,000 within two years of entering into the EDI Turkey License Agreement, with minimum installment payments of $2,000 per month. The EDI Turkey License Agreement calls for additional payments equal to 10% of net profits, if any, from any drilling projects undertaken by EDI Turkey. If EDI Turkey fails to secure any drilling projects utilizing EDI Germany’s technologies within one year after the date the agreement was executed, its license rights will become non-exclusive.

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PART III

ITEM 10.             DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors, Executive Officers and Significant Employees

The following information sets forth the names of our officers, directors and significant employees, their present positions with our company, and their biographical information.

Name	Age	Positions
Rainer Rotthaeuser	50	Director, Chief Executive Officer and President of the Company.
Guenter Thiemann	50	Director, Chief Financial Officer and Treasurer of the Company and Managing Director of EDI Germany.
John Boschert	38	Secretary of the Company.
Christian Runge	45	Chief Executive Officer and Managing Director of EDI Germany.

Set forth below is a brief description of the background and business experience of our executive officers, directors and significant employees:

Rainer Rotthaeuser, President, CEO and Director

Mr. Rotthaeuser was appointed as a member of our Board of Directors and as our Chief Executive Officer and President upon closing of the acquisition of EDI Germany. Mr. Rotthaeuser also acted as a managing director of EDI Germany from inception on December 7, 2004 until January 31, 2008. Mr. Rotthaeuser has been self-employed since 1988 when he formed his own architectural firm. Mr. Rotthaeuser’s architectural expertise is in the development and construction of large building projects.

Guenter Thiemann, Treasurer, CFO and Director

Mr. Thiemann was appointed as our Chief Financial Officer and Treasurer upon closing of the acquisition of EDI Germany. On December 27, 2006, Mr. Thiemann was appointed as a member of our Board of Directors. Mr. Thiemann is also a managing director of EDI Germany. From 1989 to 1999, Mr. Thiemann was employed at LVM Insurance in the development and implementation of corporate marketing strategies. In 1999, he formed Thiemann Gesellschaft fuer Fondsmanagement GmbH, an investment fund firm. From 2001 to 2003, he acted as a branch manager for the investment counseling firm of Comfort Finance AG. Since 2003, Mr. Thiemann has been self-employed as a consultant in the areas of capital investments and financing.

John Boschert, Secretary

Mr. Boschert has acted as our Secretary since March 20, 2006. Mr. Boschert was a member of our Board of Directors from March 13, 2006 to December 27, 2006. From March 20, 2006 to April 26, 2006, Mr. Boschert also acted as our Chief Executive Officer, President, Chief Financial Officer and Treasurer.

Mr. Boschert is a self-employed business consultant. From July 2003 to June 2005, he was the president and owner of a food and beverage company based in Port Alberni, British Columbia, Canada. From 1999 to 2003, he served as a business consultant and officer of Qincom Networks Inc., a telecommunications services provider. From 1998 to 2002, he served as a business consultant and director of Universal Domains, Inc., a food services and domain name provider.

Since July 2002, Mr. Boschert has been an officer and director of Balsam Ventures, Inc., a company engaged in the business of developing a self-chilling beverage container.

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Since June 28, 2005, Mr. Boschert has been the Secretary of Clyvia Inc., a company that, through its German subsidiary, Clyvia Technology GmbH, is developing a proprietary technology that utilizes a process known as fractional depolymerization to produce diesel fuel and heating oil from various forms of recyclable waste materials, including vegetable oils, plastics and organic solids.

Since April 19, 2006, Mr. Boschert has been the Secretary and Treasurer of Blackstone Lake Minerals Inc. (formerly, Skyflyer Inc.), a company engaged in the exploration of mineral properties and in the business of developing a recreational flying device and facility in which the flying device is to operate.

From November 13, 2006 to March 26, 2008, Mr. Boschert was the Chief Financial Officer, Treasurer and Secretary and, from May 30, 2006 to April 2, 2008, he was a member of the board of directors, of Vitavea Inc., a company engaged in the marketing and distribution of nutritional supplements.

Christian Runge, Chief Executive Officer and Managing Director of EDI Germany

Mr. Runge was appointed as a Managing Director of EDI Germany in August, 2007. Mr. Runge began his career with the GEA Group in Bochum before successfully founding a number of his own companies. Most recently, Mr. Runge was responsible for building up the European sales structure of a technology-oriented supplier to the automotive industry. In the course of his diverse activities, Mr. Runge has acquired a wide range of experience, including operational experience within Europe, Africa, Brazil and the United States.

Legal Proceedings Involving Directors And Executive Officers

We are not aware of any legal proceedings to which any of our current or former directors, officers, or significant employees is a party adverse in interest to us. None of our current or former officers, directors or significant employees has, during the past 5 years, been the subject of any:

(a)	bankruptcy petitions filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
(b)	conviction in a criminal proceeding or been subject to a criminal proceeding (not including traffic violations or other minor offenses);
(c)	order, judgment or decree of any court of competent jurisdiction or any administrative authority that permanently or temporarily enjoined, barred, suspended or otherwise limited such person’s involvement in any type of business, securities or banking activities; or
(d)	finding by a court of competent jurisdiction, the SEC or the Commodity Futures Trading Commission, that such person violated a federal or state securities or commodities law.

Committees Of The Board Of Directors

Our Board of Directors does not maintain a separately-designated standing audit committee. As a result, our entire Board of Directors acts as our audit committee. None of the members of our Board of Directors, as currently constituted, meets the definition of an “audit committee financial expert.” We believe that the cost related to appointing a financial expert to our Board of Directors at this time is prohibitive.

We presently do not have a compensation committee, nominating committee, an executive committee of our Board of Directors, stock plan committee or any other committees.

Terms Of Office

Our directors are elected to hold office until the next annual meeting of the shareholders and until their respective successors have been elected and qualified. Our executive officers are appointed by our Board of Directors and hold office until removed by our Board of Directors or until their successors are appointed.

27

CODE OF ETHICS

We have adopted a Code of Ethics applicable to our officers and directors which is a "code of ethics" as defined by applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to our Annual Report on Form 10-KSB, filed with the SEC on May 17, 2007. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our Chief Executive Officer, Chief Financial Officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a current report on Form 8-K filed with the SEC.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our securities (the “Reporting Persons”) to file reports of ownership and changes in ownership with the SEC. The Reporting Persons are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on a review of such reports received by us, we believe that, except as otherwise disclosed below, during the last fiscal year, all Reporting Persons complied with all Section 16(a) filing requirements applicable to them.

The following persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act:

Name and Principal Position	Number of Late Insider Reports	Transactions Not Timely Reported	Known Failures to File a Required Form
Rainer Rotthaeuser CEO, President and Director	None	None	None
Guenter Thiemann CFO, Treasurer and Director	None	None	None
John Boschert Secretary	None	None	None
EDI Exploration Drilling International Holding GmbH(1) Owner of more than 10% of outstanding common stock	Twenty-One	Twenty-Two	None

(1) Mr. Rotthaeuser and Mr. Thiemann are each managing directors of EDI Holding. Magdalena Rotthaeuser, the wife of Mr. Rotthaeuser, holds legal and beneficial title to a 55.9% ownership interest in EDI Holding. As a result, she has the ability to direct the voting or disposition of the EDI USA shares held by EDI Holding.

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ITEM 11.             EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table sets forth total compensation paid to or earned by our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K during the fiscal years ended December 31, 2007 and 2006:

SUMMARY COMPENSATION TABLE
Name & Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non- Equity Incentive Plan Compen- sation ($)	Nonqualified Deferred Compen- sation Earnings ($)	All Other Compen -sation ($)	Total ($)
Rainer Rotthaeuser(1) CEO, President & Director	2007 2006	$164,372 $253,737	$0 $0	$0 $0	$605,136 $605,155	$0 $0	$0 $0	$0 $0	$769,508 $858,892
Guenter Thiemann(1) CFO, Treasurer & Director	2007 2006	$164,372 $196,172	$0 $0	$0 $0	$172,896 $172,902	$0 $0	$0 $0	$0 $0	$337,268 $369,074
John Boschert(2) Secretary Former Director	2007 2006	$12,000 $8,000	$0 $0	$0 $0	$72,040 $72,042	$0 $0	$0 $0	$0 $0	$84,040 $80,042
Frank Rigney(4) Former Director & Former Officer	2007 2006	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0
David Duval(5) Former Director	2007 2006	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0	n/a $0

(1)	Mr. Rotthaeuser and Mr. Thiemann were appointed to their respective positions on April 26, 2006 upon the completion of our acquisition of EDI Germany. From July 1, 2005 to March 31, 2006, Mr. Rotthaeuser and Mr. Thiemann were each paid management fees of EUR 10,000 per month. From April 1, 2006 to September 30, 2006, Mr. Rotthaeuser was paid management fees of EUR 19,000 per month, and Mr. Thiemann was paid management fees of EUR 16,000 per month. Because of our limited financial resources, Mr. Rotthaeuser and Mr. Thiemann each agreed to reduce their management fees to EUR 10,000 per month beginning October 1, 2006. On May 5, 2006, we granted a number of stock options to each of Mr. Rotthaeuser and Mr. Thiemann. See “Outstanding Equity Awards at Fiscal Year-End Table” below.
(2)	Mr. Boschert was appointed as a director and as CEO, President, CFO, Treasurer and Secretary on March 20, 2006. As of the completion of the acquisition of EDI Germany, Mr. Boschert no longer acts as our CEO, President, CFO or Treasurer. As of December 27, 2006, Mr. Boschert no longer acts on our Board of Directors. Mr. Boschert continues to act as our Secretary. Mr. Boschert receives $1,000 per month for acting as our Secretary. On May 5, 2006, we granted a number of stock options to Mr. Boschert. See “Outstanding Equity Awards at Fiscal Year-End Table” below.
(3)	Mr. Rigney was a member of our Board of Directors and our sole executive officer from the date of our inception to March 20, 2006.
(4)	Mr. Duval was a member of our Board of Directors from January 28, 2004 to March 13, 2006.

Outstanding Equity Awards At Fiscal Year-End Table

The following table provides information concerning unexercised options for each our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K as of our fiscal year end of December 31, 2007 and 2006:

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Name and Principal Position	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options	Option Exercise Price	Option Expiration Date
Rainer Rotthaeuser CEO, President & Director	840,000 840,000 - - -	- - 840,000(1) 840,000(2) 840,000(3)	- - - - -	$1.00 $1.00 $1.00 $1.00 $1.00	May 5, 2011 May 5, 2012 May 5, 2013 May 5, 2014 May 5, 2015
Guenter Thiemann CFO, Treasurer & Director	240,000 240,000 - - -	- - 240,000(1) 240,000(2) 240,000(3)	- - - - -	$1.00 $1.00 $1.00 $1.00 $1.00	May 5, 2011 May 5, 2012 May 5, 2013 May 5, 2014 May 5, 2015
John Boschert Secretary	100,000 100,000	- -	- -	$1.00 $1.00	May 5, 2011 May 5, 2012

Notes:
(1)	Options vest on May 5, 2008.
(2)	Options vest on May 5, 2009.
(3)	Options vest on May 5, 2010.

Employment Contracts

Mr. Rotthaeuser had a management contract, executed in January, 2005, prior to our acquisition of EDI Germany. In June 2005, the former shareholders of EDI Germany determined that Mr. Rotthaeuser would be paid a management fee of EUR 10,000 per month, with an annual bonus equal to 5% of the annual profits of EDI Germany, if any. In March, 2006, the former shareholders of EDI Germany approved an increase to Mr. Rotthaeuser’s management fees to EUR 19,000 per month, beginning April 1, 2006. Because of our limited financial resources, Mr. Rotthaeuser’s management fee was later decreased back to EUR 10,000 per month. As Mr. Rotthaeuser’s no longer acts as a managing director of EDI Germany, his management contract with them was terminated. Mr. Rotthaeuser does not currently receive any compensation for acting as our CEO or President or as a member of our Board of Directors.

Mr. Thiemann has a management contract with EDI Germany which was entered into in January, 2005, prior to our acquisition of EDI Germany. Mr. Thiemann’s management contract terminates automatically upon the later of his reaching the age of 65 or his becoming entitled to receive pension payments for the first time. The contract may be terminated earlier with six months prior written notice. Mr. Thiemann’s management contract provides that the compensation to be paid to Mr. Thiemann is to be determined by EDI Germany’s shareholders. In June 2005, EDI Germany’s former shareholders determined that Mr. Thiemann would be paid management fees of EUR 10,000 per month, with an annual bonus equal to 5% of the annual profits of EDI Germany, if any. In March, 2006, the former shareholders of EDI Germany decided to increase the management fees payable to Mr. Thiemann to EUR 16,000 per month. Because of our limited financial resources, the management fees were decreased back to EUR 10,000 per month. Beginning January 1, 2008, Mr. Thiemann agreed to further reduce his management fees to EUR 1,500 per month. Mr. Thiemann’s management contract does not contain any change-in-control provisions.

We do not have an employment contract with Mr. Boschert.

Director Compensation

All compensation paid or earned to our directors for the fiscal years ended December 31, 2007 and 2006 has been disclosed in the Summary Compensation Table provided above.

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ITEM 12.             SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of April 8, 2008 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and each of our named executive officers as defined under Item 402(m)(2) of Regulation S-K; and (iii) officers and directors as a group. Unless otherwise indicated, the shareholder listed possesses sole voting and investment power with respect to the shares shown.

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percentage of Common Stock(1)
DIRECTORS AND OFFICERS
Common Stock	Rainer Rotthaeuser Chief Executive Officer and President Director	2,520,000(2) Direct	2.1%
Common Stock	Guenter Thiemann Chief Financial Officer and Treasurer Director	720,000(3) Direct	*
Common Stock	John Boschert Secretary	200,000(4) Direct	*
Common Stock	All Officers and Directors as a Group (3 persons)	3,440,000	2.9%
Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percentage of Common Stock(1)
5% STOCKHOLDERS
Common Stock	EDI Exploration Drilling International Holding GmbH Goethestrasse 61 D-45721 Haltern am See, Germany	69,289,827(5) Direct	59.8%
Common Stock	Dirk Beisemann Residence Parc Saint Roman 7 Avenue Saint Roman Terraces MC – 98000, Monaco	6,000,000(6) Direct	5.0%
Common Stock	R.V. Investment Group & Holding Inc. Pasea Estate, P.O. Box 958 Road Town, Tortola, British Virgin Islands	6,000,000(7) Direct	5.0%

31

Notes
*	Represents less than 1%
(1)	Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of our common stock actually outstanding on the date of this Information Statement. As of April 8, 2008, we had 115,952,011 shares of common stock issued and outstanding.
(2)	Mr. Rotthaeuser owns options to acquire 2,520,000 shares of our common stock, exercisable at a price of $1.00 per share, that are either currently exercisable or will become exercisable within 60 days. Mr. Rotthaeuser is also a managing director of EDI Holding. In addition, Mr. Rotthaeuser’s wife beneficially owns a 55.9% interest in, EDI Holding. However, none of the EDI USA shares owned by EDI Holding are listed as being indirectly owned by Mr. Rotthaeuser as Mr. Rotthaeuser does not have the power to direct the voting or disposition of those shares.
(3)	Mr. Thiemann owns options to acquire 720,000 shares of our common stock, exercisable at a price of $1.00 per share, that are either currently exercisable or will become exercisable within 60 days. Mr. Thiemann is also a managing director of, and owns a 10.5% interest in, EDI Holding. However, none of the EDI USA shares owned by EDI Holding are listed as being indirectly owned by Mr. Thiemann as Mr. Thiemann does not have the power to direct the voting or disposition of those shares.
(4)	Mr. Boschert owns options to acquire 200,000 shares of our common stock, exercisable at a price of $1.00 per share, that are currently exercisable.
(5)	Mr. Rotthaeuser and Mr. Thiemann are each managing directors of EDI Holding. Magdalena Rotthaeuser, the wife of Mr. Rotthaeuser, holds legal and beneficial title to a 55.9% ownership interest in EDI Holding. As a result, she has the ability to direct the voting or disposition of the EDI USA shares held by EDI Holding.
(6)	The amount listed as beneficially owned by Mr. Beisemann consists of: (i) 3,000,000 shares held directly by Mr. Beisemann; and (ii) 3,000,000 share purchase warrants, exercisable at a price of $0.30 per share until June 28, 2008.
(7)	The amount listed as beneficially owned by R.V. Investment Group & Holding Inc. consists of: (i) 3,000,000 shares held directly by R.V. Investment Group & Holding Inc.; and (ii) 3,000,000 share purchase warrants, exercisable at a price of $0.34 per share until February 26, 2009.

Change in Control

We are not aware of any arrangement that might result in a change in control in the future.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information concerning all equity compensation plans previously approved by stockholders and all previous equity compensation plans not previously approved by stockholders, as of the most recently completed fiscal year.

In 2006, our board of directors approved the 2006 Stock Option Plan (the “2006 Plan”). Under the terms of the 2006 Plan, options to purchase up to 11,000,000 shares of our common stock may be granted to our officers, directors, employees and permitted consultants of our company. Under the terms of the 2006 Plan, the total number of shares that may be subjected to options grants will increase each fiscal quarter by the greater of 10% of any increase in the number of shares of our common stock outstanding during the previous fiscal quarter and such lesser amount that that may be determined by our Board of Directors. The 2006 Plan provides that exercise price be not less than 75% of the Fair Market Value of the common stock on the date of the grant.

32

EQUITY COMPENSATION PLAN INFORMATION AS AT DECEMBER 31, 2007
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity Compensation Plans approved by security holders	Nil	N/A	N/A
Equity Compensation Plans not approved by security holders	10,400,000	$0.93	1,657,540
Total	10,400,000	$0.93	1,657,540

ITEM 13.             CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Except as described below, none of the following parties has, during the last fiscal year, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, other than noted in this section:

(i)	Any of our directors or officers;
(ii)	Any person proposed as a nominee for election as a director;
(iii)	Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock;
(iv)	Any of our promoters; and
(v)	Any relative or spouse of any of the foregoing persons who has the same house as such person.

On December 23, 2005, EDI Germany loaned EUR 115,000 (approximately $169,267) to Magdalena Rotthaeuser, and on January 3, 2006, EDI Germany loaned an additional EUR 15,400 (approximately $22,667) to Ms. Rotthaeuser. These loans were granted by EDI Germany prior to our acquisition of EDI Germany and thus prior to EDI Germany being an “issuer” or a company controlled by an “issuer” as defined under Section 2 of the Sarbanes-Oxley Act of 2002. The loan for EUR 115,000 was originally due on June 30, 2006, with interest payable at a rate of 6% per annum. In June, 2006, because Ms. Rotthaeuser was unable to repay this loan on the original due date, EDI Germany agreed to extend the due date to December 31, 2006. In December, 2006, EDI Germany agreed to further extend the due date to June 30, 2007. During the year ended December 31, 2007, Ms. Rotthaeuser repaid EUR 72,000 (approximately $105,976) on the loan of EUR 115,000. The loan for EUR 15,400 is due on January 5, 2008 and bears interest at a rate of 3% per annum. On April 17, 2007, we made a demand for repayment of the loans. The balance remaining on the loans are currently in default. Ms. Rotthaeuser has not yet repaid the above loans. At December 31, 2007, we wrote down the loans and interest receivable, however we are still in the process of trying to collect the amounts owed by her.

Ms. Rotthaeuser is the wife of Rainer Rotthaeuser and is a significant shareholder of EDI Holding, which is currently our majority stockholder. In December, 2005 and January, 2006, at the time the above loans were granted to Ms. Rotthaeuser, Ms. Rotthaeuser was a significant shareholder of EDI Germany, and Mr. Rotthaeuser was one of the managing directors of EDI Germany, along with Mr. Thiemann. In April, 2006, subsequent to our acquisition of EDI Germany, Mr. Rotthaeuser became an executive officer and director of EDI USA.

We have received a number of short-term loans from related parties. The funds received from these loans have been used by us as general working capital as we pursue our plan of operation. A summary of the amounts owed to related parties as of our December 31, 2007 fiscal year is provided below.

33

(a) As of December 31, 2007, we were indebted to EDI Exploration Drilling International Holding GmbH, our majority stockholder, for principal amounts totaling EUR 387,288 (approximately $570,045) as follows:

Principal	Interest Rate	Grant Date	Due Date
EUR 15,144 ($22,291)	5%	July 15, 2006	July 31, 2008
EUR 3,400 ($5,004)	6%	October 28, 2006	June 30, 2008
EUR 75,000 ($110,392)	5%	December 19, 2006	December 21, 2009
EUR 2,000 ($2,944)	5%	December 29, 2006	July 31, 2008
EUR 1,000 ($1,472)	6%	December 29, 2006	July 31, 2008
EUR 21,000 ($30,910)	5%	January 19, 2007	December 31, 2008
EUR 40,960 ($60,288)	5%	February 23, 2007	December 31, 2008
EUR 40,000 ($58,876)	5%	August 9, 2007	August 10, 2008
EUR 10,000 ($14,719)	5%	August 12, 2007	August 14, 2008
EUR 15,000 ($22,078)	5%	August 20, 2007	August 22, 2008
EUR 35,000 ($51,516)	5%	August 30, 2007	August 31, 2008
EUR 33,000 ($48,572)	5%	September 11, 2007	September 13, 2008
EUR 24,000 ($35,325)	5%	September 19, 2007	September 21, 2008
EUR 12,000 ($17,663)	5%	September 26, 2007	September 28, 2008
EUR 9,400 ($13,836)	5%	October 12, 2007	December 31, 2008
EUR 15,000 ($22,078)	5%	November 16, 2007	December 31, 2008
EUR 6,000 ($8,831)	5%	November 23, 2007	December 31, 2008
EUR 29,384 ($43,250)	5%	December 30, 2007	December 31, 2008

Magdalena Rotthaeuser, the wife of Rainer Rotthaeuser, and Guenter Thiemann, are both significant shareholders of EDI Holding. During the year ended December 31, 2007, EUR 4,856 ($7,147) of the loan granted on July 15, 2006 was repaid. Interest expenses accrued during the year ended December 31, 2007 on account of these loans totaled EUR 10,600 (approximately $14,734).

(b) As of December 31, 2007, Guenter Thiemann, our CFO and one of our directors, for principal amounts totaling EUR 56,554 (approximately $83,241) as follows:

Principal	Interest Rate	Grant Date	Due Date
EUR 36,000 ($52,988)	6.0%	June 8, 2005	July 31, 2008
	(starting 7/1/06)
EUR 20,554 ($30,253)	6.0%	May 4, 2006	May 4, 2008
	(starting 7/1/06)

During the year, an extension was granted to July 31, 2008 by Mr. Thiemann for the EUR 36,000 loan granted on June 8, 2005. Interest accrued in respect of the above loans during fiscal 2007 totaled EUR 3,728 (approximately $5,110). No amounts were paid to Mr. Thiemann on account of principal or interest during fiscal 2007.

(c) As of December 31, 2007, we were indebted to Dieter Thiemann, the brother of Guenter Thiemann, lfor principal amounts totaling EUR 49,000 (approximately $72,122) as follows:

Principal	Interest Rate	Grant Date	Due Date
EUR 8,000 ($11,775)	7%	December 13, 2004	December 31, 2009
EUR 2,000 ($2,943)	6%	May 30, 2005	December 31, 2008
EUR 12,000 ($17,663)	5%	September 20, 2006	July 31, 2008
EUR 10,000 ($14,719)	5%	February 2, 2007	July 31, 2008
EUR 12,000 ($17,663)	5%	July 16, 2007	December 31, 2008
EUR 5,000 ($7,359)	5%	August 5, 2007	December 31, 2008

34

During the year ended December 31, 2007, EUR 3,000 ($4,416) in principal was repaid to Mr. Thiemann for the loan granted Mary 30, 2005. Interest accrued during the year ended December 31, 2007 totaled EUR 2,036 (approximately $2,791).

(d) As of December 31, 2007, we were indebted to DTB Patente GmbH, a company of which Magdalena Rotthaeuser is a significant shareholder, for principal totaling EUR 92,853 (approximately $136,698) as follows:

Principal	Interest Rate	Grant Date	Due Date
EUR 23,753 ($34,961)	6%	March 2, 2006	March 31, 2008
EUR 11,600 ($17,074)	5%	October 28, 2006	November 30, 2008
EUR 57,500 ($84,663)	5%	January 28, 2007	January 28, 2009

Ms. Rotthaeuser is the wife of Rainer Rotthaeuser, our CEO and one of our directors. During the year ended December 31, 2007, we repaid EUR 36,247 ($53,352) in principal was repaid to DTB Patente. Interest accrued fiscal 2007 totaled EUR 5,800 (approximately $7,924). During the 2007 fiscal year, extension were granted by DTB on the first and second loans to March 31, 2008 and November 30, 2008, respectively.

Subsequent to our December 31, 2007 fiscal year, we received a loan for EUR 6,500 (approximately $9,567) from Dieter Thiemann, bearing interest at a rate of 6% per annum, payable on or before December 31, 2008.

Director Independence

Our common stock is listed on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. All of our current directors are executive officers. As a result, none of our directors are independent.

ITEM 14.             PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit Fees

The aggregate fees billed for the two most recently completed fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included our Quarterly Reports on Form 10-QSB and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

	Year Ended December 31, 2007	Year Ended December 31, 2006
Audit Fees	$30,500	$29,750
Audit Related Fees	Nil	Nil
Tax Fees	Nil	Nil
All Other Fees	Nil	Nil
Total	$30,500	$29,750

ITEM 15.             EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibit
Number	Description of Exhibit
3.1	Articles of Incorporation.(1)
3.2	Certificate of Change to Authorized Capital.(3)
3.3	Certificate of Amendment to Articles of Incorporation – name change to Exploration Drilling International Inc.(9)

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Exhibit
Number	Description of Exhibit
3.4	Amended and Restated Bylaws.(8)
4.1	Specimen Common Stock Certificate.(1)
10.1	Option Purchase and Royalty Agreement.(1)
10.2	Amendment to Option Purchase and Royalty Agreement.(2)
10.3	Share Purchase Agreement among the Company, EDI Exploration Drilling International Holding GmbH (“EDI Holding”), EDI Exploration Drilling International GmbH (“EDI Germany”) and Frank Rigney, dated for reference the 5th day of April, 2006.(4)
10.4	Agreement and Deed of Transfer between EDI Holding and the Company dated for reference as of the 26th day of April, 2006.(5)
10.5	2006 Stock Option Plan.(6)
10.6	Joint Operating Agreement Between A. Abuynayyan Trading Corporation and EDI Germany.(7)
10.7	Managing Director Contract between EDI Germany and Rainer Rotthaeuser dated effective as of the 1st day of January, 2005 (translated from German to English).(10)
10.8	Managing Director Contract between EDI Germany and Guenter Thiemann dated effective as of the 1st day of January, 2005 (translated from German to English).(10)
10.9	Loan Agreement for EUR 25,000 with interest at 6% per annum between EDI Germany (as the lender) and Guenter Thiemann (as the borrower) dated December 23, 2005 (translated from German to English).(10)
10.10	Loan Agreement for EUR 115,000 with interest at 6% per annum between EDI Germany (as the lender) and Magdalena Rotthaeuser (as the borrower) dated December 23, 2005 (translated from German to English).(10)
10.11	Addendum to Loan Agreement dated December 23, 2005 between EDI Germany (as the lender) and Magdalena Rotthaeuser (as the borrower), extending due date to December 31, 2006, dated June 25, 2006 (translated from German to English).(10)
10.12	Addendum to Loan Agreement dated December 23, 2005 between EDI Germany (as the lender) and Magdalena Rotthaeuser (as the borrower), extending due date to June 30, 2007, dated December 28, 2006 (translated from German to English).(10)
10.13	Loan Agreement for EUR 15,400 with interest at 3% per annum between EDI Germany (as the lender) and Magdalena Rotthaeuser (as the borrower) dated January 3, 2006 (translated from German to English).(10)
10.14	Loan Agreement for EUR 20,000 with interest at 5% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated July 15, 2006 (translated from German to English).(10)
10.15	Loan Agreement for EUR 3,400 with interest at 6% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated October 28, 2006 (translated from German to English).(10)
10.16	Loan Agreement for EUR 75,000 with interest at 5% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated December 19, 2006 (translated from German to English).(10)
10.17	Loan Agreement for EUR 2,000 with interest at 5% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated December 29, 2006 (translated from German to English).(10)
10.18	Loan Agreement for EUR 1,000 with interest at a rate of 6% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated December 29, 2006 (translated from German to English).(10)
10.19	Loan Agreement for EUR 36,000 without interest between Guenter Thiemann (as the lender) and EDI Germany (as the borrower) dated June 8, 2005 (translated from German to English).(10)
10.20	Addendum to Loan Agreement dated June 8, 2005 between Guenter Thiemann (as the lender) and EDI Germany (as the borrower), providing for interest at a rate of 6% per annum, dated July 1, 2006 (translated from German to English).(10)

36

Exhibit
Number	Description of Exhibit
10.21	Addendum to Loan Agreement dated June 8, 2005 between Guenter Thiemann (as the lender) and EDI Germany (as the borrower), extending due date to December 31, 2007, dated April 22, 2007 (translated from German to English).(10)
10.22	Loan Agreement for EUR 50,000 without interest between Guenter Thiemann (as the lender) and EDI Germany (as the borrower) dated May 4, 2006 (translated from German to English).(10)
10.23	Addendum to Loan Agreement dated May 4, 2006 between Guenter Thiemann (as the lender) and EDI Germany (as the borrower) dated July 1, 2006 (translated from German to English).(10)
10.24	Loan Agreement for EUR 8,000 with interest at 7% per annum between Dieter Thiemann (as the lender) and EDI Germany (as the borrower), providing for interest at a rate of 6% per annum dated December 13, 2004 (translated from German to English).(10)
10.25	Loan Agreement for EUR 5,000 with interest at 6% per annum between Dieter Thiemann (as the lender) and EDI Germany (as the borrower) dated May 30, 2005 (translated from German to English).(10)
10.26	Addendum to Loan Agreement dated May 30, 2005 between Dieter Thiemann (as the lender) and EDI Germany (as the borrower), extending due date to December 31, 2007, dated December 26, 2006 (translated from German to English).(10)
10.27	Loan Agreement for EUR 12,000 with interest at 5% per annum between Dieter Thiemann (as the lender) and EDI Germany (as the borrower) dated September 20, 2006 (translated from German to English).(10)
10.28	Addendum to Loan Agreement dated September 20, 2006 between Dieter Thiemann (as the lender) and EDI Germany (as the borrower), extending due date to March 22, 2007, dated December 18, 2006 (translated from German to English).(10)
10.29	Loan Agreement for EUR 90,000 with interest at 6% per annum between DTB Patente GmbH (as the lender) and EDI Germany (as the borrower) dated March 2, 2006 (translated from German to English).(10)
10.30	Addendum to Loan Agreement Dated March 2, 2006 between DTB Patente GmbH (as the lender) and EDI Germany (as the borrower), extending the due date to September 30, 2007, dated January 4, 2007 (translated from German to English).(10)
10.31	Loan Agreement for EUR 11,600 with interest at 5% per annum between DTB Patente GmbH (as the lender) and EDI Germany (as the borrower) dated October 28, 2006 (translated from German to English).(10)
10.32	Loan Agreement for EUR 21,000 with interest at 5% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated January 19, 2007 (translated from German to English).(10)
10.33	Loan Agreement for EUR 39,160 with interest at 5% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated February 23, 2007 (translated from German to English).(10)
10.34	Loan Agreement for EUR 1,800 with interest at 5% per annum between EDI Holding (as the lender) and EDI Germany (as the borrower) dated February 23, 2007 (translated from German to English).(10)
10.35	Loan Agreement for EUR 57,500 with interest at 5% per annum between DTB Patente GmbH (as the lender) and EDI Germany (as the borrower) dated January 28, 2007 (translated from German to English).(10)
10.36	Loan Agreement for EUR 10,000, with interest at 6% per annum between Dieter Thiemann (as the lender) and EDI Germany (as the borrower) dated February 2, 2007 (translated from German to English).(10)
10.37	Loan Agreement for EUR 23,000 with interest at 7% per annum between Albert and Margareta Meyer (as the lenders) and EDI Germany (as the borrower) dated July 6, 2006 (translated from German to English).(10)

37

Exhibit
Number	Description of Exhibit
10.38	Addendum to Loan Agreement dated September 20, 2006 between Dieter Thiemann (as lender) and EDI Germany (as borrower), extending due date to December 31, 2007, dated June 26, 2007 (translated from German to English).(11)
10.39	Addendum to Loan Agreement dated February 2, 2007 between Dieter Thiemann (as lender) and EDI Germany (as borrower), extending the due date to December 31, 2007, dated June 28, 2007 (translated from German to English).(11)
10.40	Addendum to Loan Agreement dated July 15, 2006 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to December 31, 2007, dated July 15, 2007 (translated from German to English).(11)
10.41	Loan Agreement for EUR 12,000 with interest at 6% per annum between Dieter Thiemann (as lender) and EDI Germany (as borrower) dated July 16, 2007 (translated from German to English).(11)
10.42	Loan Agreement for EUR 5,000 with interest at 6% per annum between Dieter Thiemann (as lender) and EDI Germany (as borrower) dated August 5, 2007 (translated from German to English).(11)
10.43	Loan Agreement for EUR 40,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated August 9, 2007 (translated from German to English).
10.44	Loan Agreement for EUR 10,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated August 12, 2007 (translated from German to English).(12)
10.45	Loan Agreement for EUR 15,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated August 20, 2007 (translated from German to English).(12)
10.46	Loan Agreement for EUR 35,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated August 30, 2007 (translated from German to English).(12)
10.47	Addendum to Loan Agreement dated October 28, 2006 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to June 30, 2008, dated September 1, 2007 (translated from German to English).(12)
10.48	Loan Agreement for EUR 33,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated September 11, 2007 (translated from German to English).(12)
10.49	Loan Agreement for EUR 24,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated September 19, 2007 (translated from German to English).(12)
10.50	Addendum to Loan Agreement dated March 2, 2006 between DTB Patente GmbH (as lender) and EDI Germany (as borrower) extending the due date to March 31, 2008, dated September 25, 2007 (translated from German to English).(12)
10.51	Loan Agreement for EUR 12,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated September 26, 2007 (translated from German to English).(12)
10.52	Consulting Agreement dated February 13, 2008 between the Company and Jesko Beck.(13)
10.53	Loan Agreement for EUR 9,400 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated October 12, 2007 (translated from German to English).
10.54	Addendum to Loan Agreement dated October 28, 2006 between DTB Patente GmbH (as lender) and EDI Germany (as borrower) extending the due date to November 30, 2008, dated November 1, 2007 (translated from German to English).
10.55	Loan Agreement for EUR 15,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated November 16, 2007 (translated from German to English).

38

Exhibit
Number	Description of Exhibit
10.56	Loan Agreement for EUR 6,000 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated November 23, 2007 (translated from German to English).
10.57	Addendum to Loan Agreement dated June 8, 2005 between Guenter Thiemann (as lender) and EDI Germany (as borrower) extending the due date to July 31, 2008, dated December 25, 2007 (translated from German to English).
10.58	Addendum to Loan Agreement dated May 30, 2005 between Dieter Thiemann (as lender) and EDI Germany (as borrower) extending the due date to December 31, 2008, dated December 26, 2007 (translated from German to English).
10.59	Addendum to Loan Agreement dated September 20, 2006 between Dieter Thiemann (as lender) and EDI Germany (as borrower) extending the due date to July 31, 2008, dated December 26, 2007 (translated from German to English).
10.60	Addendum to Loan Agreement dated February 2, 2007 between Dieter Thiemann (as lender) and EDI Germany (as borrower) extending the due date to July 31, 2008, dated December 28, 2007 (translated from German to English).
10.61	Addendum to Loan Agreement dated December 29, 2006 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to July 31, 2008, dated December 28, 2007 (translated from German to English).
10.62	Addendum to Loan Agreement dated July 15, 2007 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to July 31, 2008, dated December 28, 2007 (translated from German to English).
10.63	Addendum to Loan Agreement dated December 29, 2006 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to July 31, 2008, dated December 28, 2007 (translated from German to English).
10.64	Loan Agreement for EUR 29,383 with interest at 5% per annum between EDI Holding (as lender) and EDI Germany (as borrower) dated December 30, 2007 (translated from German to English).
10.65	Loan Agreement for EUR 6,500 with interest at 6% per annum between Dieter Thiemann (as lender) and EDI Germany (as borrower) dated January 18, 2008 (translated from German to English).
10.66	Addendum to Loan Agreement dated January 19, 2007 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to December 31, 2008, dated January 20, 2008 (translated from German to English).
10.67	Addendum to Loan Agreement dated January 28, 2007 between DTB Patente GmbH (as lender) and EDI Germany (as borrower) extending the due date to January 28, 2009, dated January 22, 2008 (translated from German to English).
10.68	Addendum to Loan Agreement dated February 23, 2007 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to December 31, 2008, dated February 20, 2008 (translated from German to English).
10.69	Addendum to Loan Agreement dated February 23, 2007 between EDI Holding (as lender) and EDI Germany (as borrower) extending the due date to December 31, 2008, dated February 23, 2008 (translated from German to English).
10.70	Technology License Agreement between EDI Germany and EDI Turkey, dated effective as of March 28, 2008.
21.1	List of Subsidiaries.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

39

Exhibit
Number	Description of Exhibit
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Notes:
(1)	Filed as an exhibit to our Registration Statement on Form 10-SB originally filed with the SEC on November 5, 2003.
(2)	Filed as an exhibit to our Quarterly Report on Form 10-QSB filed with the SEC on March 17, 2006.
(3)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on March 27, 2006.
(4)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on April 27, 2006.
(5)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 2, 2006.
(6)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 11, 2006.
(7)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 28, 2006.
(8)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 28, 2006.
(9)	Filed as an exhibit to our Quarterly Report on Form 10-QSB filed with the SEC on November 14, 2006.
(10)	Filed as an exhibit to our Annual Report on Form 10-KSB filed with the SEC on May 16, 2007.
(11)	Filed as an exhibit to our Quarterly Report on Form 10-QSB filed with the SEC on August 20, 2007.
(12)	Filed as an exhibit to our Quarterly Report on Form 10-QSB filed with the SEC on November 19, 2007.
(13)	Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on February 20, 2008.

40

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		EXPLORATION DRILLING INTERNATIONAL INC.
Date: April 15, 2008	By:	/s/ Rainer Rotthaeuser
		RAINER ROTTHAEUSER
		Chief Executive Officer and President
		(Principal Executive Officer )
Date: April 15, 2008	By:	/s/ Guenter Thiemann
		GUENTER THIEMANN
		Chief Financial Officer and Treasurer
		(Principal Accounting Officer)
Date: April 15, 2008	By:	/s/ John Boschert
		JOHN BOSCHERT
		Secretary

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: April 15, 2008	By:	/s/ Rainer Rotthaeuser
		RAINER ROTTHAEUSER
		Chief Executive Officer and President
		(Principal Executive Officer )
		Director
Date: April 15, 2008	By:	/s/ Guenter Thiemann
		GUENTER THIEMANN
		Chief Financial Officer and Treasurer
		(Principal Accounting Officer)
		Director
Date: April 15, 2008	By:	/s/ John Boschert
		JOHN BOSCHERT
		Secretary